N-CSRS 1 bishopstsar6_06comb.txt BISHOP STREET FUNDS SAR 6_06 COMBINED UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- FORM N-CSRS -------- CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES INVESTMENT COMPANY ACT FILE NUMBER 811-08572 BISHOP STREET FUNDS (Exact name of registrant as specified in charter) -------- 101 Federal Street Boston, MA 02110 (Address of principal executive offices) SEI Investments One Freedom Valley Drive Oaks, PA 19456 (Name and address of agent for service) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-262-9565 DATE OF FISCAL YEAR END: DECEMBER 31, 2006 DATE OF REPORTING PERIOD: JUNE 30, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. [GRAPHIC OMITTED] BISHOP STREET FUNDS SEMI-ANNUAL REPORT JUNE 30, 2006 LARGE CAP GROWTH FUND STRATEGIC GROWTH FUND LARGE CAP CORE EQUITY FUND HIGH GRADE INCOME FUND HAWAII MUNICIPAL BOND FUND MONEY MARKET FUND TREASURY MONEY MARKET FUND INVESTMENT ADVISER BISHOP STREET CAPITAL MANAGEMENT BISHOP STREET [LOGO] FUNDS The Funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q within sixty days after the end of the period. The Funds' Forms N-Q are available on the Commission's website at http://www.sec.gov, and may be reviewed and copied at the Commission's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. A description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities is available without charge, by calling 1-800-262-9565 or by visiting the Commission's website at http://www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available without charge, by calling 1-800-262-9565 or by visiting the Funds' website at http://www.bishopstreetfunds.com or the website of the Securities and Exchange Commission. -------------------------------------------------------------------------------- BISHOP STREET TABLE OF CONTENTS FUNDS -------------------------------------------------------------------------------- LETTER TO SHAREHOLDERS ..................................................... 2 STATEMENTS OF NET ASSETS Large Cap Growth Fund ................................................ 3 Strategic Growth Fund ................................................ 8 Large Cap Core Equity Fund ........................................... 12 High Grade Income Fund ............................................... 18 Hawaii Municipal Bond Fund ........................................... 26 Money Market Fund .................................................... 36 Treasury Money Market Fund ........................................... 40 STATEMENTS OF OPERATIONS ................................................... 42 STATEMENTS OF CHANGES IN NET ASSETS ........................................ 44 FINANCIAL HIGHLIGHTS ....................................................... 48 NOTES TO FINANCIAL STATEMENTS .............................................. 52 DISCLOSURE OF FUND EXPENSES ................................................ 61 APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS .............................................. 63 SHAREHOLDER VOTING RESULTS ................................................. 66 1 -------------------------------------------------------------------------------- BISHOP STREET LETTER TO SHAREHOLDERS FUNDS -------------------------------------------------------------------------------- [PHOTO OMITTED] We have now come full circle from the economic cycle initiated by the Federal Reserve Bank's easing policy in 2002 which precipitated the economic expansion since then. The challenge at that time was to kick start the economy out of its post tech bubble, post 9/11 stagnation, an effort which, by most measures, succeeded. The Fed rate cuts drove a cycle of higher home prices and refinancing which spurred consumer spending. Increased economic activity in turn creates inflationary pressure, prompting the Fed to raise rates. Increased mortgage rates are currently creating conditions for the long awaited slowdown in the housing market. Do we now run the risk of cycling back to economic conditions dominated by recessionary risk? The answer depends on Fed chair Bernanke's ability to walk the line between inflation concerns and recessionary fears in setting the fed funds rate. As the effect of rate changes on economic activity is lagging; setting the correct rate policy becomes more art than science. After 17 consecutive increases over the last 2 years, is this the right point to move into a neutral mode? Only time will tell. However this much is clear: During periods of Fed easing, equity markets show an average annual return of 12.9%, compared to 4.5% during Fed tightening. With core CPI growing at a 2.4% annual rate, low by historical standards, and home sales off 6.6% year on year, the thinking here is the Fed gets it right, resulting in a relatively soft landing for the U.S. economy. Sincerely, /s/ Dale Kobayashi Dale Kobayashi President and Chief Investment Officer Bishop Street Capital Management Bishop Street Funds 2 Large Cap Growth Fund (UNAUDITED) -------------------------------------------------------------------------------- TOP TEN EQUITY HOLDINGS+ -------------------------------------------------------------------------------- Percentage of Investments ---------------------------------------------------------------------------- 1. Halliburton 3.8% ---------------------------------------------------------------------------- 2. United Technologies 3.6% ---------------------------------------------------------------------------- 3. Goldman Sachs Group 3.5% ---------------------------------------------------------------------------- 4. JPMorgan Chase 3.2% ---------------------------------------------------------------------------- 5. Amgen 3.0% ---------------------------------------------------------------------------- 6. Citigroup 3.0% ---------------------------------------------------------------------------- 7. Microsoft 2.9% ---------------------------------------------------------------------------- 8. UnitedHealth Group 2.5% ---------------------------------------------------------------------------- 9. General Electric 2.4% ---------------------------------------------------------------------------- 10. Johnson & Johnson 2.3% -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] -------------------------------------------------------------------------------- SECTOR WEIGHTINGS+ Financials 18.2% Health Care 16.6% Information Technology 15.2% Industrials 13.6% Energy 13.2% Consumer Staples 8.3% Consumer Discretionary 8.1% Materials 3.1% Telecommunication Services 2.5% Short-Term Investments 1.2% -------------------------------------------------------------------------------- +PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. STATEMENT OF NET ASSETS Market Value Shares (000) ------ ---------- COMMON STOCK -- 98.8% CONSUMER DISCRETIONARY -- 8.1% 10,885 Best Buy $ 597 11,875 Carnival (A) 496 20,320 eBay* (A) 595 7,746 IAC/InterActiveCorp* (A) 205 3,762 Mohawk Industries* 265 3,013 Omnicom Group 268 ---------- 2,426 ---------- June 30, 2006 3 www.bishopstreetfunds.com Large Cap Growth Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Market Value Shares (000) ------ ---------- CONSUMER STAPLES -- 8.3% 16,986 CVS (A) $ 521 10,125 PepsiCo 608 10,860 Procter & Gamble 604 9,830 Sysco 300 6,944 Whole Foods Market 449 ---------- 2,482 ---------- ENERGY -- 13.2% 4,170 Apache 285 3,795 ConocoPhillips 249 9,144 GlobalSantaFe 528 15,506 Halliburton (A) 1,151 9,750 Peabody Energy (A) 543 9,106 Schlumberger Ltd. (A) 593 7,450 Transocean* 598 ---------- 3,947 ---------- FINANCIALS -- 18.2% 4,455 AMBAC Financial Group (A) 361 6,228 American Express 331 6,570 Bank of America 316 18,573 Citigroup 896 6,925 Goldman Sachs Group 1,042 22,605 JPMorgan Chase 949 7,950 Merrill Lynch 553 7,554 St. Paul Travelers 337 9,865 Wells Fargo 662 ---------- 5,447 ---------- HEALTH CARE -- 16.6% 13,745 Amgen* 896 12,280 Boston Scientific* 207 13,850 Caremark Rx (A) 691 5,541 Genzyme* 338 5,690 Gilead Sciences* (A) 337 11,709 Johnson & Johnson 702 17,721 Pfizer 416 17,009 UnitedHealth Group 762 4,600 WellPoint* 335 6,340 Wyeth 281 ---------- 4,965 ---------- INDUSTRIALS -- 13.6% 2,360 Boeing (A) 193 5,360 Danaher 345 Bishop Street Funds 4 Large Cap Growth Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Market Value Shares (000) ------ ---------- INDUSTRIALS -- (CONTINUED) 6,129 Fluor $ 570 22,115 General Electric 729 6,892 Pentair 236 10,950 Tyco International Ltd. 301 2,680 Union Pacific 249 4,775 United Parcel Service, Cl B (A) 393 16,810 United Technologies 1,066 ---------- 4,082 ---------- INFORMATION TECHNOLOGY -- 15.2% 3,545 Analog Devices 114 7,161 Apple Computer* 409 12,834 Applied Materials (A) 209 17,940 Cisco Systems* 350 10,502 Dell* 256 11,800 EMC* 129 7,730 Hewlett-Packard 245 20,190 Intel (A) 383 3,177 International Business Machines (A) 244 4,117 Linear Technology 138 36,904 Microsoft 860 6,310 Motorola 127 10,810 Oracle* (A) 157 4,005 Paychex (A) 156 9,670 Qualcomm (A) 387 7,911 Symantec* (A) 123 5,280 Texas Instruments (A) 160 3,690 Yahoo!* 122 ---------- 4,569 ---------- MATERIALS -- 3.1% 6,880 Dow Chemical 269 1,850 Phelps Dodge 152 9,630 Praxair 520 ---------- 941 ---------- TELECOMMUNICATION SERVICES -- 2.5% 7,486 Corning* 181 701 Embarq* 29 14,025 Sprint Nextel 280 8,100 Verizon Communications 271 ---------- 761 ---------- TOTAL COMMON STOCK (Cost $28,248) 29,620 ---------- June 30, 2006 5 www.bishopstreetfunds.com Large Cap Growth Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Shares/Face Market Amount Value (000) (000) ----------- ---------- CORPORATE OBLIGATIONS (B) -- 5.2% FINANCIALS -- 5.2% $ 1,040 Bank of America 5.383%, 07/03/06 $ 1,040 520 Sigma Finance MTN (C) 5.330%, 07/07/06 520 ---------- TOTAL CORPORATE OBLIGATIONS (Cost $1,560) 1,560 ---------- COMMERCIAL PAPER (B) -- 5.2% 1,560 Morgan Stanley Dean Witter 5.383%, 11/09/06 1,560 ---------- TOTAL COMMERCIAL PAPER (Cost $1,560) 1,560 ---------- CERTIFICATES OF DEPOSIT/BANK NOTES (B) -- 3.5% 1,040 First Tennessee Bank 5.339%, 04/18/07 1,040 ---------- TOTAL CERTIFICATES OF DEPOSIT/BANK NOTES (Cost $1,040) 1,040 ---------- CASH EQUIVALENTS (D) -- 1.2% 180,054 Dreyfus Cash Management Fund, Institutional Shares, 5.010% 180 180,026 Fidelity Institutional Money Market Portfolio, Institutional Shares, 5.060% 180 ---------- TOTAL CASH EQUIVALENTS (Cost $360) 360 ---------- REPURCHASE AGREEMENT (B) -- 11.5% Lehman Brothers 5.363%, dated 06/30/06, to be repurchased on 07/03/06, repurchase price $3,451,087 (collateralized by various collateralized mortgage obligations, ranging in par value $167,290,000-$407,245,722, 0.000%-0.642%, 11/25/33-10/15/41; with total 3,450 market value $3,518,536) 3,450 ---------- TOTAL REPURCHASE AGREEMENT (Cost $3,450) 3,450 ---------- TOTAL INVESTMENTS (COST $36,218) -- 125.4% 37,590 ---------- Bishop Street Funds 6 Large Cap Growth Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Value (000) ---------- OTHER ASSETS AND LIABILITIES -- (25.4)% Payable Upon Return of Securities Loaned $ (7,609) Investment Adviser Fees Payable (13) Payable for Capital Shares Redeemed (5) Administration Fees Payable (3) Shareholder Servicing Fees Payable (2) Other Assets and Liabilities, Net 8 ---------- TOTAL OTHER ASSETS AND LIABILITIES (7,624) ---------- NET ASSETS -- 100.0% $ 29,966 ========== NET ASSETS: Fund Shares (unlimited authorization -- no par value) $ 73,055 Undistributed net investment income 3 Accumulated net realized loss on investments (44,464) Net unrealized appreciation on investments 1,372 ---------- NET ASSETS $ 29,966 ========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS I ($29,966,246 / 3,027,875 SHARES) $ 9.90 ========== * NON-INCOME PRODUCING SECURITY (A) THE SECURITY OR A PORTION OF THIS SECURITY IS ON LOAN AT JUNE 30, 2006 (SEE NOTE 5 IN THE NOTES TO FINANCIAL STATEMENTS. THE TOTAL VALUE OF SECURITIES ON LOAN AT JUNE 30, 2006 WAS $7,364,261. (B) THESE SECURITIES WERE PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. THE TOTAL VALUE OF SUCH SECURITIES AS OF JUNE 30, 2006 WAS $7,609,411. (C) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS IS THE RATE IN EFFECT ON JUNE 30, 2006. THE MATURITY DATE SHOWN IS THE NEXT SCHEDULED RESET DATE. (D) RATES SHOWN ARE THE 7-DAY EFFECTIVE YIELDS AS OF JUNE 30, 2006. CL -- CLASS LTD. -- LIMITED MTN -- MEDIUM TERM NOTE COST FIGURES ARE SHOWN WITH "000" OMITTED. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 7 www.bishopstreetfunds.com Strategic Growth Fund (UNAUDITED) -------------------------------------------------------------------------------- TOP TEN EQUITY HOLDINGS+ -------------------------------------------------------------------------------- Percentage of Investments ---------------------------------------------------------------------------- 1. XTO Energy 2.2% ---------------------------------------------------------------------------- 2. Oracle 2.2% ---------------------------------------------------------------------------- 3. Google 2.2% ---------------------------------------------------------------------------- 4. Yum! Brands 2.1% ---------------------------------------------------------------------------- 5. UnitedHealth Group 2.1% ---------------------------------------------------------------------------- 6. Genentech 2.1% ---------------------------------------------------------------------------- 7. Aetna 2.1% ---------------------------------------------------------------------------- 8. W.W. Grainger 2.1% ---------------------------------------------------------------------------- 9. United Technologies 2.1% ---------------------------------------------------------------------------- 10. Hilton Hotels 2.1% -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] -------------------------------------------------------------------------------- SECTOR WEIGHTINGS+ Information Technology 23.9% Consumer Discretionary 20.0% Health Care 19.7% Financials 13.5% Industrials 9.8% Energy 8.1% Materials 2.1% Telecommunication Services 1.9% Short-Term Investments 1.0% -------------------------------------------------------------------------------- +PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. STATEMENT OF NET ASSETS Market Value Shares (000) ------ ---------- COMMON STOCK -- 99.4% CONSUMER DISCRETIONARY -- 20.1% 47,600 Abercrombie & Fitch, Cl A $ 2,638 95,400 Coach* 2,852 72,200 Federated Department Stores 2,643 102,607 Hilton Hotels 2,902 44,100 Lowe's 2,676 73,800 Nordstrom 2,694 110,250 Staples 2,681 57,300 Target 2,800 Bishop Street Funds 8 Strategic Growth Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Market Value Shares (000) ------ ---------- CONSUMER DISCRETIONARY -- (CONTINUED) 39,100 W.W. Grainger $ 2,941 59,500 Yum! Brands 2,991 ---------- 27,818 ---------- ENERGY -- 8.2% 63,500 Arch Coal 2,691 74,500 BJ Services 2,776 44,800 Exxon Mobil 2,748 70,500 XTO Energy 3,121 ---------- 11,336 ---------- FINANCIALS -- 13.5% 27,500 Affiliated Managers Group* 2,389 49,800 Allstate 2,726 33,900 Capital One Financial 2,897 31,200 Everest Re Group Ltd. 2,701 18,200 Goldman Sachs Group 2,738 42,800 Lehman Brothers Holdings 2,788 36,700 Merrill Lynch 2,553 ---------- 18,792 ---------- HEALTH CARE -- 19.8% 74,600 Aetna 2,979 42,800 Amgen* 2,792 55,100 Caremark Rx 2,748 34,500 Express Scripts* 2,475 36,500 Genentech* 2,986 43,100 Genzyme* 2,631 44,600 Gilead Sciences* 2,638 51,900 Medtronic 2,435 48,700 Sepracor* 2,783 66,700 UnitedHealth Group 2,987 ---------- 27,454 ---------- INDUSTRIALS -- 9.8% 58,200 Canadian National Railway 2,546 174,200 Cendant 2,838 33,300 L-3 Communications Holdings 2,512 52,000 Norfolk Southern 2,767 46,200 United Technologies 2,930 ---------- 13,593 ---------- June 30, 2006 9 www.bishopstreetfunds.com Strategic Growth Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Market Value Shares (000) ------ ---------- INFORMATION TECHNOLOGY -- 24.0% 100,100 Accenture Ltd., Cl A $ 2,835 76,700 Autodesk* 2,643 131,400 Cisco Systems* 2,566 7,200 Google* 3,019 89,900 Hewlett-Packard 2,848 111,300 Jabil Circuit* 2,849 62,600 Marvel Technology Group Ltd.* 2,775 126,600 Motorola 2,551 111,400 National Semiconductor 2,657 119,400 Nvidia* 2,542 213,000 Oracle* 3,087 142,900 Western Digital* 2,831 ---------- 33,203 ---------- MATERIALS -- 2.1% 41,600 Allegheny Technologies 2,880 ---------- TELECOMMUNICATIONS -- 1.9% 130,552 Sprint Nextel 2,610 ---------- TOTAL COMMON STOCK (Cost $120,248) 137,686 ---------- CASH EQUIVALENTS (A) -- 1.1% 732,982 Dreyfus Cash Management Fund, Institutional Shares, 5.010% 733 732,955 Fidelity Institutional Money Market Portfolio, Institutional Shares, 5.060% 733 ---------- TOTAL CASH EQUIVALENTS (Cost $1,466) 1,466 ---------- TOTAL INVESTMENTS (COST $121,714) -- 100.5% 139,152 ---------- OTHER ASSETS AND LIABILITIES -- (0.5)% Payable for Investment Securities Purchased (473) Payable for Capital Shares Redeemed (151) Investment Adviser Fees Payable (83) Administration Fees Payable (13) Shareholder Servicing Fees Payable (11) Trustees' Fees Payable (2) Other Assets and Liabilities, Net 53 ---------- TOTAL OTHER ASSETS AND LIABILITIES (680) ---------- NET ASSETS -- 100.0% $ 138,472 ========== Bishop Street Funds 10 Strategic Growth Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Value (000) ---------- NET ASSETS: Fund Shares (unlimited authorization -- no par value) $ 116,537 Accumulated net investment loss (96) Accumulated net realized gain on investments 4,593 Net unrealized appreciation on investments 17,438 ---------- NET ASSETS $ 138,472 ========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS I ($138,471,995 / 9,818,405 SHARES) $ 14.10 ========== * NON-INCOME PRODUCING SECURITY (A) RATES SHOWN ARE THE 7-DAY EFFECTIVE YIELDS AS OF JUNE 30, 2006. CL -- CLASS LTD. -- LIMITED COST FIGURES ARE SHOWN WITH "000" OMITTED. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 11 www.bishopstreetfunds.com Large Cap Core Equity Fund (UNAUDITED) -------------------------------------------------------------------------------- TOP TEN EQUITY HOLDINGS+ -------------------------------------------------------------------------------- Percentage of Investments ---------------------------------------------------------------------------- 1. SPDR Trust, Ser 1 4.1% ---------------------------------------------------------------------------- 2. Citigroup 2.4% ---------------------------------------------------------------------------- 3. Johnson & Johnson 2.4% ---------------------------------------------------------------------------- 4. Microsoft 2.2% ---------------------------------------------------------------------------- 5. ConocoPhillips 2.2% ---------------------------------------------------------------------------- 6. Chevron 1.9% ---------------------------------------------------------------------------- 7. Ingersoll-Rand, Cl A 1.6% ---------------------------------------------------------------------------- 8. Bear Stearns 1.6% ---------------------------------------------------------------------------- 9. Pfizer 1.6% ---------------------------------------------------------------------------- 10. Eaton 1.6% -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] -------------------------------------------------------------------------------- SECTOR WEIGHTINGS+ Financials 18.9% Information Technology 14.6% Health Care 12.5% Industrials 11.6% Consumer Discretionary 11.5% Energy 9.4% Consumer Staples 8.0% Exchange Traded Fund 4.1% Short-Term Investments 3.4% Materials 2.8% Utilities 1.6% Telecommunication Services 1.6% -------------------------------------------------------------------------------- +PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. STATEMENT OF NET ASSETS Market Value Shares (000) ------ ---------- COMMON STOCK -- 93.7% CONSUMER DISCRETIONARY -- 11.7% 4,200 Apollo Group, Cl A* $ 217 4,800 Bed Bath & Beyond* 159 6,100 Best Buy 335 5,500 Brunswick 183 4,600 Carnival 192 13,000 Centex 654 10,600 Comcast, Cl A* 347 Bishop Street Funds 12 Large Cap Core Equity Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Market Value Shares (000) ------ ---------- CONSUMER DISCRETIONARY -- (CONTINUED) 7,400 EchoStar Communications, Cl A* $ 228 2,700 Fortune Brands 192 4,500 Gannett 252 19,800 H&R Block 472 7,400 Harley-Davidson 406 12,000 Hasbro 217 17,000 Home Depot 608 8,000 International Game Technology 304 8,635 Liberty Media Capital* 723 10,475 Liberty Media Interactive* 181 3,300 McGraw-Hill 166 3,200 Omnicom Group 285 13,800 Pulte Homes 397 3,400 Sherwin-Williams 162 3,300 VF 224 ---------- 6,904 ---------- CONSUMER STAPLES -- 8.1% 10,000 Altria Group 734 11,600 Archer-Daniels-Midland 479 2,800 Bunge 141 5,900 Campbell Soup 219 10,700 Coca-Cola 460 6,000 Costco Wholesale 343 8,000 PepsiCo 480 13,500 Procter & Gamble 751 13,000 Wal-Mart Stores 626 11,600 WM Wrigley Jr. 526 ---------- 4,759 ---------- ENERGY -- 9.5% 10,700 Apache 730 19,100 BJ Services 712 18,200 Chevron 1,129 20,100 ConocoPhillips 1,317 8,700 Devon Energy 526 5,400 Encana Corp 284 4,200 Occidental Petroleum 431 7,100 Valero Energy 472 ---------- 5,601 ---------- FINANCIALS -- 19.1% 10,900 ACE 551 2,900 Allstate 159 15,700 American International Group 927 June 30, 2006 13 www.bishopstreetfunds.com Large Cap Core Equity Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Market Value Shares (000) ------ ---------- FINANCIALS -- (CONTINUED) 12,800 Bank of America $ 616 6,800 Bear Stearns 952 3,800 Capital One Financial 325 4,600 CIT Group 240 29,700 Citigroup 1,433 11,800 Countrywide Credit Industry 449 9,200 Fannie Mae 442 1,700 Franklin Resources 148 4,500 Freddie Mac 257 5,200 Golden West Financial 386 3,300 Goldman Sachs Group 496 6,100 Hartford Financial Services Group 516 20,300 JPMorgan Chase 853 5,900 Lehman Brothers Holdings 384 6,200 Merrill Lynch 431 8,900 Morgan Stanley 563 19,005 Sovereign Bancorp 386 17,000 St Paul Travelers 758 ---------- 11,272 ---------- HEALTH CARE -- 12.7% 13,700 Amgen* 894 10,000 Biogen Idec* 463 3,400 Caremark Rx 170 5,200 Coventry Health Care* 286 8,000 Genzyme* 488 23,500 Johnson & Johnson 1,408 9,100 Laboratory Corp of America Holdings* 566 5,100 Medco Health Solutions* 292 8,400 Merck 306 40,500 Pfizer 951 8,900 Quest Diagnostics 533 11,600 UnitedHealth Group 519 6,700 Wyeth 298 5,600 Zimmer Holdings* 318 ---------- 7,492 ---------- INDUSTRIALS -- 11.8% 7,200 Caterpillar 536 4,400 Danaher 283 12,500 Eaton 942 3,600 Exelon 205 12,300 General Dynamics 805 16,600 General Electric 547 12,400 Illinois Tool Works 589 Bishop Street Funds 14 Large Cap Core Equity Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Market Value Shares (000) ------ ---------- INDUSTRIALS -- (CONTINUED) 23,000 Ingersoll-Rand, Cl A $ 984 4,300 ITT Industries 213 5,500 L-3 Communications Holdings 415 9,900 Norfolk Southern 527 6,200 Paccar 511 5,100 Parker Hannifin 396 ---------- 6,953 ---------- INFORMATION TECHNOLOGY -- 14.7% 13,200 Accenture Ltd., Cl A 374 8,300 Adobe Systems* 252 6,800 Affiliated Computer Services, Cl A* 351 6,900 Apple Computer* 394 23,300 Applied Materials 379 6,600 Autodesk* 227 11,200 Broadcom, Cl A* 337 29,900 Cisco Systems* 584 4,300 Citrix Systems* 173 22,800 EMC* 250 5,900 Freescale Semiconductor* 174 7,300 Hewlett-Packard 231 11,500 Juniper Networks* 184 2,800 Kla-Tencor 116 5,000 Marvel Technology Group Ltd.* 222 57,600 Microsoft 1,342 18,500 Motorola 373 11,800 Nvidia* 251 33,900 Oracle* 491 11,200 Qualcomm 449 10,500 Sandisk* 535 19,300 Texas Instruments 585 8,400 Xilinx 190 7,600 Yahoo!* 251 ---------- 8,715 ---------- MATERIALS -- 2.9% 6,500 Dow Chemical 254 3,900 Freeport-McMoRan Copper & Gold 216 3,500 Inco Ltd. 231 5,800 Phelps Dodge 476 7,500 United States Steel 526 ---------- 1,703 ---------- June 30, 2006 15 www.bishopstreetfunds.com Large Cap Core Equity Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Market Value Shares (000) ------ ---------- TELECOMMUNICATION SERVICES -- 1.6% 4,300 Alltel $ 274 19,000 Sprint Nextel 380 9,500 Verizon Communications 318 ---------- 972 ---------- UTILITIES -- 1.6% 5,600 FirstEnergy 303 11,300 TXU 676 ---------- 979 ---------- TOTAL COMMON STOCK (Cost $56,938) 55,350 ---------- EXCHANGE TRADED FUND -- 4.1% 19,100 SPDR Trust, Ser 1* 2,431 ---------- TOTAL EXCHANGE TRADED FUND (Cost $2,455) 2,431 ---------- CASH EQUIVALENTS (A) -- 3.4% 997,866 Dreyfus Cash Management Fund, Institutional Shares, 5.010% 998 997,866 Fidelity Institutional Money Market Portfolio, Institutional Shares, 5.060% 998 ---------- TOTAL CASH EQUIVALENTS (Cost $1,996) 1,996 ---------- TOTAL INVESTMENTS (COST $61,389) -- 101.2% 59,777 ---------- OTHER ASSETS AND LIABILITIES -- (1.2)% Payable for Investment Securities Purchased (761) Payable for Capital Shares Redeemed (50) Investment Adviser Fees Payable (31) Administration Fees Payable (5) Shareholder Servicing Fees Payable (5) Trustees' Fees Payable (1) Other Assets and Liabilities, Net 116 ---------- TOTAL OTHER ASSETS AND LIABILITIES (737) ---------- NET ASSETS -- 100.0% $ 59,040 ========== Bishop Street Funds 16 Large Cap Core Equity Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Value (000) ---------- NET ASSETS: Fund Shares (unlimited authorization -- no par value) $ 60,847 Distributions in excess of net investment income (2) Accumulated net realized loss on investments (193) Net unrealized depreciation on investments (1,612) ---------- NET ASSETS $ 59,040 ========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS I ($59,039,778 / 6,133,078 SHARES) $ 9.63 ========== * NON-INCOME PRODUCING SECURITY (A) RATES SHOWN ARE THE 7-DAY EFFECTIVE YIELDS AS OF JUNE 30, 2006. CL -- CLASS LTD. -- LIMITED SER -- SERIES SPDR -- STANDARD & POOR'S DEPOSITARY RECEIPT COST FIGURES SHOWN WITH "000" OMITTED. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 17 www.bishopstreetfunds.com High Grade Income Fund (UNAUDITED) -------------------------------------------------------------------------------- TOP TEN HOLDINGS+ -------------------------------------------------------------------------------- Coupon Maturity Percentage of Rate Date Investments ---------------------------------------------------------------------------- 1. U.S. Treasury Bonds 7.250% 05/15/16 4.8% ---------------------------------------------------------------------------- 2. U.S. Treasury Bonds 4.500% 02/15/36 4.0% ---------------------------------------------------------------------------- 3. U.S. Treasury Bonds 7.500% 11/15/16 2.4% ---------------------------------------------------------------------------- 4. FNMA 7.250% 01/15/10 2.1% ---------------------------------------------------------------------------- 5. FHLMC MTN 4.850% 12/01/09 2.1% ---------------------------------------------------------------------------- 6. Goldman Sachs Group 6.600% 01/15/12 1.8% ---------------------------------------------------------------------------- 7. FHLB 3.375% 02/15/08 1.8% ---------------------------------------------------------------------------- 8. Wal-Mart Stores 8.000% 09/15/06 1.8% ---------------------------------------------------------------------------- 9. Abbott Laboratories 6.400% 12/01/06 1.8% ---------------------------------------------------------------------------- 10. FHLMC 5.125% 10/15/08 1.8% -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] -------------------------------------------------------------------------------- SECTOR WEIGHTINGS+ U.S. Government Agency Obligations 33.2% U.S. Treasury Obligations 18.7% Financials 14.2% Consumer Discretionary 8.0% Health Care 5.9% Energy 4.3% Information Technology 3.5% Industrials 3.4% Consumer Staples 2.9% Telecommunication Services 1.8% U.S. Government Mortgage-Backed Obligations 1.5% Municipal Bonds 1.0% Utilities 1.0% Short-Term Investments 0.6% -------------------------------------------------------------------------------- +PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. STATEMENT OF NET ASSETS Face Market Amount Value (000) (000) ---------- ---------- CORPORATE OBLIGATIONS -- 48.8% AEROSPACE & DEFENSE -- 2.7% General Dynamics $ 1,000 4.500%, 08/15/10 $ 960 Rockwell Automation 1,200 6.700%, 01/15/28 1,273 United Technologies 1,350 6.350%, 03/01/11 1,382 ---------- 3,615 ---------- Bishop Street Funds 18 High Grade Income Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- AUTO FINANCE -- 1.1% Toyota Motor Credit $1,500 5.450%, 05/18/11 $ 1,492 ---------- AUTOMOTIVE -- 0.5% DaimlerChrysler NA Holding 700 8.000%, 06/15/10 743 ---------- BANKS -- 3.0% Bank of America 2,350 4.875%, 01/15/13 2,236 BHP Billiton Finance 850 5.250%, 12/15/15 806 Caterpillar Financial Service 1,000 5.500%, 03/15/16 970 ---------- 4,012 ---------- BIOTECHNOLOGY -- 0.9% Boston Scientific 1,350 4.250%, 01/12/11 1,242 ---------- BROADCASTING & CABLE -- 1.9% TCI Communications 1,400 7.875%, 08/01/13 1,509 Turner Broadcasting System 975 8.375%, 07/01/13 1,073 ---------- 2,582 ---------- COMPUTER HARDWARE -- 2.0% Cisco Systems 1,400 5.500%, 02/22/16 1,345 Dell 1,325 6.550%, 04/15/08 1,343 ---------- 2,688 ---------- FINANCIALS -- 13.5% American General Finance MTN, Ser G 1,400 5.750%, 03/15/07 1,401 Bank of America (B) 3,960 5.383%, 07/03/06 3,960 Boeing Capital (A) 1,400 6.500%, 02/15/12 1,448 CIT Group 1,350 5.000%, 11/24/08 1,332 Fannie Mae (D) 625 4.750%, 03/30/09 614 June 30, 2006 19 www.bishopstreetfunds.com High Grade Income Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- FINANCIALS -- (CONTINUED) General Electric Capital MTN, Ser A $2,350 5.450%, 01/15/13 $ 2,310 Goldman Sachs Group 2,350 6.600%, 01/15/12 2,425 Jefferies Group 675 6.250%, 01/15/36 616 JPMorgan Chase 1,350 3.500%, 03/15/09 1,280 Sigma Finance MTN (B) (C) 1,980 5.330%, 07/07/06 1,980 Unitrin 850 4.875%, 11/01/10 812 ---------- 18,178 ---------- FOOD & BEVERAGE -- 0.7% ConAgra Foods 884 7.875%, 09/15/10 946 ---------- GENERAL MERCHANDISE -- 2.7% Target 1,150 6.350%, 01/15/11 1,181 Wal-Mart Stores 2,400 8.000%, 09/15/06 2,409 ---------- 3,590 ---------- HEALTH CARE -- 2.1% Johnson & Johnson 1,400 6.950%, 09/01/29 1,603 UnitedHealth Group 1,250 5.200%, 01/17/07 1,247 ---------- 2,850 ---------- HOUSEHOLD PRODUCTS -- 1.7% Proctor & Gamble 1,350 8.000%, 10/26/29 1,662 Rubbermaid 600 6.600%, 11/15/06 602 ---------- 2,264 ---------- MOVIES & ENTERTAINMENT -- 1.1% Walt Disney MTN 1,400 6.200%, 06/20/14 1,423 ---------- OIL & GAS - EQUIPMENT/SERVICES -- 0.9% Baker Hughes 1,175 6.000%, 02/15/09 1,184 ---------- Bishop Street Funds 20 High Grade Income Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- OIL & GAS - EXPLORATION/PRODUCTION -- 1.0% Anadarko Petroleum $1,250 7.200%, 03/15/29 $ 1,294 ---------- OIL & GAS - INTEGRATED -- 2.4% BP Amoco 1,385 9.125%, 03/01/11 1,582 Occidental Petroleum 1,600 6.750%, 01/15/12 1,683 ---------- 3,265 ---------- PHARMACEUTICALS -- 2.8% Abbott Laboratories 2,400 6.400%, 12/01/06 2,406 1,400 5.400%, 09/15/08 1,395 ---------- 3,801 ---------- REAL ESTATE -- 0.8% Post Apartment Homes LP 1,050 7.700%, 12/20/10 1,112 ---------- RETAIL - DRUGS -- 1.5% CVS (A) 2,200 4.875%, 09/15/14 2,011 ---------- RETAIL - FOOD -- 0.7% McDonald's MTN, Ser E (A) 900 5.950%, 01/15/08 904 ---------- SEMI-CONDUCTORS -- 1.5% Applied Materials 800 6.750%, 10/15/07 808 Duke Energy 1,275 4.200%, 10/01/08 1,232 ---------- 2,040 ---------- TELECOMMUNICATIONS -- 1.7% GTE South, Ser C 675 6.000%, 02/15/08 675 Sprint Capital 1,475 7.625%, 01/30/11 1,570 Verizon Global Funding MTN 100 7.600%, 03/15/07 101 ---------- 2,346 ---------- TRANSPORTATION SERVICES -- 0.6% FedEx 800 7.250%, 02/15/11 843 ---------- June 30, 2006 21 www.bishopstreetfunds.com High Grade Income Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- UTILITIES -- 1.0% Dominion Resources $1,350 4.125%, 02/15/08 $ 1,316 ---------- TOTAL CORPORATE OBLIGATIONS (Cost $68,145) 65,741 ---------- U.S. GOVERNMENT AGENCY OBLIGATIONS -- 32.8% FHLB 200 6.875%, 08/13/10 210 1,000 6.000%, 08/24/15 1,000 1,350 5.375%, 02/15/07 1,348 1,000 5.000%, 03/20/07 996 1,000 5.000%, 02/22/13 961 1,300 4.750%, 08/13/10 1,266 1,450 4.100%, 06/13/08 1,414 1,000 4.000%, 02/27/14 (D) 982 1,000 3.875%, 07/24/09 955 1,750 3.875%, 02/12/10 1,662 1,800 3.750%, 08/15/08 1,739 1,000 3.600%, 10/19/07 976 2,500 3.375%, 02/15/08 2,418 250 3.000%, 08/13/09 (D) 249 200 2.625%, 02/16/07 197 FHLMC 1,300 6.375%, 08/01/11 1,296 700 5.500%, 08/20/19 675 1,400 5.200%, 03/05/19 1,313 2,400 5.125%, 10/15/08 (A) 2,383 1,000 5.000%, 01/30/14 963 1,400 4.750%, 05/06/13 1,319 1,500 4.625%, 08/15/08 1,475 1,350 4.375%, 07/30/09 1,310 1,400 4.375%, 03/01/10 1,348 FHLMC MTN 1,400 5.750%, 05/23/11 1,395 1,400 5.400%, 02/01/16 1,349 1,400 5.250%, 12/01/14 1,341 1,000 5.000%, 12/27/07 992 375 5.000%, 02/08/08 372 200 5.000%, 06/18/18 (D) 189 2,800 4.850%, 12/01/09 (A) 2,739 1,000 3.650%, 05/07/08 968 200 2.500%, 12/04/06 198 Bishop Street Funds 22 High Grade Income Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- U.S. GOVERNMENT AGENCY OBLIGATIONS -- (CONTINUED) FNMA $2,600 7.250%, 01/15/10 $ 2,748 250 5.280%, 02/27/09 246 200 4.500%, 08/04/08 196 800 3.875%, 11/17/08 (A) 771 200 3.250%, 03/17/08 193 2,000 2.540%, 01/12/07 1,969 ---------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $45,148) 44,121 ---------- U.S. TREASURY OBLIGATIONS -- 18.4% U.S. Treasury Bonds 2,750 7.500%, 11/15/16 (A) 3,253 5,500 7.250%, 05/15/16 (A) 6,368 1,700 6.375%, 08/15/27 1,930 800 6.250%, 05/15/30 (A) 906 1,000 6.000%, 02/15/26 (A) 1,083 1,500 5.250%, 11/15/28 (A) 1,493 5,900 4.500%, 02/15/36 (A) 5,290 U.S. Treasury Notes (A) 1,000 4.375%, 05/15/07 992 1,400 4.250%, 08/15/15 1,310 1,200 4.000%, 02/15/14 1,115 1,200 4.000%, 02/15/15 1,106 ---------- TOTAL U.S. TREASURY OBLIGATIONS (Cost $24,906) 24,846 ---------- COMMERCIAL PAPER (B) -- 4.4% Morgan Stanley Dean Witter 5,940 5.383%, 11/09/06 5,940 ---------- TOTAL COMMERCIAL PAPER (Cost $5,940) 5,940 ---------- CERTIFICATES OF DEPOSIT/BANK NOTES (B) -- 2.9% FINANCIALS -- 2.9% First Tennessee Bank 3,960 5.339%, 04/18/07 3,962 ---------- TOTAL CERTIFICATES OF DEPOSIT/BANK NOTES (Cost $3,962) 3,962 ---------- June 30, 2006 23 www.bishopstreetfunds.com High Grade Income Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Market Shares/Face Value Amount (000) (000) ----------- ---------- U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS -- 1.5% CONSUMER DISCRETIONARY -- 1.5% FHLMC $ 72 3.500%, 05/01/08 $ 68 FHLMC, Ser 3070, Cl DH 927 5.500%, 11/15/35 914 FNMA 1,059 3.500%, 08/01/10 983 ---------- TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (Cost $2,045) 1,965 ---------- MUNICIPAL BONDS -- 1.0% GOVERNMENT AGENCIES -- 1.0% Honolulu City & County, Ser E, GO, FGIC Insured 500 5.250%, 07/01/20 530 Honolulu City & County, Waste Water, Senior Ser A, RB, FGIC Insured 780 5.000%, 07/01/35 796 ---------- TOTAL MUNICIPAL BONDS (Cost $1,341) 1,326 ---------- CASH EQUIVALENTS (E) -- 0.6% 387,220 Dreyfus Cash Management Fund, Institutional Shares, 5.010% 387 387,220 Fidelity Institutional Money Market Portfolio, Institutional Shares, 5.060% 387 ---------- TOTAL CASH EQUIVALENTS (Cost $774) 774 ---------- REPURCHASE AGREEMENT (B) -- 9.8% Lehman Brothers 5.363%, dated 06/30/06, to be repurchased on 07/03/06, repurchase price $13,142,840 (collateralized by various collateralized mortgage obligations, ranging in par value $167,290,000-$407,245,722, 0.000%-0.642%, 11/25/33- 13,137 10/15/41; with total market value $13,399,708) 13,137 ---------- TOTAL REPURCHASE AGREEMENT (Cost $13,137) 13,137 ---------- TOTAL INVESTMENTS (COST $165,398) -- 120.2% 161,812 ---------- Bishop Street Funds 24 High Grade Income Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Value (000) ---------- OTHER ASSETS AND LIABILITIES -- (20.2)% Payable Upon Return of Securities Loaned $ (28,979) Payable for Investment Securities Purchased (248) Income Distribution Payable (197) Investment Adviser Fees Payable (45) Administration Fees Payable (13) Shareholder Servicing Fees Payable (11) Payable for Capital Shares Redeemed (6) Trustees' Fees Payable (2) Other Assets and Liabilities, Net 2,347 ---------- TOTAL OTHER ASSETS AND LIABILITIES (27,154) ---------- NET ASSETS -- 100.0% $ 134,658 ========== NET ASSETS: Fund Shares (unlimited authorization -- no par value) $ 138,555 Accumulated net realized loss on investments (311) Net unrealized depreciation on investments (3,586) ---------- NET ASSETS $ 134,658 ========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS I ($134,658,308 / 13,854,760 SHARES) $ 9.72 ========== (A) THE SECURITY OR A PORTION OF THIS SECURITY IS ON LOAN AT JUNE 30, 2006 (SEE NOTE 5 IN THE NOTES TO FINANCIAL STATEMENTS). THE TOTAL VALUE OF SECURITIES ON LOAN AT JUNE 30, 2006 WAS $28,417,944. (B) THESE SECURITIES WERE PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. THE TOTAL VALUE OF SUCH SECURITIES AS OF JUNE 30, 2006 WAS $28,979,068. (C) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS IS THE RATE IN EFFECT ON JUNE 30, 2006. THE MATURITY DATE SHOWN IS THE NEXT SCHEDULED RESET DATE. (D) STEP BOND -- COUPON RATE INCREASES IN INCREMENTS TO MATURITY. RATE DISCLOSED IS AS OF JUNE 30, 2006. (E) RATES SHOWN ARE THE 7-DAY EFFECTIVE YIELDS AS OF JUNE 30, 2006. CL -- CLASS FGIC -- FINANCIAL GUARANTEE INSURANCE CORPORATION FHLB -- FEDERAL HOME LOAN BANK FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION GO -- GENERAL OBLIGATION LP -- LIMITED PARTNERSHIP MTN -- MEDIUM TERM NOTE NA -- NATIONAL ASSOCIATION RB -- REVENUE BOND SER -- SERIES COST FIGURES SHOWN WITH "000" OMITTED. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 25 www.bishopstreetfunds.com Hawaii Municipal Bond Fund (UNAUDITED) --------------------------------------------------------------------------------
TOP TEN HOLDINGS+ --------------------------------------------------------------------------------------------------- Percentage Coupon Maturity of Rate Date Investments ----------------------------------------------------------------------------------------------- 1. Kauai County GO 6.250% 08/01/10 3.3% ----------------------------------------------------------------------------------------------- 2. Honolulu City & County Waste Water RB 5.000% 07/01/35 2.5% ----------------------------------------------------------------------------------------------- 3. Hawaii State Department of Budget & Finance RB 5.650% 10/01/27 2.1% ----------------------------------------------------------------------------------------------- 4. Puerto Rico Public Buildings Authority RB 5.250% 07/01/25 2.0% ----------------------------------------------------------------------------------------------- 5. University of California RB 5.000% 05/15/24 1.9% ----------------------------------------------------------------------------------------------- 6. Honolulu City & County GO 5.000% 07/01/19 1.6% ----------------------------------------------------------------------------------------------- 7. Edinburg Consolidated Independent School District GO 5.000% 02/15/21 1.6% ----------------------------------------------------------------------------------------------- 8. Hawaii State GO 5.000% 07/01/25 1.5% ----------------------------------------------------------------------------------------------- 9. Puerto Rico Housing Financing Authority RB 5.000% 12/01/16 1.5% ----------------------------------------------------------------------------------------------- 10. Hawaii State GO 6.500% 12/01/13 1.4% ---------------------------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] -------------------------------------------------------------------------------- SECTOR WEIGHTINGS+ General Obligation 41.9% Transportation 10.5% Facilities 8.0% Higher Education 7.3% Utilities 6.0% Water 5.3% Power 5.2% General Revenue 3.9% Airport 3.6% Single-Family Housing 3.1% School District 1.9% Medical 1.1% Development 1.0% Education 0.9% Short-Term Investments 0.2% Multi-Family Housing 0.1% -------------------------------------------------------------------------------- +PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. STATEMENT OF NET ASSETS Face Market Amount Value (000) (000) --------- ---------- MUNICIPAL BONDS -- 98.6% CALIFORNIA -- 4.4% California State, GO $2,000 5.000%, 03/01/24 $ 2,045 Coast, Unified School District, School Facilities District 1-B, GO, FSA Insured (C) 1,610 5.050%, 08/01/40 308 Bishop Street Funds 26 Hawaii Municipal Bond Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- CALIFORNIA -- (CONTINUED) Highland, Redevelopment Agency, Project Area No. 1 Tax Allocation, RB, AMBAC Insured $1,440 5.650%, 12/01/24 $ 1,625 La Mesa-Spring Valley, School District, Electric of 2002 Project, Ser B, GO, FGIC Insured (C) 630 5.250%, 08/01/27 221 University of California, Ser B, RB, FSA Insured 3,000 5.000%, 05/15/24 3,083 ---------- 7,282 ---------- HAWAII -- 80.3% Hawaii County, Refunding & Improvement Project, Ser A, GO, FGIC Insured 450 5.600%, 05/01/12 486 430 5.600%, 05/01/13 468 400 5.550%, 05/01/09 418 Hawaii County, Ser A, GO, FGIC Insured 630 5.500%, 07/15/12 674 Hawaii County, Ser A, GO, FSA Insured 500 5.400%, 05/15/15 523 1,000 5.000%, 07/15/23 1,027 Hawaii County, Ser A, GO, MBIA Insured 1,055 5.250%, 07/15/18 1,122 1,205 5.000%, 07/15/15 1,268 1,470 5.000%, 07/15/24 1,512 Hawaii State, Airport System, RB, AMT, FGIC Insured 280 5.250%, 07/01/21 287 Hawaii State, Airport System, Second Ser, RB, AMT, ETM 60 6.900%, 07/01/12 66 Hawaii State, Airport System, Second Ser, RB, AMT, ETM, MBIA Insured 1,505 6.900%, 07/01/12 1,650 Hawaii State, Airport System, Ser B, RB, AMT, FGIC Insured 1,500 6.625%, 07/01/18 1,639 1,500 6.500%, 07/01/14 1,639 500 6.000%, 07/01/19 534 Hawaii State, Department of Budget & Finance, Chaminade University, RB, Radian Insured 1,000 5.000%, 01/01/26 1,018 1,000 4.750%, 01/01/36 968 1,000 4.700%, 01/01/31 969 June 30, 2006 27 www.bishopstreetfunds.com Hawaii Municipal Bond Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- HAWAII -- (CONTINUED) Hawaii State, Department of Budget & Finance, Electric Company & Subsidiary Project, RB, MBIA Insured $ 170 5.450%, 11/01/23 $ 170 Hawaii State, Department of Budget & Finance, Electric Company & Subsidiary Project, Ser A, RB, AMT, FGIC Insured 1,500 4.800%, 01/01/25 1,468 Hawaii State, Department of Budget & Finance, Electric Company & Subsidiary Project, Ser B, RB, AMT, XLCA Insured 1,025 5.000%, 12/01/22 1,038 Hawaii State, Department of Budget & Finance, Hawaiian Electric, Ser A, RB, AMT, AMBAC Insured 460 5.100%, 09/01/32 464 Hawaii State, Department of Budget & Finance, Hawaiian Electric, Ser A, RB, AMT, MBIA Insured 805 6.200%, 05/01/26 815 3,250 5.650%, 10/01/27 3,445 Hawaii State, Department of Budget & Finance, Hawaiian Electric, Ser C, RB, AMT, AMBAC Insured 1,000 6.200%, 11/01/29 1,073 Hawaii State, Department of Budget & Finance, Kapiolani Health Care System Project, RB, Pre-Refunded @ 102 (A) 100 6.250%, 07/01/06 102 Hawaii State, Department of Budget & Finance, Mid Pacific Institute, RB, Radian Insured 1,000 5.000%, 01/01/26 1,024 1,000 4.625%, 01/01/31 958 Hawaii State, Department of Budget & Finance, Queens Health Systems, Ser B, RB, MBIA Insured, Pre-Refunded @ 101 (A) 750 5.250%, 07/01/08 778 Hawaii State, Harbor Capital Improvement, RB, AMT, MBIA Insured 2,000 5.500%, 07/01/27 2,027 545 5.400%, 07/01/09 561 Hawaii State, Harbor System, Ser A, RB, AMT, FSA Insured 2,025 5.750%, 07/01/17 2,144 670 5.750%, 07/01/29 704 1,210 5.700%, 07/01/16 1,280 1,000 5.600%, 07/01/15 1,059 Hawaii State, Harbor System, Ser B, RB, AMT, AMBAC Insured 200 5.500%, 07/01/19 210 Hawaii State, Harbor System, Ser B, RB, AMT, FSA Insured 1,000 5.000%, 01/01/13 1,039 Hawaii State, Harbor System, Ser B, RB, FSA Insured 870 5.000%, 01/01/07 874 Bishop Street Funds 28 Hawaii Municipal Bond Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- HAWAII -- (CONTINUED) Hawaii State, Highway, RB $1,000 6.000%, 07/01/08 $ 1,040 2,000 6.000%, 07/01/09 2,117 Hawaii State, Highway, Ser A, RB, FSA Insured 725 5.000%, 07/01/21 751 Hawaii State, Highway, Ser A, RB, FSA Insured 1,805 5.000%, 07/01/23 1,864 Hawaii State, Housing, Finance & Development, Single-Family Housing, Ser A, RB, AMT, FNMA Collateral 450 5.750%, 07/01/30 452 690 5.400%, 07/01/30 705 150 5.250%, 07/01/13 153 Hawaii State, Housing, Finance & Development, Single-Family Housing, Ser B, RB, FNMA Collateral 1,000 5.450%, 07/01/17 1,019 Hawaii State, Housing, Finance & Development, University of Hawaii Faculty Housing Project, RB, AMBAC Insured 700 5.650%, 10/01/16 707 415 5.000%, 10/01/06 416 Hawaii State, Kapolei Office Building, Ser A, COP, AMBAC Insured 1,475 5.250%, 05/01/13 1,531 1,000 5.000%, 05/01/08 1,019 1,000 5.000%, 05/01/14 1,032 1,100 5.000%, 05/01/15 1,135 1,500 5.000%, 05/01/16 1,548 1,000 5.000%, 05/01/17 1,031 500 5.000%, 05/01/18 515 Hawaii State, No. 1 Capitol District State Office, COP, MBIA Insured 1,000 5.200%, 05/01/14 1,035 175 5.000%, 05/01/11 181 Hawaii State, Pacific Health Special Purpose, Ser A, RB 615 5.600%, 07/01/33 631 Hawaii State, Ser CL, GO 1,000 6.000%, 03/01/09 1,051 Hawaii State, Ser CM, GO, FGIC Insured 2,000 6.500%, 12/01/13 2,298 500 6.000%, 12/01/09 533 1,500 6.000%, 12/01/11 1,643 Hawaii State, Ser CP, GO, FGIC Insured 90 5.000%, 10/01/16 92 Hawaii State, Ser CU, GO, MBIA Insured (A) 25 5.750%, 10/01/10 27 550 5.750%, 10/01/12 586 June 30, 2006 29 www.bishopstreetfunds.com Hawaii Municipal Bond Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- HAWAII -- (CONTINUED) Hawaii State, Ser CV, GO, FGIC Insured $1,000 5.250%, 08/01/21 $ 1,046 Hawaii State, Ser CX, GO, FSA Insured 1,000 5.500%, 02/01/21 1,063 Hawaii State, Ser CZ, GO, FSA Insured 2,000 5.250%, 07/01/16 2,110 Hawaii State, Ser DF, GO, AMBAC Insured 1,250 5.000%, 07/01/14 1,320 2,000 5.000%, 07/01/21 2,072 2,400 5.000%, 07/01/25 2,469 Hawaii State, Ser DI, GO, FSA Insured 1,000 5.000%, 03/01/14 1,054 Hawaii State, University of Hawaii, Ser A, RB, FGIC Insured 1,805 5.500%, 07/15/14 1,943 500 5.500%, 07/15/21 534 500 5.125%, 07/15/32 514 Hawaii State, University of Hawaii, Ser B, RB, FSA Insured 320 5.250%, 10/01/16 335 775 5.250%, 10/01/17 813 Honolulu City & County, Board of Water Supply, Ser A, RB, FGIC Insured 2,000 5.000%, 07/01/33 2,045 Honolulu City & County, GO 1,320 5.400%, 09/27/07 1,344 Honolulu City & County, GO, ETM 230 6.000%, 12/01/09 245 Honolulu City & County, Ser A, GO 55 6.000%, 01/01/10 59 Honolulu City & County, Ser A, GO, ETM 500 6.000%, 01/01/09 525 95 6.000%, 01/01/10 101 Honolulu City & County, Ser A, GO, MBIA Insured 1,000 5.250%, 03/01/27 1,042 500 5.250%, 03/01/28 521 1,000 5.000%, 07/01/14 1,056 Honolulu City & County, Ser B, GO, ETM, FGIC Insured 635 5.500%, 10/01/11 681 Honolulu City & County, Ser B, GO, MBIA Insured 825 5.000%, 07/01/13 869 Honolulu City & County, Ser B, RB, AMT, MBIA Insured 1,000 5.250%, 07/01/21 1,044 Honolulu City & County, Ser C, GO, FGIC Insured 125 5.500%, 11/01/07 128 1,200 5.125%, 07/01/11 1,251 1,100 5.125%, 07/01/15 1,144 2,500 5.000%, 07/01/19 2,583 Bishop Street Funds 30 Hawaii Municipal Bond Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- HAWAII -- (CONTINUED) Honolulu City & County, Ser C, GO, MBIA Insured $2,000 5.000%, 07/01/16 $ 2,105 Honolulu City & County, Ser D, GO, AMT, FGIC Insured 245 4.850%, 02/01/10 250 Honolulu City & County, Ser D, GO, MBIA Insured 885 5.000%, 07/01/19 923 2,000 5.000%, 07/01/23 2,065 Honolulu City & County, Ser E, GO, FGIC Insured 1,500 5.250%, 07/01/20 1,590 Honolulu City & County, Waipahu Towers Project, Ser A, RB, AMT, GNMA Collateral 200 6.900%, 06/20/35 202 Honolulu City & County, Waste Water, 2nd Board Resolution, Junior Ser, RB, FGIC Insured 900 5.250%, 07/01/13 939 1,000 5.250%, 07/01/17 1,043 1,500 5.250%, 07/01/18 1,563 1,000 5.000%, 07/01/23 1,029 Honolulu City & County, Waste Water, Senior Ser A, RB, FGIC Insured 4,050 5.000%, 07/01/35 4,131 Honolulu City & County, Water Board, Ser A, RB, FGIC Insured 1,700 4.750%, 07/01/16 1,772 Honolulu City & County, Water Board, Ser A, RB, FGIC Insured 2,000 4.750%, 07/01/17 2,085 Honolulu City & County, Water Board, Ser B, RB, AMT MBIA Insured 1,000 5.250%, 07/01/20 1,046 Kauai County, Public Improvement, Ser B, GO, MBIA Insured, Pre-Refunded @ 101 (A) 175 5.200%, 08/01/07 179 165 5.150%, 08/01/07 169 155 5.100%, 08/01/07 159 120 5.050%, 08/01/07 123 Kauai County, Ser A, GO, FGIC Insured 1,610 5.000%, 08/01/21 1,668 1,000 5.000%, 08/01/22 1,035 1,440 5.000%, 08/01/23 1,487 1,555 5.000%, 08/01/24 1,604 1,700 5.000%, 08/01/26 1,747 Kauai County, Ser A, GO, FGIC Insured, Pre-Refunded @ 100 (A) 5,000 6.250%, 08/01/10 5,436 June 30, 2006 31 www.bishopstreetfunds.com Hawaii Municipal Bond Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- HAWAII -- (CONTINUED) Kauai County, Ser A, GO, MBIA Insured $ 490 5.625%, 08/01/18 $ 521 1,500 5.000%, 08/01/25 1,526 Kauai County, Ser A, GO, MBIA Insured, Pre-Refunded @ 100 (A) 260 5.625%, 08/01/11 280 Maui County, GO, MBIA Insured 1,100 5.000%, 03/01/24 1,133 Maui County, Ser A, GO 485 5.375%, 03/01/12 513 Maui County, Ser A, GO, FGIC Insured 150 5.000%, 03/01/13 154 Maui County, Ser A, GO, FGIC Insured, Pre-Refunded @ 101 (A) 100 5.125%, 03/01/08 103 50 5.000%, 03/01/08 51 Maui County, Ser A, GO, MBIA Insured 840 5.000%, 03/01/20 862 Maui County, Ser B, GO, MBIA Insured 500 5.000%, 09/01/17 523 ---------- 132,540 ---------- ILLINOIS -- 0.4% Illinois State, Educational Facilities Authority, Northwestern University, RB 670 5.000%, 12/01/38 678 ---------- INDIANA -- 0.9% Elkhart, Community School Building Company, First Meeting, RB, XLCA Insured 1,500 4.500%, 07/15/24 1,464 ---------- MASSACHUSETTS -- 0.4% Massachusetts State, Water Resources Authority, Ser J, RB 565 5.000%, 08/01/42 573 ---------- PUERTO RICO -- 7.9% Commonwealth of Puerto Rico, GO, MBIA Insured 500 6.500%, 07/01/14 577 1,500 6.000%, 07/01/15 1,689 Commonwealth of Puerto Rico, Public Improvement, GO, FSA Insured 435 5.000%, 07/01/21 451 Commonwealth of Puerto Rico, Public Improvement, Ser A, GO 1,000 5.000%, 07/01/27 1,004 Puerto Rico, Electric Power Authority, Ser DD, RB, FSA Insured 1,000 5.000%, 07/01/28 1,015 Bishop Street Funds 32 Hawaii Municipal Bond Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Market Amount Value (000) (000) --------- ---------- PUERTO RICO -- (CONTINUED) Puerto Rico, Electric Power Authority, Ser HH, RB, FSA Insured $ 500 5.250%, 07/01/29 $ 526 Puerto Rico, Housing Financing Authority, Capital Funding Program, RB 2,360 5.000%, 12/01/16 2,445 Puerto Rico, Housing, Banking & Financing Agency, Single-Family Mortgage, Affordable Housing Mortgage, Portfolio I, RB, AMT, GNMA/FNMA/FHLMC Collateral 180 6.100%, 10/01/15 181 Puerto Rico, Industrial Tourist Educational Medical Environmental Control Facilities, Hospital Auxilio Mutuo Obligation Group, Ser A, RB, MBIA Insured 300 6.250%, 07/01/24 303 Puerto Rico, Public Buildings Authority, Ser F, RB 3,000 5.250%, 07/01/25 3,232 Puerto Rico, University of Puerto Rico, Ser O, RB, MBIA Insured 1,500 5.750%, 06/01/19 1,592 ---------- 13,015 ---------- TEXAS -- 3.5% Dallas, Rapid Transportation, Sr Lien, RB, AMBAC Insured 1,400 5.000%, 12/01/19 1,442 Edinburg, Consolidated Independent School District, GO 2,470 5.000%, 02/15/21 2,544 Galveston, Waterworks & Sewer Systems, RB, FGIC Insured 1,200 4.375%, 05/01/24 1,134 Harris County, Houston Texas Sports Authority, Ser A, Special RB, MBIA Insured (C) 5,000 5.400%, 11/15/40 731 ---------- 5,851 ---------- WASHINGTON -- 0.8% Washington State, University of Washington, RB, FSA Insured 1,315 5.000%, 06/01/23 1,348 ---------- TOTAL MUNICIPAL BONDS (Cost $161,211) 162,751 ---------- June 30, 2006 33 www.bishopstreetfunds.com Hawaii Municipal Bond Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Market Value Shares (000) ----------- ---------- CASH EQUIVALENTS (B) -- 0.2% 181,839 Dreyfus Tax-Exempt Cash Management Fund, Institutional Shares, 3.670% $ 182 181,839 Fidelity Institutional Tax-Exempt Portfolio, Institutional Shares, 3.720% 182 ---------- TOTAL CASH EQUIVALENTS (Cost $364) 364 ---------- TOTAL INVESTMENTS (COST $161,575) -- 98.8% 163,115 ---------- OTHER ASSETS AND LIABILITIES -- 1.2% Payable for Investment Securities Purchased (2,088) Income Distribution Payable (451) Payable for Capital Shares Redeemed (168) Investment Adviser Fees Payable (30) Shareholder Servicing Fees Payable (14) Administration Fees Payable (9) Distribution Fees Payable (7) Trustees' Fees Payable (3) Other Assets and Liabilities, Net 4,675 ---------- TOTAL OTHER ASSETS AND LIABILITIES 1,905 ---------- NET ASSETS -- 100.0% $ 165,020 ========== NET ASSETS: Fund Shares (unlimited authorization -- no par value) $ 163,162 Undistributed net investment income 53 Accumulated net realized gain on investments 265 Net unrealized appreciation on investments 1,540 ---------- NET ASSETS $ 165,020 ========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS I ($134,288,444 / 12,741,905 SHARES) $ 10.54 ========== NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- CLASS A ($30,731,404 / 2,915,499 SHARES) $ 10.54 ========== MAXIMUM OFFERING PRICE PER SHARE -- CLASS A ($10.54 / 97.00%) $ 10.87 ========== Bishop Street Funds 34 Hawaii Municipal Bond Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) (A) PREREFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PREREFUNDED DATE. (B) RATES SHOWN ARE THE 7-DAY EFFECTIVE YIELDS AS OF JUNE 30, 2006. (C) ZERO COUPON SECURITY -- THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE EFFECTIVE YIELD AT TIME OF PURCHASE. AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY AMT -- ALTERNATIVE MINIMUM TAX COP -- CERTIFICATE OF PARTICIPATION ETM -- ESCROWED TO MATURITY FGIC -- FINANCIAL GUARANTEE INSURANCE CORPORATION FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION FSA -- FINANCIAL SECURITY ASSURANCE GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION GO -- GENERAL OBLIGATION MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE RB -- REVENUE BOND SER -- SERIES XLCA -- XL CAPITAL COST FIGURES SHOWN WITH "000" OMITTED. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 35 www.bishopstreetfunds.com Money Market Fund (UNAUDITED) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] -------------------------------------------------------------------------------- SECTOR WEIGHTINGS + Commercial Paper 67.0% Certificates of Deposit/Bank Notes 13.2% U.S. Government Agency Obligations 11.0% Repurchase Agreement 3.8% Asset Backed Securities 2.9% Corporate Obligations 2.1% -------------------------------------------------------------------------------- +PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. STATEMENT OF NET ASSETS Face Amount Value (000) (000) --------- ---------- COMMERCIAL PAPER (B) -- 67.2% AUTO FINANCE -- 4.6% BMW Vehicle Lease Trust $ 9,500 5.262%, 07/03/06 $ 9,497 ---------- BANKS -- 30.4% Danske 2,000 5.258%, 07/10/06 1,997 8,000 5.274%, 07/28/06 7,969 Deutsche Ausgleichsbank 1,000 5.252%, 07/03/06 1,000 9,000 5.261%, 07/11/06 8,987 Lloyds TSB Bank 10,000 5.275%, 07/31/06 9,956 Societe Generale 9,500 5.282%, 07/03/06 9,497 Toronto Dominion 5,000 5.315%, 08/04/06 4,975 UBS 9,500 5.272%, 07/03/06 9,497 Westpac Capital 4,700 5.193%, 07/20/06 4,687 4,800 5.107%, 07/21/06 4,787 ---------- 63,352 ---------- FINANCIALS -- 32.2% Abbey National Treasury Services 10,000 5.253%, 07/26/06 9,964 ABN-Amro North America Finance 9,500 5.067%, 07/06/06 9,493 Atlantic Asset Securitization 9,500 5.282%, 07/21/06 9,472 CBA Finance 10,000 5.283%, 07/26/06 9,964 Bishop Street Funds 36 Money Market Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Amount Value (000) (000) --------- ---------- FINANCIALS -- (CONTINUED) Chariot Funding $ 2,000 5.218%, 07/10/06 $ 1,997 5,000 5.244%, 07/21/06 4,986 Dresdner U.S. Finance 1,300 5.257%, 07/25/06 1,295 HBOS Treasury Services 8,000 5.162%, 07/14/06 7,985 1,900 5.167%, 08/16/06 1,888 Svenska Handels New York 8,000 5.125%, 08/02/06 7,964 Svenska Handlesbank 2,000 5.306%, 07/31/06 1,991 ---------- 66,999 ---------- TOTAL COMMERCIAL PAPER (Cost $139,848) 139,848 ---------- CERTIFICATES OF DEPOSIT/BANK NOTES -- 13.2% Citi 8,000 5.030%, 07/24/06 8,000 2,000 5.400%, 09/20/06 2,000 Dresdner Funding 8,500 5.290%, 07/31/06 8,500 Wells Fargo Bank 9,000 5.240%, 07/17/06 9,000 ---------- TOTAL CERTIFICATES OF DEPOSIT/BANK NOTES (Cost $27,500) 27,500 ---------- U.S. GOVERNMENT AGENCY OBLIGATIONS (B) -- 11.1% FHLB 10,000 5.163%, 07/14/06 9,981 FHLMC 6,105 5.207%, 07/25/06 6,084 FNMA 7,000 5.192%, 07/26/06 6,975 ---------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $23,040) 23,040 ---------- June 30, 2006 37 www.bishopstreetfunds.com Money Market Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Face Amount Value (000) (000) --------- ---------- ASSET BACKED SECURITIES -- 3.0% AUTO FINANCE -- 3.0% Honda Auto Receivables Owner Trust, Ser 2005-6, Cl A1 $ 1,001 4.512%, 12/18/06 $ 1,001 Nissan Auto Lease Trust, Ser 2006-A, Cl A1 3,023 5.081%, 05/15/07 3,023 Nissan Auto Receivables Owner Trust, Ser 2006-A, Cl A1 1,890 4.663%, 02/15/07 1,890 Volkswagen Auto Loan Enhanced Trust, Ser 2005-1, Cl A1 191 4.366%, 11/20/06 191 ---------- TOTAL ASSET BACKED SECURITIES (Cost $6,105) 6,105 ---------- CORPORATE OBLIGATIONS (A) -- 2.1% FINANCIALS -- 2.1% General Electric Capital 2,300 5.250%, 07/10/06 2,300 General Electric Capital MTN 2,000 5.352%, 07/17/06 2,000 ---------- TOTAL CORPORATE OBLIGATIONS (Cost $4,300) 4,300 ---------- REPURCHASE AGREEMENT -- 3.7% Barclays Bank 5.500%, dated 06/30/06, to be repurchased on 07/03/06, repurchase price $7,803,315 (collateralized by a FNMA obligation, par value $8,469,402, 5.500%, 01/01/36; with 7,800 total market value $7,956,000) 7,800 ---------- TOTAL REPURCHASE AGREEMENT (Cost $7,800) 7,800 ---------- TOTAL INVESTMENTS (COST $208,593) -- 100.3% 208,593 ---------- OTHER ASSETS AND LIABILITIES -- (0.3)% Income Distribution Payable (608) Investment Adviser Fees Payable (26) Administration Fees Payable (20) Shareholder Servicing Fees Payable (17) Distribution Fee Payable (7) Trustees' Fees Payable (3) Other Assets and Liabilities, Net 159 ---------- TOTAL OTHER ASSETS AND LIABILITIES (522) ---------- NET ASSETS -- 100.0% $ 208,071 ========== Bishop Street Funds 38 Money Market Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Value (000) ---------- NET ASSETS: Fund Shares (unlimited authorization -- no par value) $ 208,094 Distributions in excess of net investment income (1) Accumulated net realized loss on investments (22) ---------- NET ASSETS $ 208,071 ========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS I ($167,057,646 / 167,082,358 SHARES) $ 1.00 ========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS A ($41,012,999 / 41,013,368 SHARES) $ 1.00 ========== (A) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS IS THE RATE IN EFFECT ON JUNE 30, 2006. THE MATURITY DATE SHOWN IS THE NEXT SCHEDULED RESET DATE. (B) THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE EFFECTIVE YIELD AT THE TIME OF PURCHASE. CL -- CLASS FHLB -- FEDERAL HOME LOAN BANK FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION MTN -- MEDIUM TERM NOTE SER -- SERIES COST FIGURES ARE SHOWN WITH "000" OMITTED. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 39 www.bishopstreetfunds.com Treasury Money Market Fund (UNAUDITED) -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] -------------------------------------------------------------------------------- SECTOR WEIGHTINGS+ Repurchase Agreements 86.0% U.S. Treasury Obligations 14.0% -------------------------------------------------------------------------------- + PERCENTAGES BASED ON TOTAL INVESTMENTS. STATEMENT OF NET ASSETS Face Amount Value (000) (000) --------- ---------- U.S. TREASURY OBLIGATIONS (A) -- 14.0% U.S. Treasury Bills $10,000 4.579%, 07/06/06 $ 9,994 10,000 4.631%, 08/03/06 9,958 10,000 4.837%, 08/24/06 9,929 ---------- TOTAL U.S. TREASURY OBLIGATIONS (Cost $29,881) 29,881 ---------- REPURCHASE AGREEMENTS -- 86.4% Barclays Bank 4.400%, dated 06/30/06, to be repurchased on 07/03/06, repurchase price $89,232,707 (collateralized by various U.S. Treasury obligations, ranging in par value $28,266,000-$44,388,000, 3.500%-3.375%, 01/15/07-01/15/11; with total market value 89,200 $90,985,029) 89,200 UBS 4.500%, dated 06/30/06, to be repurchased on 07/03/06, repurchase price $95,035,625 (collateralized by various U.S. Treasury obligations, ranging in par value $6,190,000-$40,420,000, 0.000%-3.875%, 04/15/10- 95,000 04/15/32; with total market value $96,905,181) 95,000 ---------- TOTAL REPURCHASE AGREEMENTS (Cost $184,200) 184,200 ---------- TOTAL INVESTMENTS (COST $214,081) -- 100.4% 214,081 ---------- Bishop Street Funds 40 Treasury Money Market Fund (UNAUDITED) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS (CONTINUED) Value (000) ---------- OTHER ASSETS AND LIABILITIES -- (0.4)% Income Distribution Payable $ (795) Administration Fees Payable (20) Shareholder Servicing Fees Payable (18) Investment Adviser Fee Payable (17) Trustees' Fees Payable (2) Other Assets and Liabilities, Net 62 ---------- TOTAL OTHER ASSETS AND LIABILITIES (790) ---------- NET ASSETS -- 100.0% $ 213,291 ========== NET ASSETS: Fund Shares (unlimited authorization -- no par value) $ 213,344 Undistributed net investment income 4 Accumulated net realized loss on investments (57) ---------- NET ASSETS $ 213,291 ========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS I ($213,291,095 / 213,346,073 SHARES) $ 1.00 ========== (A) THE RATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE EFFECTIVE YIELD AT THE TIME OF PURCHASE. COST FIGURES ARE SHOWN WITH "000" OMITTED. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 41 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (IN THOUSANDS)
Large High Large Cap Strategic Cap Core Grade Growth Growth Equity Income Fund Fund Fund* Fund --------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividend Income $ 532 $ 637 $ 187 $ 38 Interest Income -- -- -- 3,214 Securities Lending, Net 6 -- -- 22 --------------------------------------------------------------------------------------------------- Total Investment Income 538 637 187 3,274 --------------------------------------------------------------------------------------------------- EXPENSES: Investment Adviser Fees 249 503 61 374 Shareholder Servicing Fees 84 170 20 170 Administration Fees 67 136 16 136 Transfer Agent Fees 19 19 6 21 Professional Fees 12 26 5 26 Trustees' Fees 5 10 1 10 Printing Fees 5 10 2 10 Custody Fees 4 6 1 7 Registration Fees 2 1 -- 2 Miscellaneous Expenses 6 4 -- 15 --------------------------------------------------------------------------------------------------- Total Expenses 453 885 112 771 --------------------------------------------------------------------------------------------------- Less Waivers: Investment Adviser Fees (38) -- (6) (95) Shareholder Servicing Fees (50) (102) (12) (102) Administration Fees (29) (58) (7) (58) --------------------------------------------------------------------------------------------------- Total Waivers (117) (160) (25) (255) --------------------------------------------------------------------------------------------------- Net Expenses 336 725 87 516 --------------------------------------------------------------------------------------------------- Net Investment Income (Loss) 202 (88) 100 2,758 --------------------------------------------------------------------------------------------------- Net Realized Gain (Loss) on Investments 7,825 2,860 (193) (211) Change in Unrealized Depreciation on Investments (5,268) (5,729) (1,612) (4,451) --------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on Investments 2,557 (2,869) (1,805) (4,662) --------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets Resulting from Operations $ 2,759 $ (2,957) $ (1,705) $ (1,904) ===================================================================================================
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. * COMMENCED OPERATIONS ON MAY 3, 2006. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. Bishop Street Funds 42 Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (IN THOUSANDS)
Hawaii Treasury Municipal Money Money Bond Market Market Fund Fund Fund ------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividend Income $ 27 $ -- $ -- Interest Income 3,883 4,851 4,739 ------------------------------------------------------------------------------------ Total Investment Income 3,910 4,851 4,739 ------------------------------------------------------------------------------------ EXPENSES: Investment Adviser Fees 299 308 318 Shareholder Servicing Fees 213 257 265 Administration Fees 171 206 212 Distribution Fees, Class A 39 47 -- Transfer Agent Fees 34 36 25 Professional Fees 32 38 38 Trustees' Fees 13 15 15 Printing Fees 12 14 15 Custody Fees 9 12 11 Registration Fees 3 4 4 Miscellaneous Expenses 23 13 30 ------------------------------------------------------------------------------------ Total Expenses 848 950 933 ------------------------------------------------------------------------------------ Less Waivers: Investment Adviser Fees (101) (146) (217) Shareholder Servicing Fees (128) (154) (159) Administration Fees (111) (88) (91) ------------------------------------------------------------------------------------ Total Waivers (340) (388) (467) ------------------------------------------------------------------------------------ Net Expenses 508 562 466 ------------------------------------------------------------------------------------ Net Investment Income 3,402 4,289 4,273 ------------------------------------------------------------------------------------ Net Realized Gain (Loss) on Investments 258 1 (3) Change in Unrealized Depreciation on Investments (3,937) -- -- ------------------------------------------------------------------------------------ Net Realized and Unrealized Gain (Loss) on Investments (3,679) 1 (3) ------------------------------------------------------------------------------------ Increase (Decrease) in Net Assets Resulting from Operations $ (277) $ 4,290 $ 4,270 ====================================================================================
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 43 www.bishopstreetfunds.com Bishop Street Funds -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 2005 (IN THOUSANDS)
Large Cap Growth Fund --------------------------------------------------------------------------------------------------------- 2006 2005 --------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES FROM OPERATIONS: Net Investment Income $ 202 $ 516 Net Realized Gain on Investments 7,825 11,372 Change in Unrealized Depreciation on Investments (5,268) (12,061) --------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets Resulting from Operations 2,759 (173) --------------------------------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS: Net Investment Income: Class I Shares (199) (523) Class A Shares -- (1) --------------------------------------------------------------------------------------------------------- Total Dividends (199) (524) --------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: Class I Shares: Proceeds from Shares Issued 1,753 8,226 Reinvestments of Cash Distributions 171 403 Proceeds from Shares Issued in Connection with Conversion from Class A Shares(1) -- 1,428 Cost of Shares Redeemed (62,233) (91,416) --------------------------------------------------------------------------------------------------------- Total Class I Capital Share Transactions (60,309) (81,359) --------------------------------------------------------------------------------------------------------- Class A Shares: Proceeds from Shares Issued -- 2 Reinvestments of Cash Distributions -- -- Value of Shares Liquidated in Connection with Conversion to Class I Shares(1) -- (1,428) Cost of Shares Redeemed -- (99) --------------------------------------------------------------------------------------------------------- Total Class A Capital Share Transactions -- (1,525) --------------------------------------------------------------------------------------------------------- Net Decrease in Net Assets From Capital Share Transactions (60,309) (82,884) --------------------------------------------------------------------------------------------------------- Total Decrease in Net Assets (57,749) (83,581) --------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of Period 87,715 171,296 --------------------------------------------------------------------------------------------------------- End of Period $ 29,966 $ 87,715 ========================================================================================================= Undistributed Net Investment Income $ 3 $ -- ========================================================================================================= SHARE TRANSACTIONS: Class I Shares: Shares Issued 174 858 Shares Issued in Lieu of Cash Distributions 17 42 Shares Issued in Connection with Conversion from Class A Shares(1) -- 155 Shares Redeemed (6,032) (9,545) --------------------------------------------------------------------------------------------------------- Total Class I Share Transactions (5,841) (8,490) --------------------------------------------------------------------------------------------------------- Class A Shares: Shares Issued -- -- Shares Issued in Lieu of Cash Distributions -- -- Value of Shares Liquidated in Connection with Conversion to Class I Shares(1) -- (156) Shares Redeemed -- (10) --------------------------------------------------------------------------------------------------------- Total Class A Share Transactions -- (166) --------------------------------------------------------------------------------------------------------- Net Decrease in Shares Outstanding from Share Transactions (5,841) (8,656) =========================================================================================================
(1) ON APRIL 29, 2005, CLASS A SHARES OF THE BISHOP STREET LARGE CAP GROWTH FUND WERE CONVERTED TO CLASS I SHARES. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR ADDITIONAL INFORMATION. AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. Bishop Street Funds 44 Bishop Street Funds -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 2005 (IN THOUSANDS)
Strategic Large Cap Core Growth Fund Equity Fund ------------------------------------------------------------------------------------------------------------------------- 2006 2005 2006* ------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES FROM OPERATIONS: Net Investment Income (Loss) $ (88) $ (356) $ 100 Net Realized Gain (Loss) on Investments 2,860 3,839 (193) Change in Unrealized Appreciation (Depreciation) on Investments (5,729) 9,564 (1,612) ------------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets Resulting from Operations (2,957) 13,047 (1,705) ------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Net Investment Income: Class I Shares -- -- (102) Capital Gains: Class I Shares -- (2,019) -- ------------------------------------------------------------------------------------------------------------------------- Total Dividends and Distributions -- (2,019) (102) ------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: Class I Shares: Proceeds from Shares Issued 24,216 46,780 60,808 Reinvestments of Cash Distributions -- 1,500 93 Cost of Shares Redeemed (6,128) (15,135) (54) ------------------------------------------------------------------------------------------------------------------------- Net Increase in Net Assets From Capital Share Transactions 18,088 33,145 60,847 ------------------------------------------------------------------------------------------------------------------------- Total Increase in Net Assets 15,131 44,173 59,040 ------------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of Period 123,341 79,168 -- ------------------------------------------------------------------------------------------------------------------------- End of Period $ 138,472 $ 123,341 $ 59,040 ========================================================================================================================= Accumulated Net Investment Loss/Distributions in excess of net investment income $ (96) $ (8) $ (2) ========================================================================================================================= SHARE TRANSACTIONS: Class I Shares: Shares Issued 1,641 3,544 6,129 Shares Issued in Lieu of Cash Distributions -- 105 10 Shares Redeemed (419) (1,105) (6) ------------------------------------------------------------------------------------------------------------------------- Net Increase in Shares Outstanding from Share Transactions 1,222 2,544 6,133 =========================================================================================================================
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. * COMMENCED OPERATIONS ON MAY 3, 2006. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 45 www.bishopstreetfunds.com Bishop Street Funds -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 2005 (IN THOUSANDS)
High Grade Hawaii Municipal Income Fund Bond Fund --------------------------------------------------------------------------------------------------------------------------------- 2006 2005 2006 2005 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES FROM OPERATIONS: Net Investment Income $ 2,758 $ 5,507 $ 3,402 $ 7,003 Net Realized Gain (Loss) on Investments (211) 880 258 1,417 Change in Unrealized Depreciation on Investments (4,451) (3,598) (3,937) (4,087) --------------------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets Resulting from Operations (1,904) 2,789 (277) 4,333 --------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Net Investment Income: Class I Shares (2,766) (5,502) (2,812) (5,833) Class A Shares -- (3) (585) (1,167) Capital Gains: Class I Shares -- (1,158) -- (1,183) Class A Shares -- -- -- (252) --------------------------------------------------------------------------------------------------------------------------------- Total Dividends and Distributions (2,766) (6,663) (3,397) (8,435) --------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: Class I Shares: Proceeds from Shares Issued 6,853 18,810 6,278 18,692 Reinvestments of Cash Distributions 1,602 3,659 439 1,160 Proceeds from Shares Issued in Connection with Conversion from Class A Shares(1) -- 310 -- -- Cost of Shares Redeemed (10,566) (34,634) (14,634) (19,845) --------------------------------------------------------------------------------------------------------------------------------- Total Class I Capital Share Transactions (2,111) (11,855) (7,917) 7 --------------------------------------------------------------------------------------------------------------------------------- Class A Shares: Proceeds from Shares Issued -- 96 1,006 2,724 Reinvestments of Cash Distributions -- 1 237 652 Value of Shares Liquidated in Connection with Conversion to Class I Shares(1) -- (310) -- -- Cost of Shares Redeemed -- (14) (1,360) (1,612) --------------------------------------------------------------------------------------------------------------------------------- Total Class A Capital Share Transactions -- (227) (117) 1,764 --------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets from Capital Share Transactions (2,111) (12,082) (8,034) 1,771 --------------------------------------------------------------------------------------------------------------------------------- Total Decrease in Net Assets (6,781) (15,956) (11,708) (2,331) --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of Period 141,439 157,395 176,728 179,059 --------------------------------------------------------------------------------------------------------------------------------- End of Period $ 134,658 $ 141,439 $ 165,020 $ 176,728 ================================================================================================================================= Undistributed Net Investment Income $ -- $ 9 $ 53 $ 48 ================================================================================================================================= SHARE TRANSACTIONS: Class I Shares: Shares Issued 698 1,834 590 1,710 Shares Issued in Lieu of Cash Distributions 163 358 41 107 Shares Issued in Connection with Conversion from Class A Shares(1) -- 30 -- -- Shares Redeemed (1,072) (3,370) (1,375) (1,813) --------------------------------------------------------------------------------------------------------------------------------- Total Class I Share Transactions (211) (1,148) (744) 4 --------------------------------------------------------------------------------------------------------------------------------- Class A Shares: Shares Issued -- 10 95 249 Shares Issued in Lieu of Cash Distributions -- -- 22 60 Value of Shares Liquidated in Connection with Conversion to Class I Shares(1) -- (30) -- -- Shares Redeemed -- (2) (128) (149) --------------------------------------------------------------------------------------------------------------------------------- Total Class A Share Transactions -- (22) (11) 160 --------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares Outstanding from Share Transactions (211) (1,170) (755) 164 =================================================================================================================================
(1) ON APRIL 29, 2005, CLASS A SHARES OF THE BISHOP STREET HIGH GRADE INCOME FUND WERE CONVERTED TO CLASS I SHARES. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR ADDITIONAL INFORMATION. AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. Bishop Street Funds 46 Bishop Street Funds -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 2005 (IN THOUSANDS)
Money Market Treasury Money Fund Market Fund --------------------------------------------------------------------------------------------------------------------------------- 2006 2005 2006 2005 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES FROM OPERATIONS: Net Investment Income $ 4,289 $ 5,595 $ 4,273 $ 6,168 Net Realized Gain (Loss) on Investments 1 (1) (3) (7) --------------------------------------------------------------------------------------------------------------------------------- Increase in Net Assets Resulting from Operations 4,290 5,594 4,270 6,161 --------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS: Net Investment Income: Class I Shares (3,537) (4,936) (4,269) (6,178) Class A Shares (749) (663) -- -- --------------------------------------------------------------------------------------------------------------------------------- Total Dividends (4,286) (5,599) (4,269) (6,178) --------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (ALL AT $1.00 PER SHARE): Class I Shares: Proceeds from Shares Issued 226,959 456,536 238,949 554,900 Reinvestments of Cash Distributions 130 192 8 13 Cost of Shares Redeemed (230,489) (454,204) (249,281) (539,435) --------------------------------------------------------------------------------------------------------------------------------- Total Class I Capital Share Transactions (3,400) 2,524 (10,324) 15,478 --------------------------------------------------------------------------------------------------------------------------------- Class A Shares: Proceeds from Shares Issued 70,680 157,534 -- -- Reinvestments of Cash Distributions 751 646 -- -- Cost of Shares Redeemed (65,949) (140,448) -- -- --------------------------------------------------------------------------------------------------------------------------------- Total Class A Capital Share Transactions 5,482 17,732 -- -- --------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets from Capital Share Transactions 2,082 20,256 (10,324) 15,478 --------------------------------------------------------------------------------------------------------------------------------- Total Increase (Decrease) in Net Assets 2,086 20,251 (10,323) 15,461 --------------------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of Period 205,985 185,734 223,614 208,153 --------------------------------------------------------------------------------------------------------------------------------- End of Period $ 208,071 $ 205,985 $ 213,291 $ 223,614 ================================================================================================================================= Undistributed Net Investment Income/Distributions in excess of net investment income $ (1) $ (4) $ 4 $ -- =================================================================================================================================
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 47 www.bishopstreetfunds.com Bishop Street Funds -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (UNAUDITED) AND THE PERIODS ENDED DECEMBER 31,
DIVIDENDS AND INVESTMENT ACTIVITIES DISTRIBUTIONS FROM ------------------------ ------------------------ NET REALIZED AND TOTAL NET ASSET NET UNREALIZED INVESTMENT TOTAL VALUE, INVESTMENT GAIN ACTIVITIES NET DIVIDENDS BEGINNING INCOME (LOSS) ON FROM INVESTMENT CAPITAL AND OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS --------- ---------- ----------- ---------- ---------- -------- ------------- --------------------- LARGE CAP GROWTH FUND --------------------- CLASS I SHARES: 2006(1) $ 9.89 $ 0.03 $ 0.02 $ 0.05 $ (0.04) $ -- $ (0.04) 2005(1) 9.78 0.04 0.11 0.15 (0.04) -- (0.04) 2004(1) 9.49 0.06 0.29 0.35 (0.06) -- (0.06) 2003(1) 7.53 0.04 1.96 2.00 (0.04) -- (0.04) 2002(1) 10.08 0.02 (2.55) (2.53) (0.02) -- (0.02) 2001 13.55 -- (3.47) (3.47) -- -- -- --------------------- STRATEGIC GROWTH FUND --------------------- CLASS I SHARES: 2006(1) $ 14.35 $ (0.01) $ (0.24) $ (0.25) $ -- $ -- $ -- 2005(1) 13.08 (0.05) 1.56 1.51 -- (0.24) (0.24) 2004(1) 11.93 (0.05) 1.20 1.15 -- -- -- 2003(1) 8.64 (0.06) 3.35 3.29 -- -- -- 2002(2) 10.00 (0.03) (1.33) (1.36) -- -- -- -------------------------- LARGE CAP CORE EQUITY FUND -------------------------- CLASS I SHARES: 2006(1)(3) $ 10.00 $ 0.02 $ (0.37) $ (0.35) $ (0.02) $ -- $ (0.02) ---------------------- HIGH GRADE INCOME FUND ---------------------- CLASS I SHARES: 2006(1) $ 10.06 $ 0.20 $ (0.34) $ (0.14) $ (0.20) $ -- $ (0.20) 2005(1) 10.33 0.39 (0.19) 0.20 (0.39) (0.08) (0.47) 2004(1) 10.40 0.38 (0.03) 0.35 (0.38) (0.04) (0.42) 2003(1) 10.67 0.42 (0.07) 0.35 (0.42) (0.20) (0.62) 2002 10.00 0.46 0.67 1.13 (0.46) -- (0.46) 2001 9.81 0.50 0.19 0.69 (0.50) -- (0.50)
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. FEE WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD HAVE BEEN LOWER. * ANNUALIZED (1) PER SHARE NET INVESTMENT INCOME AMOUNT CALCULATED USING AVERAGE SHARES. (2) COMMENCED OPERATIONS ON JULY 1, 2002. (3) COMMENCED OPERATIONS ON MAY 3, 2006. AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. Bishop Street Funds 48 --------------------------------------------------------------------------------
RATIO OF RATIO OF EXPENSES NET NET RATIO OF TO AVERAGE INVESTMENT NET ASSET ASSETS, EXPENSES NET ASSETS INCOME VALUE, END OF TO AVERAGE EXCLUDING (LOSS) PORTFOLIO END OF TOTAL PERIOD NET FEE TO AVERAGE TURNOVER PERIOD RETURN+ (000) ASSETS WAIVERS NET ASSETS RATE --------- ------- --------- ---------- ---------- ---------- --------- --------------------- LARGE CAP GROWTH FUND --------------------- CLASS I SHARES: 2006(1) $ 9.90 0.47% $ 29,966 1.00%* 1.35%* 0.60%* 24% 2005(1) 9.89 1.59 87,715 1.00 1.31 0.43 40 2004(1) 9.78 3.72 169,685 1.00 1.30 0.67 42 2003(1) 9.49 26.62 156,381 1.00 1.28 0.48 43 2002(1) 7.53 (25.06) 129,981 1.00 1.27 0.24 60 2001 10.08 (25.61) 216,412 1.00 1.27 -- 86 --------------------- STRATEGIC GROWTH FUND --------------------- CLASS I SHARES: 2006(1) $ 14.10 (1.74)% $ 138,472 1.07%* 1.30%* (0.13)%* 21% 2005(1) 14.35 11.52 123,341 1.07 1.31 (0.35) 55 2004(1) 13.08 9.64 79,168 1.05 1.29 (0.38) 59 2003(1) 11.93 38.08 46,845 1.17 1.41 (0.57) 59 2002(2) 8.64 (13.60) 19,899 1.25* 1.67* (0.61)* 50 -------------------------- LARGE CAP CORE EQUITY FUND -------------------------- CLASS I SHARES: 2006(1)(3) $ 9.63 (3.53)% $ 59,040 1.05%* 1.36%* 1.22%* 15% ---------------------- HIGH GRADE INCOME FUND ---------------------- CLASS I SHARES: 2006(1) $ 9.72 (1.41)% $ 134,658 0.76%* 1.13%* 4.06%* 20% 2005(1) 10.06 2.00 141,439 0.76 1.13 3.82 45 2004(1) 10.33 3.41 157,170 0.76 1.11 3.68 45 2003(1) 10.40 3.31 134,845 0.76 1.10 3.91 48 2002 10.67 11.54 138,516 0.76 1.09 4.45 19 2001 10.00 7.16 124,416 0.76 1.09 5.02 89
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 49 www.bishopstreetfunds.com Bishop Street Funds -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (UNAUDITED) AND THE PERIODS ENDED DECEMBER 31,
DIVIDENDS AND INVESTMENT ACTIVITIES DISTRIBUTIONS FROM ------------------------- ------------------------ NET REALIZED AND TOTAL NET ASSET UNREALIZED INVESTMENT TOTAL VALUE, NET GAIN ACTIVITIES NET DIVIDENDS BEGINNING INVESTMENT (LOSS) ON FROM INVESTMENT CAPITAL AND OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS --------- ---------- ----------- ---------- ---------- --------- ------------- -------------------------- HAWAII MUNICIPAL BOND FUND -------------------------- CLASS I SHARES: 2006(2) $ 10.77 $ 0.21 $ (0.23) $ (0.02) $ (0.21) $ -- $ (0.21) 2005(2) 11.02 0.43 (0.16) 0.27 (0.43) (0.09) (0.52) 2004(2) 11.21 0.44 (0.07) 0.37 (0.44) (0.12) (0.56) 2003(2) 11.20 0.45 0.13 0.58 (0.45) (0.12) (0.57) 2002 10.66 0.47 0.57 1.04 (0.46) (0.04) (0.50) 2001 10.70 0.49 (0.04) 0.45 (0.49) -- (0.49) CLASS A SHARES: 2006(2) $ 10.77 $ 0.20 $ (0.23) $ (0.03) $ (0.20) $ -- $ (0.20) 2005(2) 11.02 0.41 (0.16) 0.25 (0.41) (0.09) (0.50) 2004(2) 11.21 0.41 (0.07) 0.34 (0.41) (0.12) (0.53) 2003(2) 11.20 0.42 0.13 0.55 (0.42) (0.12) (0.54) 2002 10.66 0.44 0.58 1.02 (0.44) (0.04) (0.48) 2001 10.69 0.46 (0.02) 0.44 (0.47) -- (0.47) ----------------- MONEY MARKET FUND ----------------- CLASS I SHARES: 2006(2) $ 1.00 $ 0.02 $ -- $ 0.02 $ (0.02) $ -- $ (0.02) 2005(2) 1.00 0.03 -- 0.03 (0.03) -- (0.03) 2004(2) 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2003(2) 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2002 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2001 1.00 0.04 -- 0.04 (0.04) -- (0.04) CLASS A SHARES: 2006(2) $ 1.00 $ 0.02 $ -- $ 0.02 $ (0.02) $ -- $ (0.02) 2005(2) 1.00 0.03 -- 0.03 (0.03) -- (0.03) 2004(2) 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2003(2) 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2002 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2001(1) 1.00 0.02 -- 0.02 (0.02) -- (0.02) -------------------------- TREASURY MONEY MARKET FUND -------------------------- CLASS I SHARES: 2006(2) $ 1.00 $ 0.02 $ -- $ 0.02 $ (0.02) $ -- $ (0.02) 005(2) 1.00 0.03 -- 0.03 (0.03) -- (0.03) 2004(2) 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2003(2) 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2002 1.00 0.01 -- 0.01 (0.01) -- (0.01) 2001 1.00 0.04 -- 0.04 (0.04) -- (0.04)
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED. TOTAL RETURN DOES NOT REFLECT THE SALES CHARGE ON CLASS A SHARES. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. FEE WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD HAVE BEEN LOWER. * ANNUALIZED (1) COMMENCED OPERATIONS ON MAY 1, 2001. (2) PER SHARE NET INVESTMENT INCOME AMOUNT CALCULATED USING AVERAGE SHARES. AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. Bishop Street Funds 50 --------------------------------------------------------------------------------
RATIO OF EXPENSES RATIO OF NET RATIO OF TO AVERAGE NET NET ASSET ASSETS, EXPENSES NET ASSETS INVESTMENT VALUE, END OF TO AVERAGE EXCLUDING INCOME PORTFOLIO END OF TOTAL PERIOD NET FEE TO AVERAGE TURNOVER PERIOD RETURN+ (000) ASSETS WAIVERS NET ASSETS RATE --------- --------- --------- ---------- ---------- ---------- --------- -------------------------- HAWAII MUNICIPAL BOND FUND -------------------------- CLASS I SHARES: 2006(2) $ 10.54 (0.16)% $ 134,289 0.55%* 0.95%* 4.03%* 22% 2005(2) 10.77 2.51 145,213 0.55 0.93 3.97 41 2004(2) 11.02 3.36 148,575 0.55 0.92 3.97 40 2003(2) 11.21 5.27 150,373 0.45 0.91 4.01 38 2002 11.20 10.02 150,287 0.45 0.89 4.23 26 2001 10.66 4.24 137,206 0.45 0.88 4.54 4 CLASS A SHARES: 2006(2) $ 10.54 (0.28)% $ 30,731 0.80%* 1.20%* 3.78%* 22% 2005(2) 10.77 2.25 31,515 0.80 1.18 3.72 41 2004(2) 11.02 3.10 30,484 0.80 1.17 3.72 40 2003(2) 11.21 5.01 30,975 0.70 1.16 3.76 38 2002 11.20 9.75 33,456 0.70 1.14 3.98 26 2001 10.66 4.13 30,499 0.70 1.13 4.29 4 ----------------- MONEY MARKET FUND ----------------- CLASS I SHARES: 2006(2) $ 1.00 2.11% $ 167,058 0.50%* 0.88%* 4.22%* n/a 2005(2) 1.00 2.78 170,455 0.50 0.87 2.73 n/a 2004(2) 1.00 0.92 167,910 0.50 0.84 0.90 n/a 2003(2) 1.00 0.76 182,166 0.50 0.83 0.76 n/a 2002 1.00 1.34 238,498 0.50 0.81 1.33 n/a 2001 1.00 3.86 309,935 0.50 0.82 3.71 n/a CLASS A SHARES: 2006(2) $ 1.00 1.98% $ 41,013 0.75%* 1.12%* 3.98%* n/a 2005(2) 1.00 2.53 35,531 0.75 1.12 2.60 n/a 2004(2) 1.00 0.67 17,824 0.75 1.09 0.65 n/a 2003(2) 1.00 0.50 17,440 0.75 1.08 0.41 n/a 2002 1.00 1.08 188 0.75 1.06 1.10 n/a 2001(1) 1.00 1.96 500 0.75* 1.07* 2.66* n/a -------------------------- TREASURY MONEY MARKET FUND -------------------------- CLASS I SHARES: 2006(2) $ 1.00 2.01% $ 213,291 0.44%* 0.88%* 4.03%* n/a 005(2) 1.00 2.62 223,614 0.44 0.87 2.61 n/a 2004(2) 1.00 0.91 208,153 0.44 0.84 0.89 n/a 2003(2) 1.00 0.74 270,365 0.44 0.83 0.75 n/a 2002 1.00 1.29 331,678 0.44 0.83 1.28 n/a 2001 1.00 3.68 372,422 0.44 0.85 3.68 n/a
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. June 30, 2006 51 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION The Bishop Street Funds (the "Trust") are registered under the Investment Company Act of 1940, as amended, as an open-end, management investment company. The Bishop Street Funds consist of a series of seven funds (each a Fund, collectively the "Funds") which includes the Large Cap Growth Fund, Strategic Growth Fund, Large Cap Core Equity Fund, High Grade Income Fund, Hawaii Municipal Bond Fund, Money Market Fund and the Treasury Money Market Fund. Class A Shares of the Hawaii Municipal Bond Fund are subject to a sales load as disclosed in the prospectus. The assets of each Fund are segregated, and a shareholder's interest is limited to the Fund in which shares are held. The Funds' prospectus provides a description of each Fund's investment objectives, policies and strategies. Prior to April 29, 2005, the Large Cap Growth Fund and High Grade Income Fund offered Class A Shares and Class I Shares. Effective April 29, 2005, Class A Shares were fully liquidated and converted as Class I Shares. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Trust. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. SECURITY VALUATION The Funds' investments in equity securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ) are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded, or, if there is no such reported sale, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. Debt securities are priced based upon valuations provided by independent, third-party pricing agents, if available. Such values generally reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which approximates market value. Prices for most securities held in the Funds are provided daily by recognized Bishop Street Funds 52 (UNAUDITED) -------------------------------------------------------------------------------- independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Funds seek to obtain a bid price from at least one independent broker. Securities for which market prices are not "readily available" are valued in accordance with Fair Value Procedures established by the Funds' Board of Trustees (the "Board"). The Funds' Fair Value Procedures are implemented through a Fair Value Pricing Committee (the "Committee") designated by the Funds' Board. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the security's trading has been halted or suspended; the security has been de-listed from a national exchange; the security's primary trading market is temporarily closed at a time when under normal conditions it would be open; or the security's primary pricing source is not able or willing to provide a price. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee. Investment securities held by the Money Market and Treasury Money Market Funds are stated at amortized cost, which approximates market value. Under this valuation method, purchase discounts and premiums are accreted and amortized ratably to maturity and are included in interest income. SECURITY TRANSACTIONS AND INVESTMENT INCOME Security transactions are accounted for on trade date. Costs used in determining net realized capital gains and losses on the sale of securities are on the basis of specific identification. Interest income is recorded on the accrual basis; dividend income is recorded on ex-dividend date. Discounts and premiums are accreted or amortized over the life of each security and are recorded as interest income. The Large Cap Growth, Strategic Growth, Large Cap Core Equity, High Grade Income and Hawaii Municipal Bond Funds use the scientific interest method, which approximates the effective interest method. The Money Market and Treasury Money Market Funds use the straight line method. REPURCHASE AGREEMENTS Securities pledged as collateral for repurchase agreements are held by the custodian bank until the respective agreements are repurchased. The Funds may also invest in tri-party repurchase agreements. Securities held as collateral for tri-party repurchase agreements are maintained in a segregated account by the broker's custodian bank. Provisions of repurchase agreements and procedures adopted by the Adviser (as defined in Note 3) monitor that the market value of the collateral is sufficient in the event of default by the counterparty. If the counterparty defaults and the value of the collateral declines or if the counterparty enters an insolvency proceeding, realization of the collateral by the Fund may be delayed or limited. June 30, 2006 53 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- CLASSES Class-specific expenses are borne by that class of shares. Income, realized and unrealized gains/losses and non class-specific expenses are allocated to the respective class on the basis of relative daily net assets. EXPENSES Expenses that are directly related to one of the Funds are charged directly to that Fund. Other operating expenses of the Funds are prorated to the Funds on the basis of relative net assets. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income are declared daily and paid on a monthly basis for the High Grade Income, Hawaii Municipal Bond, Money Market and Treasury Money Market Funds. The Large Cap Growth, Strategic Growth and Large Cap Core Equity Funds declare and pay dividends from any net investment income, if available, on a quarterly basis. Any net realized capital gains will be distributed at least annually for all Funds. Distributions to shareholders are recorded on the ex-dividend date. ILLIQUID SECURITIES Valuations of illiquid securities may differ significantly from the values that would have been used had an active market value for these securities existed. At June 30, 2006, there were no illiquid securities held by the Funds. CASH OVERDRAFT CHARGES Per the terms of an informal agreement with Union Bank of California, N.A., the custodian of the Funds, if a fund has a cash overdraft on a given day, it will be assessed an overdraft charge of 110% of the current Fed Funds rate. Cash overdraft charges are included in miscellaneous expenses on the Statement of Operations. 3. INVESTMENT ADVISORY AND CUSTODIAN AGREEMENT Investment advisory services are provided to the Funds by Bishop Street Capital Management (the "Adviser"), a registered adviser and wholly-owned subsidiary of First Hawaiian Bank. First Hawaiian Bank is a subsidiary of Banc West Corporation, itself a subsidiary of BNP Paribas. The Adviser is entitled to receive an annual fee of 0.74% of the average daily net assets of the Large Cap Growth, Strategic Growth and the Large Cap Core Equity Funds, 0.55% of the average daily net assets of the High Grade Income Fund, 0.35% of the average daily net assets of the Hawaii Municipal Bond Fund, and 0.30% of the average daily net assets of the Money Market and Treasury Money Market Funds (collectively, the "Money Market Funds"). The Adviser has voluntarily agreed to waive a portion of its advisory fee to the extent necessary to keep operating expenses at or below certain percentages of the respective average daily net assets. The voluntary expense limitations are as follows: Large Cap Growth Fund (Class I) 1.00%, Strategic Growth Fund (Class I) 1.25%, Large Cap Core Equity Fund (Class I) 1.05%, High Grade Income Fund (Class I) 0.76%, Hawaii Municipal Bond Fund (Class I) 0.55%, Hawaii Municipal Bond Fund (Class A) Bishop Street Funds 54 (UNAUDITED) -------------------------------------------------------------------------------- 0.80%, Money Market Fund (Class I) 0.50%, Money Market Fund (Class A) 0.75% and Treasury Money Market Fund (Class I) 0.44%. BNP Paribas Asset Management, Inc. ("BNP PAM") serves as the investment sub-adviser for the Strategic Growth Fund, pursuant to a sub-adviser agreement. BNP PAM is entitled to receive from the Adviser a fee, computed daily and paid monthly, at the annual rate of 0.37% of the average daily net assets of the Strategic Growth Fund. Fischer, Francis, Trees & Watts ("FFTW") serves as the investment sub-adviser for the Money Market Funds, pursuant to a sub-adviser agreement dated July 1, 2005, as approved by shareholders on August 15, 2005. FFTW is entitled to receive from the Adviser a fee, computed daily and paid monthly, at the annual rate of 0.060% of the average daily net assets of the Money Market Funds up to $500 million and 0.020% of the average daily net assets of the Money Market Funds in excess of $500 million. Union Bank of California, N.A. acts as custodian (the "Custodian") for the Funds. The Custodian plays no role in determining the investment policies of the Funds or which securities are to be purchased or sold by the Funds. 4. ADMINISTRATIVE, TRANSFER AGENT AND DISTRIBUTION SERVICES Pursuant to an administration agreement dated January 27, 1995, (the "Agreement") SEI Investments Global Funds Services ("GFS"), a wholly owned subsidiary of SEI Investments Company, acts as the Trust's Administrator. Under the terms of the Agreement, GFS is entitled to receive an annual fee of 0.20% of the average daily net assets of the Funds. GFS has voluntarily agreed to waive a portion of its administrative fee to the extent necessary to keep operating expenses at or below certain percentages of the respective average daily net assets. Pursuant to an agreement dated January 30, 1995, DST Systems, Inc. ("DST") acts as the Transfer Agent of the Trust. As such, DST provides transfer agency, dividend disbursing and shareholder services to the Trust. SEI Investments Distribution Co. ("SIDCO"), a wholly owned subsidiary of SEI Investments Company, acts as the Trust's Distributor pursuant to a distribution agreement dated June 10, 1999. The Funds have adopted a Distribution Plan (the "Plan") on behalf of Class A Shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The Plan provides that Class A Shares will bear the cost of their distribution expenses. SIDCO, as compensation for its services under the Plan, receives a distribution fee, computed daily and payable monthly, of 0.25% of the average daily net assets attributable to each Fund's Class A Shares. The Trust has adopted and entered into a shareholder service plan and agreement with SIDCO. Each Fund pays to SIDCO a shareholder servicing fee at an annual rate of 0.25% of the average daily net asset value of all shares of each Fund, which is computed daily and paid monthly. Under the shareholder service plan, SIDCO may perform, or may compensate other service providers for performing various shareholder and administrative services. June 30, 2006 55 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- SIDCO may also retain as profit any difference between the fee it receives and amount it pays to third parties. For the period, SIDCO paid the entire amount of fees received under the shareholder service plan to First Hawaiian Bank, the Parent Company of Bishop Street Capital Management, for shareholder services performed for the Funds. SIDCO has voluntarily agreed to waive a portion of its shareholder servicing fee to the extent necessary to keep operating expenses at or below certain percentages of the respective average daily net assets. Certain ministerial officers of the Trust are also ministerial officers of the Administrator. Such officers are paid no fees by the Trust. 5. SECURITIES LENDING Each Fund may lend portfolio securities to brokers, dealers and other financial organizations that meet capital and other credit requirements or other criteria established by the Board. These loans may not exceed 33 1/3% of the total asset value of the Fund (including the loan collateral). No Fund will lend portfolio securities to its investment adviser, sub-adviser or their affiliates unless it has applied for and received specific authority to do so from the SEC. Loans of portfolio securities will be fully collateralized by cash, letters of credit or U.S. Government securities, and the collateral will be maintained in an amount equal to at least 100% of the current market value of the loaned securities by marking to market daily, although the borrower will be required to deliver collateral of 102% of the market value of borrowed securities. Although the risk of lending is mitigated by the collateral, a Fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return them. Securities lending on the Statement of Operations is net of commissions to the security lending agent. 6. INVESTMENT TRANSACTIONS The cost of security purchases and the proceeds from the sale and maturities of securities, other than short-term investments for the six-month period ended June 30, 2006 are presented below for the Funds.
Large Cap Strategic Large High Grade Hawaii Growth Growth Cap Core Income Municipal Fund Fund Equity Fund Fund Bond Fund (000) (000) (000) (000) (000) --------- --------- ----------- ---------- --------- Purchases U.S. Government Securities $ -- $ -- $ -- $ 15,630 $ -- Other 16,554 47,113 67,574 9,258 37,417 Sales and Maturities U.S. Government Securities $ -- $ -- $ -- $ 15,478 $ -- Other 76,341 28,692 7,988 9,043 45,809
Bishop Street Funds 56 (UNAUDITED) -------------------------------------------------------------------------------- 7. FEDERAL TAX INFORMATION It is each Fund's intention to continue to qualify as a regulated investment company for federal income tax purposes under Subchapter M of the Internal Revenue Code, as amended, and to distribute substantially all of its taxable income and net capital gains. Accordingly, no provision for federal income taxes is required. The timing and characterization of certain income and capital gains distributions are determined annually in accordance with Federal tax regulations which may differ from accounting principles generally accepted in the United States of America. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for the reporting period may differ from distributions during such period. These book/tax differences may be temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain, as appropriate, in the period that the differences arise. The tax character of dividends and distributions declared during the years ended December 31, 2005 and December 31, 2004 were as follows: Ordinary Tax Exempt Long-Term Income Income Capital Gain Total (000) (000) (000) (000) -------- ---------- ------------ --------- Large Cap Growth Fund 2005 $ 524 $ -- $ -- $ 524 2004 1,049 -- -- 1,049 Strategic Growth Fund 2005 $ -- $ -- $ 2,019 $ 2,019 2004 -- -- -- -- High Grade Income Fund 2005 $ 6,284 $ -- $ 379 $ 6,663 2004 5,298 -- 547 5,845 Hawaii Municipal Bond Fund 2005 $ 24 $ 7,000 $ 1,411 $ 8,435 2004 71 7,003 1,786 8,860 June 30, 2006 57 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- Ordinary Tax Exempt Long-Term Income Income Capital Gain Total (000) (000) (000) (000) -------- ---------- ------------ -------- Money Market Fund 2005 $ 5,599 $ -- $ -- $ 5,599 2004 2,030 -- -- 2,030 Treasury Money Market Fund 2005 $ 6,178 $ -- $ -- $ 6,178 2004 2,173 -- -- 2,173 As of December 31, 2005, the components of Distributable Earnings (Accumulated Losses) on a tax basis were as follows:
Treasury Large Cap Strategic High Grade Hawaii Money Money Growth Growth Income Municipal Market Market Fund Fund Fund Bond Fund Fund Fund (000) (000) (000) (000) (000) (000) ---------- ---------- ------------ ---------- ---------- ---------- Undistributed (Distributions in excess of) net investment income $ -- $ -- $ 9 $ -- $ (4) $ -- Undistributed tax exempt income -- -- -- 2 -- -- Undistributed long-term capital gain -- 2,042 -- 7 -- -- Capital loss carryforwards (52,057) -- -- -- (23) (54) Post-October Losses -- -- (44) -- -- -- Other Temporary Differences -- (8) -- -- -- -- Unrealized appreciation 6,408 22,858 808 5,523 -- -- -------- --------- ----------- -------- ------- ------- Total Distributable Earnings (Accumulated Losses) $ (45,649) $ 24,892 $ 773 $ 5,532 $ (27) $ (54) ========= ========= =========== ======== ======= =======
Bishop Street Funds 58 (UNAUDITED) -------------------------------------------------------------------------------- Post-October losses represent losses realized on investment transactions from November 1, 2005 through December 31, 2005 that, in accordance with Federal income tax regulations the Funds have elected to defer and treat as having arisen in the following fiscal year. For Federal income tax purposes, capital loss carryforwards represent realized losses of the Funds that may be carried forward for a maximum period of eight years and applied against future capital gains as follows: Treasury Large Cap Money Money Growth Market Market Fund Fund Fund (000) (000) (000) --------- -------- --------- Dec. 2008 $ -- $ 2 $ -- Dec. 2009 24,675 18 -- Dec. 2010 25,686 -- -- Dec. 2011 1,696 -- -- Dec. 2012 -- -- 27 Dec. 2013 -- 3 27 -------- -------- --------- Total $ 52,057 $ 23 $ 54 During the year ended December 31, 2005 the Large Cap Growth Fund, utilized capital loss carryforwards of $11,595,848, to offset realized capital gains. The aggregate gross unrealized appreciation and depreciation of securities held by the Large Cap Growth, Strategic Growth, Large Cap Core Equity, High Grade Income, and Hawaii Municipal Bond Funds for Federal income tax purposes at June 30, 2006 were as follows:
Large Cap Strategic Large Cap High Grade Hawaii Growth Growth Core Income Municipal Fund Fund Equity Fund Fund Bond Fund (000) (000) (000) (000) (000) --------- ---------- ------------ ---------- ---------- Federal Tax Cost $ 36,343 $ 121,771 $ 61,502 $ 165,398 $ 161,524 --------- --------- ----------- ---------- --------- Gross Unrealized Appreciation 2,942 22,185 929 844 3,033 Gross Unrealized Depreciation (1,695) (4,804) (2,654) (4,430) (1,442) --------- --------- ----------- ---------- --------- Net Unrealized Appreciation (Depreciation) $ 1,247 $ 17,381 $ (1,725) $ (3,586) $ 1,591 ========= ========= =========== ========== =========
June 30, 2006 59 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- 8. RISK The Hawaii Municipal Bond Fund invests primarily in debt instruments in the state of Hawaii. The issuers' ability to meet their obligations may be affected by economic developments in that state. In the normal course of business, the Funds enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be established; however, based on experience, the risk of loss from such claim is considered remote. 9. OTHER At June 30, 2006, the percentage of total shares outstanding held by shareholders for each Fund, which comprised of an omnibus account that was held on behalf of several individual shareholders, was as follows: Number of % of Outstanding Shareholders Shares ------------ ---------------- Large Cap Growth Fund, Class I Shares 3 81.97% Strategic Growth Fund, Class I Shares 2 91.72 Large Cap Core Equity Fund, Class I Shares 1 90.99 High Grade Income Fund, Class I Shares 2 86.90 Hawaii Municipal Bond Fund, Class I Shares 1 83.47 Hawaii Municipal Bond Fund, Class A Shares 1 12.97 Money Market Fund, Class I Shares 1 96.21 Money Market Fund, Class A Shares 1 99.94 Treasury Money Market Fund, Class I Shares 1 99.81 10. SUBSEQUENT EVENT On July 14, 2006, the Trust's Board of Trustees approved the closing and liquidation of the Bishop Street Large Cap Growth Fund. The Fund is expected to cease operations and make a liquidating distribution to shareholders on or about September 29, 2006. Bishop Street Funds 60 Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- DISCLOSURE OF FUND EXPENSES All mutual funds have operating expenses. As a shareholder of a mutual fund, your investment is affected by these ongoing costs, which include (among others) costs for portfolio management, administrative services, and shareholder reports like this one. It is important for you to understand the impact of these costs on your investment returns. Operating expenses such as these are deducted from a mutual fund's gross income and directly reduce its final investment return. These expenses are expressed as a percentage of the mutual fund's average net assets; this percentage is known as the mutual fund's expense ratio. The following examples use the expense ratio and are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The table on the next page illustrates your Fund's costs in two ways: o ACTUAL FUND RETURN. This section helps you to estimate the actual expenses after fee waivers that your Fund incurred over the period. The "Expenses Paid During Period" column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the "Ending Account Value" number is derived from deducting that expense cost from the Fund's gross investment return. You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over that period. Simply divide your actual account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by the number shown for your Fund under "Expenses Paid During Period." o HYPOTHETICAL 5% RETURN. This section helps you compare your Fund's costs with those of other mutual funds. It assumes that the Fund had an annual 5% return before expenses during the year, but that the expense ratio (Column 3) for the period is unchanged. This example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to make this 5% calculation. You can assess your Fund's comparative cost by comparing the hypothetical result for your Fund in the "Expenses Paid During Period" column with those that appear in the same charts in the shareholder reports for other funds. NOTE: Because the return is set at 5% for comparison purposes -- NOT your Fund's actual return -- the account values shown may not apply to your specific investment. June 30, 2006 61 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) --------------------------------------------------------------------------------
------------------------------------------------------------------------------------------ Beginning Ending Expenses Account Account Annualized Paid Value Value Expense During 1/1/06 6/30/06 Ratios Period* ------------------------------------------------------------------------------------------ LARGE CAP GROWTH FUND -- CLASS I ------------------------------------------------------------------------------------------ ACTUAL FUND RETURN $1,000.00 $1,004.70 1.00% $4.97 HYPOTHETICAL 5% RETURN 1,000.00 1,019.84 1.00 5.01 ------------------------------------------------------------------------------------------ STRATEGIC GROWTH FUND -- CLASS I ------------------------------------------------------------------------------------------ ACTUAL FUND RETURN $1,000.00 $ 982.60 1.07% $5.26 HYPOTHETICAL 5% RETURN 1,000.00 1,019.49 1.07 5.36 ------------------------------------------------------------------------------------------ LARGE CAP CORE EQUITY FUND -- CLASS I ------------------------------------------------------------------------------------------ ACTUAL FUND RETURN** $1,000.00 $ 964.70 1.05% $1.61 HYPOTHETICAL 5% RETURN 1,000.00 1,019.59 1.05 5.26 ------------------------------------------------------------------------------------------ HIGH GRADE INCOME FUND -- CLASS I ------------------------------------------------------------------------------------------ ACTUAL FUND RETURN $1,000.00 $ 985.90 0.76% $3.74 HYPOTHETICAL 5% RETURN 1,000.00 1,021.03 0.76 3.81 ------------------------------------------------------------------------------------------ HAWAII MUNICIPAL BOND FUND -- CLASS I ------------------------------------------------------------------------------------------ ACTUAL FUND RETURN $1,000.00 $ 998.40 0.55% $2.73 HYPOTHETICAL 5% RETURN 1,000.00 1,022.07 0.55 2.76 ------------------------------------------------------------------------------------------ HAWAII MUNICIPAL BOND FUND -- CLASS A ------------------------------------------------------------------------------------------ ACTUAL FUND RETURN $1,000.00 $ 997.20 0.80% $3.96 HYPOTHETICAL 5% RETURN 1,000.00 1,020.83 0.80 4.01 ------------------------------------------------------------------------------------------ MONEY MARKET FUND -- CLASS I ------------------------------------------------------------------------------------------ ACTUAL FUND RETURN $1,000.00 $1,021.10 0.50% $2.51 HYPOTHETICAL 5% RETURN 1,000.00 1,022.32 0.50 2.51 ------------------------------------------------------------------------------------------ MONEY MARKET FUND -- CLASS A ------------------------------------------------------------------------------------------ ACTUAL FUND RETURN $1,000.00 $1,019.80 0.75% $3.76 HYPOTHETICAL 5% RETURN 1,000.00 1,021.08 0.75 3.76 ------------------------------------------------------------------------------------------ TREASURY MONEY MARKET FUND -- CLASS I ------------------------------------------------------------------------------------------ ACTUAL FUND RETURN $1,000.00 $1,020.10 0.44% $2.20 HYPOTHETICAL 5% RETURN 1,000.00 1,022.61 0.44 2.21 ------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). ** Fund commenced operations on May 3, 2006. Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 58/365. Bishop Street Funds 62 Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS BOARD CONSIDERATION AND APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS. The annual approval of the investment advisory agreement with Bishop Street Capital Management (the "Adviser") and the sub-advisory agreement with BNP Paribas Asset Management, Inc. ("BNP PAM") must be made by: (i) the vote of the Trustees or a vote of the shareholders of the relevant Fund, as applicable; and (ii) the vote of a majority of the Trustees who are not parties to the agreements or "interested persons" of any party thereto, cast in person at a meeting called for the purpose of voting on such approval. Each year the Board of Trustees calls and holds a meeting to decide whether to renew the agreements for the upcoming year. In preparation for such meeting, the Board requests and reviews a wide variety of information. The Trustees use this information to help them decide whether to renew an agreement for another year. In preparation for a meeting held on February 17, 2006, at which the Board considered the renewal of the agreements with the Adviser and BNP PAM, the Board requested and received materials from the Adviser and BNP PAM about: (a) the quality of the Adviser's and BNP PAM's investment management and other services; (b) the Adviser's and BNP PAM's investment management personnel; (c) the Adviser's and BNP PAM's operations and financial condition; (d) the Adviser's and BNP PAM's trading practices (including any soft dollar arrangements) and investment strategies; (e) the level of the fees that the Adviser and BNP PAM charges the Funds compared with the fees they charge to comparable mutual funds or accounts (if any); (f) each Fund's overall fees and operating expenses compared with similar mutual funds; (g) the level of the Adviser's and BNP PAM's profitability from their Fund-related operations; (h) the Adviser's and BNP PAM's compliance systems; (i) the Adviser's and BNP PAM's policies on and compliance procedures for personal securities transactions; (j) the Adviser's and BNP PAM's reputation, expertise and resources in domestic financial markets; and (k) each Fund's performance compared with similar mutual funds. Representatives from the Adviser and BNP PAM presented additional oral and written information to the Board at the meeting to help the Board evaluate the Adviser's and BNP PAM's fees and other aspects of the agreements. The Board also considered information presented by these and other service providers at meetings throughout the year. The Trustees discussed the written materials, oral presentations, and any other information that the Board received, and considered the approval of the agreements in light of this information. Based on the Board's deliberations and its evaluation of the information it received, the Board, including all of the independent Trustees, approved the agreements and the selection of the Adviser and BNP PAM. The Board considered the following specific factors, none of which was controlling, and made the following conclusions: June 30, 2006 63 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- NATURE, EXTENT, AND QUALITY OF SERVICES. The Board received and considered information regarding the nature, extent, and quality of services to be provided to the Funds by the Adviser and BNP PAM. In this regard, the Trustees evaluated, among other things, the Adviser's and BNP PAM's personnel, experience, track record, and compliance program. The Board considered the background and experience of the Adviser's and BNP PAM's senior management and the expertise of, and amount of attention expected to be given to the Funds by, their portfolio management teams. The Board reviewed the qualifications, backgrounds, and responsibilities of the portfolio managers responsible for the day-to-day management of the Funds. The Board also reviewed information pertaining to the Adviser's and BNP PAM's organizational structure, senior management, investment operations, and other relevant information. The Board concluded that, within the context of its full deliberations, the nature, extent, and quality of the services to be provided to the Funds by the Adviser and BNP PAM supported the approval of the agreements. PERFORMANCE. The Board considered the investment performance of each Fund, including any periods of outperformance and underperformance, both on an absolute basis and a comparative basis to indices and other funds within the same investment categories. Specifically, the Board considered each Fund's performance relative to its peer group and appropriate benchmarks in light of total return, yield, and market trends. As part of this review, the Board considered the composition of the peer group and selection criteria, as well as market risk and shareholder risk expectations. The Board considered the Adviser's explanations regarding specific performance issues relating to asset size and adviser resources. The Board concluded that, within the context of its full deliberations, the performance of the Funds and the Adviser and BNP PAM supported the approval of the agreements. FUND EXPENSES. With respect to advisory fees, the Board considered the rate of compensation under the agreements and each Fund's net operating expense ratio in comparison to those of comparable mutual funds. The Trustees also considered information about average expense ratios of comparable mutual funds in each Fund's peer group. Finally, the Trustees considered the effect of the Adviser's and its affiliates' voluntary waiver of fees and expenses, where applicable, to prevent total fund expenses from exceeding a specified amount and that due to these waivers net operating expenses have been maintained at competitive levels. The Board concluded that, within the context of its full deliberations, the expenses of the Funds are reasonable and supported the approval of the agreements. Bishop Street Funds 64 Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- PROFITABILITY. The Board reviewed information about the profitability of the Funds to the Adviser and BNP PAM and considered whether the level of profitability was reasonable and justified in light of the quality of the services rendered to the Funds. The Board concluded that, within the context of its full deliberations, the profitability of the Adviser and BNP PAM is within the range the Board considered reasonable and appropriate. ECONOMIES OF SCALE. The Board considered the existence of economies of scale and whether they were passed along to Fund shareholders through a graduated advisory fee schedule or other means, including any fee and expense waivers by the Adviser and its affiliates. The Board also considered the potential economies of scale and other efficiencies that may result from increases in the Funds' asset levels. The Board concluded that, within the context of its full deliberations, the Funds obtain reasonable benefit from economies of scale. June 30, 2006 65 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- SHAREHOLDER VOTING RESULTS At a special meeting held on April 21, 2006, the shareholders of the Bishop Street Funds voted on the proposal to elect a new Board of Trustees for the Trust. The results of the voting were as follows: % OF % OF NUMBER SHARES SHARES OF SHARES VOTED OUTSTANDING ----------- --------- ------------ 1. ROBERT A. NESHER AFFIRMATIVE 285,117,814 93.662% 57.904% WITHHOLD 19,294,544 6.338% 3.919% ------------ -------- -------- TOTAL 304,412,358 100% 61.823% 2. WILLIAM M. DORAN AFFIRMATIVE 303,108,686 99.572% 61.558% WITHHOLD 1,303,672 0.428% 0.265% ------------ -------- -------- TOTAL 304,412,358 100% 61.823% 3. EUGENE B. PETERS AFFIRMATIVE 302,966,980 99.535% 61.536% WITHHOLD 1,415,378 0.465% 0.287% ------------ -------- -------- TOTAL 304,382,358 100% 61.823% 4. JAMES M. STOREY AFFIRMATIVE 302,966,980 99.535% 61.536% WITHHOLD 1,415,378 0.465% 0.287% ------------ -------- -------- TOTAL 304,382,358 100% 61.823% 5. GEORGE J. SULLIVAN AFFIRMATIVE 303,108,686 99.572% 61.558% WITHHOLD 1,303,672 0.428% 0.265% ------------ -------- -------- TOTAL 304,412,358 100% 61.823% June 30, 2006 66 www.bishopstreetfunds.com Bishop Street Funds (UNAUDITED) -------------------------------------------------------------------------------- % OF % OF NUMBER SHARES SHARES OF SHARES VOTED OUTSTANDING ----------- --------- ------------ 6. BETTY L. KRIKORIAN AFFIRMATIVE 303,108,686 99.572% 61.558% WITHHOLD 1,303,672 0.428% 0.265% ------------ -------- -------- TOTAL 304,412,358 100% 61.823% 7. CHARLES E. CARLBOM AFFIRMATIVE 302,966,980 99.535% 61.536% WITHHOLD 1,415,378 0.465% 0.287% ------------ -------- -------- TOTAL 304,382,358 100% 61.823% 8. MITCHELL A. JOHNSON AFFIRMATIVE 303,107,874 99.571% 61.558% WITHHOLD 1,304,484 0.429% 0.265% ------------ -------- -------- TOTAL 304,412,358 100% 61.823% June 30, 2006 67 www.bishopstreetfunds.com NOTES INVESTMENT ADVISER BISHOP STREET CAPITAL MANAGEMENT HONOLULU, HI 96813 ADMINISTRATOR SEI INVESTMENTS GLOBAL FUNDS SERVICES OAKS, PA 19456 DISTRIBUTOR SEI INVESTMENTS DISTRIBUTION CO. OAKS, PA 19456 TRANSFER AGENT DST SYSTEMS, INC. KANSAS CITY, MO 64121 CUSTODIAN UNION BANK OF CALIFORNIA, N.A. SAN FRANCISCO, CA 94101 LEGAL COUNSEL MORGAN, LEWIS & BOCKIUS LLP PHILADELPHIA, PA 19103 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PRICEWATERHOUSECOOPERS LLP PHILADELPHIA, PA 19103 [LOGO] BISHOP STREET FUNDS FOR MORE INFORMATION ABOUT BISHOP STREET FUNDS, CALL 1-800-262-9565 OR YOUR INVESTMENT SPECIALIST VISIT US ONLINE AT WWW.BISHOPSTREETFUNDS.COM -------------------------------------------------------------------------------- [LOGO] BISHOP BISHOP STREET FUNDS STREET P.O. BOX 3708 FUNDS HONOLULU, HI 96811 THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF BISHOP STREET FUNDS' SHAREHOLDERS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. SHARES OF BISHOP STREET FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY FIRST HAWAIIAN BANK OR ANY OF ITS AFFILIATES. SUCH SHARES ARE ALSO NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. INVESTMENT IN SHARES OF MUTUAL FUNDS INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE BISHOP STREET FUNDS ARE DISTRIBUTED BY SEI INVESTMENTS DISTRIBUTION CO., WHICH IS NOT AFFILIATED WITH FIRST HAWAIIAN BANK, BANK OF THE WEST OR BANCWEST CORPORATION. BANCWEST CORPORATION IS A WHOLLY-OWNED SUBSIDIARY OF BNP PARIBAS. BSF-SAR-004-1200 -------------------------------------------------------------------------------- ITEM 2. CODE OF ETHICS. Not applicable for semi-annual report. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semi-annual report. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semi-annual report. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. Effective for closed-end management investment companies for fiscal years ending on or after December 31, 2005 ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 11. CONTROLS AND PROCEDURES. (a) The certifying officers, whose certifications are included herewith, have evaluated the registrant's disclosure controls and procedures within 90 days of the filing date of this report. In their opinion, based on their evaluation, the registrant's disclosure controls and procedures are adequately designed, and are operating effectively to ensure, that information required to be disclosed by the registrant in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEMS 12. EXHIBITS. (a)(1) Not applicable for semi-annual report. (a)(2) A separate certification for the principal executive officer and the principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), is filed herewith. (b) Officer certifications as required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing as an exhibit. -------------------------------------------------------------------------------- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Bishop Street Funds By (Signature and Title)* /s/ Robert A. Nesher -------------------- Robert A. Nesher President Date: August 28, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Robert A. Nesher -------------------- Robert A. Nesher President Date: August 28, 2006 By (Signature and Title)* /s/ Michael Lawson ------------------ Michael Lawson Treasurer and Controller Date: August 28, 2006 * Print the name and title of each signing officer under his or her signature.