-----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, CJHt6HSKu54X39oFctUHY6LyRpR3z2M6ekLSVAbb2m2po+b0ngnONVYHLc35s4B1 6zoXuegpayvC+U2ViNTo2g== 0000749748-07-000007.txt : 20070607 0000749748-07-000007.hdr.sgml : 20070607 20070607121046 ACCESSION NUMBER: 0000749748-07-000007 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20070331 FILED AS OF DATE: 20070607 DATE AS OF CHANGE: 20070607 EFFECTIVENESS DATE: 20070607 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: 07906030 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 3/31/07 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: 3/31/07 FORM N-CSR ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT MARCH 31, 2007 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 PACIFIC CAPITAL FUNDS OF CASH CAPITAL FUNDS(R) ASSETS TRUST: A LION OF STANDING ON A TWISTED CASH ASSETS TRUST ROPE AND SALE TO LEFT OF PACIFIC](R) ANNUAL REPORT May, 2007 Dear Investor: It gives us considerable pleasure to present the Annual Report for The Pacific Capital Funds of Cash Assets Trust for the fiscal year ended March 31, 2007. The enclosed 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. The Trust was specifically created to meet the short-term investment needs of Hawaii investors and others. ************************************ SLOWING ECONOMY During the current report period, the U.S. economy continued to grow, albeit at a somewhat slower pace. It would appear that the Federal Reserve Board's (the "Fed") two-year campaign of raising short-term interest rates to slow the economy may have taken hold. Recall, when the Fed began raising short-term interest rates in March 2004, the Federal Fund's rate - the interest rate member banks charge each other for overnight loans and the primary tool for influencing economic activity - was 1%, a historically low rate environment. After 17 consecutive interest rate hikes of 0.25% each ending in June 2006, the Fed Fund's rate was 5.25%. The Fed's action along with a weakening manufacturing sector, slumping housing market and high oil prices have contributed to the slowing of the U.S. economy to its lowest level in four years. With mounting evidence of a slowing economy and mixed signs of a rising level of inflation, the Fed's monetary policy has remained steady and noncommittal about the outlook for future rate action. Economic analysts continue to debate the direction of the economy. On the one hand, the Fed could orchestrate an economic "soft landing" with positive growth and low inflation. On the other hand, should the economy surprise and show signs of heating up with inflation rising, the Fed may choose to raise short-term interest rates. A WATCHFUL EYE Rest assured the Trust's investment management team will seek to keep a watchful eye on economic developments, financial markets and interest rate movements, as they steer the course of NOT A PART OF THE ANNUAL REPORT each of the Trust's portfolios. In managing the portfolios, the team intends to continue to be alert to market opportunities as it seeks to produce a higher return competitive with other short-term alternatives. You can be assured that in our desire to achieve higher returns for investors, the Asset Management Group of the Bank of Hawaii will continually seek to manage investments in a cautious, but aggressive, manner. Safety of your cash reserves remains of utmost concern to us. We believe that there is absolutely no substitute for strict adherence to high quality of securities which possess minimum credit risk. On behalf of the Board of Trustees and the Trust's management, thank your for your continued confidence and trust you have placed in us. We look forward to serving your investment needs for many years to come. 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 ANNUAL REPORT - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of The Pacific Capital Funds of Cash Assets Trust: We have audited the accompanying statement of assets and liabilities, including the schedules of investments, of The Pacific Capital Funds of Cash Assets Trust (the "Trust") (comprised of Pacific Capital Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust, and Pacific Capital U.S. Government Securities Cash Assets Trust) (the "Funds"), as of March 31, 2007 and the related statements of operations for the year then ended, and the changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the years in the three year period ended March 31, 2005 have been audited by other auditors, whose report dated May 23, 2005 expressed an unqualified opinion on such financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform our audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of March 31, 2007, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds comprising the Trust as of March 31, 2007, the results of their operations for the year then ended, and the changes in their net assets and the financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. TAIT, WELLER & BAKER LLP Philadelphia, Pennsylvania May 18, 2007 - -------------------------------------------------------------------------------- PACIFIC CAPITAL CASH ASSETS TRUST STATEMENT OF INVESTMENTS MARCH 31, 2007
PRINCIPAL AMOUNT COMMERCIAL PAPER (65.9%) VALUE - --------------- --------------------------------------------------------------------- ------------- Automotive (4.4%) --------------------------------------------------------------------- $ 20,000,000 Toyota Motor Credit Corp., 5.21%, 06/27/07 .......................... $ 19,748,183 ------------- Banks (17.6%) --------------------------------------------------------------------- 20,000,000 Bank of America, 5.21%, 07/02/07 .................................... 19,733,711 20,000,000 Citigroup Global Markets Holdings, Inc., 5.21%, 05/17/07 ............ 19,866,856 20,000,000 Rabobank 5.24%, 04/24/07 ............................................ 19,933,108 20,000,000 Societe Generale N.A., Inc., 5.20%, 04/02/07 19,997,111 ------------- 79,530,786 ------------- Borrowing Conduit (4.4%) --------------------------------------------------------------------- 20,000,000 Abbey National North America Corp., 5.24%, 04/12/07 ................. 19,967,978 ------------- Brokerage (8.8%) --------------------------------------------------------------------- 20,000,000 Bear Stearns & Co., 5.24%, 4/11/07 .................................. 19,970,889 20,000,000 Goldman Sachs Group, Inc., 5.18%, 06/18/07 ......................... 19,775,533 ------------- 39,746,422 ------------- Conglomerate (4.4%) --------------------------------------------------------------------- 20,000,000 General Electric Capital Corp., 5.23%, 04/30/07 ..................... 19,915,739 ------------- Education (8.8%) --------------------------------------------------------------------- 20,000,000 Harvard University, 5.35%, 04/02/07 ................................. 19,997,028 20,000,000 Stanford University, 5.23%, 04/10/07 ................................ 19,973,850 ------------- 39,970,878 ------------- Finance (13.1%) --------------------------------------------------------------------- 20,000,000 American General Finance Corp., 5.13%, 08/24/07 ..................... 19,586,347 20,000,000 Calyon NA, Inc., 5.23%, 04/23/07 .................................... 19,936,078 20,000,000 PACCAR Financial Corp., 5.22%, 05/15/07 ............................. 19,872,400 ------------- 59,394,825 ------------- Insurance (4.4%) --------------------------------------------------------------------- 20,000,000 Prudential Funding, 5.17%, 05/03/07 ................................. 19,908,089 ------------- Total Commercial Paper 298,182,900 ------------- CERTIFICATES OF DEPOSIT (4.4%) --------------------------------------------------------------------- 20,000,000 Wells Fargo, 5.40%, 06/15/07 ........................................ 20,000,000 -------------
PRINCIPAL AMOUNT REPURCHASE AGREEMENTS (29.8%) VALUE - --------------- --------------------------------------------------------------------- ------------- Bank of America Securities $ 70,000,000 5.33%, 04/02/07 ..................................................... $ 70,000,000 (Proceeds of $70,031,092 to be received at maturity, Collateral: $70,220,000 Federal Home Loan Bank 4.75% due 12/09/11; the collateral fair value plus interest receivable equals $71,259,236) 65,000,000 Morgan Stanley Dean Witter 5.30%, 04/02/07 ..................................................... 65,000,000 ------------- (Proceeds of $65,028,708 to be received at maturity, Collateral: $64,345,000 US Treasury Note 5.00% due 10/13/11; the collateral fair value plus interest receivable equals $66,135,864) Total Repurchase Agreements ......................................... 135,000,000 ------------- SHARES INVESTMENT COMPANY (0.0%) - --------------- --------------------------------------------------------------------- ------------- 23,106 JP Morgan U.S. Government Money Market Fund, Capital Shares ......... 23,106 ------------- Total Investments (Amortized Cost $453,206,006*) ....... 100.1% 453,206,006 Other assets less liabilities .......................... (0.1)% (569,057) ----- ------------- NET ASSETS ............................................. 100.0% $ 452,636,949 ===== =============
* Cost for Federal income tax and financial reporting purposes is identical. PERCENT OF PORTFOLIO DISTRIBUTION (UNAUDITED) PORTFOLIO ---------------------------------- --------- Commercial Paper ............................. 65.8% Certificates of Deposit ...................... 4.4 Repurchase Agreements ........................ 29.8 Investment Company ........................... 0.0 ------- 100.0% ======= See accompanying notes to financial statements. PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST SCHEDULE OF INVESTMENTS MARCH 31, 2007
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL SECURITIES (99.9%) S&P VALUE - --------------- ------------------------------------------------------- ----------- -------------- ARIZONA (0.2%) ------------------------------------------------------- Arizona State Municipal Financing Program COP, Series 15, ETM, Collateral: U.S. Government Securities $ 450,000 8.750%, 08/01/07 ...................................... Aaa/AAA $ 457,353 -------------- COLORADO (1.6%) ------------------------------------------------------- Colorado Housing & Finance Authority Revenue Bonds, Class I, Series A-1, Weekly Reset VRDO*, SPA: FHLB 4,100,000 3.660%, 10/01/30 ...................................... VMIG1/A-1+ 4,100,000 -------------- FLORIDA (0.4%) ------------------------------------------------------- West Palm Beach, FL Utilities System Revenue, Prerefunded to 10/01/07 @101, Collateral: State & Local Government Series, FGIC Insured 1,000,000 5.500%, 10/01/29 ...................................... Aaa/NR 1,019,422 -------------- HAWAII (29.6%) ------------------------------------------------------- City and County Honolulu, HI, GO Bonds, Series A, ETM, Collateral: U.S. Government Securities 2,870,000 5.600%, 04/01/07 ...................................... #Aaa/AA 2,870,000 City and County Honolulu, HI, GO Bonds, Series A, ETM, Collateral: U.S. Government Securities, FGIC Insured 1,165,000 6.000%, 09/01/07 ...................................... #Aaa/AAA 1,177,143 City and County Honolulu, HI, GO Commercial Paper, Interest at Maturity Series H, LOC: Landesbank Hessen-Thuringen Girozentrale (Heleba) 15,000,000 3.504%, 07/03/07 ...................................... P-1/A1+ 15,000,000 City and County Honolulu, HI, GO Commercial Paper, Interest at Maturity, Series W, LOC - Westdeutsche Landesbank 7,100,000 3.545%, 06/05/07 ...................................... P-1/A1+ 7,100,000 5,000,000 3.573%, 06/12/07 ...................................... P-1/A1+ 5,000,000 Hawaii State, GO Bonds, Series C, Refunding, FSA Insured 250,000 5.125%, 02/01/08 ...................................... Aaa/AAA 253,080
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL SECURITIES (CONTINUED) S&P VALUE - --------------- ------------------------------------------------------- ----------- -------------- HAWAII (continued) ------------------------------------------------------- Hawaii State, GO Bonds, Series CV, FGIC Insured $ 305,000 5.500%, 08/01/07 ...................................... Aaa/AAA $ 306,827 Hawaii State Department of Budget and Finance Special Purpose Revenue Bonds (Hawaiian Electric Company), AMT, Notified Call 05/01/07, MBIA Insured 3,500,000 6.200%, 05/01/26 ...................................... Aaa/AAA 3,506,720 Hawaii State Department of Budget and Finance Special Purpose Revenue Bonds (Queen's Health Systems) Series A, Weekly Reset VRDO*, SPA: Bank of Nova Scotia, AMBAC Insured 4,600,000 3.470%, 07/01/29 ...................................... VMIG1/A-1+ 4,600,000 Hawaii State Department of Budget and Finance Special Purpose Revenue Bonds (Queens Health Systems) Series C, Weekly Reset VRDO*, SPA: Bank of America N.A., AMBAC Insured 36,335,000 3.500%, 07/01/28 ...................................... MIG1/AAA 36,335,000 Maui County, HI, GO Bonds, Series A, Prerefunded to 09/01/07 @101, Collateral: U.S. Government Securities, FGIC Insured 500,000 5.100%, 09/01/11 ...................................... Aaa/AAA 508,203 -------------- 76,656,973 -------------- ILLINOIS (5.3%) ------------------------------------------------------- Chicago, IL GO Bonds, Series B, Weekly Reset VRDO*, SPA: Landesbank Baden-Wurttemberg, FGIC Insured 6,000,000 3.680%, 01/01/37 ...................................... VMIG1/A-1+ 6,000,000 Chicago IL Housing Authority Capital Program Revenue Bonds, ETM, Collateral: State & Local Government Series, Prerefunded 2,185,000 5.000%, 07/01/07 ...................................... #Aaa/NR 2,192,706
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL SECURITIES (CONTINUED) S&P VALUE - --------------- ------------------------------------------------------- ----------- -------------- ILLINOIS (continued) ------------------------------------------------------- Chicago, IL Water Revenue Bonds, Prerefunded to 11/01/07 @102, Collateral: State & Local Government Series, FGIC Insured $ 600,000 5.250%, 11/01/23 ...................................... Aaa/AAA $ 617,172 Chicago, IL Water Revenue Refunding Bonds, Second Lien, Weekly Reset, VRDO*, SPA - Dexia Credit Local, MBIA Insured 5,000,000 3.650%, 11/01/31 ...................................... Aaa/AAA 5,000,000 -------------- 13,809,878 -------------- INDIANA (1.0%) ------------------------------------------------------- Duneland, IN Independent School Building Corp. First Mortgage Revenue Bonds, Prerefunded to 08/01/07 @101, Collateral: U.S. Government Securities, MBIA Insured 1,050,000 5.500%, 08/01/17 ...................................... Aaa/AAA 1,067,411 South Bend, IN Community School Corp. Riley School Building Corp. First Mortgage Revenue Bonds, Prerefunded to 08/01/07 @101, Collateral: 100% U.S. Treasury Obligations, FSA Insured 1,500,000 5.700%, 08/01/19 ...................................... Aaa/AAA 1,525,502 -------------- 2,592,913 -------------- KENTUCKY (3.0%) ------------------------------------------------------- Louisville & Jefferson County, KY Metropolitan Sewer District Sewer & Drain System Revenue Bonds, Series A, Weekly Reset, VRDO*, SPA - Bank One Kentucky, FSA Insured 7,655,000 3.650%, 05/15/23 ...................................... Aaa/AAA 7,655,000 -------------- MARYLAND (0.4%) ------------------------------------------------------- Montgomery County, MD, Public Improvement Series GO Bonds, ETM, Prerefunded 05/01/07 @102, Collateral: State & Local Government Series 1,085,000 5.375%, 05/01/13 ...................................... Aaa/AAA 1,108,070 --------------
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL SECURITIES (CONTINUED) S&P VALUE - --------------- ------------------------------------------------------- ----------- -------------- MASSACHUSETTS (0.6%) ------------------------------------------------------- Massachusetts State Health & Educational Facilities Authority Revenue Bonds (Wellesley College), Series G, Daily Reset, VRDO* $ 1,550,000 3.680%, 07/01/39 ...................................... VMIG1/A-1+ $ 1,550,000 -------------- MICHIGAN (12.4%) ------------------------------------------------------- Detroit, MI Sewer Disposal Revenue Bonds, Series A, ETM, Prerefunded to 07/01/07 @101, Collateral: State & Local Government Series, MBIA Insured 250,000 5.000%, 07/01/11 ...................................... Aaa/AAA 253,235 Detroit, MI Sewer Disposal Revenue Bonds, Series A, Prerefunded to 07/01/07 @101, Collateral: U.S. Government Securities, MBIA Insured 4,000,000 5.400%, 07/01/15 ...................................... Aaa/AAA 4,056,997 Eastern Michigan University, University Revenue Bonds, Daily Reset VRDO*, FGIC Insured, SPA: FGIC-SPI 8,700,000 3.790%, 06/01/27 ...................................... Aaa/A-1+ 8,700,000 Michigan Municipal Bond Authority Revenue Bonds, State Revolving Fund, Prerefunded to 10/01/07 @101, Collateral: State & Local Government Series 1,000,000 5.250%, 10/01/15 ...................................... Aaa/AAA 1,018,046 Michigan State Building Authority Facilities Program Revenue Bonds, Series II, Prerefunded to 10/15/07 @101, Collateral: State & Local Government Series 2,535,000 5.000%, 10/15/11 ...................................... Aa3/AA- 2,577,816 Northern Michigan University Revenue Bonds, Daily Reset VRDO*, SPA: DEPFA Bank PLC, AMBAC Insured 4,285,000 3.790%, 12/01/35 ...................................... Aaa/AAA 4,285,000 Northern Michigan University, Revenue Bonds, Daily Reset VRDO*, SPA: FGIC-SPI, FGIC Insured 3,960,000 3.790%, 06/01/31 ...................................... VMIG1/A-1+ 3,960,000
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL SECURITIES (CONTINUED) S&P VALUE - --------------- ------------------------------------------------------- ----------- -------------- MICHIGAN (continued) ------------------------------------------------------- Rochester, MI, Community School District GO Bonds, ETM, Prerefunded 05/01/07 @100, Collateral: State & Local Government Securities, MBIA Insured $ 7,315,000 5.250%, 05/01/15 ...................................... #Aaa/AAA $ 7,324,738 -------------- 32,175,832 -------------- MISSOURI (13.8%) ------------------------------------------------------- Curators University, MO System Facility Revenue Bonds, Series A, Daily Reset, VRDO* 1,800,000 3.770%, 11/01/32 ...................................... VMIG1/A-1+ 1,800,000 Kansas City, MO Industrial Development Authority Revenue Bonds, (Ewing Marion Kaufman Foundation), Daily Reset VRDO* 8,360,000 3.790%, 04/01/27 ...................................... NR/A-1+ 8,360,000 650,000 3.790%, 04/01/27 ...................................... NR/A-1+ 650,000 Missouri State, Health & Educational Facilities Authority Revenue Bonds (St. Louis University), Series B, Daily Reset VRDO*, SPA: Bank of America N.A. 6,000,000 3.820%, 10/01/24 ...................................... VMIG1/A-1+ 6,000,000 Missouri State, Health & Educational Facilities Authority Revenue Bonds (Washington University), Series B, SPA: JPMorgan Chase Bank, Daily Reset VRDO* 4,800,000 3.770%, 03/01/40 ...................................... VMIG1/A-1+ 4,800,000 Missouri State, Health & Educational Facilities Authority Revenue Bonds (Washington University), Series C, Daily Reset VRDO*, SPA: JPMorgan Chase Bank 2,800,000 3.730%, 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: JPMorgan Chase Bank 2,100,000 3.730%, 09/01/30 ...................................... VMIG1/A-1+ 2,100,000 University of Missouri University System Facilities Revenue Bonds, Series A, Daily Reset, VRDO* 3,770,000 3.770%, 11/01/31 ...................................... VMIG1/A-1+ 3,770,000
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL SECURITIES (CONTINUED) S&P VALUE - --------------- ------------------------------------------------------- ----------- -------------- MISSOURI (continued) ------------------------------------------------------- University of Missouri University System Facilities Revenue Bonds, Series B, Daily Reset VRDO* $ 5,350,000 3.770%, 11/01/30 ...................................... VMIG1/A-1+ $ 5,350,000 -------------- 35,630,000 -------------- MONTANA (2.4%) ------------------------------------------------------- Montana State, Health Facilities Authority Revenue Bonds, Series A, Weekly Reset VRDO*, SPA: Wells Fargo, FGIC Insured 6,355,000 3.680%, 12/01/15 ...................................... VMIG1/A-1+ 6,355,000 -------------- NEBRASKA (0.4%) ------------------------------------------------------- Nebraska Public Power District Revenue Bonds, Prerefunded 2005, Series A, Prerefunded to 01/01/08 @101, Collateral: U.S. Treasury Obligations, MBIA Insured 910,000 5.250%, 01/01/11 ...................................... Aaa/AAA 929,778 -------------- NEVADA (3.8%) ------------------------------------------------------- Clark County, NV Airport Revenue Bonds, Series C, Weekly Reset VRDO*, SPA: Landesbank Baden- Wurttemberg, FGIC Insured 8,800,000 3.660%, 07/01/29 ...................................... VMIG1/A-1+ 8,800,000 Clark County, NV School District Building and Renovation GO Bonds, Series B, Prerefunded to 06/15/07 @ 101, Collateral: U.S. Government Securities, FGIC Insured 1,000,000 5.250%, 06/15/17 ...................................... Aaa/AAA 1,013,483 -------------- 9,813,483 -------------- NEW YORK (6.3%) ------------------------------------------------------- Long Island, NY Power Authority Revenue Bonds, Series 1A, Weekly Reset VRDO*, LOC: 80% Bayerische Landesbank; 20% Landesbank Baden-Wurttemberg 9,000,000 3.650%, 05/01/33 ...................................... VMIG1/A-1+ 9,000,000
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL SECURITIES (CONTINUED) S&P VALUE - --------------- ------------------------------------------------------- ----------- -------------- NEW YORK (continued) ------------------------------------------------------- New York, NY City Transitional Finance Authority Revenue Bonds, Series 3, Daily Reset VRDO*, SPA: Royal Bank of Canada $ 3,900,000 3.750%, 11/01/22 ...................................... VMIG1/A-1+ $ 3,900,000 New York, NY Municipal Water Financing Authority Water & Sewer System Revenue Bonds, Series B, Prerefunded to 06/15/07 @ 101, Collateral: U.S. Government Securities, FSA Insured 3,500,000 5.750%, 06/15/29 ...................................... Aaa/AAA 3,550,577 -------------- 16,450,577 -------------- NORTH CAROLINA (9.7%) ------------------------------------------------------- Charlotte, NC Airport Revenue Bonds, Series A, Weekly Reset VRDO*, SPA: JPMorgan Chase Bank, MBIA Insured 9,120,000 3.650%, 07/01/16 ...................................... VMIG1/A-1+ 9,120,000 Concord, NC Utility Systems Revenue Bonds, Series B, Weekly Reset VRDO*, SPA: Wachovia Bank, FSA Insured 8,820,000 3.650%, 12/01/22 ...................................... VMIG1/NR 8,820,000 Durham, NC, Public Improvement Project GO Bonds, Weekly Reset VRDO*, SPA: Wachovia Bank of North Carolina 1,425,000 3.670%, 02/01/09 ...................................... VMIG1/A-1+ 1,425,000 2,975,000 3.670%, 02/01/11 ...................................... VMIG1/A-1+ 2,975,000 1,270,000 3.670%, 02/01/12 ...................................... VMIG1/A-1+ 1,270,000 1,475,000 3.670%, 02/01/13 ...................................... VMIG1/A-1+ 1,475,000 -------------- 25,085,000 -------------- OHIO (0.9%) ------------------------------------------------------- Ohio Housing Finance Agency Mortgage Revenue Bonds (Residential Mortgage), Series E, AMT, Weekly Reset VRDO*, SPA: FHLB 2,335,000 3.700%, 09/01/34 ...................................... VMIG1/NR 2,335,000 --------------
RATING PRINCIPAL MOODY'S/ AMOUNT MUNICIPAL SECURITIES (CONTINUED) S&P VALUE - --------------- ------------------------------------------------------- ----------- -------------- OREGON (0.4%) ------------------------------------------------------- Josephine County, OR School District #007 GO Bonds, ETM, Prerefunded 06/01/07 @100, Collateral: U.S. Government Securities, FGIC Insured $ 1,000,000 5.700%, 06/01/13 ...................................... Aaa/AAA $ 1,003,593 -------------- PENNSYLVANIA (0.8%) ------------------------------------------------------- Philadelphia, PA Hospitals & Higher Education Facilities Authority Hospital Revenue Bonds, Children's Hospital Project, Series A, Daily Reset, VRDO*, SPA - JPMorgan Chase Bank 800,000 3.760%, 02/15/14 ...................................... VMIG1/A-1+ 800,000 Pittsburgh, PA, GO Bonds, Series B, ETM, Collateral: State & Local Government Series 100%, MBIA Insured 1,380,000 5.000%, 09/01/07 ...................................... Aaa/AAA 1,387,966 -------------- 2,187,966 -------------- UTAH (0.4%) ------------------------------------------------------- Utah State GO Bonds, Prerefunded to 07/01/07 @100, Collateral: State & Local Government Series 1,000,000 5.000%, 07/01/12 ...................................... Aaa/AAA 1,003,670 -------------- VIRGINIA (2.6%) ------------------------------------------------------- University of Virginia Revenue Bonds, Series A, Weekly Reset VRDO* 6,700,000 3.630%, 06/01/34 ...................................... VMIG1/A-1+ 6,700,000 -------------- WASHINGTON (0.6%) ------------------------------------------------------- Seattle, WA, GO Bonds, Prerefunded to 08/01/07 @100, Collateral: 100% State & Local Government Series 1,545,000 5.300%, 08/01/17 ...................................... Aa1/AAA 1,554,148 -------------- PUERTO RICO (3.3%) ------------------------------------------------------- Puerto Rico Commonwealth Infrastructure Financing Authority Revenue Bonds, Series A, Prerefunded to 01/01/08 @101, Collateral: U.S. Government Agencies 98%; U.S. Treasury Obligations 2%, AMBAC Insured 8,300,000 5.000%, 07/01/28 ...................................... Aaa/AAA 8,471,298 -------------- Total Municipal Securities 258,644,954 --------------
SHARES INVESTMENT COMPANY (1.2%) VALUE - --------------- ------------------------------------------------------- -------------- 3,092,339 Goldman Sachs Financial Square Tax-Free Money Market Fund Institutional Shares ................... $ 3,092,339 -------------- Total Investments (Amortized Cost $261,737,293**) ..... 101.1% 261,737,293 Other assets less liabilities ......................... (1.1) (2,778,792) ------ -------------- NET ASSETS ............................................ 100.0% $ 258,958,501 ====== ==============
* 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 ------------ Arizona 0.2% Colorado 1.6 Florida 0.4 Hawaii 29.3 Illinois 5.3 Indiana 1.0 Investment Company 1.2 Kentucky 2.9 Maryland 0.4 Massachusetts 0.6% Michigan 12.3 Missouri 13.6 Montana 2.4 Nebraska 0.3 Nevada 3.7 New York 6.3 North Carolina 9.6 Ohio 0.9 Oregon 0.4% Pennsylvania 0.8 Puerto Rico 3.2 Utah 0.4 Virginia 2.6 Washington 0.6 ------ 100.0% ====== PORTFOLIO ABBREVIATIONS: ------------------------ AMBAC - American Municipal Bond Assurance Corp. AMT - Alternative Minimum Tax COP - Certificates of Participation ETM - Escrowed to Maturity FGIC - Financial Guaranty Insurance Corporation FHLB - Federal Home Loan Bank FSA - Financial Security Assurance GO - General Obligation LOC - Letter of Credit MBIA - Municipal Bond Investors Assurance NR - Not Rated 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 MARCH 31, 2007
PRINCIPAL AMOUNT SECURITY DESCRIPTION VALUE - --------------- --------------------------------------------------------------------- -------------- U.S. GOVERNMENT AGENCIES (100.1%) --------------------------------------------------------------------- Federal Farm Credit Bank (9.9%) --------------------------------------------------------------------- $ 25,000,000 5.16%, 04/03/07 ..................................................... $ 24,992,833 25,000,000 5.15%, 04/05/07 ..................................................... 24,985,694 30,015,000 5.15%, 05/04/07 ..................................................... 29,873,304 95,000,000 5.14%, 05/21/07 ..................................................... 94,321,806 -------------- 174,173,637 -------------- Federal Home Loan Bank (90.2%) --------------------------------------------------------------------- 275,000,000 5.00%, 04/02/07 ..................................................... 274,961,806 23,000,000 5.12%, 04/04/07 ..................................................... 22,990,177 118,000,000 5.17%, 04/09/07 ..................................................... 117,864,300 90,000,000 5.15%, 04/11/07 ..................................................... 89,871,375 146,000,000 5.15%, 04/13/07 ..................................................... 145,749,590 90,000,000 5.13%, 04/18/07 ..................................................... 89,781,975 111,544,000 5.15%, 04/20/07 ..................................................... 111,240,884 95,000,000 5.18%, 04/27/07 ..................................................... 94,644,594 147,000,000 5.16%, 05/02/07 ..................................................... 146,346,830 97,491,000 5.14%, 05/16/07 ..................................................... 96,864,011 78,000,000 5.15%, 05/18/07 ..................................................... 77,476,068 127,178,000 5.15%, 05/23/07 ..................................................... 126,232,856 149,390,000 5.15%, 05/25/07 ..................................................... 148,235,206 29,000,000 5.13%, 06/22/07 ..................................................... 28,661,135 21,000,000 5.13%, 06/27/07 ..................................................... 20,739,653 -------------- 1,591,660,460 -------------- Total U.S. Government Agencies ................................... 1,765,834,097 -------------- SHARES INVESTMENT COMPANY (0.1%) - --------------- --------------------------------------------------------------------- -------------- 2,015,284 JP Morgan U.S. Government Money Market Fund, Capital Shares ......... 2,015,284 -------------- Total Investments (Amortized Cost $1,767,849,381*) .... 100.2% 1,767,849,381 Other assets less liabilities ......................... (0.2) (3,648,009) ------ -------------- NET ASSETS ............................................ 100.0% $1,764,201,372 ====== ==============
* Cost for Federal income tax and financial reporting purposes is identical. PERCENT OF PORTFOLIO DISTRIBUTION (UNAUDITED) PORTFOLIO ---------------------------------- --------- U.S. Government Agencies 99.9% Investment Company 0.1 ------ 100.0% ====== See accompanying notes to financial statements. THE PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST STATEMENTS OF ASSETS AND LIABILITIES MARCH 31, 2007
CASH TAX-FREE GOVERNMENT FUND FUND FUND --------------- --------------- --------------- ASSETS: Investments at value and amortized cost (note 2) ........ $ 318,206,006 $ 261,737,293 $ 1,767,849,381 Repurchase agreements (note 2) .......................... 135,000,000 -- -- Cash .................................................... -- 7,170 -- Interest receivable ..................................... 914,303 1,840,069 8,045 Other assets ............................................ 16,762 7,160 43,080 --------------- --------------- --------------- Total Assets ......................................... 454,137,071 263,591,692 1,767,900,506 --------------- --------------- --------------- LIABILITIES: Payable for investment securities purchased ............. -- 4,040,889 -- Dividends payable ....................................... 1,157,961 440,394 2,841,364 Adviser and Administrator fees payable .................. 202,967 87,144 583,003 Distribution fees payable ............................... 41,012 19,436 216,262 Accrued expenses ........................................ 98,182 45,328 58,505 --------------- --------------- --------------- Total Liabilities .................................... 1,500,122 4,633,191 3,699,134 --------------- --------------- --------------- NET ASSETS .............................................. $ 452,636,949 $ 258,958,501 $ 1,764,201,372 =============== =============== =============== NET ASSETS CONSIST OF: Capital Stock - Authorized an unlimited number of shares, par value $0.01 per share ............................ $ 4,526,226 $ 2,589,734 $ 17,641,311 Additional paid-in capital .............................. 448,109,543 256,385,878 1,746,558,190 Distributions in excess of net investment income ........ -- (17,111) -- Accumulated net realized gain (loss) on investments ..... 1,180 -- 1,871 --------------- --------------- --------------- $ 452,636,949 $ 258,958,501 $ 1,764,201,372 =============== =============== =============== SHARES OF BENEFICIAL INTEREST: Original Shares Class: Net Assets ........................................... $ 287,048,739 $ 170,609,483 $ 685,330,056 =============== =============== =============== Shares outstanding ................................... 287,266,865 170,619,507 685,300,260 =============== =============== =============== Net asset value per share ............................ $ 1.00 $ 1.00 $ 1.00 =============== =============== =============== Service Shares Class: Net Assets ........................................... $ 165,588,210 $ 88,349,018 $ 1,078,871,316 =============== =============== =============== Shares outstanding ................................... 165,355,694 88,353,922 1,078,830,840 =============== =============== =============== 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 YEAR ENDED MARCH 31, 2007
CASH TAX-FREE GOVERNMENT FUND FUND FUND ------------ ------------ ------------ INVESTMENT INCOME: Interest income .................................. $ 24,950,093 $ 7,659,158 $ 70,381,247 ------------ ------------ ------------ EXPENSES: Investment Advis er fees (note 3) ................ 1,728,112 658,852 4,470,519 Administrator fees (note 3) ...................... 659,224 208,845 991,924 Distribution fees (note 3) ....................... 447,519 196,556 2,228,626 Trustees' fees and expenses ...................... 93,103 59,219 174,730 Insurance ........................................ 47,672 19,881 115,573 Legal fees (note 3) .............................. 44,969 29,548 61,780 Registration fees and dues ....................... 38,355 20,909 49,376 Fund accounting fees ............................. 31,320 31,532 32,472 Shareholders' reports ............................ 30,090 6,282 20,205 Custodian fees ................................... 15,773 15,305 29,229 Auditing and tax fees ............................ 14,500 14,500 14,500 Transfer and shareholder servicing agent fees .... 13,284 12,816 12,468 Chief Compliance Officer (note 3) ................ 4,544 4,544 4,544 Miscellaneous .................................... 14,472 10,871 39,945 ------------ ------------ ------------ Total expenses ................................... 3,182,937 1,289,660 8,245,891 Fund accounting fees waived ...................... -- (15,654) -- Expenses paid indirectly (note 5) ................ (2,924) (4,644) (10,358) ------------ ------------ ------------ Net expenses ........................................ 3,180,013 1,269,362 8,235,533 ------------ ------------ ------------ Net investment income ............................... 21,770,080 6,389,796 62,145,714 Net realized gain (loss) from securities transactions -- 237 340 ------------ ------------ ------------ Net change in net assets resulting from operations .. $ 21,770,080 $ 6,390,033 $ 62,146,054 ============ ============ ============
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 ---------------------------------- ---------------------------------- Year Ended Year Ended Year Ended Year Ended March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 --------------- --------------- --------------- --------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income ................ $ 21,770,080 $ 14,580,671 $ 6,389,796 $ 4,482,897 Net realized gain (loss) from securities transactions ....... -- 1,180 237 10,100 --------------- --------------- --------------- --------------- Net change in net assets resulting from operations .......... 21,770,080 14,581,851 6,390,033 4,492,997 --------------- --------------- --------------- --------------- DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Original Shares .................... (13,877,905) (9,721,572) (4,219,673) (2,778,805) Service Shares ..................... (7,892,175) (4,859,099) (2,197,571) (1,704,092) --------------- --------------- --------------- --------------- Total dividends to shareholders from net investment income ....... (21,770,080) (14,580,671) (6,417,244) (4,482,897) --------------- --------------- --------------- --------------- CAPITAL SHARE TRANSACTIONS (at $1.00 per share): Proceeds from shares sold: Original Shares ...................... 729,865,243 772,407,051 230,204,313 223,627,397 Service Shares ....................... 633,141,409 498,998,950 130,614,157 165,033,651 --------------- --------------- --------------- --------------- 1,363,006,652 1,271,406,001 360,818,470 388,661,048 --------------- --------------- --------------- --------------- Reinvested dividends: Original Shares ...................... 307,349 217,287 45,489 91,298 Service Shares ....................... 7,891,836 4,773,677 2,197,555 1,695,763 --------------- --------------- --------------- --------------- 8,199,185 4,990,964 2,243,044 1,787,061 --------------- --------------- --------------- --------------- Cost of shares redeemed: Original Shares ...................... (728,327,507) (853,144,228) (192,184,780) (225,091,397) Service Shares ....................... (645,130,780) (500,085,192) (137,479,845) (145,858,384) --------------- --------------- --------------- --------------- (1,373,458,287) (1,353,229,420) (329,664,625) (370,949,781) --------------- --------------- --------------- --------------- Change in net assets from capital share transactions ...... (2,252,450) (76,832,455) 33,396,889 19,498,328 --------------- --------------- --------------- --------------- Total change in net assets ........... (2,252,450) (76,831,275) 33,369,678 19,508,428 NET ASSETS: Beginning of period .................. 454,889,399 531,720,674 225,588,823 206,080,395 --------------- --------------- --------------- --------------- End of period* ....................... $ 452,636,949 $ 454,889,399 $ 258,958,501 $ 225,588,823 =============== =============== =============== =============== *Includes undistributed (distributions in excess of) net investment income of: $ -- $ -- $ (17,111) $ -- =============== =============== =============== =============== GOVERNMENT FUND ---------------------------------- Year Ended Year Ended March 31, 2007 March 31, 2006 --------------- --------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income ................ $ 62,145,714 $ 33,279,020 Net realized gain (loss) from securities transactions ....... 340 2,274 --------------- --------------- Net change in net assets resulting from operations .......... 62,146,054 33,281,294 --------------- --------------- DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Original Shares .................... (22,368,853) (12,231,234) Service Shares ..................... (39,776,861) (21,047,786) --------------- --------------- Total dividends to shareholders from net investment income ....... (62,145,714) (33,279,020) --------------- --------------- CAPITAL SHARE TRANSACTIONS (at $1.00 per share): Proceeds from shares sold: Original Shares ...................... 1,604,790,944 892,335,436 Service Shares ....................... 3,243,154,899 3,155,652,101 --------------- --------------- 4,847,945,843 4,047,987,537 --------------- --------------- Reinvested dividends: Original Shares ...................... 175,409 139,115 Service Shares ....................... 39,776,852 21,010,927 --------------- --------------- 39,952,261 21,150,042 --------------- --------------- Cost of shares redeemed: Original Shares ...................... (1,349,057,009) (817,340,270) Service Shares ....................... (3,091,306,685) (2,867,454,460) --------------- --------------- (4,440,363,694) (3,684,794,730) --------------- --------------- Change in net assets from capital share transactions ...... 447,534,410 384,342,849 --------------- --------------- Total change in net assets ........... 447,534,750 384,345,123 NET ASSETS: Beginning of period .................. 1,316,666,622 932,321,499 --------------- --------------- End of period* ....................... $ 1,764,201,372 $ 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 MARCH 31, 2007 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, 2007, a reclassification was made to increase (decrease) undistributed net investment income (distributions in excess of net investment income) and accumulated net realized gain (loss) on investments for the Funds as follows:
Tax-Free Government Cash Fund Fund Fund --------- ---- ---- Accumulated net realized gain (loss) on investements .................. $ -- $ (10,337) $ -- Undistributed net investment income......... -- 10,337 --
These reclassifications are primarily due to dividend redesignations. Net assets were not affected by these changes. i) NEW ACCOUNTING PRONOUNCEMENTS: In July 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 to be implemented no later than September 30, 2007 and is to be applied to all open tax years as of that date. At this time, management does not believe the adoption of FIN 48 will result in any material impact on the Trust's financial statements. 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. The Trust believes adoption of SFAS 157 will have no material impact 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 year ended March 31, 2007. 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 year ended March 31, 2007, 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 $43,585; Tax-Free Fund $28,148; Government Fund $58,030. 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. 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 2007 and 2006 were as follows:
Cash Fund Tax-Free Fund Government Fund -------------------------- -------------------------- -------------------------- 2007 2006 2007 2006 2007 2006 ----------- ----------- ----------- ----------- ----------- ----------- Ordinary income ..... $21,537,828 $14,497,718 $ 10,100 $ -- $60,709,774 $33,395,289 Net tax-exempt income -- -- 6,253,366 4,452,274 -- -- Capital gain ........ -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Total ............... $21,537,828 $14,497,718 $ 6,263,466 $ 4,452,274 $60,709,744 $33,395,289 =========== =========== =========== =========== =========== ===========
As of March 31, 2007, the components of distributable earnings on a tax basis were as follows: Tax-Free Government Cash Fund Fund Fund ---------- ---------- ---------- Undistributed ordinary income ........ $1,159,141 $ 237 $2,843,235 Undistributed tax exempt income ...... -- 423,046 -- Accumulated net realized loss on investments ................... -- -- -- ---------- ---------- ---------- $1,159,141 $ 423,283 $2,843,235 ========== ========== ========== PACIFIC CAPITAL CASH ASSETS TRUST FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES ---------------------------------------------------------------- Year Ended March 31, ---------------------------------------------------------------- 2007 2006 2005 2004 2003 -------- -------- -------- -------- -------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income+ ................ 0.05 0.03 0.01 0.01 0.01 -------- -------- -------- -------- -------- Less distributions: Dividends from net investment income .. (0.05) (0.03) (0.01) (0.01) (0.01) -------- -------- -------- -------- -------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total return ............................ 4.75% 3.20% 1.36% 0.90% 1.35% Ratios/supplemental data Net assets, end of period (in millions) $ 287 $ 286 $ 366 $ 287 $ 361 Ratio of expenses to average net assets 0.57% 0.58% 0.37% 0.21% 0.36% Ratio of net investment income to average net assets .................. 4.65% 3.09% 1.39% 0.90% 1.34% 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 0.57% 0.58% 0.37%* 0.21%* 0.36%* SERVICE SHARES ---------------------------------------------------------------- Year Ended March 31, ---------------------------------------------------------------- 2007 2006 2005 2004 2003 -------- -------- -------- -------- -------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income+ ................ 0.04 0.03 0.01 0.01 0.01 -------- -------- -------- -------- -------- Less distributions: Dividends from net investment income .. (0.04) (0.03) (0.01) (0.01) (0.01) -------- -------- -------- -------- -------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total return ............................ 4.49% 2.94% 1.11% 0.65% 1.09% Ratios/supplemental data Net assets, end of period (in millions) $ 166 $ 169 $ 166 $ 119 $ 123 Ratio of expenses to average net assets 0.82% 0.83% 0.61% 0.46% 0.61% Ratio of net investment income to average net assets .................. 4.40% 2.91% 1.12% 0.65% 1.10% 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 0.82% 0.83% 0.61%* 0.46%* 0.61%*
- ---------- + Per share amounts have been calculated using the monthly average shares method. ++ No reduction in the Adviser's and the Administrator's fees was required during the period. * Net of contractual caps on fees. See accompanying notes to financial statements. PACIFIC CAPITAL TAX-FREE CASH ASSETS TRUST FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
ORIGINAL SHARES ---------------------------------------------------------------- Year Ended March 31, ---------------------------------------------------------------- 2007 2006 2005 2004 2003 -------- -------- -------- -------- -------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income+ ................. . 0.03 0.02 0.01 0.01 0.01 -------- -------- -------- -------- -------- Less distributions: Dividends from net investment income ... . (0.03) (0.02) (0.01) (0.01) (0.01) -------- -------- -------- -------- -------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total return ............................ 3.09% 2.21% 1.16% 0.84% 1.15% Ratios/supplemental data Net assets, end of period (in millions) $ 171 $ 133 $ 134 $ 99 $ 130 Ratio of expenses to average net assets 0.50% 0.50% 0.29% 0.17% 0.28% Ratio of net investment income to average net assets .................. 3.04% 2.20% 1.17% 0.84% 1.13% 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 . . 0.49% 0.50% 0.28%* 0.17%* 0.27%* SERVICE SHARES ---------------------------------------------------------------- Year Ended March 31, ---------------------------------------------------------------- 2007 2006 2005 2004 2003 -------- -------- -------- -------- -------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income+ ................. . 0.03 0.02 0.01 0.01 0.01 -------- -------- -------- -------- -------- Less distributions: Dividends from net investment income ... . (0.03) (0.02) (0.01) (0.01) (0.01) -------- -------- -------- -------- -------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total return ............................ 2.83% 1.96% 0.90% 0.59% 0.90% Ratios/supplemental data Net assets, end of period (in millions) $ 88 $ 93 $ 72 $ 50 $ 56 Ratio of expenses to average net assets 0.75% 0.75% 0.53% 0.42% 0.53% Ratio of net investment income to average net assets .................. 2.78% 1.94% 0.92% 0.59% 0.89% 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 . . 0.75% 0.75% 0.53%* 0.42%* 0.52%*
- ---------- + Per share amounts have been calculated using the monthly average shares method. ++ No reduction in the Adviser's and the Administrator's fees was required during the period. * Net of Contractual caps on fees. 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 ---------------------------------------------------------------- Year Ended March 31, ---------------------------------------------------------------- 2007 2006 2005 2004 2003 -------- -------- -------- -------- -------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income+ ................ 0.05 0.03 0.01 0.01 0.01 -------- -------- -------- -------- -------- Less distributions: Dividends from net investment income .. (0.05) (0.03) (0.01) (0.01) (0.01) -------- -------- -------- -------- -------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total return ............................ 4.80% 3.25% 1.41% 0.96% 1.34% Ratios/supplemental data Net assets, end of period (in millions) $ 685 $ 429 $ 354 $ 263 $ 270 Ratio of expenses to average net assets 0.44% 0.45% 0.27% 0.11% 0.25% Ratio of net investment income to average net assets .................. 4.72% 3.25% 1.42% 0.96% 1.34% 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 0.44% 0.45% 0.27%* 0.11%* 0.24%* SERVICE SHARES ---------------------------------------------------------------- Year Ended March 31, ---------------------------------------------------------------- 2007 2006 2005 2004 2003 -------- -------- -------- -------- -------- Net asset value, beginning of period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income+ ................ 0.04 0.03 0.01 0.01 0.01 -------- -------- -------- -------- -------- Less distributions: Dividends from net investment income .. (0.04) (0.03) (0.01) (0.01) (0.01) -------- -------- -------- -------- -------- Net asset value, end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total return ............................ 4.54% 3.00% 1.16% 0.71% 1.09% Ratios/supplemental data Net assets, end of period (in millions) $ 1,079 $ 887 $ 578 $ 575 $ 448 Ratio of expenses to average net assets 0.69% 0.70% 0.52% 0.36% 0.49% Ratio of net investment income to average net assets .................. 4.46% 3.02% 1.16% 0.71% 1.08% 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 0.69% 0.70% 0.52%* 0.36%* 0.49%*
- ---------- + Per share amounts have been calculated using the monthly average shares method. ++ No reduction in the Adviser's and the Administrator's fees was required during the period. * Net of contractual caps on fees. See accompanying notes to financial statements. ADDITIONAL INFORMATION (UNAUDITED) TRUSTEES AND OFFICERS(1)(2)
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, TRUST AND PRINCIPAL COMPLEX(5) (THE POSITION HELD IS ADDRESS(3) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- INTERESTED TRUSTEE(6) - --------------------- Diana P. Herrmann Trustee since 2004, Vice Chair and Chief Executive Officer 12 ICI Mutual Insurance New York, NY President since 1998 of Aquila Management Corporation, Company (02/25/58) and Vice Chair since Founder of the Aquila Group of 2003 Funds(SM)(7) and parent of Aquila Investment Management LLC, Administrator, since 2004, President and Chief Operating Officer since 1997, a Director since 1984, Secretary since 1986 and previously its Executive Vice President, Senior Vice President or Vice President, 1986-1997; Chief Executive Officer and Vice Chair since 2004 and President, Chief Operating Officer and Manager of the Administrator since 2003; Chair, Vice Chair, President, Executive Vice President or Senior Vice President of funds in the Aquila Group of Funds(SM) since 1986; Director of the Distributor since 1997; trustee, Reserve Money-Market Funds, 1999-2000 and Reserve Private Equity Series, 1998-2000; Governor, Investment Company Institute and head of its Small Funds Committee since 2004; active in charitable and volunteer organizations. NON-INTERESTED TRUSTEES - ----------------------- Theodore T. Mason Chair of the Board Executive Director, East Wind Power 8 Trustee, Premier VIT. New York, NY of Trustees since Partners LTD since 1994 and Louisiana (11/24/35) 2004 and Trustee Power Partners, 1999-2003; Treasurer, since 1984 Alumni Association of SUNY Maritime College since 2004 (President, 2002-2003, First Vice President, 2000-2001, Second Vice President, 1998-2000) and director of the same organization since 1997; Director, STCM Management Company, Inc., 1973-2004; twice national officer of Naval Reserve Association, commanding officer of four naval reserve units and Captain, USNR (Ret); director, The Navy League of the United States New York Council since 2002; trustee, The Maritime Industry Museum at Fort Schuyler, 2000-2004; and the Maritime College at Fort Schuyler Foundation, Inc. since 2000.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, TRUST AND PRINCIPAL COMPLEX(5) (THE POSITION HELD IS ADDRESS(3) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- Thomas W. Courtney Trustee since 1984 President, Courtney Associates, Inc., a 5 Chairman of the Board Sewickley, PA venture capital firm, since 1988. of Oppenheimer Quest (08/17/33) Value Funds Group, Oppenheimer Small Cap Value Fund, Oppenheimer Midcap Fund, and Oppenheimer Rochester Group of Funds; Chairman of the Board of Premier VIT. Stanley W. Hong Trustee since 1993 President, Waste Management of Hawaii, 4 Trustee, Pacific Honolulu, HI Inc. and Corporate Vice President - Capital Funds, which (04/05/36) Hawaii Area for Waste Management, Inc., includes 11 bond and 2001-2005; Trustee, The King William stock funds; First Charles Lunalilo Trust Estate since Insurance Co. of 2001; President and Chief Executive Hawaii, Ltd., Lanihau Officer, The Chamber of Commerce of Properties, Ltd., The Hawaii, 1996-2001; Director PBS - Hawaii Westye Group - West Foundation since 1998; Regent, Chaminade (Hawaii), Inc. University of Honolulu since 1991; Trustee, Heald College since 1998; Trustee, the Nature Conservancy of Hawaii since 1998; Trustee, Child and Family Service since 2005; Director, The East West Center Foundation since 2006; and a director of other corporate and community organizations. Russell K. Okata Trustee since 1993 Executive Director, Hawaii Government 4 Trustee, Pacific Honolulu, HI Employees Association AFSCME Local 152, Capital Funds, which (03/22/44) AFL-CIO since 1981; International Vice includes 11 bond and President, American Federation of State, stock funds; Chairman, County and Municipal Employees, AFL-CIO Royal State Group since 1981; director of various civic (insurance). and charitable organizations. Douglas Philpotts Trustee since 1992 Retired; formerly director, Chairman of 4 Trustee, Pacific Honolulu, HI the Board and President of Hawaiian Capital Funds, which (11/21/31) Trust Company, Limited, a predecessor of includes 11 bond and The Asset Management Group of Bank of stock funds. Hawaii; present or former director of various Hawaii-based civic and charitable organizations. Oswald K. Stender Trustee since 1993 Director, Hawaiian Electric Industries, 4 Trustee, Pacific Honolulu, HI Inc., a public utility holding company, Capital Funds, which (10/08/31) 1993-2004; trustee, the Bernice Pauahi includes 11 bond and Bishop Estate 1990-1999; trustee, Office stock funds; director, of Hawaiian Affairs and a member or Grace Pacific trustee of several community Corporation, an asphalt organizations. paving company, ACE Trucking Inc. and Hawaiian Telecom, a telephone company (communications).
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, TRUST AND PRINCIPAL COMPLEX(5) (THE POSITION HELD IS ADDRESS(3) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- OTHER INDIVIDUALS CHAIRMAN EMERITUS(8) - -------------------- Lacy B. Herrmann Founder, Chairman Founder and Chairman of the Board, N/A N/A New York, NY Emeritus since 2004, Aquila Management Corporation, the (05/12/29) Trustee, 1984-2004, sponsoring organization and parent of and Chairman of the the Manager or Administrator and/or Board of Trustees, Adviser or Sub-Adviser to each fund of 1984-2003 the Aquila Group of Funds(SM); Chairman of the Manager or Administrator and/or Adviser or Sub-Adviser to each since 2004; Founder and Chairman Emeritus of each fund in the Aquila Group of Funds(SM); previously Chairman and a Trustee of each fund in the Aquila Group of Funds(SM) since its establishment until 2004 or 2005; Director of the Distributor since 1981 and formerly Vice President or Secretary, 1981-1998; Trustee Emeritus, Brown University and the Hopkins School; active in university, school and charitable organizations. OFFICERS - -------- Charles E. Childs, III Executive Vice Executive Vice President of all funds in N/A N/A New York, NY President since 2003 the Aquila Group of Funds(SM) and the (04/01/57) Administrator and the Administrator's parent since 2003; formerly Senior Vice President, corporate development, Vice President, Assistant Vice President and Associate of the Administrator's parent since 1987; Senior Vice President, Vice President or Assistant Vice President of the Aquila Money-Market Funds, 1988-2003. Sherri Foster Vice President since Senior Vice President, Hawaiian Tax-Free N/A N/A Lahaina, HI 1997 Trust since 1993 and formerly Vice (07/27/50) President or Assistant Vice President; Vice President since 1997 and formerly Assistant Vice President of the three Aquila Money-Market Funds; Vice President, Aquila Rocky Mountain Equity Fund since 2006; Registered Representative of the Distributor since 1985. John M. Herndon Vice President since Assistant Secretary of the Aquila Group N/A N/A New York, NY 1990 and Assistant of Funds(SM) since 1995 and Vice President (12/17/39) Secretary since 1995 of the three Aquila Money-Market Funds since 1990; Vice President of the Administrator or its predecessor and current parent since 1990.
NUMBER OF POSITIONS PORTFOLIOS OTHER DIRECTORSHIPS HELD WITH IN FUND HELD BY TRUSTEE NAME, TRUST AND PRINCIPAL COMPLEX(5) (THE POSITION HELD IS ADDRESS(3) LENGTH OF OCCUPATION(S) OVERSEEN A DIRECTORSHIP UNLESS AND DATE OF BIRTH SERVICE(4) DURING PAST 5 YEARS BY TRUSTEE INDICATED OTHERWISE.) - ----------------- ---------- ------------------- ---------- --------------------- Robert W. Anderson Chief Compliance Chief Compliance Officer of the Trust N/A N/A New York, NY Officer since 2004 and each of the other funds in the (08/23/40) and Assistant Aquila Group of Funds(SM), the Secretary since 2000 Administrator and the Distributor since 2004, Compliance Officer of the Administrator or its predecessor and current parent 1998-2004; Assistant Secretary of the Aquila Group of Funds(SM) since 2000. Joseph P. DiMaggio Chief Financial Chief Financial Officer of the Aquila N/A N/A New York, NY Officer since 2003 Group of Funds(SM) since 2003 and (11/06/56) and Treasurer since Treasurer since 2000. 2000 Edward M. W. Hines Secretary since 1984 Partner and then shareholder of legal N/A N/A New York, NY counsel to the Trust, Hollyer Brady (12/16/39) Barrett & Hines LLP since 1989 and thereafter its successor, Butzel Long, since 2007; Secretary of the Aquila Group of Funds(SM). Lori A. Vindigni Assistant Treasurer Assistant Treasurer of the Aquila Group N/A N/A New York, NY since 2000 of Funds(SM) since 2000; Assistant Vice (11/02/66) President of the Administrator or its predecessor and current parent since 1998; Fund Accountant for the Aquila Group of Funds(SM), 1995-1998.
- ---------- (1) The Trust's Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request by calling 800-437-1020 (toll free). (2) From time to time Bank of Hawaii may enter into normal investment management, commercial banking and lending arrangements with one or more of the Trustees of the Trust and their affiliates. The Asset Management Group of Bank of Hawaii is the Trust's investment adviser. (3) The mailing address of each Trustee and officer is c/o Pacific Capital Funds of Cash Assets Trust, 380 Madison Avenue, Suite 2300, New York, NY 10017. (4) Because the Trust does not hold annual meetings, each Trustee holds office for an indeterminate term. The term of office of each officer is one year. (5) Includes certain Aquila-sponsored funds that are dormant and have no public shareholders. (6) Ms. Herrmann is an interested person of the Trust as an officer of the Trust, as a director, officer and shareholder of the Administrator's corporate parent, as an officer and Manager of the Administrator, and as a shareholder and director of the Distributor. (7) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S. Government Securities Cash Assets Trust and Pacific Capital Tax-Free Cash Assets Trust, each of which is a money-market fund, are called the "Aquila Money-Market Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky, Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of which is a tax-free municipal bond fund, are called the "Aquila Bond Funds"; Aquila Rocky Mountain Equity Fund is an equity fund; Aquila Three Peaks High Income Fund is a high income corporate bond fund; considered together, these 12 funds, which do not include the dormant funds described in footnote 5, are called the "Aquila Group of Funds(SM)." (8) The Chairman Emeritus may attend Board meetings but has no voting power. - -------------------------------------------------------------------------------- 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 October 1, 2006 and held for the six months ended March 31, 2007. 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 MARCH 31, 2007 BEGINNING ENDING EXPENSES ACTUAL ACCOUNT ACCOUNT PAID DURING TOTAL RETURN(1) VALUE VALUE THE PERIOD(2) - -------------------------------------------------------------------------------- CASH FUND Original Shares 2.40% $1,000.00 $1,024.00 $ 2.88 Service Shares 2.28% $1,000.00 $1,022.80 $ 4.14 - -------------------------------------------------------------------------------- TAX-FREE FUND Original Shares 1.55% $1,000.00 $1,015.50 $ 2.41 Service Shares 1.42% $1,000.00 $1,014.20 $ 3.67 - -------------------------------------------------------------------------------- GOVERNMENT FUND Original Shares 2.42% $1,000.00 $1,024.20 $ 2.17 Service Chares 2.29% $1,000.00 $1,022.90 $ 3.43 - -------------------------------------------------------------------------------- (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 0.57% AND 0.82%, RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.48% AND 0.73%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES, AND 0.43% AND 0.68%, RESPECTIVELY, FOR GOVERNMENT FUND ORIGINAL SHARES AND SERVICE SHARES MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 182/365 (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 MARCH 31, 2007 Hypothetical Annualized Beginning Ending Expenses Total Account Account Paid During Return Value Value the Period - -------------------------------------------------------------------------------- CASH FUND Original Shares 5.00% $1,000.00 $1,022.09 $ 2.87 Service Shares 5.00% $1,000.00 $1,020.84 $ 4.13 - -------------------------------------------------------------------------------- TAX-FREE FUND Original Shares 5.00% $1,000.00 $1,022.54 $ 2.42 Service Shares 5.00% $1,000.00 $1,021.29 $ 3.68 - -------------------------------------------------------------------------------- GOVERNMENT FUND Original Shares 5.00% $1,000.00 $1,022.79 $ 2.17 Service Chares 5.00% $1,000.00 $1,021.54 $ 3.43 - -------------------------------------------------------------------------------- (1) EXPENSES ARE EQUAL TO THE ANNUALIZED EXPENSE RATIO OF 0.57% AND 0.82%, RESPECTIVELY, FOR CASH FUND ORIGINAL SHARES AND SERVICE SHARES, 0.48% AND 0.73%, RESPECTIVELY, FOR TAX-FREE FUND ORIGINAL SHARES AND SERVICE SHARES, AND 0.43% AND 0.68%, RESPECTIVELY, FOR GOVERNMENT FUND ORIGINAL SHARES AND SERVICE SHARES MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 182/365 (TO REFLECT THE ONE-HALF YEAR PERIOD). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED) This information is presented in order to comply with a requirement of the Internal Revenue Code of 1986, as amended. NO CURRENT ACTION ON THE PART OF SHAREHOLDERS IS REQUIRED. For the fiscal year ended March 31, 2007, $6,253,366 of dividends paid by the Tax-Free Fund were exempt-interest dividends. For the Cash Fund and the Government Fund all of the dividends paid were ordinary dividend income. Prior to January 31, 2007, shareholders were mailed the appropriate tax form(s) which contained information on the status of distributions paid for the 2006 CALENDAR YEAR. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMATION AVAILABLE (UNAUDITED) Much of the information that the funds in the Aquila Group of Funds(SM) 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PRIVACY NOTICES (UNAUDITED) PACIFIC CAPITAL FUNDS OF CASH ASSETS TRUST OUR PRIVACY POLICY. In providing services to you as an individual who owns or is considering investing in shares of the Trust, we collect certain non-public personal information about you. Our policy is to keep this information strictly safeguarded and confidential, and to use or disclose it only as necessary to provide services to you or as otherwise permitted by law. Our privacy policy applies equally to former shareholders and persons who inquire about the Trust. INFORMATION WE COLLECT. "Non-public personal information" is personally identifiable financial information about you as an individual or your family. The kinds of non-public personal information we have about you may include the information you provide us on your share purchase application or in telephone calls or correspondence with us, and information about your fund transactions and holdings, how you voted your shares and the account where your shares are held. INFORMATION WE DISCLOSE. We disclose non-public personal information about you to companies that provide necessary services to us, such as the Trust's transfer agent, distributor, investment adviser or sub-adviser, as permitted or required by law, or as authorized by you. Any other use is strictly prohibited. We do not sell information about you or any of our fund shareholders to anyone. NON-CALIFORNIA RESIDENTS: We also may disclose some of this information to another fund in the Aquila Group of Funds(SM) (or its service providers) under joint marketing agreements that permit the funds to use the information only to provide you with information about other funds in the Aquila Group of Funds(SM) or new services we are offering that may be of interest to you. CALIFORNIA RESIDENTS ONLY: In addition, unless you "opt-out" of the following disclosures using the form that was mailed to you under separate cover, we may disclose some of this information to another fund in the Aquila Group of Funds(SM) (or its sevice providers) under joint marketing agreements that permit the funds to use the information only to provide you with information about other funds in the Aquila Group of Fundssm or new services we are offering that may be of interest to you. HOW WE SAFEGUARD YOUR INFORMATION. We restrict access to non-public personal information about you to only those persons who need it to provide services to you or who are permitted by law to receive it. We maintain physical, electronic and procedural safeguards to protect the confidentiality of all non-public personal information we have about you. If you have any questions regarding our Privacy Policy, please contact us at 1-800-437-1020. AQUILA DISTRIBUTORS, INC. AQUILA INVESTMENT MANAGEMENT LLC This Privacy Policy also has been adopted by Aquila Distributors, Inc. and Aquila Investment Management LLC and applies to all non-public information about you that each of these companies may obtain in connection with services provided to the Trust or to you as a shareholder of the Trust. - -------------------------------------------------------------------------------- (THIS PAGE INTENTIONALLY LEFT BLANK) 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 JPMorgan Chase Bank, N.A. 1111 Polaris Parkway o Columbus, Ohio 43240 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Tait, Weller & Baker LLP 1818 Market Street, Suite 2400 o Philadelphia, PA 19103 Further information is contained in the Prospectus which must precede or accompany this report. ITEM 2. CODE OF ETHICS. (a) As of March 31, 2007 (the end of the reporting period) the Trust has adopted a code of ethics that applies to the Trust's principal executive officer(s)and principal financial officer(s) and persons performing similar functions ("Covered Officers") as defined in the Aquila Group of Funds Code of Ethics for Principal Executive and Senior Financial Officers under Section 406 of the Sarbanes-Oxley Act of 2002; (f)(1) Pursuant to Item 10(a)(1), a copy of the Trust's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions is included as an exhibit to its annual report on this Form N-CSR; (f)(2) The text of the Trust's Code of Ethics that applies to the Trust's principal executive officer(s) and principal financial officer(s) and persons performing similar functions has been posted on its Internet website which can be found at the Trust's Internet address at aquilafunds.com. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1)(ii) The Board of Trustees of the Fund has determined that it does not have at least one audit committee financial expert serving on its audit committee. The Fund does not have such a person serving on the audit committee because none of the persons currently serving as Trustees happens to have the technical accounting and auditing expertise included in the definition of "audit committee financial expert" recently adopted by the Securities and Exchange Commission in connection with this Form N-CSR, and the Board has not heretofore deemed it necessary to seek such a person for election to the Board. The primary mission of the Board, which is that of oversight over the operations and affairs of the Fund, confronts the Trustees with a wide and expanding range of issues and responsibilities. The Trustees believe that, accordingly, it is essential that the Board's membership consist of persons with as extensive experience as possible in fulfilling the duties and responsibilities of mutual fund directors and audit committee members and, ideally, with extensive experience and background relating to the economic and financial sectors and securities in which the Fund invests, including exposure to the financial and accounting matters commonly encountered with respect to those sectors and securities. The Board believes that its current membership satisfies those criteria. It recognizes that it would also be helpful to have a member with the relatively focused accounting and auditing expertise reflected in the applicable definition of "audit committee financial expert," just as additional members with similarly focused technical expertise in other areas relevant to the Fund's operations and affairs would also contribute added value. However, the Board believes that the Fund is better served, and its assets better employed, by a policy of hiring experts in various areas, including the specialized area of technical accounting and auditing matters, if and as the Board identifies the need, rather than by seeking to expand its numbers by adding technical experts in the areas constituting its domain of responsibility. The Fund's Audit Committee Charter explicitly authorizes the Committee to retain such experts as it deems necessary in fulfilling its duties under the Charter. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES a) Audit Fees - The aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements were: 2006 2007 ---- ---- Cash Assets Trust 13,000 13,000 Tax-Free Cash Assets Trust 13,000 13,000 US Government Securities 13,000 13,000 b) Audit Related Fees - There were no amounts billed for audit-related fees over the past two years. c) Tax Fees - The Registrant was billed by the principal accountant for return preparation and tax compliance were: 2006 2007 ---- ---- Cash Assets Trust 1,500 1,500 Tax-Free Cash Assets Trust 1,500 1,500 US Government Securities 1,500 1,500 d) All Other Fees - There were no additional fees paid for audit and non-audit services other than those disclosed in a) thorough c) above. e)(1) Currently, the audit committee of the Registrant pre-approves audit services and fees on an engagement-by-engagement basis e)(2) None of the services described in b) through d) above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, all were pre-approved on an engagement-by-engagement basis. f) No applicable. g) There were no non-audit services fees billed by the Registrant's accountant to the Registrant's investment adviser or distributor over the past two years h) Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Included in Item 1 above ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Board of Directors of the Registrant has adopted a Nominating Committee Charter which provides that the Nominating Committee (the 'Committee') may consider and evaluate nominee candidates properly submitted by shareholders if a vacancy among the Independent Trustees of the Registrant occurs and if, based on the Board's then current size, composition and structure, the Committee determines that the vacancy should be filled. The Committee will consider candidates submitted by shareholders on the same basis as it considers and evaluates candidates recommended by other sources. A copy of the qualifications and procedures that must be met or followed by shareholders to properly submit a nominee candidate to the Committee may be obtained by submitting a request in writing to the Secretary of the Registrant. ITEM 11. CONTROLS AND PROCEDURES. (a) Based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) as of a date within 90 days of the fling of this report, the registrant's chief financial and executive officers have concluded that the disclosure controls and procedures of the registrant are appropriately designed to ensure tat information required to be disclosed in the registrant's reports that are filed under the Securities Exchange Act of 1934 are accumulated and communicated t registrant's management, including its principal executive officer(s) and principal financial officer(s), to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation, including no significant deficiencies or material weaknesses that required corrective action. ITEM 12. EXHIBITS. (a)(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) 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 June 7, 2007 By: /s/ Joseph P. DiMaggio - - ----------------------------------- Chief Financial Officer and Treasurer June 7, 2007 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 June 7, 2007 By: /s/ Joseph P. DiMaggio - - ----------------------------------- Joseph P. DiMaggio Chief Financial Officer and Treasurer June 7, 2007 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.CODE ETH 2 sarbanes.txt SARBANES-OXLEY CODE OF ETHICS AQUILASM GROUP OF FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS UNDER SECTION 406 OF THE SARBANES-OXLEY ACT OF 2002 I. Covered Officers/Purpose of the Code This is the code of ethics (the "Code") for the investment companies within the Aquilasm Group of Funds (collectively, "Funds" and each, a "Fund," each of which is detailed in Exhibit A). It applies to the Fund's Principal Executive Officer(s) and Principal Financial Officer(s) (the "Covered Officers," each of whom is listed in Exhibit B), for the purpose of promoting: *honest and ethical conduct, including the ethical handling of actual; *or apparent conflicts of interest between personal and professional relationships; *full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Fund; *compliance with applicable laws and governmental rules and regulations; *the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and *accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his/her service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his/her family, receives improper personal benefits as a result of his/her position with the Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as "affiliated persons" of the Fund. The Fund's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Fund and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds' Boards of Trustees ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund. Each Covered Officer must: *not use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund; *not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Fund; There are some conflict of interest situations that should always be discussed with the general counsel of the Fund ("General Counsel"), if material. Examples of these include: *service as a director on the board of any public or private company; *the receipt of any non-nominal gifts; *the receipt of any entertainment from any company with which the Fund has current or prospective business dealings unless such entertainment is business- related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; *any ownership interest in, or any consulting or employment relationship with, any of the Fund's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; *a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance Each Covered Officer should familiarize himself/herself with the disclosure requirements generally applicable to the Fund; *each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's Trustees and auditors, and to governmental regulators and self-regulatory organizations; each Covered Officer should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: *upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he/she has received, read, and understands the Code; *annually thereafter affirm to the Board that he/she has complied with the requirements of the Code; *not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and *notify the Chair of the Audit Committee of the Fund promptly if he/she knows of any violation of this Code. Failure to do so is itself a violation of this Code. *file at least annually a complete and accurate Funds' Trustees and Officers Questionnaire. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers1 sought by the Chairman of the Board or the President will be considered by the Audit Committee (the "Committee"). The Funds will follow these procedures in investigating and enforcing this Code: *the General Counsel will take all appropriate action to investigate any potential violations reported to him; *if, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action; any matter that the General Counsel believes is a violation will be reported to the Committee; * if the Committee concurs that a violation has occurred, it will inform the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; * the Committee will be responsible for granting waivers, as appropriate; and * any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as othe policies or procedures of the Funds, the Funds' adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment adviser's and principal underwriter's codes of ethics under Rule 17j-1 under the Investment Company Act and the adviser's more detailed policies and procedures set forth in their respective codes are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit B, must be approved or ratified by a majority vote of the Board, including a majority of independent Trustees. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and the General Counsel, and if deemed appropriate by the Board, with other Funds in the complex where the Funds share a common Covered Officer. VIII. Internal Use The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. Exhibit A Funds Covered by this Code of Ethics - ------------------------------------ Aquila Three Peaks High Income Fund Aquila Rocky Mountain Equity Fund Capital Cash Management Trust Cash Assets Trust series, consisting of Pacific Capital Cash Assets Trust Pacific Capital Tax-Free Cash Assets Trust Pacific Capital U.S. Government Cash Assets Trust Churchill Cash Reserves Trust Churchill Tax-Free Trust Hawaiian Tax-Free Trust Narragansett Insured Tax-Free Income Fund Tax-Free Fund For Utah Tax-Free Fund of Colorado Tax-Free Trust of Arizona Tax-Free Trust of Oregon Exhibit B Persons Covered by this Code of Ethics - -------------------------------------- The following officers of each Fund, and the identities of such officers as of December 31, 2006: Chairman and/or Chairman Emeritus And Founder Lacy B. Herrmann Chair, Vice Chair and/or Trustee and/or President Diana P. Herrmann Chief Financial Officer and Treasurer Joseph P. DiMaggio 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: June 7, 2007 /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: June 7, 2007 /s/ Joseph P. DiMaggio - - ------------------------ Title: Chief Financial Officer and Treasurer EX-99.906 CERT 4 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 March 31, 2007 (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: June 7, 2007 /s/ Diana P. Herrmann ---------------------- Vice Chair, President and Trustee Cash Assets Trust Dated: June 7, 2007 /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. -----END PRIVACY-ENHANCED MESSAGE-----