As filed with the Securities and Exchange Commission on November 10, 2003
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-6742
MONARCH FUNDS
Two Portland Square
Portland, Maine 04101
207-879-1900
David I. Goldstein, President
Two Portland Square
Portland, Maine 04101
207-879-1900
Date of fiscal year end: AUGUST 31, 2003
Date of reporting period: AUGUST 31, 2003
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
A copy of the shareholder report(s) transmitted to stockholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 (the "Act") is included at the
end of this Form N-CSR.
ITEM 2. CODE OF ETHICS.
As of the end of the period, August 31, 2003, the registrant has adopted a code
of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and
Treasurer. A copy of the code of ethics is filed as an exhibit to this Form
N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees determined that no member of the Audit Committee is an
"audit committee financial expert" as that term is defined under applicable
regulatory guidelines. In addition, the Board recognized that the experience of
the Trustees that are members of the Audit Committee is sufficent for them to
perform the services required of Audit Committee members.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a) The registrant's President and Treasurer have concluded that the
registrant's disclosure controls and procedures (as defined in rule 30a-3(c)
under the Act) are effective in design and operation and are sufficient to form
the basis of the certifications required by Rule 30a-(2) under the Act, based on
their evaluation of these disclosure controls and procedures within 90 days of
the filing date of this report on Form N-CSR.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in rule 30a-3(d) under the Act), or the internal control
over financial reporting of its service providers during the last fiscal half
year (the registrant's second half year in the case of an annual report) that
have materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Code of Ethics (Exhibit filed herewith).
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(Exhibit filed herewith).
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Exhibit filed herewith).
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 MONARCH FUNDS
-------------
By /S/ STACEY E. HONG, TREASURER
-----------------------------
Date NOVEMBER 5, 2003
----------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /S/ DAVID I. GOLDSTEIN, PRESIDENT
---------------------------------
Date NOVEMBER 5, 2003
----------------
By /S/ STACEY E. HONG, TREASURER
-----------------------------
Date NOVEMBER 5, 2003
----------------
MONARCH ANNUAL REPORT
FUNDS AUGUST 31, 2003
DAILY ASSETS TREASURY FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
[IMAGE: GREEK COLISEUM]
MONARCH FUNDS
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A MESSAGE TO OUR SHAREHOLDERS
August 31, 2003
Dear Shareholders:
During the past year, the Federal Reserve Bank focused its efforts on moving the
economy toward sustained growth. To achieve this, the Fed lowered the Federal
Funds rate in November 2002 to 1.25% and again in June 2003 to 1.00%. The
Federal government also contributed to the recovery effort with new tax and
fiscal policies in an attempt to stimulate job creation and economic growth.
Based on this, our portfolio management team extended the average maturities of
the Funds' portfolios. The team also increased its scrutiny of issuers to ensure
that credit quality did not suffer during this difficult economic period. Based
on recent economic data, we anticipate that this period of stable short-term
rates will continue through the spring of 2004, at which time we hope that
sustained economic growth will begin to put upward pressure on short-term rates.
We are pleased to report that Monarch's Daily Assets Government Fund, our oldest
fund, continued to exhibit strong performance for the year ended August 31,
2003. For the one- and ten-year periods ended as of that date, the Fund's
Universal Shares ranked five out of 148 and one out of 41, respectively, within
the Government and Agencies Institutional Funds category tracked by iMoneyNet,
Inc. (The Universal Shares seven-day yield as of August 31, 2003 was 0.92%.)*
For nearly 11 years, we have remained committed to maintaining a $1.00 per share
price through the skilled and prudent portfolio management you expect. We thank
all of our investors and the financial intermediaries we service for their
continued support. Please feel free to call us with your questions or comments
at (800) 754-8757.
Sincerely,
/s/ JOHN Y. KEFFER
John Y. Keffer
Chairman
*PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS AND INVESTMENT RETURNS WILL
FLUCTUATE. AS TRACKED BY IMONEYNET, INC., DAILY ASSETS GOVERNMENT FUND UNIVERSAL
SHARES RANKED FIVE OUT OF 150, SIX OUT OF 81, AND ONE OUT OF 41 WITHIN THE
GOVERNMENT AND AGENCIES INSTITUTIONAL FUNDS CATEGORY FOR THE ONE- AND TEN-YEAR
TOTAL RETURNS AS OF SEPTEMBER 30, 2003, RESPECTIVELY. RANKINGS ARE BASED ON
TOTAL RETURN AND WILL VARY FOR OTHER SHARE CLASSES.
ALTHOUGH MONEY MARKET FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT
$1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THEM. AN
INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT
ENDORSED OR GUARANTEED BY ANY BANK OR ANY AFFILIATE OF A BANK. THIS REPORT IS
AUTHORIZED FOR DISTRIBUTION ONLY TO CURRENT SHAREHOLDERS AND TO OTHERS WHO HAVE
RECEIVED A COPY OF A MONARCH FUNDS PROSPECTUS. FORUM FUND SERVICES, LLC,
DISTRIBUTOR. (10/03)
2
MONARCH FUNDS
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INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
Monarch Funds:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the Daily Assets Treasury Fund, Daily Assets
Government Obligations Fund, Daily Assets Government Fund, and Daily Assets Cash
Fund (formerly, Treasury Cash Fund, Daily Assets Government Fund, Government
Cash Fund, and Cash Fund, respectively) (collectively, the "Funds"), each a
series of the Monarch Funds, as of August 31, 2003, and the related statements
of operations for the year then ended, statements of changes in net assets for
each of the years in the two-year period then ended and financial highlights for
each of the years or periods in the five-year period then ended. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 2003 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statements presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects the financial position of the
Daily Assets Treasury Fund, Daily Assets Government Obligations Fund, Daily
Assets Government Fund, and Daily Assets Cash Fund as of August 31, 2003, the
results of their operations for the year then ended, changes in their net assets
for each of the years in the two-year period then ended, and financial
highlights for each of the years or periods in the five-year period then ended,
in conformity with accounting principles generally accepted in the United States
of America.
/s/ KPMG LLP
Boston, Massachusetts
October 17, 2003
3
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS TREASURY FUND
AUGUST 31, 2003
FACE SECURITY
AMOUNT DESCRIPTION VALUE
-------- ------------- -------------
U.S. TREASURY BILLS (A) (73.4%)
$ 150,000,000 0.94%, 9/25/03 ................................... $ 149,901,833
25,000,000 0.96%, 11/28/03 .................................. 24,940,722
25,000,000 1.03%, 2/26/04 ................................... 24,872,681
-------------
Total U.S. Treasury Bills 199,715,236
-------------
REPURCHASE AGREEMENTS (24.8%)
35,800,000 Bank of America, 0.90%,
9/2/03, to be repurchased at
$35,803,580; collateralized by various
U.S. Treasury Obligations ........................ 35,800,000
31,600,000 Bear Stearns & Co., Inc.,
0.98%, 9/2/03, to be repurchased at
$31,603,441; collateralized by various
U.S. Treasury Obligations ........................ 31,600,000
-------------
Total Repurchase Agreements 67,400,000
-------------
SHARES
SHORT-TERM INVESTMENT (1.9%)
5,114,000 Dreyfus Treasury Cash
Management Fund .................................. 5,114,000
-------------
Total Investments at Amortized Cost* (100.1%) $ 272,229,236
Other Assets and Liabilities, Net (-0.1)% (191,202)
-------------
Total Net Assets (100.0%) $ 272,038,034
=============
(A) Yields shown are annualized yields at time of purchase.
* Cost for federal income tax purposes is the same as for
financial statement purposes.
4
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
AUGUST 31, 2003
FACE SECURITY
AMOUNT DESCRIPTION VALUE
-------- ------------- -------------
U.S. GOVERNMENT SECURITIES (97.3%)
FEDERAL HOME LOAN BANK - DISCOUNT NOTES (A) (97.3%)
$ 4,000,000 0.98%, 9/17/03 ................................... $ 3,998,258
4,000,000 0.86%, 9/24/03 ................................... 3,997,802
3,200,000 0.98%, 10/3/03 ................................... 3,197,227
4,300,000 1.02%, 10/10/03 ................................... 4,295,248
3,400,000 1.04%, 10/29/03 ................................... 3,394,330
4,200,000 1.04%, 11/12/03 ................................... 4,191,264
1,015,000 0.96%, 12/19/03 ................................... 1,012,050
-------------
Total U.S. Government Securities 24,086,179
-------------
SHARES
- ------------------
SHORT-TERM INVESTMENT (2.8%)
693,219 Dreyfus Treasury Prime Cash Management
Fund .......................................... 693,219
Total Investments at Amortized Cost* (100.1%) $ 24,779,398
Other Assets and Liabilities, Net (-0.1)% (27,349)
------------
Total Net Assets (100.0%) $ 24,752,049
============
(A) Yields shown are annualized yields at time of purchase.
* Cost for federal income tax purposes is the same as for
financial statement purposes.
5
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT FUND
AUGUST 31, 2003
FACE SECURITY FACE SECURITY
AMOUNT DESCRIPTION VALUE AMOUNT DESCRIPTION VALUE
- -------- ------------- ------------- -------- ------------- -------------
U.S. GOVERNMENT SECURITIES (71.9%) SMALL BUSINESS ADMINISTRATION (B)
$ 3,053,272 Pool #504769 1.63% 10/25/24 .... 3,053,272
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 1,798,739 Pool #505204 1.75% 9/25/25 ..... 1,798,324
DISCOUNT NOTES (A) (52.8%) 1,295,483 Pool #505205 1.81% 9/25/07 ..... 1,295,305
$ 150,000,000 1.06%, 10/29/03 ............. $149,745,042 ------------
30,000,000 1.07%, 11/26/03 ............. 29,923,317 Total Small Business Administration 64,957,618
------------ ------------
Total U.S. Government Securities 244,625,977
Total Federal National Mortgage ------------
Association - Discount Notes 179,668,359
------------ REPURCHASE AGREEMENTS - 26.5%
40,000,000 Bank of America, 0.92%,
SMALL BUSINESS ADMINISTRATION (B) (19.1%) 9/2/03, to be repurchased at
93,456 Pool #500536 3.00% 5/25/13 ..... 95,237 $40,004,089; collateralized
24,665 Pool #500730 3.88% 2/25/04 ..... 24,665 by various U.S. Government
337,473 Pool #501077 2.50% 11/25/14 .... 337,473 Agency Securities .............. 40,000,000
624,953 Pool #501308 2.50% 10/25/15 .... 624,953 24,950,000 Bear Stearns & Co., Inc., 1.08%,
1,028,238 Pool #501543 2.38% 7/25/16 ..... 1,028,238 9/2/03, to be repurchased at
153,285 Pool #501690 2.13% 12/25/16 .... 153,284 $24,952,994; collateralized
416,115 Pool #501733 2.00% 2/25/17 ..... 419,422 by various U.S. Government
414,183 Pool #501898 2.25% 7/25/17 ..... 414,183 Agency Securities .............. 24,950,000
534,469 Pool #501989 2.13% 10/25/12 .... 539,258 25,000,000 Citigroup, 1.05%, 9/2/03, to be
2,183,838 Pool #502150 2.00% 2/25/18 ..... 2,197,761 repurchased at $25,005,833;
64,481 Pool #502161 2.00% 2/25/18 ..... 64,481 collateralized by various U.S.
642,633 Pool #502208 2.00% 2/25/18 ..... 645,028 Government Agency Securities ... 25,000,000
144,988 Pool #502306 2.00% 2/25/18 ..... 144,988 ------------
165,461 Pool #502613 2.00% 4/25/19 ..... 165,461
58,127 Pool #502914 2.00% 3/25/15 ..... 58,547 Total Repurchase Agreements 89,950,000
397,167 Pool #503058 1.88% 7/25/15 ..... 397,167 ------------
637,507 Pool #503082 1.88% 9/25/20 ..... 637,507
287,013 Pool #503120 1.88% 10/25/20 .... 287,013 SHARES
985,266 Pool #503121 1.88% 9/25/15 ..... 988,779 -------------
3,399,846 Pool #503152 1.63% 11/25/20 .... 3,399,846
400,738 Pool #503232 1.63% 12/25/15 .... 400,738 SHORT-TERM INVESTMENT (1.4%)
337,906 Pool #503278 1.63% 2/25/21 ..... 337,927 4,800,000 Dreyfus Government Cash
755,995 Pool #503429 1.75% 6/25/16 ..... 757,170 Management Fund ................ 4,800,000
770,836 Pool #503431 1.75% 7/25/21 ..... 771,062 ------------
1,535,350 Pool #503461 1.75% 9/25/21 ..... 1,536,194
272,687 Pool #503472 1.75% 8/25/21 ..... 272,687 Total Investments at Amortized Cost* (99.8%) $339,375,977
1,504,135 Pool #503553 1.63% 11/25/21 .... 1,505,327 Other Assets and Liabilities, Net (0.2%) 742,189
2,572,103 Pool #503614 1.63% 1/25/22 ..... 2,572,103 ------------
1,147,319 Pool #503671 1.63% 3/25/22 ..... 1,147,319 Net Assets (100.0%) $340,118,166
1,074,735 Pool #503754 1.63% 5/25/22 ..... 1,075,715 ============
64,368 Pool #503780 1.63% 3/25/22 ..... 64,423
1,538,018 Pool #503882 1.50% 9/25/22 ..... 1,536,805 (A) Yields shown are annualized yields at time of purchase.
250,706 Pool #503892 1.63% 7/25/22 ..... 250,976 (B) Certain securities are deemed to have a maturity remaining
1,870,244 Pool #503909 1.50% 10/25/22 .... 1,869,590 until the next adjustment of the interest rate, or the
1,252,770 Pool #504015 1.50% 1/25/23 ..... 1,252,583 longer of the demand period or time to the next readjustment.
1,155,703 Pool #504062 1.50% 2/25/23 ..... 1,155,703 The interest rates shown reflect the rate in effect on
1,990,564 Pool #504074 1.50% 2/25/23 ..... 1,990,564 August 31, 2003.
621,820 Pool #504203 1.63% 7/25/13 ..... 622,744 * Cost for federal income tax purposes is the same as for
1,070,756 Pool #504269 1.63% 5/25/15 ..... 1,072,387 financial statement purposes.
455,535 Pool #504345 1.63% 5/25/18 ..... 455,535
13,205,443 Pool #504366 1.38% 2/25/24 ..... 13,173,246
6,061,087 Pool #504719 1.63% 7/25/24 ..... 6,061,087
2,792,462 Pool #504727 1.63% 9/25/24 ..... 2,792,462
3,520,056 Pool #504765 1.63% 10/25/09 .... 3,513,079
------------
See Notes to Financial Statements.
6
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS CASH FUND
AUGUST 31, 2003
FACE SECURITY FACE SECURITY
AMOUNT DESCRIPTION VALUE AMOUNT DESCRIPTION VALUE
- -------- ------------- ------------- -------- ------------- -------------
U.S. GOVERNMENT SECURITIES (15.7%) REPURCHASE AGREEMENTS
$ 46,950,000 Bear Stearns & Co., Inc.,
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 1.08%, 9/2/03, to be repurchased
DISCOUNT NOTES (A) (15.7%) at $46,955,634; collateralized by
$ 50,000,000 1.06%, 10/29/03 ............... $ 49,914,611 various U.S. Government Agency
35,000,000 1.07%, 11/26/03 ............... 34,910,536 Securities .................... 46,950,000
------------ 40,000,000 Citigroup, 1.05%, 9/2/03, to be
repurchased at $40,009,333;
Total U.S. Government Securities 84,825,147 collateralized by various U.S.
------------ Government Agency Securities .. 40,000,000
25,000,000 Merrill Lynch, 1.03%, 9/2/03, to
COMMERCIAL PAPER (A) (38.8%) be repurchased at $25,002,861;
25,000,000 Edison Asset Securitization collateralized by various U.S.
1.03% 10/7/03 ................. 24,974,250 Government Agency Securities .. 25,000,000
30,000,000 General Electric Capital Corp. ------------
1.02% 9/10/03 ................. 29,992,350
25,000,000 Goldman Sachs Group, Inc. Total Repurchase Agreements 128,750,000
1.04% 11/26/03 ................ 24,937,889 ------------
25,000,000 International Lease Finance Corp.
1.05% 10/10/03 ................ 24,971,562 SHARES
25,000,000 Societe Generale, N.A. -------------
1.02% 11/10/03 ................ 24,950,416
25,000,000 UBS Financial Delaware LLC SHORT-TERM INVESTMENT (0.9%)
1.02% 9/8/03 .................. 24,995,042 4,941,000 Dreyfus Cash Management Fund .. 4,941,000
30,000,000 Westdeutsche Landesbank ------------
1.20% 9/3/03 .................. 29,998,000
25,000,000 Windmill Funding Corp. Total Investments at Amortized Cost* (100.0%)$540,315,740
1.06% 10/1/03 ................. 24,977,917 Other Assets & Liabilities, Net (0.0%) (44,240)
------------ ------------
Net Assets (100.0%) $540,271,500
Total Commercial Paper 209,797,426 ============
------------
(A) Yields shown are annualized yields at time of purchase.
CORPORATE NOTES (B) (18.0%) (B) Certain securities are deemed to have a maturity remaining
25,000,000 Bear Stearns & Co., Inc. until the next adjustment of the interest rate, or the
1.11% 9/24/03 ................. 25,000,000 longer of the demand period or time to the next readjustment.
20,000,000 CIT Group, Inc. The interest rates shown reflect the rate in effect on August
2.36% 11/25/03 ................ 20,002,167 31, 2003.
22,000,000 CIT Group, Inc. (C) Securities that may be resold to "qualified institutional
2.36% 1/9/04 .................. 22,000,000 buyers" under Rule 144A or securities offered pursuant to
30,000,000 Wells Fargo Bank, N.A. Section 4 (2) of the Securities Act of 1933, as amended.
1.04% 6/17/04 ................. 30,000,000 These securities have been determined to be liquid by the
------------ adviser pursuant to procedures approved by the Board of
Trustees.
Total Corporate Notes 97,002,167 CDO - Collateralized Debt Obligations
------------ * Cost for federal income tax purposes is the same as for
financial statement purposes.
ASSET-BACKED SECURITY (B, C) (2.8%)
15,000,000 Grand Central CDO Ltd.
1.26% 9/10/38 ................. 15,000,000
------------
REPURCHASE AGREEMENTS (23.8%)
16,800,000 Bank of America, 0.92%, 9/2/03,
to be repurchased at $16,801,717;
collateralized by various U.S.
Government Agency Securities .. 16,800,000
See Notes to Financial Statements.
7
MONARCH FUNDS
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STATEMENTS OF ASSETS AND LIABILITIES
August 31, 2003
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
---------------- ----------------- ----------------- -----------------
Assets
Investments:
Securities at amortized cost $ 204,829,236 $ 24,779,398 $ 249,425,977 $ 411,565,740
Repurchase agreements 67,400,000 - 89,950,000 128,750,000
Cash 17,949 601 43,828 27,145
Receivables:
Interest 8,859 656 196,303 247,398
Investment securities sold - - 805,190 -
Receivable from Administrator - - 11,762 5,773
Prepaid expenses 553 - 13,951 39,398
---------------- ----------------- ----------------- -----------------
Total Assets 272,256,597 24,780,655 340,447,011 540,635,454
---------------- ----------------- ----------------- -----------------
Liabilities
Payables:
Dividends 97,461 18,295 151,457 27,550
Accrued Expenses:
Payables to related parties 72,129 308 114,213 281,018
Other expenses 48,973 10,003 63,175 55,386
---------------- ----------------- ----------------- -----------------
Total Liabilities 218,563 28,606 328,845 363,954
---------------- ----------------- ----------------- -----------------
Net Assets $ 272,038,034 $ 24,752,049 $ 340,118,166 $ 540,271,500
================ ================= ================= =================
Components of Net Assets
Paid in capital $ 272,028,459 $ 24,766,377 $ 340,148,260 $ 540,282,808
Undistributed (distributions in excess of) net investment income 9,611 9,924 (31,056) -
Accumulated net realized gain (loss) (36) (24,252) 962 (11,308)
---------------- ----------------- ----------------- -----------------
Net Assets $ 272,038,034 $ 24,752,049 $ 340,118,166 $ 540,271,500
================ ================= ================= =================
Net Assets by Class of Shares
Preferred Shares $ - $ - $ 11,548,978 $ 2,979,268
Universal Shares 140,137,258 24,752,049 114,172,779 104,841,317
Institutional Service Shares 35,073,929 - 76,273,430 36,875,880
Institutional Shares - - 90,740,227 92,186,258
Investor Shares 96,826,847 - 47,382,752 303,388,777
---------------- ----------------- ----------------- -----------------
Net Assets $ 272,038,034 $ 24,752,049 $ 340,118,166 $ 540,271,500
================ ================= ================= =================
Shares of Beneficial Interest for each Class of Shares
Preferred Shares - - 11,548,988 2,979,649
Universal Shares 140,141,291 24,766,202 114,212,492 104,859,829
Institutional Service Shares 35,066,468 - 76,273,699 36,881,043
Institutional Shares - - 90,735,364 92,201,625
Investor Shares 96,820,711 - 47,377,729 303,437,345
Net Asset Value Per Share (Offering and Redemption
Price per Share) for each Class of Shares $ 1.00 $ 1.00 $ 1.00 $ 1.00
See Notes to Financial Statements.
8
MONARCH FUNDS
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STATEMENTS OF OPERATIONS
Year Ended August 31, 2003
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
-------------- -------------- ------------ -----------
Investment Income:
Interest income $ 636,712 $ 58,888 $ 1,500,435 $ 1,607,937
Dividend income 15,554 2,114 21,441 18,478
Interest income allocated from Portfolios 1,504,684 302,265 3,153,472 9,758,570
Dividend income allocated from Portfolios 38,162 11,025 127,312 145,498
Allocated Portfolio expenses (149,298) (32,626) (260,771) (736,679)
-------------- -------------- ------------ -----------
Total Investment Income 2,045,814 341,666 4,541,889 10,793,804
-------------- -------------- ------------ -----------
Expenses:
Investment advisory 23,356 2,976 48,805 48,075
Administration
Preferred Shares - - 61,889 7,195
Universal Shares 34,569 14,737 (e) 83,015 64,494
Institutional Service Shares 23,480 (b) 666 (d) 17,377 (c) 8,378 (c)
Institutional Shares - - 67,234 129,713
Investor Shares 79,748 151 (d) 41,944 308,532
Service Shares (a) 1,170 - 1,052 3,445
Shareholder services
Institutional Service Shares 63,741 (b) 3,327 (d) 31,595 (c) 15,232 (c)
Institutional Shares - - 190,158 394,415
Investor Shares 224,717 757 (d) 116,884 896,145
Service Shares (a) 2,659 - 2,390 7,831
Distribution
Investor Shares 280,893 454 (d) 146,103 1,120,169
Service Shares (a) 7,977 - 7,171 23,493
Transfer agency
Preferred Shares - - 10,919 8,674
Universal Shares 26,167 25,878 (e) 72,921 59,804
Institutional Service Shares 67,156 (b) 11,749 (d) 21,123 (c) 12,350 (c)
Institutional Shares - - 205,631 419,712
Investor Shares 250,681 11,122 (d) 130,685 946,866
Service Shares (a) 5,995 - 5,680 10,777
Custody 8,097 744 16,800 16,662
Professional Services 41,775 7,836 53,588 59,618
Accounting 21,778 36,448 28,241 26,174
Trustees' fees and expenses 10,139 1,051 18,993 36,905
Registration 17,942 16,699 13,047 15,953
Miscellaneous 25,218 4,471 39,792 66,380
-------------- -------------- ------------ -----------
Total Expenses 1,217,258 139,066 1,433,037 4,706,992
Expenses reimbursed and fees waived (203,008) (110,041) (279,133) (252,434)
-------------- -------------- ------------ -----------
Net Expenses 1,014,250 29,025 1,153,904 4,454,558
-------------- -------------- ------------ -----------
Net Investment Income 1,031,564 312,641 3,387,985 6,339,246
-------------- -------------- ------------ -----------
Net Realized Loss on Investments - - - (5,268)
Net Realized Gain (Loss) on Investments
Allocated from Portfolios (40) (10) 1,354 (5,698)
-------------- -------------- ------------ -----------
Increase in Net Assets from Operations $ 1,031,524 $ 312,631 $ 3,389,339 $ 6,328,280
============== ============== ============ ===========
(a) On February 10, 2003, Service Shares ceased operations.
(b) On April 23, 2003, Institutional Shares were renamed Institutional Service Shares.
(c) On June 9, 2003, Institutional Service Shares commenced operations.
(d) On June 26, 2003, Institutional Service Shares and Investor Shares ceased operations.
(e) On July 22, 2003, Institutional Shares were redesignated as Universal Shares.
See Notes to Financial Statements.
9
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended August 31, 2002 and 2003
DAILY ASSETS DAILY ASSETS
TREASURY GOVERNMENT OBLIGATIONS
FUND FUND
---------------------------------- -----------------------------------
Year Ended Year Ended Year Ended Year Ended
August 31, 2003 August 31, 2002 August 31, 2003 August 31, 2002
--------------- ---------------- ---------------- ---------------
Operations
Net investment income 1,031,564 2,936,919 312,641 568,254
Net realized gain (loss) on investments - - - -
Net realized gain (loss) on investments allocated from
Portfolios (40) 54 (10) 1
--------------- ---------------- ---------------- ---------------
Increase in Net Assets from Operations 1,031,524 2,936,973 312,631 568,255
--------------- ---------------- ---------------- ---------------
Distributions to Shareholders from
Net investment income--Preferred Shares - - - -
Net investment income--Universal Shares (256,355) (1,830) (308,095) (d) (519,130)
Net investment income--Institutional Service Shares (272,364) (b) (679,973) (13,659) (c) (32,621)
Net investment income--Institutional Shares - - - -
Net investment income--Investor Shares (511,818) (2,143,681) (2,232) (c) (7,273)
Net investment income--Service Shares (a) (6,421) (32,467) - -
Net realized gain--Preferred Shares - - - -
Net realized gain--Universal Shares - (8) - -
Net realized gain--Institutional Service Shares - (1,552) - -
Net realized gain--Institutional Shares - - - -
Net realized gain--Investor Shares - (10,344) - -
Net realized gain--Service Shares (a) - (194) - -
--------------- ---------------- ---------------- ---------------
Total Distributions to Shareholders (1,046,958) (2,870,049) (323,986) (559,024)
--------------- ---------------- ---------------- ---------------
Capital Share Transactions
Sale of shares--Preferred Shares - - - -
Sale of shares--Universal Shares 63,758,141 - 23,392,457 (d) 21,608,881
Sale of shares--Institutional Service Shares 788,768,505 (b) 247,836,193 960,790 (c) 5,764,181
Sale of shares--Institutional Shares - - - -
Sale of shares--Investor Shares 2,221,411,726 2,499,197,025 517,114 (c) 846,644
Sale of shares--Service Shares (a) 29,717,963 79,307,974 - -
Reinvestment of distributions--Preferred Shares - - - -
Reinvestment of distributions--Universal Shares 4,620 1,867 3,444 (d) 5,951
Reinvestment of distributions--Institutional Service Shares 106,985 (b) 363,863 13,655 (c) 27,199
Reinvestment of distributions--Institutional Shares - - - -
Reinvestment of distributions--Investor Shares 511,763 2,207,085 2,225 (c) 7,380
Reinvestment of distributions--Service Shares (a) 6,421 33,528 - -
Redemption of shares--Preferred Shares - - - -
Redemption of shares--Universal Shares (60,521,256) - (24,392,971) (d) (24,962,901)
Redemption of shares--Institutional Service Shares (781,026,237) (b) (278,699,511) (2,726,685) (c) (6,697,090)
Redemption of shares--Institutional Shares - - - -
Redemption of shares--Investor Shares (2,258,845,469) (2,600,836,834) (910,051) (c) (891,499)
Redemption of shares--Service Shares (a) (32,233,218) (85,980,481) - -
Transactions due to reorganization--Universal Shares
(Notes 1 and 5) 136,794,829 - - -
Transactions due to reorganization--Institutional Service
Shares (Notes 1 and 5) 7,158,960 - - -
Transactions due to reorganization--Investor Shares
(Notes 1 and 5) - - - -
--------------- ---------------- ---------------- ---------------
Increase (Decrease) from Capital Transactions 115,613,733 (136,569,291) (3,140,022) (4,291,254)
--------------- ---------------- ---------------- ---------------
Increase (Decrease) in Net Assets 115,598,299 (136,502,367) (3,151,377) (4,282,023)
--------------- ---------------- ---------------- ---------------
Net Assets
Beginning of Period 156,439,735 292,942,102 27,903,426 32,185,449
--------------- ---------------- ---------------- ---------------
End of Period $ 272,038,034 $ 156,439,735 $ 24,752,049 $ 27,903,426
=============== ================ ================ ===============
Undistributed (distributions in excess of)
Net Investment Income $ 9,611 $ 24,951 $ 9,924 $ 21,269
--------------- ---------------- ---------------- ---------------
(a) On February 10, 2003, Service Shares ceased operations.
(b) On April 23, 2003, Institutional Shares were renamed Institutional Service Shares.
(c) On June 26, 2003, Institutional Service Shares and Investor Shares ceased operations.
(d) On July 22, 2003, Institutional Shares were redesignated as Universal Shares.
See Notes to Financial Statements.
10
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended August 31, 2002 and 2003
DAILY ASSETS DAILY ASSETS
GOVERNMENT CASH
FUND FUND
---------------------------------- ----------------------------------
Year Ended Year Ended Year Ended Year Ended
August 31, 2003 August 31, 2002 August 31, 2003 August 31, 2002
--------------- ---------------- --------------- ----------------
Operations
Net investment income 3,387,985 10,292,103 6,339,246 22,705,475
Net realized gain (loss) on investments (5,268) -
Net realized gain (loss) on investments allocated
from Portfolios 1,354 16,108 (5,698) 54,031
--------------- ---------------- --------------- ----------------
Increase in Net Assets from Operations 3,389,339 10,308,211 6,328,280 22,759,506
--------------- ---------------- --------------- ----------------
Distributions to Shareholders from
Net investment income--Preferred Shares (621,089) (648,015) (151,590) (1,251,211)
Net investment income--Universal Shares (1,413,090) (3,085,902) (1,103,415) (936,651)
Net investment income--Institutional Service Shares (110,393) (b) - (57,923) (b) -
Net investment income--Institutional Shares (880,906) (5,332,274) (1,997,736) (9,675,064)
Net investment income--Investor Shares (370,340) (1,017,308) (3,058,136) (10,255,316)
Net investment income--Service Shares (a) (3,730) (83,081) (8,311) (186,947)
Net realized gain--Preferred Shares - (168) - -
Net realized gain--Universal Shares - (1,140) - -
Net realized gain--Institutional Service Shares - - - -
Net realized gain--Institutional Shares - (1,645) - -
Net realized gain--Investor Shares - (818) - -
Net realized gain--Service Shares (a) - (19) - -
--------------- ---------------- --------------- ----------------
Total Distributions to Shareholders (3,399,548) (10,170,370) (6,377,111) (22,305,189)
--------------- ---------------- --------------- ----------------
Capital Share Transactions
Sale of shares--Preferred Shares 774,265,384 81,195,742 134,949,972 254,441,042
Sale of shares--Universal Shares 618,388,835 1,512,833,007 545,045,220 190,623,922
Sale of shares--Institutional Service Shares 97,674,061 (b) - 79,389,684 (b) -
Sale of shares--Institutional Shares 634,925,725 3,131,770,836 934,006,867 1,418,938,982
Sale of shares--Investor Shares 860,191,768 694,457,809 5,847,733,697 7,051,630,371
Sale of shares--Service Shares (a) 32,275,958 105,103,222 35,906,214 242,162,740
Reinvestment of distributions--Preferred Shares 598,859 647,749 90,085 419,759
Reinvestment of distributions--Universal Shares 1,221,360 2,021,112 904,881 846,923
Reinvestment of distributions--Institutional Service Shares 46,875 (b) - 54,087 (b) -
Reinvestment of distributions--Institutional Shares 584,103 4,650,922 1,578,425 8,693,836
Reinvestment of distributions--Investor Shares 370,394 1,036,664 2,870,274 10,443,280
Reinvestment of distributions--Service Shares (a) 3,730 84,252 8,312 190,897
Redemption of shares--Preferred Shares (775,355,933) (69,810,329) (145,153,730) (241,775,419)
Redemption of shares--Universal Shares (652,099,960) (1,597,982,455) (530,370,168) (181,885,661)
Redemption of shares--Institutional Service Shares (84,691,606) (b) - (72,324,735) (b) -
Redemption of shares--Institutional Shares (662,241,985) (3,217,334,657) (1,190,855,020) (1,816,935,824)
Redemption of shares--Investor Shares (872,270,125) (698,660,396) (6,194,764,416) (7,207,142,271)
Redemption of shares--Service Shares (a) (33,658,096) (109,714,030) (43,608,634) (255,124,020)
Transactions due to reorganization--Universal Shares
(Notes 1 and 5) 65,240,533 - 42,432,455 -
Transactions due to reorganization--Institutional Service
Shares (Notes 1 and 5) 63,244,162 - 29,757,106 -
Transactions due to reorganization--Investor Shares
(Notes 1 and 5) 695,432 - 1,292,555 -
--------------- ---------------- --------------- ----------------
Increase (Decrease) from Capital Transactions 69,409,474 (159,700,552) (521,056,869) (524,471,443)
--------------- ---------------- --------------- ----------------
Increase (Decrease) in Net Assets 69,399,265 (159,562,711) (521,105,700) (524,017,126)
--------------- ---------------- --------------- ----------------
Net Assets
Beginning of Period 270,218,901 430,281,612 1,061,377,200 1,585,394,326
--------------- ---------------- --------------- ----------------
End of Period $ 339,618,166 $ 270,718,901 $ 540,271,500 $ 1,061,377,200
=============== ================ =============== ================
Undistributed (distributions in excess of) Net
Investment Income $ (31,056) $ (31,162) $ - $ -
--------------- ---------------- --------------- ----------------
(a) On February 10, 2003, Service Shares ceased operations.
(b) On June 9, 2003, Institutional Service Shares commenced operations.
See Notes to Financial Statements.
11
MONARCH FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS DAILY ASSETS
TREASURY GOVERNMENT OBLIGATIONS
FUND FUND
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
August 31, 2003 August 31, 2002 August 31, 2003 August 31, 2002
--------------- --------------- --------------- ---------------
Share Transactions
Sale of shares--Preferred Shares - - - -
Sale of shares--Universal Shares 63,758,144 - 23,392,207 (d) 21,608,881
Sale of shares--Institutional Service Shares 788,768,505 (b) 247,836,193 960,024 (c) 5,764,181
Sale of shares--Institutional Shares - - - -
Sale of shares--Investor Shares 2,221,411,726 2,499,197,025 516,995 (c) 846,644
Sale of shares--Service Shares (a) 29,717,963 79,307,974 - -
Reinvestment of distributions--Preferred Shares - - - -
Reinvestment of distributions--Universal Shares 4,621 1,867 3,444 (d) 5,951
Reinvestment of distributions--Institutional Service Shares 106,985 (b) 363,863 13,655 (c) 27,199
Reinvestment of distributions--Institutional Shares - - - -
Reinvestment of distributions--Investor Shares 511,763 2,207,085 2,225 (c) 7,380
Reinvestment of distributions--Service Shares (a) 6,421 33,528 - -
Redemption of shares--Preferred Shares - - (24,392,203) (d) -
Redemption of shares--Universal Shares (60,521,256) - (2,726,685) (c) (24,962,901)
Redemption of shares--Institutional Service Shares (781,026,237)(b) (278,699,511) - (6,697,090)
Redemption of shares--Institutional Shares - - (910,046) (c) -
Redemption of shares--Investor Shares (2,258,845,469) (2,600,836,834) - (891,499)
Redemption of shares--Service Shares (a) (32,233,218) (85,980,481) - -
Transactions due to reorganization--Universal Shares
(Notes 1 and 5) 136,795,448 - - -
Transactions due to reorganization--Institutional Service Shares
(Notes 1 and 5) 7,158,341 - - -
Transactions due to reorganization--Investor Shares
(Notes 1 and 5) - - - -
--------------- -------------- --------------- ------------
Increase (Decrease) in Shares 115,613,737 (136,569,291) (3,140,384) (4,291,254)
=============== ============== =============== ============
(a) On February 10, 2003, Service Shares ceased operations.
(b) On April 23, 2003, Institutional Shares were renamed Institutional Service Shares.
(c) On June 26, 2003, Institutional Service Shares and Investor Shares ceased operations.
(d) On July 22, 2003, Institutional Shares were redesignated as Universal Shares.
See Notes to Financial Statements.
12
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended August 31, 2002 and 2003
DAILY ASSETS DAILY ASSETS
GOVERNMENT CASH
FUND FUND
--------------------------------- ---------------------------------
Year Ended Year Ended Year Ended Year Ended
August 31, 2003 August 31, 2002 August 31, 2003 August 31, 2002
--------------- --------------- --------------- ---------------
Share Transactions
Sale of shares--Preferred Shares 774,265,384 81,195,742 134,949,972 254,441,042
Sale of shares--Universal Shares 618,388,835 1,512,833,007 545,045,222 190,623,922
Sale of shares--Institutional Service Shares 97,674,061(b) - 79,389,684(b) -
Sale of shares--Institutional Shares 634,925,725 3,131,770,836 934,006,868 1,418,938,982
Sale of shares--Investor Shares 860,191,768 694,457,809 5,847,733,697 7,051,630,371
Sale of shares--Service Shares (a) 32,275,958 105,103,222 35,906,215 242,162,740
Reinvestment of distributions--Preferred Shares 598,859 647,749 90,085 419,759
Reinvestment of distributions--Universal Shares 1,221,360 2,021,112 904,881 846,923
Reinvestment of distributions--Institutional Service Shares 46,875(b) - 54,087(b) -
Reinvestment of distributions--Institutional Shares 584,103 4,650,922 1,578,426 8,693,836
Reinvestment of distributions--Investor Shares 370,394 1,036,664 2,870,274 10,443,280
Reinvestment of distributions--Service Shares (a) 3,730 84,252 8,311 190,897
Redemption of shares--Preferred Shares (775,355,933) (69,810,329) (145,153,307) (241,775,419)
Redemption of shares--Universal Shares (652,099,960) (1,597,982,455) (530,355,298) (181,885,661)
Redemption of shares--Institutional Service Shares (84,691,606)(b) - (72,319,505)(b) -
Redemption of shares--Institutional Shares (662,241,985) (3,217,334,657) (1,190,841,943) (1,816,935,824)
Redemption of shares--Investor Shares (872,270,125) (698,660,396) (6,194,721,376) (7,207,142,271)
Redemption of shares--Service Shares (a) (33,658,096) (109,714,030) (43,608,634) (255,124,020)
Transactions due to reorganization--Universal Shares
(Notes 1 and 5) 65,240,211 - 42,433,148 -
Transactions due to reorganization--Institutional Service Shares
(Notes 1 and 5) 63,244,369 - 29,756,777 -
Transactions due to reorganization--Investor Shares
(Notes 1 and 5) 695,485 - 1,292,578 -
--------------- --------------- --------------- ---------------
Increase (Decrease) in Shares 69,409,412 (159,700,552) (520,979,838) (524,471,443)
=============== =============== =============== ===============
(a) On February 10, 2003, Service Shares ceased operations.
(b) On June 9, 2003, Institutional Service Shares commenced operations.
See Notes to Financial Statements.
13
MONARCH FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
These financial highlights reflect selected data for an outstanding share of
each class of each Fund during the periods indicated.
SELECTED DATA FOR A SINGLE SHARE
--------------------------------------------------------------------------
Beginning Net Distributions Distributions Ending
Net Asset Net Realized from Net from Net Net Asset
Value Per Investment Gain on Investment Realized Value Per Total
Year Ended August 31, Share Income Investments Income Gains Share Return (g)
- ------------------------------------------------------------------------------------------------------------------
DAILY ASSETS TREASURY FUND
Universal Shares
- ------------------------------------------------------------------------------------------------------------------
2003 $1.00 $0.01 - $(0.01) - $1.00 1.10%
2002 1.00 0.02 - (d) (0.02) - (d) 1.00 1.82%
2001 1.00 0.05 - (0.05) - 1.00 5.24%
2000 (c) 1.00 0.04 - (0.04) - 1.00 4.02%
Institutional Service Shares (e)
- ------------------------------------------------------------------------------------------------------------------
2003 1.00 0.01 - (0.01) - 1.00 0.84%
2002 1.00 0.02 - (d) (0.02) - (d) 1.00 1.57%
2001 1.00 0.05 - (0.05) - 1.00 4.92%
2000 1.00 0.05 - (0.05) - 1.00 5.47%
1999 1.00 0.04 - (d) (0.04) - (d) 1.00 4.50%
Investor Shares
- ------------------------------------------------------------------------------------------------------------------
2003 1.00 - (d) - - (d) - 1.00 0.45%
2002 1.00 0.01 - (d) (0.01) - (d) 1.00 1.17%
2001 1.00 0.04 - (0.04) - 1.00 4.52%
2000 1.00 0.05 - (0.05) - 1.00 5.06%
1999 1.00 0.04 - (d) (0.04) - (d) 1.00 4.10%
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Universal Shares (f)
- ------------------------------------------------------------------------------------------------------------------
2003 1.00 0.01 - (0.01) - 1.00 1.18%
2002 1.00 0.02 - (0.02) - 1.00 1.97%
2001 1.00 0.05 - (0.05) - 1.00 5.26%
2000 1.00 0.06 - (0.06) - 1.00 5.93%
1999 1.00 0.05 - (0.05) - 1.00 4.92%
RATIOS/SUPPLEMENTAL DATA
--------------------------------
Ratios to Average
Net Assets (a)
--------------------------------
Net Assets at Net
End of Period Net Investment Gross
Year Ended August 31, (000's Omitted) Expenses Income Expenses(b)
- --------------------------------------------------------------------------------
DAILY ASSETS TREASURY FUND
Universal Shares
- --------------------------------------------------------------------------------
2003 $140,137 0.21% 0.80% 0.37%
2002 105 0.20% 1.81% 8.77%
2001 102 0.20% 6.22% 0.92%
2000 (c) 5,976 0.20% 5.86% 0.38%
Institutional Service Shares (e)
- --------------------------------------------------------------------------------
2003 35,074 0.45% 0.84% 0.67%
2002 20,068 0.45% 1.68% 0.62%
2001 50,554 0.45% 4.57% 0.61%
2000 30,480 0.45% 5.30% 0.62%
1999 55,134 0.45% 4.43% 0.62%
Investor Shares
- --------------------------------------------------------------------------------
2003 96,827 0.84% 0.45% 0.90%
2002 133,758 0.85% 1.22% 0.87%
2001 233,138 0.84% 4.52% 0.84%
2000 314,305 0.84% 5.01% 0.85%
1999 232,624 0.83% 4.02% 0.89%
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Universal Shares (f)
- --------------------------------------------------------------------------------
2003 24,752 0.20% 1.14% 0.48%
2002 25,760 0.20% 1.97% 0.71%
2001 29,100 0.20% 5.24% 0.57%
2000 39,777 0.20% 5.78% 0.65%
1999 28,709 0.20% 4.81% 0.61%
(a) All ratios for periods less than a year are annualized.
(b) The ratio of Gross Expenses to Average Net Assets reflects the expense ratio
excluding any fee waivers and expense reimbursements for the Fund and its
corresponding Portfolio.
(c) See Note 1 for dates of commencement of operations.
(d) Less than $0.01 per share.
(e) On April 23, 2003, Institutional Shares were renamed Institutional Service
Shares.
(f) On July 22, 2003, Institutional Shares were redesignated as Universal
Shares.
(g) Not annualized.
See Notes To Financial Statements.
14
MONARCH FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
These financial highlights reflect selected data for an outstanding share of
each class of each Fund during the periods indicated.
SELECTED DATA FOR A SINGLE SHARE
--------------------------------------------------------------------------
Beginning Net Distributions Distributions Ending
Net Asset Net Realized from Net from Net Net Asset
Value Per Investment Gain on Investment Realized Value Per Total
Year Ended August 31, Share Income Investments Income Gains Share Return
- ------------------------------------------------------------------------------------------------------------------
DAILY ASSETS GOVERNMENT FUND
Preferred Shares
- ------------------------------------------------------------------------------------------------------------------
2003 $1.00 $0.01 - $(0.01) - $1.00 1.40%
2002 1.00 0.02 - (d) (0.02) - (d) 1.00 2.25%
2001 (c) 1.00 - (d) - - (d) - 1.00 0.22%
Universal Shares
- ------------------------------------------------------------------------------------------------------------------
2003 1.00 0.01 - (0.01) - 1.00 1.29%
2002 1.00 0.02 - (d) (0.02) - (d) 1.00 2.17%
2001 1.00 0.05 - (0.05) - 1.00 5.34%
2000 1.00 0.06 - (0.06) - 1.00 5.94%
1999 1.00 0.05 - (0.05) - 1.00 5.00%
Institutional Service Shares
- ------------------------------------------------------------------------------------------------------------------
2000 (c) 1.00 - (d) - - (d) - 1.00 0.16%
Institutional Shares
- ------------------------------------------------------------------------------------------------------------------
2003 1.00 0.01 - (0.01) - 1.00 0.91%
2002 1.00 0.02 - (d) (0.02) - (d) 1.00 1.80%
2001 1.00 0.05 - (0.05) - 1.00 4.95%
2000 1.00 0.05 - (0.05) - 1.00 5.54%
1999 1.00 0.05 - (0.05) - 1.00 4.59%
Investor Shares
- ------------------------------------------------------------------------------------------------------------------
2003 1.00 0.01 - (0.01) - 1.00 0.64%
2002 1.00 0.02 - (d) (0.02) - (d) 1.00 1.52%
2001 1.00 0.05 - (0.05) - 1.00 4.68%
2000 (c) 1.00 0.04 - (0.04) - 1.00 3.68%
DAILY ASSETS CASH FUND
Preferred Shares
- ------------------------------------------------------------------------------------------------------------------
2003 1.00 0.01 - (0.01) - 1.00 1.37%
2002 1.00 0.02 - (0.02) - 1.00 2.21%
2001 (c) 1.00 - (d) - - (d) - 1.00 0.22%
Universal Shares
- ------------------------------------------------------------------------------------------------------------------
2003 1.00 0.01 - (0.01) - 1.00 1.29%
2002 1.00 0.02 - (0.02) - 1.00 2.12%
2001 1.00 0.05 - (0.05) - 1.00 5.49%
2000 1.00 0.06 - (0.06) - 1.00 6.04%
1999 1.00 0.05 - (0.05) - 1.00 5.09%
Institutional Service Shares
- ------------------------------------------------------------------------------------------------------------------
2003 (c) 1.00 - (d) - - (d) - 1.00 0.18%
Institutional Shares
- ------------------------------------------------------------------------------------------------------------------
2003 1.00 0.01 - (0.01) - 1.00 0.92%
2002 1.00 0.02 - (0.02) - 1.00 1.75%
2001 1.00 0.05 - (0.05) - 1.00 5.11%
2000 1.00 0.06 - (0.06) - 1.00 5.65%
1999 1.00 0.05 - (0.05) - 1.00 4.68%
Investor Shares
- ------------------------------------------------------------------------------------------------------------------
2003 1.00 0.01 - (0.01) - 1.00 0.64%
2002 1.00 0.01 - (0.01) - 1.00 1.48%
2001 1.00 0.05 - (0.05) - 1.00 4.85%
2000 1.00 0.05 - (0.05) - 1.00 5.38%
1999 1.00 0.04 - (0.04) - 1.00 4.41%
RATIOS/SUPPLEMENTAL DATA
--------------------------------
Ratios to Average
Net Assets (a)
--------------------------------
Net Assets at Net
End of Period Net Investment Gross
Year Ended August 31, (000's Omitted) Expenses Income Expenses(b)
- --------------------------------------------------------------------------------
DAILY ASSETS GOVERNMENT FUND
Preferred Shares
- --------------------------------------------------------------------------------
2003 $11,549 0.11% 1.05% 0.25%
2002 12,041 0.12% 2.19% 0.22%
2001 (c) 8 0.12% 3.64% 97.77%
Universal Shares
- --------------------------------------------------------------------------------
2003 114,173 0.20% 1.26% 0.28%
2002 81,426 0.21% 2.17% 0.25%
2001 164,500 0.20% 5.29% 0.23%
2000 225,697 0.20% 5.73% 0.24%
1999 277,549 0.18% 4.88% 0.25%
Institutional Service Shares
- --------------------------------------------------------------------------------
2000 (c) 76,273 0.45% 0.70% 0.58%
Institutional Shares
- --------------------------------------------------------------------------------
2003 90,740 0.57% 0.92% 0.63%
2002 117,476 0.57% 2.05% 0.59%
2001 198,324 0.57% 4.80% 0.58%
2000 400,418 0.57% 5.41% 0.58%
1999 455,239 0.57% 4.50% 0.59%
Investor Shares
- --------------------------------------------------------------------------------
2003 47,383 0.84% 0.63% 0.89%
2002 58,397 0.85% 1.43% 0.85%
2001 61,546 0.84% 4.51% 0.84%
2000 (c) 36,091 0.85% 5.70% 0.97%
DAILY ASSETS CASH FUND
Preferred Shares
- --------------------------------------------------------------------------------
2003 2,979 0.12% 1.39% 0.30%
2002 13,095 0.12% 1.88% 0.20%
2001 (c) 8 0.12% 3.76% 91.14%
Universal Shares
- --------------------------------------------------------------------------------
2003 104,842 0.20% 1.24% 0.28%
2002 46,833 0.21% 2.03% 0.25%
2001 37,236 0.20% 5.68% 0.24%
2000 70,451 0.20% 5.84% 0.23%
1999 98,705 0.18% 4.99% 0.25%
Institutional Service Shares
- --------------------------------------------------------------------------------
2003 (c) 36,876 0.45% 0.76% 0.58%
Institutional Shares
- --------------------------------------------------------------------------------
2003 92,186 0.57% 1.01% 0.61%
2002 347,469 0.57% 1.84% 0.58%
2001 736,555 0.57% 5.07% 0.57%
2000 863,603 0.58% 5.55% 0.58%
1999 569,409 0.57% 4.56% 0.60%
Investor Shares
- --------------------------------------------------------------------------------
2003 303,389 0.84% 0.68% 0.86%
2002 646,285 0.83% 1.51% 0.83%
2001 791,138 0.82% 4.78% 0.82%
2000 994,191 0.83% 5.40% 0.85%
1999 269,421 0.83% 4.30% 0.85%
(a) All ratios for periods less than a year are annualized.
(b) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding any fee waivers and expense reimbursements for the Fund and
its corresponding Portfolio.
(c) See Note 1 for dates of commencement of operations.
(d) Less than $0.01 per share.
(e) Not annualized.
See Notes To Financial Statements.
15
MONARCH FUNDS
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NOTES TO FINANCIAL STATEMENTS
August 31, 2003
NOTE 1. SUMMARY OF ORGANIZATION
Monarch Funds (the "Trust") is a Massachusetts business trust registered as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "Act"). The Trust merged with Monarch Funds, a Delaware
statutory trust on April 23, 2003 and assumed that trust's registration
statement under the Act. As a result, on April 23, 2003, three separate series
of the Trust were renamed and the Trust reorganized as a Massachusetts business
trust. The series were renamed as follows: Treasury Cash Fund became Daily
Assets Treasury Fund; Government Cash Fund became Daily Assets Government Fund
and Cash Fund became Daily Assets Cash Fund.
The Trust currently consists of four diversified investment portfolios listed
below (each a "Fund" and collectively the "Funds"). The Funds are authorized
under the Trust's Trust Instrument to issue an unlimited number of shares of
beneficial interest without par value. The Funds and classes offered as of
August 31, 2003, and the dates on which they commenced operations were as
follows:
Daily Assets Treasury Fund (Universal Shares) December 30, 1999
Daily Assets Treasury Fund (Institutional Service Shares) July 12, 1993
Daily Assets Treasury Fund (Investor Shares) October 25, 1995
Daily Assets Government Obligations (Universal Shares, Note 5) March 13, 1998
Daily Assets Government Fund (Preferred Shares) August 10, 2001
Daily Assets Government Fund (Universal Shares) October 29, 1992
Daily Assets Government Fund (Institutional Service Shares) June 9, 2003
Daily Assets Government Fund (Institutional Shares) July 15, 1993
Daily Assets Government Fund (Investor Shares) December 30, 1999
Daily Assets Cash Fund (Preferred Shares) August 10, 2001
Daily Assets Cash Fund (Universal Shares) December 1, 1992
Daily Assets Cash Fund (Institutional Service Shares) June 9, 2003
Daily Assets Cash Fund (Institutional Shares) July 15, 1993
Daily Assets Cash Fund (Investor Shares) June 16, 1995
Prior to June 9, 2003, the Funds operated under a master-feeder fund structure
whereby they sought to achieve their respective investment objectives by
investing all of their investable assets in separate portfolios (each a
"Portfolio") of another registered open-end management investment company whose
series had the same investment objective and policies as the Funds. Each Fund
now invests directly in portfolio securities.
On July 22, 2003, Daily Assets Government Obligations Fund, a newly created
series of the Trust, merged with Daily Assets Government Fund (the "Forum
Fund"), a series of Forum Funds, another registered investment company. Daily
Assets Government Obligations Fund was the accounting successor of that merger
and, thus, the financial information reported in the financial statements prior
to July 23, 2003, reflects the history of the Forum Fund.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America, which require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in net
assets during the fiscal period. Actual results could differ from those
estimates. The following summarizes the significant accounting policies of the
Funds:
SECURITY VALUATION Generally, each Fund determines its net asset value per share
as of 4:00 p.m., Eastern time, on each Fund business day, utilizing the
amortized cost method pursuant to Rule 2a-7 under the Act. Under this method,
all investments purchased at a discount or premium are valued by accreting or
amortizing, respectively, the difference between the original purchase price and
the maturity value of the investment over the period to the investment's
maturity.
16
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 2003
REPURCHASE AGREEMENTS Each Fund may invest in repurchase agreements. Each Fund,
through its custodian, receives delivery of the underlying collateral, whose
market value always exceeds or equals the repurchase price plus expected
transaction costs. In the case of a tri-party agreement, the collateral is held
by an agent bank. The investment adviser is responsible for determining the
value of the underlying collateral. In the event of default, a Fund may have
difficulties with the disposition of any such securities held as collateral.
EXPENSE ALLOCATION The Trust is comprised of four active series, and it accounts
separately for the assets, liabilities and operations of each series. Expenses
that are directly attributable to more than one series are allocated among the
respective series in proportion to each series' average daily net assets. Each
share of each class of a Fund represents an undivided, proportionate interest in
the Fund. The Fund's class-specific expenses include administration fees,
transfer agency fees and certain expenses determined by the Trust's Board.
Institutional Service Shares, Institutional Shares, Investor Shares and Service
Shares incur shareholder servicing fees and Investor Shares and Service Shares
incur distribution fees. In addition, there are differences between the classes
of shares with respect to the minimum investment required.
SECURITIES TRANSACTIONS, INTEREST INCOME AND REALIZED GAIN AND LOSS Securities
transactions are recorded on trade date. Interest income is accrued as earned
and realized gain and loss on investments sold are recorded on the basis of
identified cost.
FEDERAL TAXES Each Fund intends to continue to qualify each year as a regulated
investment company and distribute all its net investment income. In addition, by
distributing in each calendar year substantially all its net investment income,
capital gain and certain other amounts, each Fund will not be subject to a
federal excise tax. Therefore, no federal income or excise tax provision is
required.
The capital loss carryovers available to offset future capital gains, as of
August 31, 2003, were as follows:
Daily Assets Treasury Fund Expiring August 2011 $ 34
Daily Assets Government Obligations Fund Expiring August 2006 19,022
Expiring August 2007 986
Expiring August 2008 3,602
Expiring August 2009 632
Expiring August 2011 2
Daily Assets Cash Fund Expiring August 2010 232
Expiring August 2011 9,421
For tax purposes, the following Funds have current year deferred post-October
losses. These losses will be recognized for tax purposes on the first day of the
following tax year. The losses were as follows:
Daily Assets Government Obligations Fund $ 9
Daily Assets Government Fund 1,101
Daily Assets Cash Fund 1,655
RECLASSIFICATIONS OF CAPITAL ACCOUNTS On the Statement of Assets and
Liabilities, as a result of permanent book-to-tax differences, reclassifications
adjustments were made as follows:
ACCUMULATED NET ACCUMULATED NET
INVESTMENT INCOME REALIZED LOSS PAID-IN-CAPITAL
----------------- --------------- ---------------
Daily Assets Treasury Fund $ 54 $ (48) $ (6)
Daily Assets Government Fund 11,669 (11,595) (74)
Daily Assets Cash Fund 37,865 (38,210) 345
17
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 2003
DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders of net investment
income are declared daily and paid monthly. Net capital gain, if any, is
distributed to shareholders at least annually. Distributions are based on
amounts calculated in accordance with applicable income tax regulations, which
may differ from accounting principles generally accepted in the United States of
Amercia. These differences are due primarily to differing treatments of income
and gain on various investment securities held by each Fund, timing differences
and differing characterizations of distributions made by the Fund.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER Forum Investment Advisors, LLC ("Forum Advisors") serves as
the investment adviser of each Fund. Forum Advisors receives an advisory fee
from Daily Assets Treasury Fund, Daily Assets Government Fund, and Daily Assets
Cash Fund based upon the total average daily net assets of those Funds ("Total
Fund Assets") that is calculated on a cumulative basis at the following annual
rates: 0.06% for the first $200 million of Total Fund Assets, 0.04% of the next
$300 million of Total Fund Assets and 0.03% of the remaining Total Fund Assets.
Forum Advisors receives an advisory fee from Daily Assets Government Obligations
Fund at an annual rate of 0.05% of the average daily net assets of the Fund.
Prior to June 9, 2003, the Funds operated under a master-feeder fund structure
through which the Funds sought to achieve their respective investment objectives
by investing all of their investable assets in a corresponding series of another
investment company. Forum Advisors served as the investment adviser of each
Portfolio. Forum Advisors received an advisory fee from the Portfolios (except
for Government Portfolio) based on the total average daily net assets of the
Portfolios ("Total Portfolio Assets") that was calculated on a cumulative basis
at the following annual rates: 0.06% for the first $200 million of Total
Portfolio Assets, 0.04% of the next $300 million of Total Portfolio Assets and
0.03% of the remaining Total Portfolio Assets. Forum Advisors received an
advisory fee from Government Portfolio at an annual rate of 0.05% of the average
daily net assets of the Portfolio.
ADMINISTRATOR Forum Administrative Services, LLC ("FAdS") is the administrator
of each Fund. For its services, FAdS receives from each Fund a fee at an annual
rate of 0.11% of the average daily net assets of each share class. Prior to June
9, 2003, FAdS received from each Fund a fee at the annual rate of 0.06% (0.11%
for Service Shares) of the average daily net assets of each share class.
TRANSFER AGENT Forum Shareholder Services, LLC ("FSS") is the transfer agent and
dividend disbursing agent for the Funds. FSS is paid a fee at an annual rate of
0.20% of the average daily net assets of Institutional Shares, Investor Shares
and Service Shares of each Fund, 0.10% of the average daily net assets of
Institutional Service Shares of each Fund and 0.05% of the average daily net
assets of Universal Shares of each Fund. All share classes, including Preferred
Shares, also pay certain account fees and out-of-pocket expenses. In addition,
FSS is paid an annual fee of $12,000 per Fund plus $6,000 per class of shares
for each class above one.
SHAREHOLDER SERVICE AGENT The Trust has adopted a shareholder servicing plan
with respect to each of Institutional Service Shares, Institutional Shares and
Investor Shares under which the Trust pays FAdS a shareholder servicing fee at
the annual rate of 0.20% of the average daily net assets attributable to
Institutional Service Shares, Institutional Shares and Investor Shares of each
Fund. FAdS may pay any or all amounts of these fees to various institutions that
provide shareholder servicing to their customers who hold Institutional Service
Shares, Institutional Shares or Investor Shares. Prior to June 9, 2003, FAdS
received shareholder servicing fees at the annual rates of 0.20%, 0.20% and
0.25%, respectively, of the average daily net assets attributable to
Institutional Shares, Investor Shares and Service Shares of each Fund.
DISTRIBUTOR Forum Fund Services, LLC ("FFS"), a registered broker-dealer and a
member of the National Association of Securities Dealers, Inc., acts as each
Fund's distributor. The Trust has adopted a Distribution Plan pursuant to Rule
12b-1 under the Act under which the Trust pays FFS a distribution fee at an
annual rate of 0.25% of the average daily net assets of Investor Shares of each
Fund. FFS may pay any or all amounts of these payments to various institutions
that provide distribution or shareholder services for Investor Shares. The plan
obligates the Funds
AUGUST 31, 2003
18
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
to pay FFS as compensation for FFS's services. Prior to June 9, 2003, FFS
received distribution fees at an annual rate of 0.25% and 0.75%, respectively,
of the average daily net assets attributable to Investor Shares and Service
Shares of each Fund.
OTHER SERVICES Forum Accounting Services, LLC ("FAcS") provides accounting
services to the Funds. For its accounting services, FAcS receives a monthly base
fee per Fund of $3,000, plus $1,000 per month for each additional share class.
Forum Trust, LLC (the "Custodian") serves as the Trust's custodian and may
employ sub-custodians. For its services, the Custodian receives a fee at an
annual rate of 0.0125% of the average daily net assets of each Fund.
NOTE 4. WAIVER OF FEES / REIMBURSEMENT OF EXPENSES
Forum Advisors, FAdS, FSS, FFS and FAcS voluntarily waived a portion of their
fees and FAdS also assumed certain expenses of the Funds. For the period ended
August 31, 2003, fees waived and expenses reimbursed for each of the Funds were
as follows:
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY FUND OBLIGATIONS FUND GOVERNMENT FUND CASH FUND
------------- ---------------- --------------- -------------
Forum Advisors $ - $ 2,976 $ - $ -
FAdS 168,623 18,936 197,276 194,643
FSS 23,536 48,093 64,634 46,893
FFS 8,871 454 3,827 4,131
FAcS - 32,912 - -
Reimbursed Expenses 1,978 6,670 13,396 6,767
--------- -------- --------- ---------
Total $ 203,008 $ 110,041 $ 279,133 $ 252,434
========= ========= ========= =========
NOTE 5. REORGANIZATIONS
On June 9, 2003, Daily Assets Treasury Fund, Daily Assets Government Fund and
Daily Assets Cash Fund (the "Monarch Funds") acquired all the net assets of
Daily Assets Treasury Obligations Fund, Daily Assets Government Obligations Fund
and Daily Assets Cash Fund (the "Forum Funds"), respectively. Under the
reorganization plan, shareholders of the Forum Funds received shares of
corresponding series of Monarch Funds with a value equal to their holdings in
the Forum Funds. The transaction was structured for tax purposes to qualify as a
tax-free reorganization under the Internal Revenue Code. After the
reorganization plan was consummated, each Fund redeemed its investment in its
respective Portfolio and began investing directly in investment securities. A
summary of shares outstanding and net assets immediately before and after the
reorganization is as follows:
BEFORE REORGANIZATION AFTER REORGANIZATION
--------------------------------------- -------------------------
DAILY ASSETS
TREASURY TREASURY DAILY ASSETS TREASURY
CASH FUND OBLIGATIONS FUND FUND
------------------ -------------------- -------------------------
Universal Shares
Shares Outstanding 105,259 - 136,900,707
Net Assets $ 105,259 - $ 136,900,088
Institutional Service Shares
Shares Outstanding 23,982,275 7,158,341 31,140,616
Net Assets $ 23,990,029 $ 7,158,960 $ 31,148,989
Institutional Shares
Shares Outstanding - 136,795,448 -
Net Assets - $ 136,794,829 -
Investor Shares
Shares Outstanding 125,118,384 - 125,118,384
Net Assets $ 125,127,133 - $ 125,127,133
Shareholders of Institutional Shares and Institutional Service Shares of Daily
Assets Treasury Obligations Fund received Universal Shares and Institutional
Service Shares, respectively, of Daily Assets Treasury Fund.
19
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 2003
BEFORE REORGANIZATION AFTER REORGANIZATION
--------------------------------------- -------------------------
DAILY ASSETS DAILY ASSET
GOVERNMENT GOVERNMENT GOVERNMENT
CASH FUND OBLIGATIONS FUND FUND
------------------ -------------------- -------------------------
Preferred Shares
Shares Outstanding 1,001 - 1,001
Net Assets $ 1,001 - $ 1,001
Universal Shares
Shares Outstanding 70,662,649 - 135,902,860
Net Assets $ 70,622,707 - $ 135,863,240
Institutional Service Shares
Shares Outstanding 63,244,369 63,244,369 -
Net Assets $ 63,244,162 $ 63,244,162 -
Institutional Shares
Shares Outstanding 93,296,961 65,240,211 93,296,961
Net Assets $ 93,301,899 $ 65,240,533 $ 93,301,899
Investor Shares
Shares Outstanding 63,310,358 695,485 64,005,843
Net Assets $ 63,315,472 $ 695,432 $ 64,010,904
Shareholders of Institutional Shares and Investor Shares of Daily Assets
Government Obligations Fund received Universal Shares and Investor Shares,
respectively, of Daily Assets Government Fund.
DAILY ASSETS DAILY ASSETS
CASH FUND CASH FUND CASH FUND
------------------ -------------------- -------------------------
Preferred Shares
Shares Outstanding 3,938,289 - 3,938,289
Net Assets $ 3,938,387 - $ 3,938,387
Universal Shares
Shares Outstanding 94,445,145 - 136,878,293
Net Assets $ 94,442,900 - $ 136,875,355
Institutional Service Shares
Shares Outstanding - 29,756,777 29,756,777
Net Assets - $ 29,757,106 $ 29,757,106
Institutional Shares
Shares Outstanding 106,837,539 42,433,148 106,837,539
Net Assets $106,836,012 $ 42,432,455 $ 106,836,012
Investor Shares
Shares Outstanding 358,133,508 1,292,578 359,426,086
Net Assets $358,131,496 $ 1,292,555 $ 359,424,051
Shareholders of Institutional Shares and Investor Shares of Daily Assets Cash
Fund received Universal Shares and Investor Shares, respectively, of Daily
Assets Cash Fund.
20
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 2003
On July 22, 2003, Daily Assets Government Fund, (the "Forum Fund"), reorganized
into Daily Assets Government Obligations Fund, a newly created Monarch series,
and transferred its assets and liabilities to Daily Assets Government
Obligations Fund. As a result, Universal Shares of the Fund acquired the net
assets of the Institutional Shares class of the Forum Fund. Financial
information reported in the financial statements prior to July 23, 2003,
reflects the history of the Forum Fund. A summary of shares outstanding and net
assets immediately before and after the reorganization is as follows:
BEFORE REORGANIZATION AFTER REORGANIZATION
------------------------- ------------------------------
DAILY ASSETS DAILY ASSETS GOVERNMENT
GOVERNMENT OBLIGATIONS
FUND FUND
------------------------- ------------------------------
Universal Shares
Shares Outstanding - 26,349,971
Net Assets - $ 26,338,017
Institutional Shares
Shares Outstanding 26,349,971 -
Net Assets $ 26,338,017 -
Shareholders of Institutional Shares of Daily Assets Government Fund received
Universal Shares of Daily Assets Government Obligations Fund.
NOTE 6. DISTRIBUTIONS TO SHAREHOLDERS
UNDISTRIBUTED CAPITAL
ORDINARY UNDISTRIBUTED AND OTHER
INCOME CAPITAL GAIN LOSSES TOTAL
------------- ------------- --------- -----
Daily Assets Treasury Fund $107,070 $ - $ (34) $107,036
Daily Assets Government Obligations Fund 28,218 - (24,244)
3,974
Daily Assets Government Fund 121,798 665 - 122,463
Daily Assets Cash Fund 27,537 - (9,653) 17,884
The tax character of distributions paid during 2003 and 2002 was as follows:
ORDINARY INCOME
----------------------------
2003 2002
---- ----
Daily Assets Treasury Fund $1,046,958 $ 2,870,049
Daily Assets Government Obligations Fund 323,986 559,024
Daily Assets Government 3,399,548 10,170,370
Daily Assets Cash Fund 6,377,111 22,305,189
21
MONARCH FUNDS
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS (UNAUDITED)
August 31, 2003
The Board is responsible for managing the Trust's business affairs and
exercising all the Trust's powers except those reserved for shareholders. The
following tables give information about each Board member and the senior
officers of the Funds. The address of each person listed is Two Portland Square,
Portland, ME 04101. The Fund Complex includes the Trust and three other
investment companies for which Forum Financial Group of companies provides
services. Each Board member (except for John Y. Keffer), oversees 24 portfolios
in the Fund Complex. Mr. Keffer oversees 25 portfolios in the Fund Complex. Mr.
Keffer is considered an interested Trustee due to his control of Forum Financial
Group, LLC ("Forum") and Forum Advisors. Each Trustee and officer holds office
until the person resigns, is removed, or replaced. The Funds' Statement of
Additional Information includes additional information about the Trustees and is
available, without charge and upon request, by calling 1-800-754-8757.
INTERESTED TRUSTEE
John Y. Keffer Principal Occupations: Member and Director, Forum (a mutual fund services
Birth Date: July 15, 1942 holding company); Director, various affiliates of Forum including Forum Fund
Chairman Services, LLC (the Trust's underwriter) Other Directorships: Trustee, Forum
Began serving: February 2003 Funds; Trustee, Cutler Trust
- ---------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
Costas Azariadis Principal Occupations: Professor of Economics, University of California-Los
Birth Date: February 15, 1943 Angeles; Visiting Professor of Economics, Athens University of Economics and
Began serving: February 2003 Business 1998-1999. Other Directorships: Trustee, Forum Funds
James C. Cheng Principal Occupation: President, Technology Marketing Associates (marketing
Birth Date: July 26, 1942 company for small- and medium-sized businesses in New England).
Began serving: February 2003 Other Directorships: Trustee, Forum Funds
J. Michael Parish Principal Occupations: Retired Partner, Wolf, Block, Schorr and Solis-Cohen
Birth Date: November 9, 1943 LLP (law firm) 2002 - 2003; Partner, Thelen Reid & Priest LLP (law firm)
Began serving: February 2003 from 1995 - 2002. Other Directorships: Trustee, Forum Funds
- ---------------------------------------------------------------------------------------------------------------
OFFICERS
David I. Goldstein Principal Occupations: Director of Business Development, Forum since 2000;
Birth Date: August 3, 1961 Secretary of Forum and its various affiliates including Forum Fund Services,
President LLC Previous Position: Managing Director and General Counsel, Forum from 1991 to
2000
Beth P. Hanson Principal Occupation: Senior Manager, Relationship Management and various
Birth Date: July 15, 1966 other positions prior thereto; Vice President/Assistant Secretary of one
Vice President and Assistant other investment company within the Fund Complex, Forum since 1995
Secretary
Stacey E. Hong Principal Occupation: Director, Forum Accounting Services, LLC (mutual fund
Birth Date: May 10, 1966 accountant) since 1992
Treasurer
Leslie K. Klenk Principal Occupation: Counsel, Forum since 1998
Birth Date: August 24, 1964
Secretary
- ---------------------------------------------------------------------------------------------------------------
22
FOR MORE INFORMATION MONARCH
FUNDS
DAILY ASSETS
TREASURY FUND
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
DAILY ASSETS
GOVERNMENT FUND
DAILY ASSETS CASH FUND
TRANSFER AGENT
Forum Shareholder Services LLC
Two Portland Square
Portland, Maine 04101
DISTRIBUTOR
Forum Fund Services LLC
Two Portland Square
Portland, Maine 04101
MONARCH FUNDS
P.O. Box 446
This report is authorized for distribution only to Portland, Maine 04112
shareholders and to others who have received a (800) 754-8757
copy of an applicable Monarch Funds prospectus.