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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 811-08816
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Malachi Millennium Income Trust
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(Exact name of registrant as specified in charter)
140 S. Dearborn Drive, Suite 1620 Chicago, Illinois 60603
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(Address of principal executive offices) (Zip code)
James A. Casselberry, Jr.
Trias Capital Management, Inc. 140 S. Dearborn Drive Chicago, Illinois 60603
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 223-9400
----------------
Date of fiscal year end: September 30, 2003
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Date of reporting period: March 31, 2003
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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.
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MALACHI MILLENNIUM INCOME TRUST
-------------------------------
TREASURERS' GOVERNMENT
MONEY MARKET FUND
-----------------
SEMI-ANNUAL REPORT
MARCH 31, 2003
(UNAUDITED)
INVESTMENT ADVISOR ADMINISTRATOR
TRIAS CAPITAL MANAGEMENT, INC. ULTIMUS FUND SOLUTIONS, LLC
140 South Dearborn Street P.O. Box 46707
Chicago, IL 60603 Cincinnati, OH 45246-0707
1.888.744.2337
================================================================================
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES - MARCH 31, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at amortized cost (Note 2) $ 1,801,796
Investment in repurchase agreements (Note 2) 985,087
Cash 10,000
Receivable from Investment Manager (Note 3) 33,751
Interest receivable 36,424
Other assets 12,487
-----------
Total Assets 2,879,545
-----------
LIABILITIES
Dividends payable 567
Payable to administrator (Note 3) 5,000
Other accrued expenses 6,897
-----------
Total Liabilities 12,464
-----------
NET ASSETS $ 2,867,081
===========
NET ASSETS CONSIST OF:
Paid-in capital $ 2,893,848
Accumulated net realized losses from
security transactions (26,767)
-----------
NET ASSETS $ 2,867,081
===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING (UNLIMITED
NUMBER OF SHARES AUTHORIZED, NO PAR VALUE) 2,881,448
===========
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING
PRICE PER SHARE (Note 2) $1.00
===========
See accompanying notes to financial statements.
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income $123,858
-----------
EXPENSES
Administration, fund accounting, shareholder
services and transfer agent fees (Note 3) 30,000
Investment management fees (Note 3) 17,530
Professional fees 27,731
S & P rating expense 11,750
Trustees' fees and expenses 5,498
Insurance expense 3,994
Custody fees 3,788
Postage and supplies 1,613
Registration and filing fees 1,579
Other expenses 648
-----------
Total Expenses 104,131
Fees waived and expenses reimbursed by the
Investment Manager (Note 3) (77,386)
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Net Expenses 26,745
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NET INVESTMENT INCOME 97,113
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NET REALIZED GAINS FROM SECURITY TRANSACTIONS 887
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NET INCREASE FROM PAYMENTS BY INVESTMENT MANAGER (NOTE 3) 12,400
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $110,400
===========
See accompanying notes to financial statements.
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2003 SEPTEMBER 30,
(UNAUDITED) 2002
------------ ------------
FROM OPERATIONS
Net investment income $ 97,113 $ 461,514
Net realized gains (losses) from security transactions 887 (1,892)
Net increase from payments by Investment Manager (Note 3) 12,400 --
------------ ------------
Net increase in net assets resulting from operations 110,400 459,622
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DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (97,113) (461,514)
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FROM CAPITAL SHARE TRANSACTIONS (a)
Proceeds from shares sold 8,449,917 27,020,709
Net asset value of shares issued in reinvestment
of distributions to shareholders 80,703 432,000
Payments for shares redeemed (24,200,259) (29,360,145)
------------ ------------
Net decrease in net assets from capital
share transactions (15,669,639) (1,907,436)
------------ ------------
TOTAL DECREASE IN NET ASSETS (15,656,352) (1,909,328)
NET ASSETS
Beginning of period 18,523,433 20,432,761
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End of period $ 2,867,081 $ 18,523,433
============ ============
(a) Capital share transactions are identical to the dollar values shown.
See accompanying notes to financial statements.
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------------
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
SIX MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, 2003 SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 2002 2001 2000 1999 1998
------------- ------------- ------------- ------------- ------------- ----------
PER SHARE DATA
- --------------
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Payments by Investment Manager (Note 3) 0.00 -- -- -- -- --
Net investment income 0.006 0.019 0.050 0.057 0.049 0.053
Dividends from net investment income (0.006) (0.019) (0.050) (0.057) (0.049) (0.053)
--------- ----------- ----------- ----------- ----------- -----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= =========== =========== =========== =========== ===========
TOTAL RETURN 0.56%(a) 1.92% 5.08% 5.89% 5.03% 5.33%
========= =========== =========== =========== =========== ===========
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets at end of period (000's) $ 2,867 $ 18,523 $ 20,433 $ 17,252 $ 65,541 $ 33,708
Ratios net of fees waived and expenses
reimbursed by Investment Manager (Note 3)
Ratio of net expenses to average net assets 0.31%(b) 0.29% 0.29% 0.25% 0.25% 0.22%
Ratio of net investment income to average
net assets 1.12%(b) 2.00% 4.79% 5.67% 4.92% 5.33%
Ratios assuming no fees waived and expenses
reimbursed by Investment Manager (Note 3)
Ratio of expenses to average net assets 1.20%(b) 0.89% 0.78% 0.77% 0.69% 0.80%
Ratio of net investment income to
average net assets 0.23%(b) 1.40% 4.30% 5.15% 4.48% 4.74%
(a) Not annualized
(b) Annualized
See accompanying notes to financial statements.
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS - MARCH 31, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
PAR VALUE VALUE
----------- ----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 62.8%
Federal Home Loan Mortgage Corporation,
4.50%, due 06/15/2003 $795,000 $ 800,314
Federal National Mortgage Association,
5.75%, due 04/15/2003 1,000,000 1,001,482
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TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS $ 1,801,796
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REPURCHASE AGREEMENTS (a) - 34.4%
FACE AMOUNT
------------
Lehman Brothers Inc.,
1.25%, dated 3/31/2003, due 4/1/2003,
repurchase proceeds of $985,121 $ 985,087 $ 985,087
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TOTAL INVESTMENTS AT VALUE (AMORTIZED
COST $2,786,883) - 97.2% $ 2,786,883
OTHER ASSETS IN EXCESS OF LIABILITIES - 2.8% 80,198
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NET ASSETS - 100.0% $ 2,867,081
===========
(a) Repurchase agreements are fully collateralized by U.S. Government agency
securities.
See accompanying notes to financial statements.
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Malachi Millennium Income Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as an open-end diversified
management investment company. The Trust was established as a Massachusetts
business trust under a Declaration of Trust dated August 19, 1994. The
Trust consists of one series, the Treasurers' Government Money Market Fund
(the "Fund"). The Fund's investment objective is to seek high current
income consistent with stability of capital and liquidity by investing in a
portfolio of U.S. Government securities. The Fund is expecting to maintain
a constant net asset value of $1.00 per share.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Fund's significant accounting policies:
SECURITY VALUATION - Securities are valued on an amortized cost basis,
which approximates market value. This involves initially valuing a security
at its original cost and thereafter assuming a constant amortization to
maturity of any discount or premium.
SHARE VALUATION - The net asset value per share of the Fund is calculated
daily by dividing the total value of the Fund's assets, less liabilities,
by the number of shares outstanding.
INVESTMENT INCOME - Interest income is accrued as earned and includes,
where applicable, the pro-rata amortization of premium or accretion of
discount.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income are
declared daily and paid on the last business day of each month. Net
realized short-term capital gains, if any, may be distributed throughout
the year and net realized long-term capital gains, if any, are distributed
at least once each year. Income distributions and capital gain
distributions are determined in accordance with income tax regulations
which may differ from accounting principles generally accepted in the
United States of America. For the six months ended March 31, 2003 and for
the year ended September 30, 2002, there were no differences between the
book basis and tax basis of distributions.
SECURITY TRANSACTIONS - Investment transactions are accounted for on the
trade date. Securities sold are determined on a specific identification
basis.
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2003 (UNAUDITED) (Continued)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - Repurchase agreements are collateralized by U.S.
Government securities and are valued at cost, which, together with accrued
interest, approximates market. Collateral for repurchase agreements is held
in safekeeping in the Fund's custodian customer-only account at the Federal
Reserve Bank of Cleveland. At the time the Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will be equal to or exceed the face amount of
the repurchase agreement. In the event of a bankruptcy or other default of
the seller of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying security and losses. These losses would equal
the face amount of the repurchase agreement(s) and accrued interest, net of
any proceeds received in liquidation of the underlying securities. To
minimize the possibility of loss, the Fund enters into repurchase
agreements only with institutions deemed to be creditworthy under
guidelines established by the Board of Trustees.
ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amount of assets and liabilities at the date of the financial
statements and the reported amount of income and expenses during the
reporting period. Actual results could differ from these estimates.
FEDERAL INCOME TAX - It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the
income distributed. Accordingly, no provision for income taxes has been
made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare and pay as
dividends in each calendar year at least 98% of its net investment income
(earned during the calendar year) and 98% of its net realized capital gains
(earned during the twelve months ended October 31) plus undistributed
amounts from prior years.
The following information is computed on a tax basis for each item as of
March 31, 2003:
Cost of portfolio investments $ 2,786,883
=============
Capital loss carryforwards $ (25,841)
Post-October losses (1,813)
Other gains 887
-------------
Accumulated deficit $ (26,767)
=============
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2003 (UNAUDITED) (Continued)
- --------------------------------------------------------------------------------
The capital loss carryforwards as of September 30, 2002 in the table above
expire as follows:
Amount Expires September 30,
------ ---------------------
$ 19,379 2008
2,476 2009
3,986 2010
----------
$ 25,841
==========
In addition, the Fund had net realized capital losses of $1,813 during the
period November 1, 2001 through September 30, 2002, which are treated for
federal income tax purposes as arising during the Fund's tax year ending
September 30, 2003. The capital loss carryforwards and the "post-October"
losses may be utilized in the current and future years to offset net
realized capital gains, if any, prior to distributing such gains to
shareholders.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The President of the Trust is the chairman and controlling shareholder of
Trias Capital Management, Inc. ("Trias"), the Trust's investment manager.
Certain other officers of the Trust are officers of Ultimus Fund Solutions,
LLC ("Ultimus"), the Trust's administrator.
INVESTMENT MANAGEMENT AGREEMENT
The Fund's investments are managed by Trias pursuant to the terms of a
Management Agreement. Under the terms of the Management Agreement, the Fund
pays Trias a fee, which is computed and accrued daily and paid monthly at
the annual rate of .20% of its average daily net assets. In order to reduce
the Fund's operating expenses during the six months ended March 31, 2003,
Trias voluntarily waived all of its management fees and reimbursed the Fund
for other operating expenses in order to limit the Fund's total expense
ratio to .25% of average daily net assets through December 16, 2002 and
.35% of such assets thereafter. During the six months ended March 31, 2003,
the total of such fee waivers and expense reimbursements was $77,386. As of
March 31, 2003, the Adviser owed the Fund $33,751 for expense
reimbursements.
Additionally, during the six months ended March 31, 2003, Trias made a
$12,400 contribution to the Fund to offset the effect of realized losses
incurred by the Fund. The effect of this contribution was to increase the
Fund's total return by 0.11% for the six months ended March 31, 2003.
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2003 (UNAUDITED) (Continued)
- --------------------------------------------------------------------------------
MUTUAL FUND SERVICES AGREEMENT
Under the terms of a Mutual Fund Services Agreement, Ultimus provides
administrative, fund accounting and pricing, and transfer agent and
shareholder services to the Fund. For these services, Ultimus receives a
base fee of $5,000 per month, plus an asset-based fee equal to the annual
rate of 0.10% of the Fund's average net assets in excess of $50 million but
less than $250 million; 0.075% of such assets in excess of $250 million but
less than $500 million; and 0.05% of such assets in excess of $500 million.
During the six months ended March 31, 2003, Ultimus was paid $30,000 under
the Mutual Fund Services Agreement.
ITEM 2. CODE OF ETHICS.
Not required
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not required
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not required
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Not required
(b) Not required
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not
applicable
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2): Attached hereto
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) Malachi Millennium Income Trust
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By (Signature and Title)* /s/ James A. Casselberry, Jr.
---------------------------------------
James A. Casselberry, Jr., President
Date May 28, 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 (Signature and Title)* /s/ James A. Casselberry, Jr.
---------------------------------------
James A. Casselberry, Jr., President
Date May 28, 2003
------------------------
By (Signature and Title)* /s/ Mark J. Seger
---------------------------------------
Mark J. Seger, Treasurer
Date May 28, 2003
------------------------
* Print the name and title of each signing officer under his or her signature.