As filed with the Securities and Exchange Commission on October 31, 2006
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 - August 31, 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, 100 F Street, N.E.,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORT TO STOCKHOLDERS.
AUGUST 31, 2006
DAILY ASSETS TREASURY FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
ANNUAL REPORT
MONARCH FUNDS
[GRAPHIC]
MONARCH FUNDS
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A MESSAGE TO OUR SHAREHOLDERS
August 31, 2006
Dear Shareholders:
Since our February 28, 2006 semi-annual report, domestic economic conditions
and Federal Reserve monetary policy have undergone some important changes.
Based on the perception that prior increases in short term interest rates are
now starting to have a restraining effect on domestic economic growth, the
Federal Reserve as of its August 2006 meeting, has indicated it will delay any
additional firming of short term interest rates to allow the central bankers
some time to monitor future reports related to the strength of the domestic
economy and the level of inflation. Given this back drop, our Portfolio
Management team has lengthened the average duration of our portfolios somewhat
but we still maintain shorter average duration than most money market funds in
our category. We believe this stance is prudent in light of the uncertainty
which exists in the current economic environment.
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 August 31, 2006. For the one- and
three-year periods ended as of August 31, 2006, the Daily Assets Government
Fund's Preferred Shares held the number 2 spot out of 145 funds and the number
1 spot out of 123 funds within the Lipper Institutional U. S. Government Money
Market category. During the same time frames, the Daily Assets Cash Fund's
Preferred Shares held the number 14 spot out of 339 funds and the number 7 spot
out of 288 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 our shareholders 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 145 AND 1 OUT OF 125 WITHIN THE INSTITUTIONAL U.S. GOVERNMENT MONEY MARKET
FUNDS CATEGORY FOR THE 1- AND 3-YEAR PERIODS AS OF SEPTEMBER 30, 2006.
PREFERRED SHARES OF DAILY ASSETS CASH FUND RANKED 12 OUT OF 342 AND 7 OUT OF
289 WITHIN THE INSTITUTIONAL MONEY MARKET FUNDS CATEGORY FOR THE 1- AND 3-YEAR
PERIODS AS OF SEPTEMBER 30, 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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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees and Shareholders
Monarch Funds:
We have audited the accompanying statements of assets and liabilities,
including the schedule of investments, of the Daily Assets Treasury Fund, Daily
Assets Government Obligations Fund, Daily Assets Government Fund and Daily
Assets Cash Fund (collectively, the "Funds"), each a series of the Monarch
Funds, as of August 31, 2006, 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 are
the responsibility of the Funds' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform 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, 2006, by
correspondence with custodians. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Daily Assets Treasury Fund, Daily Assets Government Obligations Fund, Daily
Assets Government Fund and Daily Assets Cash Fund as of August 31, 2006, the
results of its operations for the year then ended, the changes in its net
assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years or periods in the five-year period
then ended, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
October 20, 2006
2
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS TREASURY FUND
August 31, 2006
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- -----------
U.S. TREASURY BILLS # - (63.4%)
$35,000,000 U.S. Treasury Bill 4.61% 09/14/06 $34,936,047
12,000,000 U.S. Treasury Bill 4.76 09/21/06 11,966,300
-----------
Total U.S. Treasury Bills 46,902,347
-----------
REPURCHASE AGREEMENTS - (36.6%)
3,076,000 Bank of America Securities, dated 08/31/06, to be repurchased at
$3,076,440; collateralized by various U.S. Treasury Obligations 5.15 09/01/06 3,076,000
12,000,000 Deutsche Bank Securities, Inc., dated 08/31/06, to be repurchased at
$12,001,733; collateralized by various U.S. Treasury Obligations 5.20 09/01/06 12,000,000
12,000,000 Merrill Lynch & Co., Inc., dated 08/31/06, to be repurchased at
$12,001,737; collateralized by various U.S. Treasury Obligations 5.21 09/01/06 12,000,000
-----------
Total Repurchase Agreements 27,076,000
-----------
Total Investments at Amortized Cost* - (100.0%) $73,978,347
Other Assets and Liabilities, Net - (0.0%) (35,773)
-----------
NET ASSETS - (100.0%) $73,942,574
===========
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
U.S. Treasury Bills 63.4%
Repurchase Agreements 36.6%
# Rates shown are annualized yields at time of purchase.
* Cost for federal income tax purposes is 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 OBLIGATIONS FUND
August 31, 2006
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- -----------
U.S. GOVERNMENT SECURITIES - (96.5%)
FEDERAL FARM CREDIT DISCOUNT NOTE # - (93.3%)
$12,250,000 FFCB 5.15% 09/06/06 $12,241,271
5,350,000 FFCB 5.13% 09/07/06 5,345,444
-----------
17,586,715
-----------
FEDERAL HOME LOAN BANK - DISCOUNT NOTE # - (3.2%)
600,000 FHLB 5.13% 09/07/06 599,488
-----------
Total U.S. Government Securities 18,186,203
-----------
SHARES
- -----------
MONEY MARKET FUND - (3.9%)
733,710 Dreyfus Treasury Prime Cash Management Fund 733,710
-----------
Total Investments at Amortized Cost* - (100.4%) $18,919,913
Other Assets and Liabilities, Net - (0.4%) (76,346)
-----------
NET ASSETS - (100.0%) $18,843,567
===========
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
U.S. Government Securities 96.1%
Money Market Fund 3.9%
# Rates shown are annualized yields at time of purchase.
* Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements.
4
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT FUND
August 31, 2006
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ------------ --------------------------------------------------------------------------- ---- -------- ------------
U.S. GOVERNMENT SECURITIES - (7.8%)
SMALL BUSINESS ADMINISTRATION (+/-) - (7.8%)
$ 23,984 Pool #500536 7.25% 05/25/13 $ 24,300
94,711 Pool #501077 6.75 11/25/14 94,711
45,238 Pool #501308 6.75 10/25/15 45,238
583,029 Pool #501543 6.63 07/25/16 583,029
36,069 Pool #501690 6.38 12/25/16 36,069
231,817 Pool #501733 6.25 02/25/17 233,249
309,330 Pool #501898 6.50 07/25/17 309,330
333,647 Pool #501989 6.38 10/25/12 335,655
1,135,519 Pool #502150 6.25 02/25/18 1,141,257
53,591 Pool #502161 6.25 02/25/18 53,591
512,687 Pool #502208 6.25 02/25/18 514,201
47,829 Pool #502306 6.25 02/25/18 47,829
40,137 Pool #502613 6.25 04/25/19 40,137
45,097 Pool #502914 6.25 03/25/15 45,338
219,142 Pool #503058 6.13 07/25/15 219,142
92,792 Pool #503082 6.13 09/25/20 92,792
186,767 Pool #503120 6.13 10/25/20 186,767
449,829 Pool #503121 6.13 09/25/15 451,033
1,537,582 Pool #503152 5.88 11/25/20 1,537,582
174,437 Pool #503278 5.88 02/25/21 174,446
365,152 Pool #503429 6.00 06/25/16 365,586
265,200 Pool #503431 6.00 07/25/21 265,264
1,059,537 Pool #503461 6.00 09/25/21 1,060,023
237,245 Pool #503472 6.00 08/25/21 237,245
1,079,115 Pool #503553 5.88 11/25/21 1,079,829
814,507 Pool #503614 5.88 01/25/22 814,507
464,949 Pool #503671 5.88 03/25/22 464,949
579,798 Pool #503754 5.88 05/25/22 580,242
503,429 Pool #503882 5.75 09/25/22 503,095
219,855 Pool #503892 5.88 07/25/22 220,054
1,117,565 Pool #503909 5.75 10/25/22 1,117,236
421,156 Pool #504015 5.75 01/25/23 421,103
534,334 Pool #504062 5.75 02/25/23 534,334
290,662 Pool #504203 5.88 07/25/13 290,963
224,113 Pool #504269 5.88 05/25/15 224,367
5,829,596 Pool #504366 5.63 02/25/24 5,817,468
2,660,818 Pool #504719 5.88 07/25/24 2,660,818
1,211,998 Pool #504727 5.88 09/25/24 1,211,998
1,107,825 Pool #504765 5.88 10/25/09 1,106,702
1,517,773 Pool #504769 5.88 10/25/24 1,517,773
116,844 Pool #505204 6.00 09/25/25 116,820
118,257 Pool #505205 6.06 09/25/07 118,253
------------
Total Small Business Administration 26,894,325
------------
Total U.S. Government Securities 26,894,325
------------
REPURCHASE AGREEMENTS - (92.1%)
65,145,000 Bank of America Securities, dated 08/31/06, to be repurchased at
$65,154,482; collateralized by various U.S. Government Agency Obligations 5.24 09/01/06 65,145,000
100,000,000 Bear Stearns & Co., Inc., dated 08/31/06, to be repurchased at
$100,014,667; collateralized by various U.S. Government Agency Obligations 5.28 09/01/06 100,000,000
50,560,000 Deutsche Bank Securities, Inc., dated 08/31/06, to be repurchased at
$50,567,387; collateralized by various U.S. Government Agency Obligations 5.26 09/01/06 50,560,000
100,000,000 Merrill Lynch, dated 08/31/06, to be repurchased at $100,014,694;
collateralized by various U.S. Government Agency Obligations 5.29 09/01/06 100,000,000
------------
Total Repurchase Agreements 315,705,000
------------
See Notes to Financial Statements.
5
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT FUND
August 31, 2006
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ------ -------------------------------------------------------------------------- ---- -------- ------------
Total Investments at Amortized Cost* - (99.9%) $342,599,325
Other Assets and Liabilities, Net - (0.1%) 307,412
------------
NET ASSETS - (100.0%) $342,906,737
============
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Repurchase Agreements 92.1%
U.S. Government Securities 7.9%
(+/-)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 August 31, 2006.
* Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements.
6
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS CASH FUND
August 31, 2006
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- ------------
COMMERCIAL PAPER # - (42.2%)
$20,000,000 Bear Stearns & Co., Inc. 5.36% 09/21/06 $ 19,940,889
15,000,000 Cafco, LLC^ 5.34 09/25/06 14,947,000
20,000,000 Citigroup Funding, Inc. 5.33 09/21/06 19,941,222
20,000,000 Deutsche Bank Financial, LLC 5.33 09/21/06 19,941,222
20,000,000 General Electric Capital Corp. 5.33 09/21/06 19,941,222
20,000,000 Giro Funding US Corp.^ 5.36 09/27/06 19,923,155
20,000,000 International Lease Finance Corp. 5.29 09/18/06 19,950,322
20,000,000 Klio II Funding Corp.^ 5.29 09/25/06 19,929,800
20,000,000 Societe Generale N.A. 5.29 09/08/06 19,979,506
20,000,000 UBS Finance Delaware, LLC 5.31 09/18/06 19,950,133
20,000,000 Unionbancal Commercial Funding 5.30 09/19/06 19,947,300
15,000,000 Windmill Funding Corp.^ 5.29 09/15/06 14,969,317
------------
Total Commercial Paper 229,361,088
------------
CORPORATE NOTES (+/-) - (24.1%)
3,600,000 AllState Life Global Funding Trust 5.46 05/25/07 3,602,069
20,000,000 Bank of America NA 5.32 05/15/07 20,000,000
4,500,000 Bear Stearns & Co., Inc. 5.62 07/27/07 4,507,376
14,000,000 CIT Group, Inc. 5.61 02/15/07 14,013,536
6,391,000 CIT Group, Inc. 5.63 05/18/07 6,400,615
20,000,000 Countrywide Financial Corp. 5.67 04/11/07 20,015,549
10,000,000 Merrill Lynch & Co., Inc. 5.60 09/18/06 10,001,044
5,000,000 Merrill Lynch & Co., Inc. 5.51 08/27/07 5,005,832
5,000,000 Merrill Lynch & Co., Inc. 5.46 07/27/07 5,000,000
20,000,000 Morgan Stanley 5.62 07/27/07 20,025,972
15,000,000 U.S. Trust Co. of New York 5.38 09/12/06 15,000,208
7,393,000 Wells Fargo & Co. 5.55 09/28/07 7,401,437
------------
Total Corporate Notes 130,973,638
------------
CERTIFICATE OF DEPOSIT (+/-) - (3.7%)
20,000,000 Credit Suisse New York 5.51 04/24/07 20,004,445
------------
REPURCHASE AGREEMENTS - (30.0%)
35,114,000 Bank of America Securities, dated 08/31/06, to be repurchased at
$35,119,111; collateralized by various U.S. Government Agency Obligations 5.24 09/01/06 35,114,000
40,000,000 Bear Stearns & Co., Inc., dated 08/31/06, to be repurchased at
$40,005,867; collateralized by various U.S. Government Agency Obligations 5.28 09/01/06 40,000,000
37,340,000 Deutsche Bank Securities, Inc. dated 08/31/06, to be repurchased at
$37,345,456; collateralized by various U.S. Government Agency Obligations 5.26 09/01/06 37,340,000
50,000,000 Merrill Lynch & Co., Inc. dated 08/31/06, to be repurchased at
$50,007,347; collateralized by various U.S. Government Agency Obligations 5.29 09/01/06 50,000,000
------------
Total Repurchase Agreements 162,454,000
------------
Total Investments at Amortized Cost* - (100.0%) $542,793,171
Other Assets and Liabilities, Net - (0.0%) 145,375
------------
NET ASSETS - (100.0%) $542,938,546
============
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Commercial Paper 42.3%
Repurchase Agreements 29.9%
Corporate Notes 24.1%
Certificate of Deposit 3.7%
# 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 August 31, 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 $69,769,272 or 12.9% of net assets.
* Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements.
7
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STATEMENTS OF ASSETS AND LIABILITIES
August 31, 2006
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
------------ ------------ ------------ ------------
Assets
Investments:
Securities at amortized cost $46,902,347 $18,919,913 $ 26,894,325 $380,339,171
Repurchase agreements 27,076,000 -- 315,705,000 162,454,000
Cash 39,962 21,667 33,828 28,276
Receivables:
Dividends -- 3,516 -- --
Interest 3,910 -- 312,209 829,175
Investment securities sold -- -- 376,113 --
Other receivables 11,618 3,388 -- 7,597
Prepaid expenses and other assets 1,233 2,471 26,291 25,830
----------- ----------- ------------ ------------
Total Assets 74,035,070 18,950,955 343,347,766 543,684,049
----------- ----------- ------------ ------------
Liabilities
Payables:
Dividends 9,172 76,838 161,744 457,402
Accrued expenses:
Payables to related parties 2,508 -- 31,496 15,189
Trustees' fees and expenses 82 -- -- --
Other expenses and other liabilities 80,734 30,550 247,789 272,912
----------- ----------- ------------ ------------
Total Liabilities 92,496 107,388 441,029 745,503
----------- ----------- ------------ ------------
Net Assets $73,942,574 $18,843,567 $342,906,737 $542,938,546
=========== =========== ============ ============
Components of Net Assets
Paid in capital $73,942,561 $18,848,380 $342,935,160 $542,953,064
Undistributed (distributions in excess of) net investment
income 13 408 (28,425) (246)
Accumulated net realized gain (loss) -- (5,221) 2 (14,272)
----------- ----------- ------------ ------------
Net Assets $73,942,574 $18,843,567 $342,906,737 $542,938,546
=========== =========== ============ ============
Net Assets by Class of Shares
Preferred Shares $ -- $ -- $111,920,725 $101,504,157
Universal Shares -- 18,843,567 42,523,372 78,698,491
Institutional Service Shares 15,131,405 -- 46,872,841 54,766,155
Institutional Shares -- -- 73,843,068 99,321,184
Investor Shares 58,811,169 -- 67,746,731 207,457,757
B Shares -- -- -- 323,142
C Shares -- -- -- 867,660
----------- ----------- ------------ ------------
Net Assets $73,942,574 $18,843,567 $342,906,737 $542,938,546
=========== =========== ============ ============
Shares of Beneficial Interest for each Class of Shares
Preferred Shares -- -- 111,919,932 101,504,148
Universal Shares -- 18,867,613 42,562,799 78,703,147
Institutional Service Shares 15,127,126 -- 46,872,921 54,766,359
Institutional Shares -- -- 73,838,013 99,323,859
Investor Shares 58,815,445 -- 67,741,508 207,464,792
B Shares -- -- -- 323,141
C Shares -- -- -- 867,653
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, 2006
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
------------ ------------ ------------ ------------
Investment Income:
Interest income $3,163,993 $ 750,606 $59,691,066 $20,469,706
Dividend income 6,986 50,035 3,795 6,701
---------- --------- ----------- -----------
Total Investment Income 3,170,979 800,641 59,694,861 20,476,407
---------- --------- ----------- -----------
Expenses:
Investment adviser fees 24,831 9,011 461,173 154,072
Administrator fees
Preferred Shares -- -- 1,105,587 59,716
Universal Shares -- 18,550 41,640 60,604
Institutional Service Shares 13,108 -- 62,794 32,907
Institutional Shares -- -- 98,749 68,080
Investor Shares 60,181 -- 64,359 231,833
B Shares -- -- -- 25,111
C Shares -- -- -- 25,345
Shareholder service fees
Institutional Service Shares 25,471 -- 121,835 63,908
Institutional Shares -- -- 191,614 132,269
Investor Shares 116,930 -- 124,790 450,110
B Shares -- -- -- 269
C Shares -- -- -- 839
Distribution fees
Investor Shares 146,160 -- 155,986 562,632
B Shares -- -- -- 807
C Shares -- -- -- 2,516
Compliance services fees 7,808 2,854 111,220 39,568
Transfer agency fees
Preferred Shares -- -- 50,014 14,055
Universal Shares -- 23,817 37,265 47,069
Institutional Service Shares 26,500 -- 75,630 46,433
Institutional Shares -- -- 211,351 150,263
Investor Shares 139,745 -- 145,670 479,181
B Shares -- -- -- 15,258
C Shares -- -- -- 15,734
Custodian fees 8,901 2,253 166,107 55,063
Professional fees 37,091 32,997 41,470 41,152
Accountant fees 49,694 41,192 95,380 120,449
Registration fees 20,846 7,367 32,121 49,589
Trustees' fees and expenses 3,856 965 72,212 23,487
Miscellaneous expenses 20,180 7,106 64,977 38,662
---------- --------- ----------- -----------
Total Expenses 701,302 146,112 3,531,944 3,006,981
Expenses reimbursed and fees waived (150,043) (109,346) (770,891) (383,530)
---------- --------- ----------- -----------
Net Expenses 551,259 36,766 2,761,053 2,623,451
---------- --------- ----------- -----------
Net Investment Income (Loss) 2,619,720 763,875 56,933,808 17,852,956
---------- --------- ----------- -----------
Net Realized Gain (Loss) on Investments -- -- -- (687)
---------- --------- ----------- -----------
Increase (Decrease) in Net Assets from Operations $2,619,720 $ 763,875 $56,933,808 $17,852,269
========== ========= =========== ===========
See Notes to Financial Statements.
9
MONARCH FUNDS
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STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS DAILY ASSETS
TREASURY FUND GOVERNMENT OBLIGATIONS FUND
-------------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 2006 AUGUST 31, 2005 AUGUST 31, 2006 AUGUST 31, 2005
--------------- --------------- --------------- ---------------
Operations
Net investment income (loss) $ 2,619,720 $ 2,225,708 $ 763,875 $ 404,866
Net realized gain (loss) on investments -- 133 -- --
--------------- --------------- ------------ ------------
Increase (Decrease) in Net Assets from Operations 2,619,720 2,225,841 763,875 404,866
--------------- --------------- ------------ ------------
Distributions to Shareholders from
Net investment income--Universal Shares (a) -- (985,929) (763,875) (404,866)
Net investment income--Institutional Service Shares (511,144) (278,559) -- --
Net investment income--Investor Shares (2,108,577) (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 (2,619,721) (2,225,708) (763,875) (404,866)
--------------- --------------- ------------ ------------
Capital Share Transactions
Sale of shares--Universal Shares (a) -- 143,522,719 17,890,345 16,700,397
Sale of shares--Institutional Service Shares 56,995,099 137,281,165 -- --
Sale of shares--Investor Shares 1,027,908,338 1,106,065,389 -- --
Reinvestment of distributions--Universal Shares (a) -- 171,170 10,377 6,933
Reinvestment of distributions--Institutional Service Shares 426,729 199,036 -- --
Reinvestment of distributions--Investor Shares 2,107,066 960,627 -- --
Redemption of shares--Universal Shares (a) -- (230,453,376) (16,479,139) (19,667,988)
Redemption of shares--Institutional Service Shares (54,166,582) (141,153,779) -- --
Redemption of shares--Investor Shares (1,018,150,465) (1,116,289,749) -- --
--------------- --------------- ------------ ------------
Increase (Decrease) from Capital Transactions 15,120,185 (99,696,798) 1,421,583 (2,960,658)
--------------- --------------- ------------ ------------
Increase (Decrease) in Net Assets 15,120,184 (99,696,665) 1,421,583 (2,960,658)
--------------- --------------- ------------ ------------
Net Assets
Beginning of Period 58,822,390 158,519,055 17,421,984 20,382,642
--------------- --------------- ------------ ------------
End of Period $ 73,942,574 $ 58,822,390 $ 18,843,567 $ 17,421,984
=============== =============== ============ ============
Share Transactions
Sale of shares--Universal Shares (a) -- 143,522,720 17,890,345 16,700,396
Sale of shares--Institutional Service Shares 56,995,099 137,281,165 -- --
Sale of shares--Investor Shares 1,027,908,338 1,106,065,388 -- --
Reinvestment of distributions--Universal Shares (a) -- 171,170 10,378 6,933
Reinvestment of distributions--Institutional Service Shares 426,729 199,036 -- --
Reinvestment of distributions--Investor Shares 2,107,066 960,627 -- --
Redemption of shares--Universal Shares (a) -- (230,453,376) (16,479,139) (19,667,988)
Redemption of shares--Institutional Service Shares (54,166,582) (141,153,779) -- --
Redemption of shares--Investor Shares (1,018,150,465) (1,116,289,749) -- --
--------------- --------------- ------------ ------------
Increase (Decrease) in Shares 15,120,185 (99,696,798) 1,421,584 (2,960,659)
=============== =============== ============ ============
Undistributed (distributions in excess of)
Net Investment Income $ 13 $ (83) $ 408 $ 408
--------------- --------------- ------------ ------------
(a)On February 24, 2005, Universal Shares of Daily Assets Treasury Fund ceased
operations.
See Notes to Financial Statements.
10
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS
GOVERNMENT FUND
----------------------------------
YEAR ENDED YEAR ENDED
AUGUST 31, 2006 AUGUST 31, 2005
---------------- ----------------
Operations
Net investment income (loss) $ 56,933,808 $ 32,720,030
Net realized gain (loss) on investments -- --
---------------- ----------------
Increase (Decrease) in Net Assets from Operations 56,933,808 32,720,030
---------------- ----------------
Distributions to Shareholders from
Net investment income--Preferred Shares (46,380,538) (27,064,461)
Net investment income--Universal Shares (1,758,977) (1,725,437)
Net investment income--Institutional Service Shares (2,557,679) (1,476,445)
Net investment income--Institutional Shares (3,863,892) (1,233,938)
Net investment income--Investor Shares (2,372,632) (1,219,599)
Net investment income--B Shares -- --
Net investment income--C Shares -- --
Net realized gain--Universal Shares -- (149)
---------------- ----------------
Total Distributions to Shareholders (56,933,718) (32,720,029)
---------------- ----------------
Capital Share Transactions
Sale of shares--Preferred Shares 13,961,573,134 13,457,887,243
Sale of shares--Universal Shares 261,380,787 495,568,211
Sale of shares--Institutional Service Shares 406,813,980 423,309,543
Sale of shares--Institutional Shares 1,101,577,846 628,209,101
Sale of shares--Investor Shares 1,183,921,865 1,101,652,154
Sale of shares--B Shares -- --
Sale of shares--C Shares -- --
Reinvestment of distributions--Preferred Shares 46,189,852 27,064,464
Reinvestment of distributions--Universal Shares 1,761,741 1,279,994
Reinvestment of distributions--Institutional Service Shares 2,557,455 1,200,078
Reinvestment of distributions--Institutional Shares 3,318,919 833,140
Reinvestment of distributions--Investor Shares 2,359,987 1,214,233
Reinvestment of distributions--B Shares -- --
Reinvestment of distributions--C Shares -- --
Redemption of shares--Preferred Shares (13,917,158,610) (13,487,020,990)
Redemption of shares--Universal Shares (245,398,091) (585,949,775)
Redemption of shares--Institutional Service Shares (417,918,604) (424,231,220)
Redemption of shares--Institutional Shares (1,087,896,148) (645,775,244)
Redemption of shares--Investor Shares (1,181,095,338) (1,104,334,690)
Redemption of shares--B Shares -- --
Redemption of shares--C Shares -- --
---------------- ----------------
Increase (Decrease) Decrease from Capital Transactions 121,988,775 (109,093,758)
---------------- ----------------
Increase (Decrease) in Net Assets 121,988,865 (109,093,757)
---------------- ----------------
Net Assets
Beginning of Period 220,917,872 330,011,629
---------------- ----------------
End of Period $ 342,906,737 $ 220,917,872
================ ================
Undistributed (distributions in excess of)
Net Investment Income $ (28,425) $ (28,515)
---------------- ----------------
DAILY ASSETS
CASH FUND
--------------------------------
YEAR ENDED YEAR ENDED
AUGUST 31, 2006 AUGUST 31, 2005
--------------- ---------------
Operations
Net investment income (loss) $ 17,852,956 $ 7,210,676
Net realized gain (loss) on investments (687) (1,944)
--------------- ---------------
Increase (Decrease) in Net Assets from Operations 17,852,269 7,208,732
--------------- ---------------
Distributions to Shareholders from
Net investment income--Preferred Shares (2,675,457) (589,768)
Net investment income--Universal Shares (2,592,894) (776,984)
Net investment income--Institutional Service Shares (1,365,993) (634,583)
Net investment income--Institutional Shares (2,748,374) (1,240,847)
Net investment income--Investor Shares (8,454,554) (3,967,761)
Net investment income--B Shares (3,648) (347)
Net investment income--C Shares (11,722) (387)
Net realized gain--Universal Shares -- --
--------------- ---------------
Total Distributions to Shareholders (17,852,642) (7,210,677)
--------------- ---------------
Capital Share Transactions
Sale of shares--Preferred Shares 690,893,357 235,742,194
Sale of shares--Universal Shares 739,799,611 556,966,206
Sale of shares--Institutional Service Shares 352,393,100 317,798,401
Sale of shares--Institutional Shares 899,609,574 972,584,819
Sale of shares--Investor Shares 3,944,036,139 5,641,350,655
Sale of shares--B Shares 414,954 91,308
Sale of shares--C Shares 1,663,874 100,722
Reinvestment of distributions--Preferred Shares 364,322 192,222
Reinvestment of distributions--Universal Shares 2,331,253 578,709
Reinvestment of distributions--Institutional Service Shares 1,355,076 614,454
Reinvestment of distributions--Institutional Shares 2,507,112 1,123,763
Reinvestment of distributions--Investor Shares 7,735,675 3,613,494
Reinvestment of distributions--B Shares 3,647 348
Reinvestment of distributions--C Shares 11,735 387
Redemption of shares--Preferred Shares (629,499,253) (215,354,337)
Redemption of shares--Universal Shares (702,705,553) (554,163,851)
Redemption of shares--Institutional Service Shares (326,119,193) (317,698,752)
Redemption of shares--Institutional Shares (859,445,718) (1,013,042,784)
Redemption of shares--Investor Shares (3,981,055,792) (5,802,886,123)
Redemption of shares--B Shares (125,545) (61,571)
Redemption of shares--C Shares (844,167) (64,898)
--------------- ---------------
Increase (Decrease) Decrease from Capital Transactions 143,324,208 (172,514,634)
--------------- ---------------
Increase (Decrease) in Net Assets 143,323,835 (172,516,579)
--------------- ---------------
Net Assets
Beginning of Period 399,614,711 572,131,290
--------------- ---------------
End of Period $ 542,938,546 $ 399,614,711
=============== ===============
Undistributed (distributions in excess of)
Net Investment Income $ (246) $ (560)
--------------- ---------------
See Notes to Financial Statements.
11
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS DAILY ASSETS
GOVERNMENT FUND CASH FUND
-------------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 2006 AUGUST 31, 2005 AUGUST 31, 2006 AUGUST 31, 2005
--------------- --------------- --------------- ---------------
Share Transactions
Sale of shares--Preferred Shares 13,961,573,135 13,457,887,242 690,893,357 235,742,195
Sale of shares--Universal Shares 261,380,786 495,568,212 739,799,611 556,966,206
Sale of shares--Institutional Service Shares 406,813,980 423,309,542 352,393,101 317,798,401
Sale of shares--Institutional Shares 1,101,577,845 628,209,101 899,609,575 972,584,819
Sale of shares--Investor Shares 1,183,921,866 1,101,652,156 3,944,036,139 5,641,350,654
Sale of shares--B Shares -- -- 414,955 91,307
Sale of shares--C Shares -- -- 1,663,874 100,722
Reinvestment of distributions--Preferred Shares 46,189,852 27,064,464 364,322 192,222
Reinvestment of distributions--Universal Shares 1,761,741 1,279,993 2,331,253 578,709
Reinvestment of distributions--Institutional Service Shares 2,557,455 1,200,078 1,355,076 614,454
Reinvestment of distributions--Institutional Shares 3,318,919 833,140 2,507,112 1,123,763
Reinvestment of distributions--Investor Shares 2,359,987 1,214,233 7,735,675 3,613,494
Reinvestment of distributions--B Shares -- -- 3,647 348
Reinvestment of distributions--C Shares -- -- 11,735 387
Redemption of shares--Preferred Shares (13,917,158,610) (13,487,020,990) (629,499,253) (215,354,760)
Redemption of shares--Universal Shares (245,398,091) (585,949,775) (702,705,553) (554,178,721)
Redemption of shares--Institutional Service Shares (417,918,604) (424,231,220) (326,119,193) (317,703,982)
Redemption of shares--Institutional Shares (1,087,896,148) (645,775,244) (859,445,718) (1,013,055,861)
Redemption of shares--Investor Shares (1,181,095,338) (1,104,334,690) (3,981,055,792) (5,802,929,163)
Redemption of shares--B Shares -- -- (125,545) (61,571)
Redemption of shares--C Shares -- -- (844,167) (64,898)
--------------- --------------- -------------- --------------
Increase (Decrease) in Shares 121,988,775 (109,093,758) 143,324,211 (172,591,275)
=============== =============== ============== ==============
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 Omitted)
- ----------------- --------- ---------- ----------- ------------- ------------- --------- ------ ---------
- - - - - - - - - -
DAILY ASSETS TREASURY FUND
Institutional Service Shares/(b)/
- ------------------------------------------------------------------------------------------------------------
2006 $1.00 0.04/(c)/ -- (0.04) -- $1.00 4.06% $ 15,131
2005 1.00 0.02/(c)/ --/(d)/ (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 --/(d)/ (0.02) --/(d)/ 1.00 1.57% 20,068
Investor Shares
- ------------------------------------------------------------------------------------------------------------
2006 1.00 0.04/(c)/ -- (0.04) -- 1.00 3.65% 58,811
2005 1.00 0.02/(c)/ --/(d)/ (0.02) -- 1.00 1.64% 46,946
2004 1.00 --/(d)/ -- --/(d)/ -- 1.00 0.20% 56,217
2003 1.00 --/(d)/ -- --/(d)/ -- 1.00 0.45% 96,827
2002 1.00 0.01 --/(d)/ (0.01) --/(d)/ 1.00 1.17% 133,758
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Universal Shares/(e)/
- ------------------------------------------------------------------------------------------------------------
2006 1.00 0.04/(c)/ -- (0.04) -- 1.00 4.30% 18,844
2005 1.00 0.02/(c)/ -- (0.02) -- 1.00 2.27% 17,422
2004 1.00 0.01 --/(d)/ (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
RATIOS/SUPPLEMENTAL DATA
- --------------------------------
Ratios to Average Net Assets
- --------------------------------
Net
Net Gross Investment
Expenses Expenses/(a)/ Income
- ---------------------------------
- ----------------------------------
0.45% 0.82% 4.01%
0.45% 0.69% 1.92%
0.45% 0.56% 0.57%
0.45% 0.67% 0.84%
0.45% 0.62% 1.68%
- ----------------------------------
0.84% 1.02% 3.61%
0.84% 0.97% 1.61%
0.84% 0.89% 0.18%
0.84% 0.90% 0.45%
0.85% 0.87% 1.22%
- ----------------------------------
0.20% 0.81% 4.24%
0.20% 0.75% 2.22%
0.20% 0.70% 0.86%
0.20% 0.48% 1.14%
0.20% 0.71% 1.97%
(a)Reflects the expense ratio excluding any waivers and/or reimbursements.
(b)On April 23, 2003, Institutional Shares were renamed Institutional Service
Shares.
(c)Calculated based on average shares outstanding during the period.
(d)Less than $0.01 per share.
(e)On July 22, 2003, Institutional Shares were redesignated as Universal Shares.
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 GOVERNMENT FUND
Preferred Shares
- -------------------------------------------------------------------------------------------------------------------
2006 $1.00 $0.04/(d)/ -- $(0.04) -- $1.00 4.57% $111,921
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
Universal Shares
- -------------------------------------------------------------------------------------------------------------------
2006 1.00 0.04/(d)/ -- (0.04) -- 1.00 4.49% 42,523
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
Institutional Service Shares
- -------------------------------------------------------------------------------------------------------------------
2006 1.00 0.04/(d)/ -- (0.04) -- 1.00 4.23% 46,873
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
- -------------------------------------------------------------------------------------------------------------------
2006 1.00 0.04/(d)/ -- (0.04) -- 1.00 4.11% 73,843
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
Investor Shares
- -------------------------------------------------------------------------------------------------------------------
2006 1.00 0.04/(d)/ -- (0.04) -- 1.00 3.83% 67,747
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
DAILY ASSETS CASH FUND
Preferred Shares
- -------------------------------------------------------------------------------------------------------------------
2006 1.00 0.05/(d)/ --/(f)/ (0.05) -- 1.00 4.56% 101,504
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
Universal Shares
- -------------------------------------------------------------------------------------------------------------------
2006 1.00 0.04/(d)/ --/(f)/ (0.04) -- 1.00 4.48% 78,698
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
Institutional Service Shares
- -------------------------------------------------------------------------------------------------------------------
2006 1.00 0.04/(d)/ --/(f)/ (0.04) -- 1.00 4.22% 54,766
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
RATIOS/SUPPLEMENTAL DATA
- --------------------------------
Ratios to Average Net Assets/(a)/
- --------------------------------
Net
Net Gross Investment
Expenses Expenses/(c)/ Income
- ---------------------------------
- ----------------------------------
0.12% 0.18% 4.34%
0.12% 0.18% 2.56%
0.12% 0.18% 1.06%
0.11% 0.25% 1.05%
0.12% 0.22% 2.19%
- ----------------------------------
0.20% 0.30% 4.36%
0.20% 0.25% 2.12%
0.20% 0.26% 0.95%
0.20% 0.28% 1.26%
0.21% 0.25% 2.17%
- ----------------------------------
0.45% 0.51% 4.20%
0.45% 0.50% 2.10%
0.45% 0.51% 0.69%
0.45% 0.58% 0.70%
- ----------------------------------
0.57% 0.61% 4.03%
0.57% 0.61% 2.05%
0.57% 0.62% 0.58%
0.57% 0.63% 0.92%
0.57% 0.59% 2.05%
- ----------------------------------
0.84% 0.88% 3.80%
0.84% 0.87% 1.74%
0.84% 0.86% 0.32%
0.84% 0.89% 0.63%
0.85% 0.85% 1.43%
- ----------------------------------
0.12% 0.23% 4.61%
0.12% 0.32% 2.64%
0.12% 0.31% 1.06%
0.12% 0.30% 1.39%
0.12% 0.20% 1.88%
- ----------------------------------
0.20% 0.29% 4.41%
0.20% 0.34% 2.32%
0.20% 0.27% 0.94%
0.20% 0.28% 1.24%
0.21% 0.25% 2.03%
- ----------------------------------
0.45% 0.56% 4.27%
0.45% 0.60% 2.04%
0.45% 0.54% 0.71%
0.45% 0.58% 0.76%
See Notes to Financial Statements.
14
MONARCH FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SINGLE SHARE
-----------------------------------------------------------------------------------------
Beginning Net Distributions Distributions Ending
Year Ended Net Asset Net Realized from Net from Net Net Asset
August 31, Value Per Investment Gain on Investment Realized Value Total
(except as noted) Share Income Investments Income Gains Per Share Return/(b)/
- ----------------- ---------- ----------- ----------- -------------- ------------- ---------- -----------
- - - - - - - - -
Institutional Shares
- -----------------------------------------------------------------------------------------------------------------------
2006 $ 1.00 $ 0.04/(d)/ --/(f)/ $ (0.04) -- $ 1.00 4.10%
2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 2.03%
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.59%
2003 1.00 0.01 -- (0.01) -- 1.00 0.92%
2002 1.00 0.02 -- (0.02) -- 1.00 1.75%
Investor Shares
- -----------------------------------------------------------------------------------------------------------------------
2006 1.00 0.04/(d)/ --/(f)/ (0.04) -- 1.00 3.82%
2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 1.76%
2004 1.00 --/(f)/ --/(f)/ --/(f)/ -- 1.00 0.32%
2003 1.00 0.01 -- (0.01) -- 1.00 0.64%
2002 1.00 0.01 -- (0.01) -- 1.00 1.48%
B Shares
- -----------------------------------------------------------------------------------------------------------------------
2006 1.00 0.03/(d)/ --/(f)/ (0.03) -- 1.00 2.99%
2005/(e)/ 1.00 0.01/(d)/ --/(f)/ (0.01) -- 1.00 0.92%
C Shares
- -----------------------------------------------------------------------------------------------------------------------
2006 1.00 0.03/(d)/ --/(f)/ (0.03) -- 1.00 2.99%
2005/(e)/ 1.00 0.01/(d)/ --/(f)/ (0.01) -- 1.00 0.93%
Net RATIOS/SUPPLEMENTAL DATA
Assets at --------------------------------
End of Ratios to Average Net Assets/(a)/
Period --------------------------------
(000's Net
Omitted) Net Gross Investment
- ---------- Expenses Expenses/(c)/ Income
- - ---------------------------------
- ---------------------------------------------
$ 99,321 0.57% 0.65% 4.16%
56,650 0.57% 0.68% 1.97%
95,985 0.57% 0.63% 0.59%
92,186 0.57% 0.61% 1.01%
347,469 0.57% 0.58% 1.84%
- ---------------------------------------------
207,458 0.84% 0.88% 3.76%
236,742 0.84% 0.91% 1.71%
394,665 0.84% 0.87% 0.32%
303,389 0.84% 0.86% 0.68%
646,285 0.83% 0.83% 1.51%
- ---------------------------------------------
323 1.65% 48.98% 3.39%
30 1.65% 161.82% 1.20%
- ---------------------------------------------
868 1.65% 15.85% 3.50%
36 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.
15
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 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 August 31, 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 U.S. generally
accepted accounting principles, 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 Funds, and it accounts
separately for the assets, liabilities and operations of each series. Expenses
that are directly attributable to more than one Fund are allocated among the
respective Funds in proportion to each Fund's 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.
16
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 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 U.S. generally accepted accounting principles. 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.
NEW ACCOUNTING PRONOUNCEMENTS In June 2006, the Financial Accounting Standards
Board issued Financial Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" (the "Interpretation") which is effective for fiscal years
beginning after December 15, 2006 and is to be applied to all open tax years as
of the effective date. This Interpretation prescribes a minimum threshold for
financial statement recognition of the benefit of a tax position taken or
expected to be taken in a tax return, and requires certain expanded
disclosures. Management has recently begun to evaluate the application of the
Interpretation to the Funds, and has not at this time determined the impact, if
any, resulting from the adoption of this Interpretation on the Funds' financial
statements.
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 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.
17
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 2006
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 year ended August 31, 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 $ -- $ 9,011 $ -- $ --
Administration 72,548 18,589 751,138 244,509
Custody 1,336 308 17,509 7,552
Shareholder Service 403 -- -- 25,515
Transfer Agency 16,250 23,353 -- 1,284
Portfolio Accounting 34,465 34,024 -- 5,123
Reimbursed Expenses by Citigroup 25,041 24,061 2,244 99,547
-------- -------- -------- --------
Total $150,043 $109,346 $770,891 $383,530
======== ======== ======== ========
NOTE 5. FEDERAL INCOME TAX AND INVESTMENT TRANSACTIONS
As of August 31, 2006, distributable earnings (accumulated losses) on a tax
basis were as follows:
UNDISTRIBUTED CAPITAL AND
ORDINARY INCOME OTHER LOSSES TOTAL
--------------- ------------ --------
Daily Assets Treasury Fund $ 9,185 $ -- $ 9,185
Daily Assets Government Obligations Fund 77,245 (5,222) 72,023
Daily Assets Government Fund 133,320 -- 133,320
Daily Assets Cash Fund 457,156 (14,272) 442,884
On the Statement of Assets and Liabilities, as a result of permanent book to
tax differences, certain amounts have been reclassified for the year ended
August 31, 2006. The following reclassifications were primarily due to
dividends reclassed for tax purposes and the expiration of capital losses
carried forward, and has no impact on the net assets of the Fund.
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT NET REALIZED
INCOME GAIN(LOSS) PAID-IN-CAPITAL
-------------- ------------- ---------------
Daily Assets Treasury Fund $97 $ (97) $ --
Daily Assets Government Obligations Fund -- 18,999 (18,999)
The tax character of distributions paid during 2006 and 2005 were as follows:
ORDINARY INCOME
-----------------------
2006 2005
----------- -----------
Daily Assets Treasury Fund $ 2,619,721 $ 2,225,708
Daily Assets Government Obligations Fund 763,875 404,866
Daily Assets Government Fund 56,933,718 32,720,029
Daily Assets Cash Fund 17,852,642 7,210,677
The capital loss carryovers available to offset future gains, as of August 31,
2006, were as follows:
Daily Assets Government Obligations Fund 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
Expiring August 2014 2,631
18
MONARCH FUNDS
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ADDITIONAL INFORMATION (UNAUDITED)
August 31, 2006
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. 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.
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.
FEDERAL TAX STATUS OF DIVIDENDS DECLARED DURING THE FISCAL YEAR
For Federal income tax purposes, all of the income dividends paid by each Fund
for the tax year ended August 31, 2006 were ordinary income for federal income
tax purposes. The percentage of ordinary income distributions designated as
Qualifying Interest Income exempt from U.S. tax for foreign shareholders
("QII") is presented below.
QII
-----
Daily Assets Treasury Fund 99.64%
Daily Assets Government Obligations Fund 91.91
Daily Assets Government Fund 99.90
Daily Assets Cash Fund 98.98
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 March 1, 2006 through August 31,
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.
19
MONARCH FUNDS
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ADDITIONAL INFORMATION (UNAUDITED)
August 31, 2006
BEGINNING ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING EXPENSE
MARCH 1, 2006 AUGUST 31, 2006 PERIOD* RATIO
------------- --------------- ----------- ----------
DAILY ASSETS TREASURY FUND
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,022.58 $2.29 0.45%
Hypothetical Return $1,000.00 $1,022.94 $2.29 0.45%
INVESTOR SHARES
Actual Return $1,000.00 $1,020.57 $4.28 0.84%
Hypothetical Return $1,000.00 $1,020.97 $4.28 0.84%
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
UNIVERSAL SHARES
Actual Return $1,000.00 $1,023.85 $1.02 0.20%
Hypothetical Return $1,000.00 $1,024.20 $1.02 0.20%
DAILY ASSETS GOVERNMENT FUND
PREFERRED SHARES
Actual Return $1,000.00 $1,025.15 $0.61 0.12%
Hypothetical Return $1,000.00 $1,024.60 $0.61 0.12%
UNIVERSAL SHARES
Actual Return $1,000.00 $1,024.71 $1.02 0.20%
Hypothetical Return $1,000.00 $1,024.20 $1.02 0.20%
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,023.45 $2.30 0.45%
Hypothetical Return $1,000.00 $1,022.94 $2.29 0.45%
INSTITUTIONAL SHARES
Actual Return $1,000.00 $1,022.84 $2.91 0.57%
Hypothetical Return $1,000.00 $1,022.33 $2.91 0.57%
INVESTOR SHARES
Actual Return $1,000.00 $1,021.45 $4.28 0.84%
Hypothetical Return $1,000.00 $1,020.97 $4.28 0.84%
DAILY ASSETS CASH FUND
PREFERRED SHARES
Actual Return $1,000.00 $1,025.13 $0.61 0.12%
Hypothetical Return $1,000.00 $1,024.60 $0.61 0.12%
UNIVERSAL SHARES
Actual Return $1,000.00 $1,024.72 $1.02 0.20%
Hypothetical Return $1,000.00 $1,024.20 $1.02 0.20%
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,023.44 $2.30 0.45%
Hypothetical Return $1,000.00 $1,022.94 $2.29 0.45%
INSTITUTIONAL SHARES
Actual Return $1,000.00 $1,022.82 $2.91 0.57%
Hypothetical Return $1,000.00 $1,022.33 $2.91 0.57%
INVESTOR SHARES
Actual Return $1,000.00 $1,021.43 $4.28 0.84%
Hypothetical Return $1,000.00 $1,020.97 $4.28 0.84%
B SHARES
Actual Return $1,000.00 $1,017.31 $8.39 1.65%
Hypothetical Return $1,000.00 $1,016.89 $8.39 1.65%
C SHARES
Actual Return $1,000.00 $1,017.31 $8.39 1.65%
Hypothetical Return $1,000.00 $1,016.89 $8.39 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 divided by 365 to reflect the half-year period.
20
MONARCH FUNDS
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ADDITIONAL INFORMATION (UNAUDITED)
August 31, 2006
TRUSTEES AND OFFICERS OF THE TRUST
The Board is responsible for oversight of the management of the Trust's
business affairs and exercising all the Trust's powers except those reserved
for shareholders. The following table gives information about each Board member
and certain officers of the Trust. The fund complex includes the Trust and
Forum Funds, another registered investment company (collectively, "fund
complex"), which hold themselves out to investors as related companies for
purposes of investment and investor services. The Trustees and officers listed
below also serve in the same capacities noted below for Forum Funds with the
exception of Mr. Fischer and Mr. Singer who do not serve as officers of Forum
Funds. Mr. Keffer is considered an Interested Trustee due to his affiliation
with a Trust adviser and the Distributor within the past two years. Each
Trustee and officer holds office until the person resigns, is removed, or
replaced. Unless otherwise noted, the persons have held their principal
occupations for more than five years. The addresses for all Trustees and
officers is Two Portland Square, Portland, Maine 04101, unless otherwise
indicated. Each Trustee oversees thirty portfolios in the fund complex. Each
Independent Trustee is also an Independent Trustee of Forum Funds. John Y.
Keffer is an Interested Trustee/Director of Forum Funds and Wintergreen Fund,
Inc., another registered open-end investment company. The Fund's Statement of
Additional Information includes additional information about the Trustees and
is available, without charge and upon request, by calling (800) 754-8757.
NAME POSITION WITH LENGTH OF PRINCIPAL OCCUPATION(S)
AND BIRTH DATE THE TRUST TIME SERVED DURING PAST 5 YEARS
- ------------------------ ----------------------- ------------- -------------------------------------------------
INDEPENDENT TRUSTEES
J. Michael Parish Chairman of the Board; Trustee since Retired; Partner, Wolf, Block, Schorr and Solis-
Born: November 9, 1943 Trustee; Chairman, 1989 Cohen, LLP (law firm) 2002-2003; Partner,
Compliance Committee, (Chairman Thelen Reid & Priest LLP (law firm) 1995 -
Nominating Committee since 2004) 2002.
and Qualified Legal
Compliance Committee
Costas Azariadis Trustee Chairman, Trustee since Professor of Economics, Washington University
Born: February 15, 1943 Valuation Committee 1989 (effective 2006); Professor of Economics,
University of California-Los Angeles 1992-2006.
James C. Cheng Trustee Chairman, Audit Trustee since President, Technology Marketing Associates
Born: July 26, 1942 Committee 1989 (marketing company for small-and medium-sized
businesses in New England).
- ----------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
John Y. Keffer Trustee Chairman, Trustee since President, Forum Foundation (a charitable
Born: July 15, 1942 Contracts Committee 1989 organization) since 2005; President, Forum Trust,
LLC (a non-depository trust company) since
1997; President, Citigroup Fund Services, LLC
("Citigroup") 2003-2005; President, Forum
Financial Group, LLC ("Forum") (a fund services
company acquired by Citibank, N.A. in 2003).
- ----------------------------------------------------------------------------------------------------------------
OFFICERS
Anthony R. Fischer President; Principal Since 2006 Co-Chairman and President, Monarch Investment
Born: April 15, 1948 Executive Officer Advisors, LLC since 2006; President, Castle
Asset Management, Inc. since 1992.
Jack J. Singer Treasurer; Principal Since 2006 Co-Chairman and Chief Executive Officer,
Born: May 27, 1944 Financial Officer Monarch Investment Advisors, LLC since 2006;
Executive Director, Forum Investment Advisors,
LLC 2005-2006; Senior Managing Director,
Comerica Securities, Inc. 2001-2005.
Beth P. Hanson Vice President; Since 2003 Relationship Manager, Citigroup since 2003;
Born: July 15, 1966 Assistant Secretary Relationship Manager, Forum 1999 - 2003.
Sara M. Morris Vice President Since 2004 Director and Relationship Manager, Citigroup
Born: September 18, 1963 since 2004; Chief Financial Officer, The VIA
Group, LLC (a strategic marketing company)
2000 - 2003.
David M. Whitaker Secretary Since 2004 Product Manager, Citigroup since 2004; Assistant
Born: September 6, 1971 Counsel, PFPC, Inc. (a fund services company)
1999 - 2004.
- ----------------------------------------------------------------------------------------------------------------
21
MONARCH FUNDS
DAILY ASSETS TREASURY FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
MONARCH FUNDS
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.
A code of ethics has not been adopted for the registrant's principal officers,
as it is not required by Rule 17j-1 of the 1940 Act.
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 sufficient for them to
perform the services required of Audit Committee members.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Monarch Daily Assets Government Fund
Monarch Daily Assets Cash Fund
Monarch Daily Assets Treasury Fund
Monarch Daily Assets Government Obligations Fund
(a) Audit Fees - The aggregate fees billed for each of the last two fiscal
years (the "Reporting Periods") for professional services rendered by the
Registrant's principal accountant for the audit of the Registrant's annual
financial statements, or services that are normally provided by the principal
accountant in connection with the statutory and regulatory filings or
engagements for the Reporting Periods, were $74,500 in 2005 and $78,000 in 2006.
(b) Audit-Related Fees - The aggregate fees billed in the Reporting Periods for
assurance and related services rendered by the principal accountant that were
reasonably related to the performance of the audit of the Registrant's
financial statements and are not reported under paragraph (a) of this Item 4
were $0 in 2005 and $0 in 2006.
(c) Tax Fees - The aggregate fees billed in the Reporting Periods for
professional services rendered by the principal accountant to the Registrant
for tax compliance, tax advice and tax planning were $11,100 in 2005 and
$12,400 in 2006. These services consisted of review and/or preparation of U.S.
federal, state, local and excise tax returns.
(d) Other Fees - The aggregate fees billed in the Reporting Periods for
products and services provided by the principal accountant to the Registrant,
other than services reported in paragraphs (a) through (c) of this Item were
$3,000 in 2005 and $3,500 in 2006. These services consisted of registration
statement filing review.
(e) (1) The Registrant's Audit Committee pre-approves all audit and permissible
non-audit services rendered to the Registrant in accordance with paragraph
(c)(7)(i) (c) of Rule 2-01 of Regulation S-K.
(e) (2) 100.00%
(f) Not applicable
(g) The aggregate non-audit fees billed by the principal accountant for
services rendered to the Registrant for the Reporting Periods were $11,100 in
2005 and $12,400 in 2006. There were no fees billed in each of the Reporting
Periods for non-audit services rendered by the principal accountant to the
investment adviser.
(h) If the Registrant's investment adviser has engaged the Registrant's auditor
for non-audit services and the engagement relates directly to the operations
and financial reporting of the Registrant, the Audit Committee does consider
such engagement in evaluating the independence of the Registrant's auditor.
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 10/20/06
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 10/20/06
By /s/ Jack J. Singer
-----------------------------------------------
Jack J. Singer, Principal Financial Officer
Date 10/20/06