As filed with the Securities and Exchange Commission on May 4, 2006
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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 811-6742
MONARCH FUNDS
Two Portland Square
Portland, Maine 04101
207-879-1900
David M. Whitaker
Two Portland Square
Portland, ME 04101
207-822-6114
Date of fiscal year end: August 31, 2006
Date of reporting period: September 1, 2005 - February 28, 2006
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.
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ITEM 1. REPORT TO STOCKHOLDERS.
FEBRUARY 28, 2006 (UNAUDITED)
DAILY ASSETS TREASURY FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
SEMI-ANNUAL REPORT
MONARCH FUNDS
[GRAPHIC]
MONARCH FUNDS
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A MESSAGE TO OUR SHAREHOLDERS
February 28, 2006
Since our last annual report, U.S. economic growth has surpassed most people's
expectations. In spite of higher oil prices and major weather related
catastrophes, real Gross Domestic Product (GDP) and job growth have remained
strong. As such, the Federal Reserve has maintained its monetary policy bias
toward raising short term interest rates seeking to prevent a resurgence of
inflation due to higher prices for commodities, homes and finished goods. As of
February 28, 2006 the Federal Funds rate was 4.50% and expectations are that
further increases in this rate are most likely. Based on these factors our
Portfolio Management team continues to maintain short average maturities of the
Funds' portfolios without sacrificing yield. With our short average maturities,
we are well positioned to take advantage of any further interest rate increases.
We are pleased to report that Monarch's Daily Assets Government Fund, our
oldest fund and our Daily Assets Cash Fund continued to exhibit relatively
strong performance for the six months ended February 28, 2006. For the
three-year period ended December 31, 2005, the Daily Assets Government Fund's
Preferred Shares held the number 1 spot out of 120 funds within the Lipper
Institutional U.S. Government Money Market category and the Daily Assets Cash
Fund's Preferred Shares held the number 7 spot out of 262 funds within the
Lipper Institutional Money Market category.*
For more than thirteen years, we have remained committed to maintaining your
$1.00 per share price and providing competitive returns 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.
Monarch Funds
*PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. PREFERRED SHARES OF DAILY ASSETS GOVERNMENT FUND, RANKED 2 OUT
OF 143 AND 1 OUT OF 124 WITHIN THE INSTITUTIONAL U.S. GOVERNMENT MONEY MARKET
FUNDS CATEGORY FOR THE 1- AND 3-YEAR PERIODS AS OF MARCH 31, 2006. PREFERRED
SHARES OF DAILY ASSETS CASH FUND RANKED 10 OUT OF 321 AND 5 OUT OF 270 WITHIN
THE INSTITUTIONAL MONEY MARKET FUNDS CATEGORY FOR THE 1- AND 3-YEAR PERIODS AS
OF MARCH 31, 2006. RANKINGS ARE BASED ON TOTAL RETURN AND WILL VARY FOR OTHER
SHARE CLASSES. FORESIDE FUND SERVICES, LLC, DISTRIBUTOR.
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.
1
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS TREASURY FUND
February 28, 2006
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- -----------
U.S. TREASURY BILLS# - 49.0%
$20,000,000 U.S. Treasury Bill 4.40% 03/16/06 $19,963,417
20,000,000 U.S. Treasury Bill 4.38 04/20/06 19,879,583
-----------
Total U.S. Treasury Bills 39,843,000
-----------
REPURCHASE AGREEMENTS - 51.3%
14,240,000 Bank of America Securities, dated 02/28/06, to be repurchased at
$14,241,776; collateralized by various U.S. Treasury Obligations 4.49 03/01/06 14,240,000
12,500,000 Deutsche Bank Securities, Inc., dated 02/28/06, to be repurchased at
$12,501,569; collateralized by various U.S. Treasury Obligations 4.52 03/01/06 12,500,000
15,000,000 Merrill Lynch & Co., Inc., dated 02/28/06, to be repurchased at
$15,001,883; collateralized by various U.S. Treasury Obligations 4.52 03/01/06 15,000,000
-----------
Total Repurchase Agreements 41,740,000
-----------
Total Investments at Amortized Cost* - 100.3% $81,583,000
Other Assets and Liabilities, Net - (0.3%) (233,442)
-----------
NET ASSETS - 100.0% $81,349,558
===========
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Repurchase Agreements 51.2%
U.S. Treasury Bills 48.8%
# Rates shown are annualized yields at time of purchase.
* Cost for federal income tax purposes is substantially the same as for financial statement purposes.
See Notes to Financial Statements.
2
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
February 28, 2006
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- -----------
U.S. GOVERNMENT SECURITY - 91.7%
FEDERAL HOME LOAN BANK - DISCOUNT NOTE# - 91.7%
$17,020,000 FHLB 4.41% 04/30/06 $16,951,665
-----------
SHARES
- -----------
MONEY MARKET FUND - 8.5%
1,574,000 Dreyfus Treasury Prime Cash Management Fund 1,574,000
-----------
Total Investments at Amortized Cost* - 100.2% $18,525,665
Other Assets and Liabilities, Net - (0.2%) (34,558)
-----------
NET ASSETS - 100.0% $18,491,107
===========
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
U.S. Government Security 91.5%
Money Market Fund 8.5%
# Rates shown are annualized yields at time of purchase.
* Cost for federal income tax purposes is substantially the same as for financial statement purposes.
See Notes to Financial Statements.
3
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT FUND
February 28, 2006
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ---------- -------------------------------------------------------------------------- ---- -------- -----------
U.S. GOVERNMENT SECURITIES - 9.3%
SMALL BUSINESS ADMINISTRATION(+/-) - 9.3%
$ 25,391 Pool #500536 6.25% 05/25/13 $ 25,750
178,536 Pool #501077 6.00 11/25/14 178,536
105,295 Pool #501308 5.75 10/25/15 105,295
604,430 Pool #501543 5.63 07/25/16 604,430
128,985 Pool #501690 5.38 12/25/16 128,985
239,874 Pool #501733 5.25 02/25/17 241,427
319,299 Pool #501898 5.75 07/25/17 319,299
356,205 Pool #501989 5.38 10/25/12 358,525
1,170,425 Pool #502150 5.25 02/25/18 1,176,598
55,225 Pool #502161 5.50 02/25/18 55,225
550,047 Pool #502208 5.25 02/25/18 551,743
49,287 Pool #502306 5.50 02/25/18 49,287
41,206 Pool #502613 5.50 04/25/19 41,206
47,134 Pool #502914 5.25 03/25/15 47,401
228,632 Pool #503058 5.13 07/25/15 228,632
211,940 Pool #503082 5.13 09/25/20 211,940
191,089 Pool #503120 5.13 10/25/20 191,089
614,181 Pool #503121 5.13 09/25/15 615,917
1,814,958 Pool #503152 4.88 11/25/20 1,814,958
236,388 Pool #503278 4.88 02/25/21 236,400
379,186 Pool #503429 5.00 06/25/16 379,660
270,891 Pool #503431 5.25 07/25/21 270,959
1,188,960 Pool #503461 5.00 09/25/21 1,189,523
242,294 Pool #503472 5.25 08/25/21 242,294
1,102,030 Pool #503553 4.88 11/25/21 1,102,783
1,279,256 Pool #503614 5.13 01/25/22 1,279,256
474,405 Pool #503671 5.13 03/25/22 474,405
725,418 Pool #503754 5.13 05/25/22 725,991
741,095 Pool #503882 4.75 09/25/22 740,587
224,188 Pool #503892 5.13 07/25/22 224,397
1,207,566 Pool #503909 4.75 10/25/22 1,207,199
429,271 Pool #504015 4.75 01/25/23 429,215
544,552 Pool #504062 4.75 02/25/23 544,552
130,004 Pool #504074 5.00 02/25/23 130,004
379,710 Pool #504203 4.88 07/25/13 380,132
234,115 Pool #504269 5.13 05/25/15 234,396
7,505,196 Pool #504366 4.63 02/25/24 7,489,132
3,991,444 Pool #504719 5.13 07/25/24 3,991,444
1,231,641 Pool #504727 5.13 09/25/24 1,231,641
1,271,080 Pool #504765 4.88 10/25/09 1,269,586
1,650,928 Pool #504769 4.88 10/25/24 1,650,928
118,583 Pool #505204 5.00 09/25/25 118,559
223,827 Pool #505205 5.06 09/25/07 223,816
-----------
Total Small Business Administration 32,713,102
-----------
Total U.S. Government Securities 32,713,102
-----------
See Notes to Financial Statements.
4
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT FUND
February 28, 2006
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ------------ --------------------------------------------------------------------------- ---- -------- ------------
REPURCHASE AGREEMENTS - 90.6%
$ 67,404,000 Bank of America Securities, dated 2/28/06, to be repurchased at
$67,412,482; collateralized by various U.S. Government Agency Obligations 4.53% 03/01/06 $ 67,404,000
120,000,000 Bear Stearns & Co., Inc., dated 2/28/06, to be repurchased at
$120,015,233; collateralized by various U.S. Government Agency Obligations 4.57 03/01/06 120,000,000
80,000,000 Deutsche Bank Securities, Inc., dated 2/28/06, to be repurchased at
$80,010,156; collateralized by various U.S. Government Agency Obligations 4.57 03/01/06 80,000,000
49,500,000 Merrill Lynch, dated 2/28/06, to be repurchased at $49,506,284;
collateralized by various U.S. Government Agency Obligations 4.57 03/01/06 49,500,000
------------
Total Repurchase Agreements 316,904,000
------------
Total Investments at Amortized Cost* - 99.9% $349,617,102
Other Assets and Liabilities, Net - 0.1% 342,571
------------
NET ASSETS - 100.0% $349,959,673
============
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Repurchase Agreements 90.7%
U.S. Government Securities 9.3%
(+/-)Certain securities are deemed to have a maturity remaining until the next adjustment of the
interest rate, or the longer of the demand period or time to next readjustment. The interest
rates shown reflect the rate in effect on February 28, 2006.
* Cost for federal income tax purposes is substantially the same as for financial statement purposes.
See Notes to Financial Statements.
5
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS CASH FUND
February 28, 2006
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- ------------
COMMERCIAL PAPER# - 22.0%
$10,000,000 Cafco, LLC^ 4.45% 03/22/06 $ 9,974,333
18,000,000 Edison Asset Securitization, LLC^ 4.52 03/03/06 17,995,500
18,000,000 General Electric Capital Corp. 4.52 03/15/06 17,968,500
15,000,000 UBS Finance Delaware, LLC 4.52 03/15/06 14,973,721
15,000,000 Unionbancal Commerical Funding 4.56 03/31/06 14,943,375
5,000,000 Windmill Funding Corp.^ 4.50 03/01/06 5,000,000
------------
Total Commercial Paper 80,855,429
------------
CORPORATE NOTES(+/-) - 35.7%
12,838,000 Bear Stearns & Co., Inc. 4.75 06/19/06 12,848,390
5,000,000 CIT Group, Inc. 4.70 04/19/06 5,000,743
10,000,000 CIT Group, Inc. 4.75 05/12/06 10,000,000
4,000,000 Countrywide Home Loan 4.69 04/12/06 4,000,206
10,000,000 Countrywide Financial Corp. 4.55 09/13/06 10,000,000
10,000,000 Credit Suisse First Boston 4.78 06/19/06 10,008,486
7,000,000 Credit Suisse New York 4.55 07/19/06 7,000,235
15,000,000 Goldman Sachs Group, Inc. 4.70 03/21/06 15,001,861
5,250,000 Merrill Lynch & Co., Inc. 4.88 04/18/06 5,252,048
5,000,000 Merrill Lynch & Co., Inc. 4.70 06/06/06 5,003,577
10,000,000 Merrill Lynch & Co., Inc. 4.70 09/18/06 10,012,340
15,000,000 Morgan Stanley 4.80 03/27/06 15,003,371
15,000,000 U.S. Trust Co. of New York 4.62 09/12/06 15,003,682
7,205,000 Wells Fargo & Co. 4.57 06/12/06 7,206,612
------------
Total Corporate Notes 131,341,551
------------
REPURCHASE AGREEMENTS - 42.4%
41,110,000 Bank of America Securities, dated 02/28/06, to be repurchased at
$41,115,173; collateralized by various U.S. Government Agency Obligations 4.53 03/01/06 41,110,000
70,000,000 Bear Stearns & Co., Inc., dated 02/28/06, to be repurchased at
$70,008,886; collateralized by various U.S. Government Agency Obligations 4.57 03/01/06 70,000,000
45,250,000 Deutsche Bank Securities, Inc., dated 02/28/06, to be repurchased at
$45,255,744; collateralized by various U.S. Government Agency Obligations 4.57 03/01/06 45,250,000
------------
Total Repurchase Agreements 156,360,000
------------
Total Investments at Amortized Cost* - 100.1% $368,556,980
Other Assets and Liabilities, Net - (0.1%) (412,695)
------------
NET ASSETS - 100.0% $368,144,285
============
# Rates shown are annualized yields at time of purchase.
(+/-)Certain securities are deemed to have a maturity remaining until the next adjustment of the
interest rate, or the longer of the demand period or time to next readjustment. The interest rates
shown reflect the rate in effect on February 28, 2006.
^ Security exempt from registration under Rule 144A under the Securities Act of 1933. At the period
end, the value of these securities amounted to $32,969,833 or 9.0% of net assets.
* Cost for federal income tax purposes is substantially the same as for financial statement purposes.
See Notes to Financial Statements.
6
MONARCH FUNDS
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STATEMENTS OF ASSETS AND LIABILITIES
February 28, 2006
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
------------ ------------ ------------ ------------
Assets
Investments:
Securities at amortized cost $39,843,000 $18,525,665 $ 32,713,102 $212,196,980
Repurchase agreements 41,740,000 -- 316,904,000 156,360,000
Cash 40,497 30,303 34,963 23,309
Receivables:
Dividends -- 4,907 -- --
Interest 5,229 -- 314,007 963,176
Investment securities sold -- -- 1,369,321 --
Receivable from administrator 1,899 2,095 -- 7,490
Prepaid expenses and other assets 13,140 3,752 25,826 38,918
----------- ----------- ------------ ------------
Total Assets 81,643,765 18,566,722 351,361,219 369,589,873
----------- ----------- ------------ ------------
Liabilities
Payables:
Dividends 229,876 59,414 1,160,158 1,220,376
Accrued expenses:
Payables to related parties 2,273 -- 32,953 11,024
Trustees' fees and expenses 155 38 -- 765
Other expenses and other liabilities 61,903 16,163 208,435 213,423
----------- ----------- ------------ ------------
Total Liabilities 294,207 75,615 1,401,546 1,445,588
----------- ----------- ------------ ------------
Net Assets $81,349,558 $18,491,107 $349,959,673 $368,144,285
=========== =========== ============ ============
Components of Net Assets
Paid in capital $81,349,545 $18,514,919 $349,988,185 $368,159,116
Undistributed (distributions in excess of) net investment
income (84) 408 (28,514) (559)
Accumulated net realized gain (loss) 97 (24,220) 2 (14,272)
----------- ----------- ------------ ------------
Net Assets $81,349,558 $18,491,107 $349,959,673 $368,144,285
=========== =========== ============ ============
Net Assets by Class of Shares
Preferred Shares $ -- $ -- $106,745,020 $ 45,516,246
Universal Shares -- 18,491,107 52,254,812 53,145,393
Institutional Service Shares 13,978,851 -- 39,215,040 19,615,767
Institutional Shares -- -- 98,702,643 64,736,478
Investor Shares 67,370,707 -- 53,042,158 185,030,728
B Shares -- -- -- 30,448
C Shares -- -- -- 69,225
----------- ----------- ------------ ------------
Net Assets $81,349,558 $18,491,107 $349,959,673 $368,144,285
=========== =========== ============ ============
Shares of Beneficial Interest for each Class of Shares
Preferred Shares -- -- 106,744,227 45,516,455
Universal Shares -- 18,515,152 52,294,239 53,149,867
Institutional Service Shares 13,974,572 -- 39,215,120 19,615,930
Institutional Shares -- -- 98,697,588 64,739,220
Investor Shares 67,374,983 -- 53,037,025 185,038,005
B Shares -- -- -- 30,449
C Shares -- -- -- 69,225
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.
7
MONARCH FUNDS
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STATEMENTS OF OPERATIONS
Six Months Ended February 28, 2006
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
------------ ------------ ------------ ------------
Investment Income:
Interest income $1,391,038 $323,605 $30,105,681 $8,292,898
Dividend income 5,568 25,978 -- --
---------- -------- ----------- ----------
Total Investment Income 1,396,606 349,583 30,105,681 8,292,898
---------- -------- ----------- ----------
Expenses:
Investment adviser fees 12,164 4,401 256,446 69,662
Administrator fees
Preferred Shares -- -- 677,728 27,474
Universal Shares -- 9,681 23,623 33,230
Institutional Service Shares 6,618 -- 31,517 13,397
Institutional Shares -- -- 51,720 29,040
Investor Shares 31,873 -- 31,713 117,275
B Shares -- -- -- 12,421
C Shares -- -- -- 12,435
Shareholder service fees
Institutional Service Shares 12,033 -- 57,303 24,357
Institutional Shares -- -- 94,036 52,800
Investor Shares 57,951 -- 57,660 213,230
B Shares -- -- -- 48
C Shares -- -- -- 76
Distribution fees
Investor Shares 72,438 -- 72,075 266,534
B Shares -- -- -- 145
C Shares -- -- -- 229
Compliance Services fees 1,104 562 7,566 3,730
Transfer agency fees
Preferred Shares -- -- 23,039 8,763
Universal Shares -- 11,835 18,425 24,292
Institutional Service Shares 12,727 -- 36,342 19,071
Institutional Shares -- -- 105,044 61,147
Investor Shares 68,985 -- 67,300 226,870
B Shares -- -- -- 7,478
C Shares -- -- -- 7,502
Custodian fees 4,374 1,100 92,771 25,056
Professional fees 17,717 16,108 20,081 19,524
Accountant fees 24,611 20,736 48,686 61,947
Trustees' fees and expenses 1,533 377 29,448 8,603
Miscellaneous expenses 18,591 6,943 43,619 37,949
---------- -------- ----------- ----------
Total Expenses 342,719 71,743 1,846,142 1,384,285
Expenses reimbursed and fees waived (70,857) (53,789) (395,069) (184,202)
---------- -------- ----------- ----------
Net Expenses 271,862 17,954 1,451,073 1,200,083
---------- -------- ----------- ----------
Net Investment Income (Loss) 1,124,744 331,629 28,654,608 7,092,815
---------- -------- ----------- ----------
Net Realized Gain (Loss) on Investments -- -- -- (687)
---------- -------- ----------- ----------
Increase (Decrease) in Net Assets from Operations $1,124,744 $331,629 $28,654,608 $7,092,128
========== ======== =========== ==========
See Notes to Financial Statements.
8
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS
TREASURY FUND
---------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2006 AUGUST 31, 2005
----------------- ---------------
Operations
Net investment income (loss) $ 1,124,744 $ 2,225,708
Net realized gain (loss) on investments -- 133
------------- ---------------
Increase (Decrease) in Net Assets from Operations 1,124,744 2,225,841
------------- ---------------
Distributions to Shareholders from
Net investment income--Universal Shares (a) -- (985,929)
Net investment income--Institutional Service Shares (212,827) (278,559)
Net investment income--Investor Shares (911,918) (961,220)
Net realized gain--Preferred Shares -- --
Net realized gain--Universal Shares -- --
Net realized gain--Institutional Service Shares -- --
Net realized gain--Institutional Shares -- --
Net realized gain--Investor Shares -- --
------------- ---------------
Total Distributions to Shareholders (1,124,745) (2,225,708)
------------- ---------------
Capital Share Transactions
Sale of shares--Universal Shares (a) -- 143,522,719
Sale of shares--Institutional Service Shares 27,041,098 137,281,165
Sale of shares--Investor Shares 500,607,434 1,106,065,389
Reinvestment of distributions--Universal Shares (a) -- 171,170
Reinvestment of distributions--Institutional Service Shares 135,250 199,036
Reinvestment of distributions--Investor Shares 723,588 960,627
Redemption of shares--Universal Shares (a) -- (230,453,376)
Redemption of shares--Institutional Service Shares (25,073,656) (141,153,779)
Redemption of shares--Investor Shares (480,906,545) (1,116,289,749)
------------- ---------------
Increase (Decrease) from Capital Transactions 22,527,169 (99,696,798)
------------- ---------------
Increase (Decrease) in Net Assets 22,527,168 (99,696,665)
------------- ---------------
Net Assets
Beginning of Period 58,822,390 158,519,055
------------- ---------------
End of Period $ 81,349,558 $ 58,822,390
============= ===============
Share Transactions
Sale of shares--Universal Shares (a) -- 143,522,720
Sale of shares--Institutional Service Shares 27,041,098 137,281,165
Sale of shares--Investor Shares 500,607,434 1,106,065,388
Reinvestment of distributions--Universal Shares (a) -- 171,170
Reinvestment of distributions--Institutional Service Shares 135,250 199,036
Reinvestment of distributions--Investor Shares 723,588 960,627
Redemption of shares--Universal Shares (a) -- (230,453,376)
Redemption of shares--Institutional Service Shares (25,073,656) (141,153,779)
Redemption of shares--Investor Shares (480,906,545) (1,116,289,749)
------------- ---------------
Increase (Decrease) in Shares 22,527,169 (99,696,798)
============= ===============
Undistributed (distributions in excess of)
Net Investment Income $ (84) $ (83)
------------- ---------------
DAILY ASSETS
GOVERNMENT OBLIGATIONS FUND
--------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2006 AUGUST 31, 2005
----------------- ---------------
Operations
Net investment income (loss) $ 331,629 $ 404,866
Net realized gain (loss) on investments -- --
----------- ------------
Increase (Decrease) in Net Assets from Operations 331,629 404,866
----------- ------------
Distributions to Shareholders from
Net investment income--Universal Shares (a) (331,629) (404,866)
Net investment income--Institutional Service Shares -- --
Net investment income--Investor Shares -- --
Net realized gain--Preferred Shares -- --
Net realized gain--Universal Shares -- --
Net realized gain--Institutional Service Shares -- --
Net realized gain--Institutional Shares -- --
Net realized gain--Investor Shares -- --
----------- ------------
Total Distributions to Shareholders (331,629) (404,866)
----------- ------------
Capital Share Transactions
Sale of shares--Universal Shares (a) 9,533,087 16,700,397
Sale of shares--Institutional Service Shares -- --
Sale of shares--Investor Shares -- --
Reinvestment of distributions--Universal Shares (a) 3,812 6,933
Reinvestment of distributions--Institutional Service Shares -- --
Reinvestment of distributions--Investor Shares -- --
Redemption of shares--Universal Shares (a) (8,467,776) (19,667,988)
Redemption of shares--Institutional Service Shares -- --
Redemption of shares--Investor Shares -- --
----------- ------------
Increase (Decrease) from Capital Transactions 1,069,123 (2,960,658)
----------- ------------
Increase (Decrease) in Net Assets 1,069,123 (2,960,658)
----------- ------------
Net Assets
Beginning of Period 17,421,984 20,382,642
----------- ------------
End of Period $18,491,107 $ 17,421,984
=========== ============
Share Transactions
Sale of shares--Universal Shares (a) 9,533,087 16,700,396
Sale of shares--Institutional Service Shares -- --
Sale of shares--Investor Shares -- --
Reinvestment of distributions--Universal Shares (a) 3,812 6,933
Reinvestment of distributions--Institutional Service Shares -- --
Reinvestment of distributions--Investor Shares -- --
Redemption of shares--Universal Shares (a) (8,467,776) (19,667,988)
Redemption of shares--Institutional Service Shares -- --
Redemption of shares--Investor Shares -- --
----------- ------------
Increase (Decrease) in Shares 1,069,123 (2,960,659)
=========== ============
Undistributed (distributions in excess of)
Net Investment Income $ 408 $ 408
----------- ------------
(a)On February 24, 2005, Universal Shares of Daily Assets Treasury Fund ceased
operations.
See Notes to Financial Statements.
9
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS
GOVERNMENT FUND
----------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2006 AUGUST 31, 2005
----------------- ----------------
Operations
Net investment income (loss) $ 28,654,608 $ 32,720,030
Net realized gain (loss) on investments -- --
--------------- ----------------
Increase (Decrease) in Net Assets from Operations 28,654,608 32,720,030
--------------- ----------------
Distributions to Shareholders from
Net investment income--Preferred Shares (24,083,620) (27,064,461)
Net investment income--Universal Shares (852,221) (1,725,437)
Net investment income--Institutional Service Shares (1,064,952) (1,476,445)
Net investment income--Institutional Shares (1,700,038) (1,233,938)
Net investment income--Investor Shares (953,776) (1,219,599)
Net investment income--B Shares -- --
Net investment income--C Shares -- --
Net realized gain--Universal Shares -- (149)
--------------- ----------------
Total Distributions to Shareholders (28,654,607) (32,720,029)
--------------- ----------------
Capital Share Transactions
Sale of shares--Preferred Shares 8,083,415,686 13,457,887,243
Sale of shares--Universal Shares 164,384,137 495,568,211
Sale of shares--Institutional Service Shares 205,579,042 423,309,543
Sale of shares--Institutional Shares 432,038,021 628,209,101
Sale of shares--Investor Shares 516,713,071 1,101,652,154
Sale of shares--B Shares -- --
Sale of shares--C Shares -- --
Reinvestment of distributions--Preferred Shares 23,874,577 27,064,464
Reinvestment of distributions--Universal Shares 700,283 1,279,994
Reinvestment of distributions--Institutional Service Shares 820,921 1,200,078
Reinvestment of distributions--Institutional Shares 1,100,813 833,140
Reinvestment of distributions--Investor Shares 769,019 1,214,233
Reinvestment of distributions--B Shares -- --
Reinvestment of distributions--C Shares -- --
Redemption of shares--Preferred Shares (8,021,861,592) (13,487,020,990)
Redemption of shares--Universal Shares (137,608,544) (585,949,775)
Redemption of shares--Institutional Service Shares (222,604,933) (424,231,220)
Redemption of shares--Institutional Shares (391,278,643) (645,775,244)
Redemption of shares--Investor Shares (527,000,058) (1,104,334,690)
Redemption of shares--B Shares -- --
Redemption of shares--C Shares -- --
--------------- ----------------
Increase (Decrease) Decrease from Capital Transactions 129,041,800 (109,093,758)
--------------- ----------------
Increase (Decrease) in Net Assets 129,041,801 (109,093,757)
--------------- ----------------
Net Assets
Beginning of Period 220,917,872 330,011,629
--------------- ----------------
End of Period $ 349,959,673 $ 220,917,872
=============== ================
Undistributed (distributions in excess of)
Net Investment Income $ (28,514) $ (28,515)
--------------- ----------------
DAILY ASSETS
CASH FUND
---------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2006 AUGUST 31, 2005
----------------- ---------------
Operations
Net investment income (loss) $ 7,092,815 $ 7,210,676
Net realized gain (loss) on investments (687) (1,944)
--------------- ---------------
Increase (Decrease) in Net Assets from Operations 7,092,128 7,208,732
--------------- ---------------
Distributions to Shareholders from
Net investment income--Preferred Shares (1,019,965) (589,768)
Net investment income--Universal Shares (1,193,306) (776,984)
Net investment income--Institutional Service Shares (444,871) (634,583)
Net investment income--Institutional Shares (944,128) (1,240,847)
Net investment income--Investor Shares (3,489,334) (3,967,761)
Net investment income--B Shares (471) (347)
Net investment income--C Shares (739) (387)
Net realized gain--Universal Shares -- --
--------------- ---------------
Total Distributions to Shareholders (7,092,814) (7,210,677)
--------------- ---------------
Capital Share Transactions
Sale of shares--Preferred Shares 278,658,602 235,742,194
Sale of shares--Universal Shares 352,544,120 556,966,206
Sale of shares--Institutional Service Shares 157,256,435 317,798,401
Sale of shares--Institutional Shares 452,899,529 972,584,819
Sale of shares--Investor Shares 2,185,716,580 5,641,350,655
Sale of shares--B Shares 83,851 91,308
Sale of shares--C Shares 172,668 100,722
Reinvestment of distributions--Preferred Shares 66,171 192,222
Reinvestment of distributions--Universal Shares 940,382 578,709
Reinvestment of distributions--Institutional Service Shares 374,515 614,454
Reinvestment of distributions--Institutional Shares 629,993 1,123,763
Reinvestment of distributions--Investor Shares 2,621,265 3,613,494
Reinvestment of distributions--B Shares 402 348
Reinvestment of distributions--C Shares 585 387
Redemption of shares--Preferred Shares (272,954,039) (215,354,337)
Redemption of shares--Universal Shares (339,612,473) (554,163,851)
Redemption of shares--Institutional Service Shares (165,152,396) (317,698,752)
Redemption of shares--Institutional Shares (445,443,192) (1,013,042,784)
Redemption of shares--Investor Shares (2,240,048,611) (5,802,886,123)
Redemption of shares--B Shares (83,889) (61,571)
Redemption of shares--C Shares (140,238) (64,898)
--------------- ---------------
Increase (Decrease) Decrease from Capital Transactions (31,469,740) (172,514,634)
--------------- ---------------
Increase (Decrease) in Net Assets (31,470,426) (172,516,579)
--------------- ---------------
Net Assets
Beginning of Period 399,614,711 572,131,290
--------------- ---------------
End of Period $ 368,144,285 $ 399,614,711
=============== ===============
Undistributed (distributions in excess of)
Net Investment Income $ (559) $ (560)
--------------- ---------------
See Notes to Financial Statements.
10
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS DAILY ASSETS
GOVERNMENT FUND CASH FUND
--------------------------------- --------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2006 AUGUST 31, 2005 FEBRUARY 28, 2006 AUGUST 31, 2005
----------------- --------------- ----------------- ---------------
Share Transactions
Sale of shares--Preferred Shares 8,083,415,687 13,457,887,242 278,658,601 235,742,195
Sale of shares--Universal Shares 164,384,137 495,568,212 352,544,122 556,966,206
Sale of shares--Institutional Service Shares 205,579,042 423,309,542 157,256,436 317,798,401
Sale of shares--Institutional Shares 432,038,021 628,209,101 452,899,529 972,584,819
Sale of shares--Investor Shares 516,713,071 1,101,652,156 2,185,716,581 5,641,350,654
Sale of shares--B Shares -- -- 83,852 91,307
Sale of shares--C Shares -- -- 172,667 100,722
Reinvestment of distributions--Preferred Shares 23,874,577 27,064,464 66,171 192,222
Reinvestment of distributions--Universal Shares 700,283 1,279,993 940,382 578,709
Reinvestment of distributions--Institutional Service
Shares 820,921 1,200,078 374,515 614,454
Reinvestment of distributions--Institutional Shares 1,100,813 833,140 629,993 1,123,763
Reinvestment of distributions--Investor Shares 769,019 1,214,233 2,621,265 3,613,494
Reinvestment of distributions--B Shares -- -- 402 348
Reinvestment of distributions--C Shares -- -- 585 387
Redemption of shares--Preferred Shares (8,021,861,592) (13,487,020,990) (272,954,039) (215,354,760)
Redemption of shares--Universal Shares (137,608,544) (585,949,775) (339,612,473) (554,178,721)
Redemption of shares--Institutional Service Shares (222,604,933) (424,231,220) (165,152,396) (317,703,982)
Redemption of shares--Institutional Shares (391,278,643) (645,775,244) (445,443,192) (1,013,055,861)
Redemption of shares--Investor Shares (527,000,058) (1,104,334,690) (2,240,048,611) (5,802,929,163)
Redemption of shares--B Shares -- -- (83,889) (61,571)
Redemption of shares--C Shares -- -- (140,238) (64,898)
-------------- --------------- -------------- --------------
Increase (Decrease) in Shares 129,041,801 (109,093,758) (31,469,737) (172,591,275)
============== =============== ============== ==============
See Notes to Financial Statements.
11
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 Net
------------------------------------------------------------------------- Assets at
Beginning Net Distributions Distributions Ending End of
Year Ended Net Asset Net Realized from Net from Net Net Asset Period
August 31, Value Per Investment Gain on Investment Realized Value Total (000's
(except as noted) Share Income Investments Income Gains Per Share Return/(b)/ Omitted)
- ----------------- --------- ---------- ----------- ------------- ------------- --------- ---------- ---------
- - - - - - - - - -
DAILY ASSETS TREASURY FUND
Institutional Service Shares/(d)/
- -------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 $1.00 $0.02/(e)/ -- $(0.02) -- $1.00 1.76% $ 13,979
2005 1.00 0.02/(e)/ --/(f)/ (0.02) -- 1.00 2.03% 11,876
2004 1.00 0.01 -- (0.01) -- 1.00 0.59% 15,552
2003 1.00 0.01 -- (0.01) -- 1.00 0.84% 35,074
2002 1.00 0.02 --/(f)/ (0.02) --/(f)/ 1.00 1.57% 20,068
2001 1.00 0.05 -- (0.05) -- 1.00 4.92% 50,554
Investor Shares
- -------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.02/(e)/ -- (0.02) -- 1.00 1.56% 67,371
2005 1.00 0.02/(e)/ --/(f)/ (0.02) -- 1.00 1.64% 46,946
2004 1.00 --/(f)/ -- --/(f)/ -- 1.00 0.20% 56,217
2003 1.00 --/(f)/ -- --/(f)/ -- 1.00 0.45% 96,827
2002 1.00 0.01 --/(f)/ (0.01) --/(f)/ 1.00 1.17% 133,758
2001 1.00 0.04 -- (0.04) -- 1.00 4.52% 233,138
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Universal Shares/(g)/
- -------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.02/(e)/ -- (0.02) -- 1.00 1.87% 18,491
2005 1.00 0.02/(e)/ -- (0.02) -- 1.00 2.27% 17,422
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.91% 20,383
2003 1.00 0.01 -- (0.01) -- 1.00 1.18% 24,752
2002 1.00 0.02 -- (0.02) -- 1.00 1.97% 25,760
2001 1.00 0.05 -- (0.05) -- 1.00 5.26% 29,100
RATIOS/SUPPLEMENTAL DATA
- --------------------------------
Ratios to Average Net Assets/(a)/
- --------------------------------
Net
Net Gross Investment
Expenses Expenses/(c)/ Income
- ---------------------------------
- ----------------------------------
0.45% 0.83% 3.54%
0.45% 0.69% 1.92%
0.45% 0.56% 0.57%
0.45% 0.67% 0.84%
0.45% 0.62% 1.68%
0.45% 0.61% 4.57%
- ----------------------------------
0.84% 1.01% 3.15%
0.84% 0.97% 1.61%
0.84% 0.89% 0.18%
0.84% 0.90% 0.45%
0.85% 0.87% 1.22%
0.84% 0.84% 4.52%
- ----------------------------------
0.20% 0.82% 3.77%
0.20% 0.75% 2.22%
0.20% 0.70% 0.86%
0.20% 0.48% 1.14%
0.20% 0.71% 1.97%
0.20% 0.57% 5.24%
(a)Annualized for periods less than one year.
(b)Not annualized for periods less than one year.
(c)Reflects the expense ratio excluding any waivers and/or reimbursements.
(d)On April 23, 2003, Institutional Shares were renamed Institutional Service
Shares.
(e)Calculated based on average shares outstanding during the period.
(f)Less than $0.01 per share.
(g)On July 22, 2003, Institutional Shares were redesignated as Universal Shares.
See Notes to Financial Statements.
12
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 Net
------------------------------------------------------------------------- Assets at
Beginning Net Distributions Distributions Ending End of
Year Ended Net Asset Net Realized from Net from Net Net Asset Period
August 31, Value Per Investment Gain on Investment Realized Value Total (000's
(except as noted) Share Income Investments Income Gains Per Share Return/(b)/ Omitted)
- ----------------- --------- ---------- ----------- ------------- ------------- --------- ---------- ---------
- - - - - - - - - -
DAILY ASSETS GOVERNMENT FUND
Preferred Shares
- -------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 $1.00 $0.02/(d)/ -- $(0.02) -- $1.00 2.01% $106,745
2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 2.52% 21,316
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 1.04% 23,386
2003 1.00 0.01 -- (0.01) -- 1.00 1.40% 11,549
2002 1.00 0.02 --/(f)/ (0.02) --/(f)/ 1.00 2.25% 12,041
2001/(e)/ 1.00 --/(f)/ -- --/(f)/ -- 1.00 0.22% 8
Universal Shares
- -------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.02/(d)/ -- (0.02) -- 1.00 1.97% 52,255
2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 2.43% 24,779
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.96% 113,881
2003 1.00 0.01 -- (0.01) -- 1.00 1.29% 114,173
2002 1.00 0.02 --/(f)/ (0.02) --/(f)/ 1.00 2.17% 81,426
2001 1.00 0.05 -- (0.05) -- 1.00 5.34% 164,500
Institutional Service Shares
- -------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.02/(d)/ -- (0.02) -- 1.00 1.84% 39,215
2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 2.18% 55,420
2004 1.00 --/(f)/ --/(f)/ --/(f)/ -- 1.00 0.71% 55,142
2003/(e)/ 1.00 --/(f)/ -- --/(f)/ -- 1.00 0.16% 76,273
Institutional Shares
- -------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.02/(d)/ -- (0.02) -- 1.00 1.78% 98,703
2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 2.06% 56,843
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.59% 73,575
2003 1.00 0.01 -- (0.01) -- 1.00 0.91% 90,740
2002 1.00 0.02 --/(f)/ (0.02) --/(f)/ 1.00 1.80% 117,476
2001 1.00 0.05 -- (0.05) -- 1.00 4.95% 198,324
Investor Shares
- -------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.02/(d)/ -- (0.02) -- 1.00 1.65% 53,042
2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 1.78% 62,560
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.32% 64,028
2003 1.00 0.01 -- (0.01) -- 1.00 0.64% 47,383
2002 1.00 0.02 --/(f)/ (0.02) --/(f)/ 1.00 1.52% 58,397
2001 1.00 0.05 -- (0.05) -- 1.00 4.68% 61,546
RATIOS/SUPPLEMENTAL DATA
- --------------------------------
Ratios to Average Net Assets/(a)/
- --------------------------------
Net
Net Gross Investment
Expenses Expenses/(c)/ Income
- ---------------------------------
- ----------------------------------
0.12% 0.18% 3.91%
0.12% 0.18% 2.56%
0.12% 0.18% 1.06%
0.11% 0.25% 1.05%
0.12% 0.22% 2.19%
0.12% 97.77% 3.64%
- ----------------------------------
0.20% 0.28% 3.97%
0.20% 0.25% 2.12%
0.20% 0.26% 0.95%
0.20% 0.28% 1.26%
0.21% 0.25% 2.17%
0.20% 0.23% 5.29%
- ----------------------------------
0.45% 0.51% 3.72%
0.45% 0.50% 2.10%
0.45% 0.51% 0.69%
0.45% 0.58% 0.70%
- ----------------------------------
0.57% 0.61% 3.62%
0.57% 0.61% 2.05%
0.57% 0.62% 0.58%
0.57% 0.63% 0.92%
0.57% 0.59% 2.05%
0.57% 0.58% 4.80%
- ----------------------------------
0.84% 0.88% 3.31%
0.84% 0.87% 1.74%
0.84% 0.86% 0.32%
0.84% 0.89% 0.63%
0.85% 0.85% 1.43%
0.84% 0.84% 4.51%
(a)Annualized for periods less than one year.
(b)Not annualized for periods less than one year.
(c)Reflects the expense ratio excluding any waivers and/or reimbursements.
(d)Calculated based on average shares outstanding during the period.
(e)See Note 1 for dates of commencement of operations.
(f)Less than $0.01 per share.
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 Net
--------------------------------------------------------------------------- Assets at
Beginning Net Distributions Distributions Ending End of
Year Ended Net Asset Net Realized from Net from Net Net Asset Period
August 31, Value Per Investment Gain on Investment Realized Value Total (000's
(except as noted) Share Income Investments Income Gains Per Share Return/(b)/ Omitted)
- ----------------- --------- ---------- ----------- ------------- ------------- --------- ---------- ---------
- - - - - - - - - -
DAILY ASSETS CASH FUND
Preferred Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 $1.00 $0.02/(d)/ --/(f)/ $(0.02) -- $1.00 2.00% $ 45,517
2005 1.00 0.03/(d)/ $(0.01) (0.02) -- 1.00 2.49% 39,746
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 1.04% 19,166
2003 1.00 0.01 -- (0.01) -- 1.00 1.37% 2,979
2002 1.00 0.02 -- (0.02) -- 1.00 2.21% 13,095
2001/(e)/ 1.00 --/(f)/ -- --/(e)/ -- 1.00 0.22% 8
Universal Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 1.96% 53,145
2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 2.41% 39,274
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.96% 35,892
2003 1.00 0.01 -- (0.01) -- 1.00 1.29% 104,842
2002 1.00 0.02 -- (0.02) -- 1.00 2.12% 46,833
2001 1.00 0.05 -- (0.05) -- 1.00 5.49% 37,236
Institutional Service Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 1.83% 19,616
2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 2.15% 27,137
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.71% 26,423
2003/(e)/ 1.00 --/(f)/ -- --/(f)/ -- 1.00 0.18% 36,876
Institutional Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 1.77% 64,736
2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 2.03% 56,650
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.59% 95,985
2003 1.00 0.01 -- (0.01) -- 1.00 0.92% 92,186
2002 1.00 0.02 -- (0.02) -- 1.00 1.75% 347,469
2001 1.00 0.05 -- (0.05) -- 1.00 5.11% 736,555
Investor Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 1.64% 185,031
2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 1.76% 236,742
2004 1.00 --/(f)/ --/(f)/ --/(f)/ -- 1.00 0.32% 394,665
2003 1.00 0.01 -- (0.01) -- 1.00 0.64% 303,389
2002 1.00 0.01 -- (0.01) -- 1.00 1.48% 646,285
2001 1.00 0.05 -- (0.05) -- 1.00 4.85% 791,138
B Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.01/(d)/ --/(f)/ (0.01) -- 1.00 1.23% 30
2005/(e)/ 1.00 0.01/(d)/ --/(f)/ (0.01) -- 1.00 0.92% 30
C Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2006 1.00 0.01/(d)/ --/(f)/ (0.01) -- 1.00 1.23% 69
2005/(e)/ 1.00 0.01/(d)/ --/(f)/ (0.01) -- 1.00 0.93% 36
RATIOS/SUPPLEMENTAL DATA
- --------------------------------
Ratios to Average Net Assets/(a)/
- --------------------------------
Net
Net Gross Investment
Expenses Expenses/(c)/ Income
- ---------------------------------
- ----------------------------------
0.12% 0.25% 4.08%
0.12% 0.32% 2.64%
0.12% 0.31% 1.06%
0.12% 0.30% 1.39%
0.12% 0.20% 1.88%
0.12% 91.14% 3.76%
- ----------------------------------
0.20% 0.29% 3.95%
0.20% 0.34% 2.32%
0.20% 0.27% 0.94%
0.20% 0.28% 1.24%
0.21% 0.25% 2.03%
0.20% 0.24% 5.68%
- ----------------------------------
0.45% 0.57% 3.65%
0.45% 0.60% 2.04%
0.45% 0.54% 0.71%
0.45% 0.58% 0.76%
- ----------------------------------
0.57% 0.67% 3.58%
0.57% 0.68% 1.97%
0.57% 0.63% 0.59%
0.57% 0.61% 1.01%
0.57% 0.58% 1.84%
0.57% 0.57% 5.07%
- ----------------------------------
0.84% 0.88% 3.27%
0.84% 0.91% 1.71%
0.84% 0.87% 0.32%
0.84% 0.86% 0.68%
0.83% 0.83% 1.51%
0.82% 0.82% 4.78%
- ----------------------------------
1.65% 125.37% 2.44%
1.65% 161.82% 1.20%
- ----------------------------------
1.65% 76.02% 2.42%
1.64% 158.38% 1.23%
(a)Annualized for periods less than one year.
(b)Not annualized for periods less than one year.
(c)Reflects the expense ratio excluding any waivers and/or reimbursements.
(d)Calculated based on average shares outstanding during the period.
(e)See Note 1 for dates of commencement of operations.
(f)Less than $0.01 per share.
See Notes to Financial Statements.
14
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
February 28, 2006
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 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 February 28, 2006, and the dates on which they commenced
operations were as follows:
COMMENCEMENT OF
FUND SHARE CLASS OPERATIONS
------------------------ ------------------------ ------------------------
Daily Assets Treasury Institutional Service
Fund Shares July 12, 1993
Investor Shares October 25, 1995
Daily Assets Government
Obligations Universal Shares July 1, 1998
Daily Assets Government
Fund Preferred Shares August 10, 2001
Universal Shares October 29, 1992
Institutional Service
Shares June 9, 2003
Institutional Shares July 15, 1993
Investor Shares December 30, 1999
Daily Assets Cash Fund Preferred Shares August 10, 2001
Universal Shares December 1, 1992
Institutional Service
Shares June 9, 2003
Institutional Shares July 15, 1993
Investor Shares June 16, 1995
B Shares November 22, 2004
C Shares November 17, 2004
Daily Assets Treasury Fund Universal Shares ceased operations on February 24,
2005.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with accounting
principles generally accepted in the United States, 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.
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 Funds' 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 Funds' 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, B Shares and C Shares incur shareholder servicing fees and Investor
Shares, B Shares and C 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.
15
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
February 28, 2006
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.
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.
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 Monarch Investment Advisors, LLC, formerly known as Forum
Investment Advisors, LLC (the "Adviser"), is the investment adviser of each
Fund. The Adviser receives an advisory fee from the Daily Assets Treasury Fund,
Daily Assets Government Fund, and Daily Assets Cash Fund based upon the total
average daily net assets of the 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. The Adviser 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.
ADMINISTRATION AND OTHER SERVICES Citigroup Fund Services, LLC ("Citigroup"),
provides certain administration, portfolio accounting and transfer agency
services to the Fund.
SHAREHOLDER SERVICES The Funds pay (other than Daily Assets Government
Obligations Fund) a shareholder servicing fee at an annual rate of 0.20% of the
average daily net assets attributable to Institutional Service Shares,
Institutional Shares and Investor Shares of each Fund and 0.25% of the average
daily net assets attributable to B Shares and C Shares of Daily Assets Cash
Fund. These fees are paid to various financial institutions that provide
shareholder services.
DISTRIBUTOR Foreside Fund Services, LLC is the Trust's distributor (the
"Distributor"). Under a Distribution Plan adopted pursuant to Rule 12b-1 under
the Act, the Trust pays the Distributor a distribution fee at an annual rate of
0.25% of the average daily net assets of Investor Shares of each Fund and 0.75%
of the average daily net assets of B Shares and C Shares of Daily Assets Cash
Fund. The Distributor pays some or all of these fees to various financial
institutions that provide distribution services for Investor Shares. The plan
obligates the Funds to pay the Distributor as compensation for its services.
The Distributor is not affiliated with Citigroup or its affiliated companies.
Under a Compliance Services Agreement with the Trust, the Distributor provides
a Chief Compliance Officer to the Trust as well as certain additional
compliance support functions.
TRUSTEES AND OFFICERS Certain officers of the Trust are directors, officers or
employees of the aforementioned companies.
NOTE 4. WAIVER OF FEES/REIMBURSEMENT OF EXPENSES
The Adviser and Citigroup voluntarily waived a portion of their fees and
assumed certain expenses of the Funds. For the period ended February 28, 2006,
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
------------- ---------------- --------------- ------------
Advisory $ -- $ 4,401 $ -- $ --
Administration 34,893 9,021 395,069 127,064
Shareholder Service 403 -- -- 3,176
Transfer Agency 10,014 11,771 -- 6,407
Portfolio Accounting 17,085 19,603 -- --
Reimbursed Expenses by Citigroup 8,462 8,993 -- 47,555
------- ------- -------- --------
Total $70,857 $53,789 $395,069 $184,202
======= ======= ======== ========
16
MONARCH FUNDS
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NOTES TO FINANCIAL STATEMENTS
February 28, 2006
NOTE 5. FEDERAL INCOME TAX AND INVESTMENT TRANSACTIONS
As of August 31, 2005, distributable earnings (accumulated losses) on a tax
basis were as follows:
UNDISTRIBUTED CAPITAL
ORDINARY AND OTHER
INCOME LOSSES TOTAL
------------- --------- --------
Daily Assets Treasury Fund $ 6,458 $ -- $ 6,458
Daily Assets Government Obligations Fund 44,813 (24,221) 20,592
Daily Assets Government Fund 14,094 -- 14,094
Daily Assets Cash Fund 178,603 (13,585) 165,018
The capital loss carryovers available to offset future gains, as of August 31,
2005, were as follows:
Daily Assets Government Obligations Fund Expiring August 2006 $18,999
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
Expiring August 2012 1,655
Expiring August 2013 333
NOTE 6. PROXY RESULTS
DAILY ASSETS GOVERNMENT FUND At the Special Meeting of Shareholders, held on
December 7, 2005, shares were voted as summarized below on the following
proposal presented to Shareholders: To approve the new investment advisory
agreement between the Trust and Monarch Investment Advisors, LLC with respect
to Daily Assets Government Fund.
FOR AGAINST ABSTAIN
------------- ------- ---------
1,963,862,250 588,897 7,307,729
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND At the Special Meeting of
Shareholders, held on December 7, 2005, shares were voted as summarized below
on the following proposal presented to Shareholders: To approve the new
investment advisory agreement between the Trust and Monarch Investment
Advisors, LLC with respect to Daily Assets Government Obligations Fund.
FOR AGAINST ABSTAIN
---------- ------- -------
17,631,209 0 0
DAILY ASSETS CASH FUND At the Special Meeting of Shareholders, held on
December 21, 2005, shares were voted as summarized below on the following
proposal presented to Shareholders: To approve the new investment advisory
agreement between the Trust and Monarch Investment Advisors, LLC with respect
to Daily Assets Cash Fund.
FOR AGAINST ABSTAIN
----------- ------- ----------
175,960,693 142,346 11,748,979
DAILY ASSETS TREASURY FUND At the Special Meeting of Shareholders, held on
December 21, 2005, shares were voted as summarized below on the following
proposal presented to Shareholders: To approve the new investment advisory
agreement between the Trust and Monarch Investment Advisors, LLC with respect
to Daily Assets Treasury Fund.
FOR AGAINST ABSTAIN
---------- ------- ---------
32,198,795 0 4,623,925
NOTE 7. PROXY VOTING GUIDELINES
A description of the policies and procedures the Funds use to determine how to
vote as a shareholder of the companies whose securities are held in the Funds'
portfolio is available, without charge and upon request, by calling
800-754-8757.
17
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
February 28, 2006
This information is also available from the EDGAR database on the SEC's website
at www.sec.gov. For the twelve months ended June 30, the Funds did not own any
securities for which a shareholder meeting was called and voted on.
NOTE 8. AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE
The Funds file their complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Funds' Form
N-Q are available on the SEC's website at www.sec.gov or may be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
NOTE 9. SHAREHOLDER EXPENSES EXAMPLE
As a shareholder of a Fund, you incur two types of costs: (1) transactions
costs, including contingent deferred sales charges (loads); and (2) ongoing
costs, including management fees; distribution (12b-1) fees; and other Fund
expenses. This example is intended to help you understand your ongoing costs
(in dollars) of investing in a Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The following example is based on $1,000 invested at the beginning of the
period and held for the entire period from September 1, 2005, through
February 28, 2006.
ACTUAL EXPENSES - The first line of the table below provides information about
actual account values and actual expenses. You may use the information in this
line, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES - The second line of the table
below provides information about hypothetical account values and hypothetical
expenses based on a Fund's actual expense ratio and an assumed rate of return
of 5% per year before expenses, which is not a Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing cost of investing in a Fund and other funds.
To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
contingent deferred sales charges (loads). Therefore, the second line of the
table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
18
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
February 28, 2006
BEGINNING ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING EXPENSE
SEPTEMBER 1, 2005 FEBRUARY 28, 2006 PERIOD* RATIO
----------------- ----------------- ----------- ----------
DAILY ASSETS TREASURY FUND
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,017.61 $2.25 0.45%
Hypothetical Return $1,000.00 $1,022.56 $2.26 0.45%
INVESTOR SHARES
Actual Return $1,000.00 $1,015.64 $4.20 0.84%
Hypothetical Return $1,000.00 $1,020.63 $4.21 0.84%
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
UNIVERSAL SHARES
Actual Return $1,000.00 $1,018.74 $1.00 0.20%
Hypothetical Return $1,000.00 $1,023.80 $1.00 0.20%
DAILY ASSETS GOVERNMENT FUND
PREFERRED SHARES
Actual Return $1,000.00 $1,020.08 $0.60 0.12%
Hypothetical Return $1,000.00 $1,024.20 $0.60 0.12%
UNIVERSAL SHARES
Actual Return $1,000.00 $1,019.66 $1.00 0.20%
Hypothetical Return $1,000.00 $1,023.80 $1.00 0.20%
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,018.42 $2.25 0.45%
Hypothetical Return $1,000.00 $1,022.56 $2.26 0.45%
INSTITUTIONAL SHARES
Actual Return $1,000.00 $1,017.82 $2.85 0.57%
Hypothetical Return $1,000.00 $1,021.97 $2.86 0.57%
INVESTOR SHARES
Actual Return $1,000.00 $1,016.46 $4.20 0.84%
Hypothetical Return $1,000.00 $1,020.63 $4.21 0.84%
DAILY ASSETS CASH FUND
PREFERRED SHARES
Actual Return $1,000.00 $1,020.01 $0.60 0.12%
Hypothetical Return $1,000.00 $1,024.20 $0.60 0.12%
UNIVERSAL SHARES
Actual Return $1,000.00 $1,019.61 $1.00 0.20%
Hypothetical Return $1,000.00 $1,023.80 $1.00 0.20%
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,018.35 $2.25 0.45%
Hypothetical Return $1,000.00 $1,022.56 $2.26 0.45%
INSTITUTIONAL SHARES
Actual Return $1,000.00 $1,017.75 $2.85 0.57%
Hypothetical Return $1,000.00 $1,021.97 $2.86 0.57%
INVESTOR SHARES
Actual Return $1,000.00 $1,016.39 $4.20 0.84%
Hypothetical Return $1,000.00 $1,020.63 $4.21 0.84%
B SHARES
Actual Return $1,000.00 $1,012.35 $8.23 1.65%
Hypothetical Return $1,000.00 $1,016.61 $8.25 1.65%
C SHARES
Actual Return $1,000.00 $1,012.34 $8.23 1.65%
Hypothetical Return $1,000.00 $1,016.61 $8.25 1.65%
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the
average account value over the period, multiplied by the number of days in
most recent fiscal half-year/365 (to reflect the half-year period).
19
[THIS PAGE INTENTIONALLY LEFT BLANK]
MONARCH FUNDS
DAILY ASSETS TREASURY FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
P.O. Box 446
Portland, Maine 04112
(800) 754-8757
FOR MORE INFORMATION
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective prospectus, which includes information
regarding the Funds' risks, objectives, fees and expenses, experience of its
management, and other information.
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Included as part of report to shareholders under Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant does not accept nominees to the board of directors from
shareholders.
ITEM 11. 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 Investment Company Act of 1940 (the "Act")) are effective, based on
their evaluation of these disclosure controls and procedures required by Rule
30a-3(b) as of a date within 90 days of the filing date of this report.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in rule 30a-3(d) under the Act) that occurred during the
registrant's last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) of the Investment Company Act
of 1940 as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 (Exhibit
filed herewith).
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) of the Investment Company Act of
1940, as amended, and 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/ Anthony R. Fischer
-------------------------
Anthony R. Fischer,
Principal Executive
Officer
Date April 26, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Anthony R. Fischer
-------------------------
Anthony R. Fischer,
Principal Executive
Officer
Date April 26, 2006
By /s/ Jack J. Singer
-------------------------
Jack J. Singer,
Principal Financial
Officer
Date April 26, 2006