As filed with the Securities and Exchange Commission on May 6, 2004
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-6742
MONARCH FUNDS
Two Portland Square
Portland, Maine 04101
207-879-1900
David I. Goldstein, President
Two Portland Square
Portland, Maine 04101
207-879-1900
Date of fiscal year end: FEBRUARY 29, 2004
Date of reporting period: SEPTEMBER 1, 2003 THROUGH FEBRUARY 29, 2004
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORT TO STOCKHOLDERS.
MONARCH
FUNDS SEMI-ANNUAL REPORT
FEBRUARY 29, 2004 (UNAUDITED)
DAILY ASSETS TREASURY FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
MONARCH FUNDS
- --------------------------------------------------------------------------------
A Message to Our Shareholders
- --------------------------------------------------------------------------------
February 29, 2004
Dear Shareholders:
During the past year, the Federal Reserve Bank has continued to focus its
efforts on moving the economy forward and encouraging job growth. In order to
reach this goal, the Fed has maintained the Federal Funds rate at 1% since June
2003. While the Gross Domestic Product has grown rapidly over the last six
months, job growth remains anemic. This has created a flat yield curve in the
short end of the market, which has allowed our portfolio management team to
shorten average maturities of the funds' portfolios without sacrificing yield.
The Federal Reserve Bank will eventually increase the Federal Funds rate. When
this happens, we believe that our funds will be well positioned to take
advantage of that increase.
We are pleased to report that Monarch's Daily Assets Government Fund, our oldest
fund and performance leader, continued to exhibit strong performance for the six
months ended February 29, 2004. For the ten-year period ended as of that date,
the fund's Universal Shares held the number two spot out of 43 funds within the
Government and Agencies Institutional category tracked by iMoneyNet, Inc. (The
Universal Shares seven-day yield as of February 29, 2004 was 0.92%.)*
For nearly 12 years, we have remained committed to maintaining your $1.00 per
share price through the skilled and prudent portfolio management you expect. We
thank all of our investors and the financial intermediaries we service for their
continued support. Please feel free to call us with your questions or comments
at (800) 754-8757.
Sincerely,
/s/ John Y. Keffer
------------------
John Y. Keffer
Trustee
* PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE
DATA QUOTED. FOR THE MOST RECENT MONTH END PERFORMANCE, PLEASE CALL
(800)-754-8757. UNIVERSAL SHARES OF DAILY ASSETS GOVERNMENT FUND, RANKED 16 OUT
OF 161, SIX OUT OF 93, AND TWO OUT OF 44 WITHIN THE GOVERNMENT AND AGENCIES
INSTITUTIONAL FUNDS CATEGORY FOR THE 1-, 5- AND 10-YEAR TOTAL RETURNS AS OF
MARCH 31, 2004. RANKINGS ARE BASED ON TOTAL RETURN AND WILL VARY FOR OTHER SHARE
CLASSES.
ALTHOUGH MONEY MARKET FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT
$1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THEM. AN
INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT
ENDORSED OR GUARANTEED BY ANY BANK OR ANY AFFILIATE OF A BANK. THIS REPORT IS
AUTHORIZED FOR DISTRIBUTION ONLY TO CURRENT SHAREHOLDERS AND TO OTHERS WHO HAVE
RECEIVED A COPY OF THE MONARCH FUNDS PROSPECTUS. FORUM FUND SERVICES, LLC,
DISTRIBUTOR.(4/04)
1
MONARCH FUNDS
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Schedule of Investments - Daily Assets Treasury Fund
- --------------------------------------------------------------------------------
February 29, 2004
FACE SECURITY
AMOUNT DESCRIPTION RATE MATURITY VALUE
- ------------- -------------------- ---- -------- --------------
U.S. TREASURY BILLS * - 73.3%
$150,000,000 U.S. Treasury Bill 0.90% 03/25/04 $ 149,906,000
50,000,000 U.S. Treasury Bill 0.96 06/24/04 49,845,069
-------------------
Total U.S. Treasury Bills 199,751,069
-------------------
REPURCHASE AGREEMENTS - 26.8%
26,675,000 Bank of America Securities LLC, to be repurchased at $26,677,223;
collateralized by various U.S. Treasury Obligations 1.00 03/01/04 26,675,000
23,000,000 Bear Stearns & Co., Inc., to be repurchased at $23,001,840;
collateralized by various U.S. Treasury Obligations 0.96 03/01/04 23,000,000
23,450,000 Merrill Lynch, Pierce, Fenner & Smith, Inc., to be repurchased at $23,451,896;
collateralized by various U.S. Treasury Obligations 0.97 03/01/04 23,450,000
-------------------
Total Repurchase Agreements 73,125,000
-------------------
Total Investments at Amortized Cost - 100.1% $ 272,876,069
Other Assets and Liabilities, Net - (0.1)% (198,728)
-------------------
NET ASSETS - 100.0% $ 272,677,341
===================
* Yields shown are annualized yields at time of purchase.
2
MONARCH FUNDS
- --------------------------------------------------------------------------------
Schedule of Investments - Daily Assets Government Obligations Fund
- --------------------------------------------------------------------------------
February 29, 2004
FACE SECURITY
AMOUNT DESCRIPTION RATE MATURITY VALUE
- ------------- -------------------- ---- -------- --------------
U.S. GOVERNMENT SECURITIES - 96.2%
FEDERAL FARM CREDIT BANK (FFCB) - DISCOUNT NOTE * - 9.0%
$2,000,000 FFCB 1.00% 03/22/04 $ 1,998,833
----------------
FEDERAL HOME LOAN BANK (FHLB) - DISCOUNT NOTES * - 87.2%
1,000,000 FHLB 1.03 03/10/04 999,743
3,200,000 FHLB 1.04 03/12/04 3,198,983
1,000,000 FHLB 0.99 03/31/04 999,175
2,970,000 FHLB 0.98 04/07/04 2,967,009
7,600,000 FHLB 0.99 04/16/04 7,590,323
3,615,000 FHLB 0.99 05/19/04 3,607,146
----------------
19,362,379
----------------
Total U.S. Government Securities 21,361,212
----------------
SHARES
------
SHORT-TERM INVESTMENT - 3.8%
831,424 Dreyfus Prime Treasury Cash Management Fund 831,424
----------------
Total Investments at Amortized Cost - 100.0% $ 22,192,636
Other Assets and Liabilities, Net - 0.0% 3,396
----------------
NET ASSETS - 100.0% $ 22,196,032
================
* Yields shown are annualized yields at time of purchase.
3
MONARCH FUNDS
- --------------------------------------------------------------------------------
Schedule of Investments - Daily Assets Government Fund
- --------------------------------------------------------------------------------
February 29, 2004
FACE SECURITY
AMOUNT DESCRIPTION RATE MATURITY VALUE
- ------------- -------------------- ---- -------- --------------
U.S. GOVERNMENT SECURITIES - 84.0%
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - Discount Notes * - 28.3%
$50,000,000 FNMA 1.07% 03/10/04 $ 49,986,687
30,000,000 FNMA 1.07 04/07/04 29,967,008
----------------
Total Federal National Mortgage Association - Discount Notes
79,953,695
----------------
STUDENT LOAN MARKETING ASSOCIATION (SLMA) - DISCOUNT NOTE * - 35.4%
100,000,000 SLMA 0.91 03/01/04 100,000,000
----------------
SMALL BUSINESS ADMINISTRATION (SBA) # - 20.3%
31,203 SBA Pool #500536 3.00 05/25/13 31,767
324,290 SBA Pool #501077 2.50 11/25/14 324,290
122,899 SBA Pool #501308 2.50 10/25/15 122,899
993,763 SBA Pool #501543 2.38 07/25/16 993,763
148,249 SBA Pool #501690 2.13 12/25/16 148,249
402,526 SBA Pool #501733 2.00 02/25/17 405,606
401,348 SBA Pool #501898 2.25 07/25/17 401,348
449,662 SBA Pool #501989 2.13 10/25/12 453,469
2,118,157 SBA Pool #502150 2.00 02/25/18 2,131,193
62,541 SBA Pool #502161 2.00 02/25/18 62,541
623,305 SBA Pool #502208 2.00 02/25/18 625,547
140,628 SBA Pool #502306 2.00 02/25/18 140,627
160,913 SBA Pool #502613 2.00 04/25/19 160,913
55,868 SBA Pool #502914 2.00 03/25/15 56,254
382,106 SBA Pool #503058 1.88 07/25/15 382,106
539,787 SBA Pool #503082 1.88 09/25/20 539,787
279,852 SBA Pool #503120 1.88 10/25/20 279,852
948,484 SBA Pool #503121 1.88 09/25/15 951,724
3,251,209 SBA Pool #503152 1.63 11/25/20 3,251,209
385,894 SBA Pool #503232 1.63 12/25/15 385,894
329,478 SBA Pool #503278 1.63 02/25/21 329,498
729,415 SBA Pool #503429 1.75 06/25/16 730,503
588,099 SBA Pool #503431 1.75 07/25/21 588,266
1,454,257 SBA Pool #503461 1.75 09/25/21 1,455,035
266,179 SBA Pool #503472 1.75 08/25/21 266,179
1,468,399 SBA Pool #503553 1.63 11/25/21 1,469,530
2,511,635 SBA Pool #503614 1.63 01/25/22 2,511,635
1,120,627 SBA Pool #503671 1.63 03/25/22 1,120,627
873,632 SBA Pool #503754 1.63 05/25/22 874,407
62,870 SBA Pool #503780 1.63 03/25/22 62,923
1,217,244 SBA Pool #503882 1.50 09/25/22 1,216,309
244,993 SBA Pool #503892 1.63 07/25/22 245,250
1,806,005 SBA Pool #503909 1.50 10/25/22 1,805,391
992,715 SBA Pool #504015 1.50 01/25/23 992,571
1,053,433 SBA Pool #504062 1.50 02/25/23 1,053,433
1,353,063 SBA Pool #504074 1.50 02/25/23 1,353,063
592,540 SBA Pool #504203 1.63 07/25/13 593,377
1,028,906 SBA Pool #504269 1.63 05/25/15 1,030,407
441,726 SBA Pool #504345 1.63 05/25/18 441,726
10,749,508 SBA Pool #504366 1.38 02/25/24 10,723,944
4
MONARCH FUNDS
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Schedule of Investments - Daily Assets Government Fund
- --------------------------------------------------------------------------------
February 29, 2004
FACE SECURITY
AMOUNT DESCRIPTION RATE MATURITY VALUE
- ------------- -------------------- ---- -------- --------------
SMALL BUSINESS ADMINISTRATION (SBA)
$ 5,938,345 SBA Pool #504719 1.63% 07/25/24 $ 5,938,345
2,311,782 SBA Pool #504727 1.63 09/25/24 2,311,782
2,923,347 SBA Pool #504765 1.63 10/25/09 2,918,027
2,992,304 SBA Pool #504769 1.63 10/25/24 2,992,304
1,765,072 SBA Pool #505204 1.75 09/25/25 1,764,674
864,205 SBA Pool #505205 1.81 09/25/07 864,100
----------------
Total Small Business Administration 57,502,344
----------------
Total U.S. Government Securities 237,456,039
----------------
REPURCHASE AGREEMENTS - 15.4%
10,823,000 Bank of America Securities LLC, to be repurchased at $10,823,947;
collateralized by various U.S. Government Agency Obligations 1.05 03/01/04 10,823,000
32,630,000 Bear Stearns & Co., Inc., to be repurchased aT $32,632,910;
collateralized by various U.S. Government Agency Obligations 1.07 03/01/04 32,630,000
----------------
Total Repurchase Agreements 43,453,000
----------------
Total Investments at Amortized Cost - 99.4% $ 280,909,039
Other Assets and Liabilities, Net - 0.6% 1,677,602
----------------
NET ASSETS - 100.0% $ 282,586,641
================
* Yields 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 29, 2004.
5
MONARCH FUNDS
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Schedule of Investments - Daily Assets Cash Fund
- --------------------------------------------------------------------------------
February 29, 2004
FACE SECURITY
AMOUNT DESCRIPTION RATE MATURITY VALUE
- ------------- -------------------- ---- -------- --------------
U.S. GOVERNMENT SECURITIES - 21.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - DISCOUNT NOTE * - 10.5%
$50,000,000 FHLMC 1.06% 03/25/04 $ 49,964,833
----------------
Student Loan Marketing Association (SLMA) - DISCOUNT NOTE * - 10.5%
50,000,000 SLMA 0.91 03/01/04 50,000,000
----------------
Total U.S. Government Securities 99,964,833
COMMERCIAL PAPER * - 40.2%
25,000,000 BNP Paribas Finance, Inc. 1.05 05/05/04 24,952,604
28,000,000 Bank of America Corp. 1.03 04/20/04 27,959,945
30,000,000 Citigroup Global Markets 1.06 03/03/04 29,998,233
28,000,000 General Electric Capital Corp. 1.05 05/26/04 27,929,767
20,000,000 Goldman Sachs Group, Inc. 1.12 03/22/04 19,986,933
20,000,000 Societe Generale, N.A. 1.09 03/15/04 19,991,522
20,000,000 UBS Finance Delaware LLC 1.06 03/17/04 19,990,578
20,000,000 Windmill Funding Corp. 1.02 03/19/04 19,989,800
----------------
Total Commercial Paper 190,799,382
----------------
CORPORATE NOTES * - 13.6%
4,500,000 Bear Stearns & Co., Inc. 1.56 09/21/04 4,509,887
20,000,000 Countrywide Home Loan 1.19 01/18/05 19,999,264
10,000,000 Credit Suisse First Boston USA, Inc. 1.52 12/03/04 10,022,957
30,000,000 Wells Fargo Bank, N.A. 1.04 06/17/04 30,000,000
----------------
Total Corporate Notes 64,532,108
----------------
ASSET-BACKED SECURITY #, o - 3.1%
14,673,113 Grand Central CDO Ltd. 1.30 09/10/38 14,673,113
----------------
REPURCHASE AGREEMENTS - 22.1%
11,994,000 Bank of America Securities LLC, to be repurchased at $11,995,049;
collateralized by various U.S. Government Agency Obligations 1.05 03/01/04 11,994,000
46,000,000 Bank of America Securities LLC, to be repurchased at $46,004,063;
collateralized by various U.S. Government Agency Obligations 1.06 03/01/04 46,000,000
47,000,000 Merrill Lynch, Pierce, Fenner & Smtih, Inc., to be repurchased at $47,004,034;
collateralized by various U.S. Government Agency Obligations 1.03 03/01/04 47,000,000
----------------
Total Repurchase Agreements 104,994,000
----------------
Total Investments at Amortized Cost - 100.0% $ 474,963,436
Other Assets and Liabilities, Net - 0.0% (167,889)
---------------
NET ASSETS - 100.0% $ 474,795,547
---------------
* Yields 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 29, 2004.
o Securities that may be resold to "qualified institutional buyers" under
Rule 144A or securities offered pursuant to Section 4 (2) of the Securities
Act of 1933, as amended. These securities have been determined to be liquid
by the adviser pursuant to procedures approved by the Board of Trustees.
CDO - Collateralized Debt Obligations.
6
MONARCH FUNDS
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Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
February 29, 2004
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
---------------- ---------------- ---------------- ----------------
Assets
Investments:
Securities at amortized cost $ 199,751,069 $ 22,192,636 $ 237,456,039 $ 369,969,436
Repurchase agreements 73,125,000 - 43,453,000 104,994,000
Cash 34,241 625 34,174 28,910
Receivables:
Interest 5,959 571 163,216 199,436
Investment securities sold - - 1,861,555 -
Prepaid expenses and other assets 1,758 18,344 8,291 54,407
---------------- ---------------- ---------------- ----------------
Total Assets 272,918,027 22,212,176 282,976,275 475,246,189
---------------- ---------------- ---------------- ----------------
Liabilities
Payables:
Dividends 114,392 15,081 164,360 174,391
Accrued expenses:
Payables to related parties 37,373 220 42,280 78,922
Trustees' fees and expenses 4,233 275 6,415 7,423
Other expenses 84,688 568 135,976 189,906
Other liabilities - - 40,603 -
---------------- ---------------- ---------------- ----------------
Total Liabilities 240,686 16,144 389,634 450,642
---------------- ---------------- ---------------- ----------------
Net Assets $ 272,677,341 $ 22,196,032 $ 282,586,641 $ 474,795,547
================ ================ ================ ================
Components of Net Assets
Paid in capital $ 272,677,459 $ 22,220,095 $ 282,615,206 $ 474,807,734
Undistributed (distributions in
excess of net investment income) (82) 149 (30,777) (546)
Accumulated net realized gain (loss) (36) (24,212) 2,212 (11,641)
---------------- ---------------- ---------------- ----------------
Net Assets $ 272,677,341 $ 22,196,032 $ 282,586,641 $ 474,795,547
================ ================ ================ ================
Net Assets by Class of Shares
Preferred Shares $ - $ - $ 9,648,679 $ 5,044,421
Universal Shares 151,832,971 22,196,032 82,137,096 81,478,913
Institutional Service Shares 24,441,853 - 51,383,163 24,941,731
Institutional Shares - - 82,812,865 102,025,256
Investor Shares 96,402,517 - 56,604,838 261,305,226
---------------- ---------------- ---------------- ----------------
Net Assets $ 272,677,341 $ 22,196,032 $ 282,586,641 $ 474,795,547
================ ================ ================ ================
Shares of Beneficial Interest for each Class of Shares
Preferred Shares - - 9,647,881 5,044,810
Universal Shares 151,842,000 22,219,919 82,176,576 81,498,036
Institutional Service Shares 24,435,507 - 51,383,243 24,946,912
Institutional Shares - - 82,807,813 102,040,672
Investor Shares 96,399,964 - 56,599,706 261,353,989
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
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
Six Months Ended February 29, 2004
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
---------------- ---------------- ---------------- ----------------
Investment Income:
Interest income $ 1,284,966 $ 116,337 $ 5,004,153 $ 3,115,453
Dividend income 24,296 3,106 23,756 25,392
------------- -------------- -------------- --------------
Total Investment Income 1,309,262 119,443 5,027,909 3,140,845
------------- -------------- -------------- --------------
Expenses:
Investment advisory 48,004 5,794 165,369 99,778
Administration
Preferred Shares - - 311,053 5,015
Universal Shares 75,214 12,747 66,507 60,464
Institutional Service Shares 15,849 - 44,827 19,936
Institutional Shares - - 44,913 48,924
Investor Shares 55,349 - 35,616 169,796
Shareholder services
Institutional Service Shares 28,819 - 81,503 36,269
Institutional Shares - - 81,659 89,003
Investor Shares 100,631 - 64,757 308,661
Distribution
Investor Shares 125,787 - 80,945 385,823
Transfer agency
Preferred Shares - - 12,556 3,612
Universal Shares 41,738 14,130 38,163 34,576
Institutional Service Shares 20,249 - 46,646 23,536
Institutional Shares - - 87,977 96,635
Investor Shares 110,860 - 71,026 325,652
Custody 16,638 1,449 57,152 34,562
Professional services 12,035 14,423 13,313 14,981
Accounting 36,508 19,958 51,104 52,342
Trustees' fees and expenses 350 125 4,976 3,041
Miscellaneous 20,190 5,435 46,341 57,464
------------- -------------- -------------- --------------
Total Expenses 708,221 74,061 1,406,403 1,870,070
Expenses reimbursed and fees waived (80,373) (50,496) (269,378) (115,505)
------------- -------------- -------------- --------------
Net Expenses 627,848 23,565 1,137,025 1,754,565
------------- -------------- -------------- --------------
Net Investment Income 681,414 95,878 3,890,884 1,386,280
------------- -------------- -------------- --------------
Net Realized Gain (Loss) on Investments - 40 1,250 (333)
------------- -------------- -------------- --------------
Increase in Net Assets from Operations $ 681,414 $ 95,918 $ 3,892,134 $ 1,385,947
============= ============== ============== ==============
See Notes to Financial Statements.
8
MONARCH FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
DAILY ASSETS DAILY ASSETS
TREASURY FUND GOVERNMENT OBLIGATIONS FUND
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2004 AUGUST 31, 2003 FEBRUARY 29, 2004 AUGUST 31, 2003
------------------------------------- -------------------------------------
Operations
Net investment income $ 681,414 $ 1,031,564 $ 95,878 $ 312,641
Net realized gain (loss) on investments - - 40 -
Net realized gain (loss) on investments
from Portfolios - (40) - (10)
---------------- ------------------ --------------- -----------------
Increase in Net Assets from Operations 681,414 1,031,524 95,918 312,631
---------------- ------------------ --------------- -----------------
Distributions to Shareholders from
Net investment income--Universal Shares (538,216) (256,355) (105,653) (308,095) (d)
Net investment income--Institutional Service Shares (77,665) (272,364) (b) - (13,659) (c)
Net investment income--Investor Shares (75,226) (511,818) - (2,232) (c)
Net investment income--Service Shares (a) - (6,421) - -
---------------- ------------------ --------------- -----------------
Total Distributions to Shareholders (691,107) (1,046,958) (105,653) (323,986)
---------------- ------------------ --------------- -----------------
Capital Share Transactions
Sale of shares--Universal Shares 145,224,825 63,758,141 8,232,689 23,392,457 (d)
Sale of shares--Institutional Service Shares 165,165,328 788,768,505 (b) - 960,790 (c)
Sale of shares--Investor Shares 878,715,216 2,221,411,726 - 517,114 (c)
Sale of shares--Service Shares (a) - 29,717,963 - -
Reinvestment of distributions--Universal Shares 349 4,620 2,093 3,444 (d)
Reinvestment of distributions--Institutional Service Shares 31,875 106,985 (b) - 13,655 (c)
Reinvestment of distributions--Investor Shares 61,227 511,763 - 2,225 (c)
Reinvestment of distributions--Service Shares (a) - 6,421 - -
Redemption of shares--Universal Shares (133,524,467) (60,521,256) (10,781,064) (24,392,971) (d)
Redemption of shares--Institutional Service Shares (175,828,163) (781,026,237) (b) - (2,726,685) (c)
Redemption of shares--Investor Shares (879,197,190) (2,258,845,469) - (910,051) (c)
Redemption of shares--Service Shares (a) - (32,233,218) - -
Transactions due to reorganization--Universal Shares
(Notes 1 and 5) - 136,794,829 - -
Transactions due to reorganization--Institutional Service
Shares (Notes 1 and 5) - 7,158,960 - -
---------------- ------------------ --------------- -----------------
Increase (Decrease) from Capital Transactions 649,000 115,613,733 (2,546,282) (3,140,022)
---------------- ------------------ --------------- -----------------
Increase (Decrease) in Net Assets 639,307 115,598,299 (2,556,017) (3,151,377)
---------------- ------------------ --------------- -----------------
Net Assets
Beginning of Period 272,038,034 156,439,735 24,752,049 27,903,426
---------------- ------------------ --------------- -----------------
End of Period $ 272,677,341 $ 272,038,034 $ 22,196,032 $ 24,752,049
================ ================== =============== =================
Undistributed (distributions in excess of) Net
Investment Income $ (82) $ 9,611 $ 149 $ 9,924
---------------- ------------------ --------------- -----------------
(a) On February 10, 2003, Service Shares ceased operations.
(b) On April 23, 2003, Institutional Shares were renamed Institutional Service Shares.
(c) On June 26, 2003, Institutional Service Shares and Investor Shares ceased operations.
(d) On July 22, 2003, Institutional Shares were redesignated as Universal Shares.
See Notes to Financial Statements.
9
MONARCH FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
DAILY ASSETS DAILY ASSETS
TREASURY FUND GOVERNMENT OBLIGATIONS FUND
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2004 AUGUST 31, 2003 FEBRUARY 29, 2004 AUGUST 31, 2003
------------------------------------- -------------------------------------
Share Transactions
Sale of shares--Universal Shares 145,224,827 63,758,144 8,232,688 23,392,207 (d)
Sale of shares--Institutional Service Shares 165,165,327 788,768,505 (b) - 960,024 (c)
Sale of shares--Investor Shares 878,715,216 2,221,411,726 - 516,995 (c)
Sale of shares--Service Shares (a) - 29,717,963 - -
Reinvestment of distributions--Universal Shares 349 4,621 2,093 3,444 (d)
Reinvestment of distributions--Institutional Service Shares 31,875 106,985 (b) - 13,655 (c)
Reinvestment of distributions--Investor Shares 61,227 511,763 - 2,225 (c)
Reinvestment of distributions--Service Shares (a) - 6,421 - -
Redemption of shares--Universal Shares (133,524,467) (60,521,256) (10,781,064) (24,392,203) (d)
Redemption of shares--Institutional Service Shares (175,828,163) (781,026,237)(b) - (2,726,685) (c)
Redemption of shares--Investor Shares (879,197,190) (2,258,845,469) - (910,046) (c)
Redemption of shares--Service Shares (a) - (32,233,218) - -
Transactions due to reorganization--Universal Shares
(Notes 1 and 5) - 136,795,448 - -
Transactions due to reorganization--Institutional Service
Shares (Notes 1 and 5) - 7,158,341 - -
--------------- ------------------ --------------- -----------------
Increase (Decrease) in Shares 649,001 115,613,737 (2,546,283) (3,140,384)
=============== ================== =============== =================
(a) On February 10, 2003, Service Shares ceased operations.
(b) On April 23, 2003, Institutional Shares were renamed Institutional Service Shares.
(c) On June 26, 2003, Institutional Service Shares and Investor Shares ceased operations.
(d) On July 22, 2003, Institutional Shares were redesignated as Universal Shares.
See Notes to Financial Statements.
10
MONARCH FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
DAILY ASSETS DAILY ASSETS
GOVERNMENT FUND CASH FUND
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2004 AUGUST 31, 2003 FEBRUARY 29, 2004 AUGUST 31, 2003
------------------------------------- -------------------------------------
Operations
Net investment income $ 3,890,884 $ 3,387,985 $ 1,386,280 $ 6,339,246
Net realized gain (loss) on investments 1,250 - (333) (5,268)
Net realized gain (loss) on investments allocated
from Portfolios - 1,354 - (5,698)
---------------- -------------- ---------------- ----------------
Increase in Net Assets from Operations 3,892,134 3,389,339 1,385,947 6,328,280
---------------- -------------- ---------------- ----------------
Distributions to Shareholders from
Net investment income--Preferred Shares (2,777,795) (621,089) (45,598) (151,590)
Net investment income--Universal Shares (544,945) (1,413,090) (512,475) (1,103,415)
Net investment income--Institutional Service Shares (265,287) (110,393)(b) (124,272) (57,923)(b)
Net investment income--Institutional Shares (217,458) (880,906) (250,303) (1,997,736)
Net investment income--Investor Shares (85,120) (370,340) (454,178) (3,058,136)
Net investment income--Service Shares (a) - (3,730) - (8,311)
---------------- -------------- ---------------- ----------------
Total Distributions to Shareholders (3,890,605) (3,399,548) (1,386,826) (6,377,111)
---------------- -------------- ---------------- ----------------
Capital Share Transactions
Sale of shares--Preferred Shares 3,746,790,145 774,265,384 72,380,843 134,949,972
Sale of shares--Universal Shares 206,294,126 618,388,835 853,405,167 545,045,220
Sale of shares--Institutional Service Shares 189,497,382 97,674,061 (b) 188,719,213 79,389,684 (b)
Sale of shares--Institutional Shares 410,320,519 634,925,725 457,128,096 934,006,867
Sale of shares--Investor Shares 456,403,094 860,191,768 2,579,921,946 5,847,733,697
Sale of shares--Service Shares (a) - 32,275,958 - 35,906,214
Reinvestment of distributions--Preferred Shares 2,733,229 598,859 19,606 90,085
Reinvestment of distributions--Universal Shares 209,680 1,221,360 269,719 904,881
Reinvestment of distributions--Institutional Service Shares 69,914 46,875 (b) 87,951 54,087 (b)
Reinvestment of distributions--Institutional Shares 110,900 584,103 140,933 1,578,425
Reinvestment of distributions--Investor Shares 69,768 370,394 361,894 2,870,274
Reinvestment of distributions--Service Shares (a) - 3,730 - 8,312
Redemption of shares--Preferred Shares (3,751,424,481) (775,355,933) (70,335,289) (145,153,730)
Redemption of shares--Universal Shares (238,539,723) (652,099,960) (877,036,679) (530,370,168)
Redemption of shares--Institutional Service Shares (214,457,752) (84,691,606)(b) (200,741,295) (72,324,735)(b)
Redemption of shares--Institutional Shares (418,358,970) (662,241,985) (447,429,982) (1,190,855,020)
Redemption of shares--Investor Shares (447,250,885) (872,270,125) (2,622,367,197) (6,194,764,416)
Redemption of shares--Service Shares (a) - (33,658,096) - (43,608,634)
Transactions due to reorganization--Universal Shares
(Notes 1 and 5) - 65,240,533 - 42,432,455
Transactions due to reorganization--Institutional Service
Shares (Notes 1 and 5) - 63,244,162 - 29,757,106
Transactions due to reorganization--Investor Shares
(Notes 1 and 5) - 695,432 - 1,292,555
---------------- -------------- ---------------- ----------------
Increase (Decrease) Decrease from Capital Transactions (57,533,054) 69,409,474 (65,475,074) (521,056,869)
---------------- -------------- ---------------- ----------------
Increase (Decrease) in Net Assets (57,531,525) 69,399,265 (65,475,953) (521,105,700)
---------------- -------------- ---------------- ----------------
Net Assets
Beginning of Period 340,118,166 270,718,901 540,271,500 1,061,377,200
---------------- -------------- ---------------- ----------------
End of Period $ 282,586,641 $ 340,118,166 $ 474,795,547 $ 540,271,500
================ ============== ================ ================
Undistributed (distributions in excess of) Net
Investment Income $ (30,777) $ (31,056) $ (546) $ -
---------------- -------------- ---------------- ----------------
(a) On February 10, 2003, Service Shares ceased operations.
(b) On June 9, 2003, Institutional Service Shares commenced operations.
See Notes to Financial Statements.
11
MONARCH FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
DAILY ASSETS DAILY ASSETS
GOVERNMENT FUND CASH FUND
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2004 AUGUST 31, 2003 FEBRUARY 29, 2004 AUGUST 31, 2003
------------------------------------- -------------------------------------
Share Transactions
Sale of shares--Preferred Shares 3,746,790,145 774,265,384 72,380,844 134,949,972
Sale of shares--Universal Shares 206,294,127 618,388,835 853,405,167 545,045,222
Sale of shares--Institutional Service Shares 189,497,382 97,674,061 (b) 188,719,213 79,389,684 (b)
Sale of shares--Institutional Shares 410,320,519 634,925,725 457,128,096 934,006,868
Sale of shares--Investor Shares 456,403,094 860,191,768 2,579,921,947 5,847,733,697
Sale of shares--Service Shares (a) - 32,275,958 - 35,906,215
Reinvestment of distributions--Preferred Shares 2,733,229 598,859 19,606 90,085
Reinvestment of distributions--Universal Shares 209,680 1,221,360 269,719 904,881
Reinvestment of distributions--Institutional Service Shares 69,914 46,875 (b) 87,951 54,087 (b)
Reinvestment of distributions--Institutional Shares 110,900 584,103 140,933 1,578,426
Reinvestment of distributions--Investor Shares 69,768 370,394 361,894 2,870,274
Reinvestment of distributions--Service Shares (a) - 3,730 - 8,311
Redemption of shares--Preferred Shares (3,751,424,481) (775,355,933) (70,335,289) (145,153,307)
Redemption of shares--Universal Shares (238,539,723) (652,099,960) (877,036,679) (530,355,298)
Redemption of shares--Institutional Service Shares (214,457,752) (84,691,606)(b) (200,741,295) (72,319,505) (b)
Redemption of shares--Institutional Shares (418,358,970) (662,241,985) (447,429,982) (1,190,841,943)
Redemption of shares--Investor Shares (447,250,885) (872,270,125) (2,622,367,197) (6,194,721,376)
Redemption of shares--Service Shares (a) - (33,658,096) - (43,608,634)
Transactions due to reorganization--Universal Shares
(Notes 1 and 5) - 65,240,211 - 42,433,148
Transactions due to reorganization--Institutional Service
Shares (Notes 1 and 5) - 63,244,369 - 29,756,777
Transactions due to reorganization--Investor Shares
(Notes 1 and 5) - 695,485 - 1,292,578
---------------- -------------- ---------------- ---------------
Increase (Decrease) in Shares (57,533,053) 69,409,412 (65,475,072) (520,979,838)
================ ============== ================ ===============
(a) On February 10, 2003, Service Shares ceased operations.
(b) On June 9, 2003, Institutional Service Shares commenced operations.
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.
RATIOS/SUPPLEMENTAL
SELECTED DATA FOR A SINGLE SHARE DATA
------------------------------------------------ -----------------------
Ratios to Average
Net Assets (a)
Beginning Net Distri- Distri- Ending Net Assets -----------------------
Net Asset Net Realized butions butions Net Asset at End Net
Value Per Investment Gain on from Net from Net Value of Period Invest Gross
Year Ended August 31, Share Income Invest- Investment Realized Per Share Total (000's Net -ment Expenses
(except as noted) ments Income Gains Return (b) Omitted) Expenses Income (c)
- ----------------------------------------------------------------------------------------------------------------------------------
DAILY ASSETS TREASURY FUND
Universal Shares
- ----------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 $ 1.00 - (e) - - (e) - $1.00 0.39% $151,833 0.20% 0.78% 0.27%
2003 1.00 0.01 - (0.01) - 1.00 1.10% 140,137 0.21% 0.80% 0.37%
2002 1.00 0.02 - (e) (0.02) - (e) 1.00 1.82% 105 0.20% 1.81% 8.77%
2001 1.00 0.05 - (0.05) - 1.00 5.24% 102 0.20% 6.22% 0.92%
2000 (d) 1.00 0.04 - (0.04) - 1.00 4.02% 5,976 0.20% 5.86% 0.38%
Institutional Service Shares (f)
- ----------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - - (e) - 1.00 0.27% 24,442 0.45% 0.53% 0.56%
2003 1.00 0.01 - (0.01) - 1.00 0.84% 35,074 0.45% 0.84% 0.67%
2002 1.00 0.02 - (e) (0.02) - (e) 1.00 1.57% 20,068 0.45% 1.68% 0.62%
2001 1.00 0.05 - (0.05) - 1.00 4.92% 50,554 0.45% 4.57% 0.61%
2000 1.00 0.05 - (0.05) - 1.00 5.47% 30,480 0.45% 5.30% 0.62%
1999 1.00 0.04 - (e) (0.04) - (e) 1.00 4.50% 55,134 0.45% 4.43% 0.62%
Investor Shares
- ----------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - - (e) - 1.00 0.07% 96,402 0.84% 0.14% 0.88%
2003 1.00 - (e) - - (e) - 1.00 0.45% 96,827 0.84% 0.45% 0.90%
2002 1.00 0.01 - (e) (0.01) - (e) 1.00 1.17% 133,758 0.85% 1.22% 0.87%
2001 1.00 0.04 - (0.04) - 1.00 4.52% 233,138 0.84% 4.52% 0.84%
2000 1.00 0.05 - (0.05) - 1.00 5.06% 314,305 0.84% 5.01% 0.85%
1999 1.00 0.04 - (e) (0.04) - (e) 1.00 4.10% 232,624 0.83% 4.02% 0.89%
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Universal Shares (g)
- ----------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - (e) - (e) - 1.00 0.45% 22,196 0.20% 0.83% 0.64%
2003 1.00 0.01 - (0.01) - 1.00 1.18% 24,752 0.20% 1.14% 0.48%
2002 1.00 0.02 - (0.02) - 1.00 1.97% 25,760 0.20% 1.97% 0.71%
2001 1.00 0.05 - (0.05) - 1.00 5.26% 29,100 0.20% 5.24% 0.57%
2000 1.00 0.06 - (0.06) - 1.00 5.93% 39,777 0.20% 5.78% 0.65%
1999 1.00 0.05 - (0.05) - 1.00 4.92% 28,709 0.20% 4.81% 0.61%
(a) All ratios for periods less than a year are annualized.
(b) Not annualized.
(c) The ratio of Gross Expenses to Average Net Assets reflects the expense ratio excluding any fee waivers and/or
expense reimbursements.
(d) See Note 1 for dates of commencement of operations.
(e) Less than $0.01 per share.
(f) On April 23, 2003, Institutional Shares were renamed Institutional Service Shares.
(g) 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.
Ratios/Supplemental
SELECTED DATA FOR A SINGLE SHARE DATA
------------------------------------------------ -----------------------
Ratios to Average
Net Assets (a)
Beginning Net Distri- Distri- Ending Net Assets -----------------------
Net Asset Net Realized butions butions Net Asset at End Net
Value Per Investment Gain on from Net from Net Value of Period Invest Gross
Year Ended August 31, Share Income Invest- Investment Realized Per Share Total (000's Net -ment Expenses
(except as noted) ments Income Gains Return (b) Omitted) Expenses Income (c)
- ----------------------------------------------------------------------------------------------------------------------------------
DAILY ASSETS GOVERNMENT FUND
Preferred Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 $1.00 - (e) - (e) - (e) - $1.00 0.49% $9,649 0.11% 0.98% 0.18%
2003 1.00 0.01 - (0.01) - 1.00 1.40% 11,549 0.11% 1.05% 0.25%
2002 1.00 0.02 - (e) (0.02) - (e) 1.00 2.25% 12,041 0.12% 2.19% 0.22%
2001 (d) 1.00 - (e) - - (e) - 1.00 0.22% 8 0.12% 3.64% 97.77%
Universal Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - (e) - (e) - 1.00 0.45% 82,137 0.20% 0.90% 0.26%
2003 1.00 0.01 - (0.01) - 1.00 1.29% 114,173 0.20% 1.26% 0.28%
2002 1.00 0.02 - (e) (0.02) - (e) 1.00 2.17% 81,426 0.21% 2.17% 0.25%
2001 1.00 0.05 - (0.05) - 1.00 5.34% 164,500 0.20% 5.29% 0.23%
2000 1.00 0.06 - (0.06) - 1.00 5.94% 225,697 0.20% 5.73% 0.24%
1999 1.00 0.05 - (0.05) - 1.00 5.00% 277,549 0.18% 4.88% 0.25%
Institutional Service Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - (e) - (e) - 1.00 0.33% 51,383 0.45% 0.65% 0.51%
2003 (d) 1.00 - (e) - - (e) - 1.00 0.16% 76,273 0.45% 0.70% 0.58%
Institutional Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - (e) - (e) - 1.00 0.27% 82,813 0.57% 0.53% 0.62%
2003 1.00 0.01 - (0.01) - 1.00 0.91% 90,740 0.57% 0.92% 0.63%
2002 1.00 0.02 - (e) (0.02) - (e) 1.00 1.80% 117,476 0.57% 2.05% 0.59%
2001 1.00 0.05 - (0.05) - 1.00 4.95% 198,324 0.57% 4.80% 0.58%
2000 1.00 0.05 - (0.05) - 1.00 5.54% 400,418 0.57% 5.41% 0.58%
1999 1.00 0.05 - (0.05) - 1.00 4.59% 455,239 0.57% 4.50% 0.59%
Investor Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - (e) - (e) - 1.00 0.13% 56,605 0.84% 0.26% 0.87%
2003 1.00 0.01 - (0.01) - 1.00 0.64% 47,383 0.84% 0.63% 0.89%
2002 1.00 0.02 - (e) (0.02) - (e) 1.00 1.52% 58,397 0.85% 1.43% 0.85%
2001 1.00 0.05 - (0.05) - 1.00 4.68% 61,546 0.84% 4.51% 0.84%
2000 (d) 1.00 0.04 - (0.04) - 1.00 3.68% 36,091 0.85% 5.70% 0.97%
(a) All ratios for periods less than a year are annualized.
(b) Not annualized.
(c) The ratio of Gross Expenses to Average Net Assets reflects the expense ratio excluding any fee waivers and/or
expense reimbursements.
(d) See Note 1 for dates of commencement of operations.
(e) Less than $0.01 per share.
See Notes to Financial Statements.
14
MONARCH FUNDS
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
These financial highlights reflect selected data for an outstanding share of each class of each Fund during the periods indicated.
RATIOS/SUPPLEMENTAL
SELECTED DATA FOR A SINGLE SHARE DATA
------------------------------------------------ -----------------------
Ratios to Average
Net Assets (a)
Beginning Net Distri- Distri- Ending Net Assets -----------------------
Net Asset Net Realized butions butions Net Asset at End Net
Value Per Investment Gain on from Net from Net Value of Perio d Invest Gross
Year Ended August 31, Share Income Invest- Investment Realized Per Share Total (000's Net -ment Expenses
(except as noted) ments Income Gains Return (b) Omitted) Expenses Income (c)
- ----------------------------------------------------------------------------------------------------------------------------------
DAILY ASSETS CASH FUND
Preferred Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 $1.00 0.01 - (e) (0.01) - $1.00 0.51% $5,045 0.12% 1.00% 0.27%
2003 1.00 0.01 - (0.01) - 1.00 1.37% 2,979 0.12% 1.39% 0.30%
2002 1.00 0.02 - (0.02) - 1.00 2.21% 13,095 0.12% 1.88% 0.20%
2001 (d) 1.00 - (e) - - (e) - 1.00 0.22% 8 0.12% 3.76% 91.14%
Universal Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - (e) - (e) - 1.00 0.47% 81,479 0.20% 0.93% 0.27%
2003 1.00 0.01 - (0.01) - 1.00 1.29% 104,842 0.20% 1.24% 0.28%
2002 1.00 0.02 - (0.02) - 1.00 2.12% 46,833 0.21% 2.03% 0.25%
2001 1.00 0.05 - (0.05) - 1.00 5.49% 37,236 0.20% 5.68% 0.24%
2000 1.00 0.06 - (0.06) - 1.00 6.04% 70,451 0.20% 5.84% 0.23%
1999 1.00 0.05 - (0.05) - 1.00 5.09% 98,705 0.18% 4.99% 0.25%
Institutional Service Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - (e) - (e) - 1.00 0.34% 24,942 0.45% 0.69% 0.53%
2003 (d) 1.00 - (e) - - (e) - 1.00 0.18% 36,876 0.45% 0.76% 0.58%
Institutional Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - (e) - (e) - 1.00 0.28% 102,025 0.57% 0.56% 0.64%
2003 1.00 0.01 - (0.01) - 1.00 0.92% 92,186 0.57% 1.01% 0.61%
2002 1.00 0.02 - (0.02) - 1.00 1.75% 347,469 0.57% 1.84% 0.58%
2001 1.00 0.05 - (0.05) - 1.00 5.11% 736,555 0.57% 5.07% 0.57%
2000 1.00 0.06 - (0.06) - 1.00 5.65% 863,603 0.58% 5.55% 0.58%
1999 1.00 0.05 - (0.05) - 1.00 4.68% 569,409 0.57% 4.56% 0.60%
Investor Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended
February 29, 2004 1.00 - (e) - (e) - (e) - 1.00 0.15% 261,305 0.84% 0.29% 0.86%
2003 1.00 0.01 - (0.01) - 1.00 0.64% 303,389 0.84% 0.68% 0.86%
2002 1.00 0.01 - (0.01) - 1.00 1.48% 646,285 0.83% 1.51% 0.83%
2001 1.00 0.05 - (0.05) - 1.00 4.85% 791,138 0.82% 4.78% 0.82%
2000 1.00 0.05 - (0.05) - 1.00 5.38% 994,191 0.83% 5.40% 0.85%
1999 1.00 0.04 - (0.04) - 1.00 4.41% 269,421 0.83% 4.30% 0.85%
(a) All ratios for periods less than a year are annualized.
(b) Not annualized.
(c) The ratio of Gross Expenses to Average Net Assets reflects the expense ratio excluding any fee waivers and/or
expense reimbursements.
(d) See Note 1 for dates of commencement of operations.
(e) Less than $0.01 per share.
See Notes To Financial Statements.
15
MONARCH FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
February 29, 2004
NOTE 1. SUMMARY OR 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 29, 2004, and the dates on which they commenced
operations were as follows:
Daily Assets Treasury Fund Universal Shares December 30, 1999
Daily Assets Treasury Fund Institutional Service Shares July 12, 1993
Daily Assets Treasury Fund Investor Shares October 25, 1995
Daily Assets Government Obligations Universal Shares March 13, 1998
Daily Assets Government Fund Preferred Shares August 10, 2001
Daily Assets Government Fund Universal Shares October 29, 1992
Daily Assets Government Fund Institutional Service Shares June 9, 2003
Daily Assets Government Fund Institutional Shares July 15, 1993
Daily Assets Government Fund Investor Shares December 30, 1999
Daily Assets Cash Fund Preferred Shares August 10, 2001
Daily Assets Cash Fund Universal Shares December 1, 1992
Daily Assets Cash Fund Institutional Service Shares June 9, 2003
Daily Assets Cash Fund Institutional Shares July 15, 1993
Daily Assets Cash Fund Investor Shares June 16, 1995
Prior to June 9, 2003, the Funds operated under a master-feeder fund structure
whereby they sought to achieve their respective investment objectives by
investing all of their investable assets in separate portfolios (each a
"Portfolio") of another registered open-end management investment company whose
series had the same investment objective and policies as the Funds. Each Fund
now invests directly in portfolio securities.
On July 22, 2003, Daily Assets Government Obligations Fund, a newly created
series of the Trust, merged with Daily Assets Government Fund (the "Forum
Fund"), a series of Forum Funds, another registered investment company. Daily
Assets Government Obligations Fund was the accounting successor of that merger
and, thus, the financial information reported in the financial statements prior
to July 23, 2003, reflects the history of the Forum Fund.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America, which require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in net
assets during the fiscal period. Actual results could differ from those
estimates. The following summarizes the significant accounting policies of the
Funds:
SECURITY VALUATION Generally, each Fund determines its net asset value per share
as of 4:00 p.m., Eastern time, on each Fund business day, utilizing the
amortized cost method pursuant to Rule 2a-7 under the Act. Under this method,
all investments purchased at a discount or premium are valued by accreting or
amortizing, respectively, the difference between the original purchase price and
the maturity value of the investment over the period to the investment's
maturity.
REPURCHASE AGREEMENTS Each Fund may invest in repurchase agreements. Each Fund,
through its custodian, receives delivery of the underlying collateral, whose
market value always exceeds or equals the repurchase price plus expected
transaction costs. In the case of a tri-party agreement, the collateral is held
by an agent bank. The investment adviser is responsible for determining the
value of the underlying collateral. In the event of default, a Fund may have
difficulties with the disposition of any such securities held as collateral.
16
MONARCH FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
February 29, 2004
EXPENSE ALLOCATION The Trust is comprised of four active series, and it accounts
separately for the assets, liabilities and operations of each series. Expenses
that are directly attributable to more than one series are allocated among the
respective series in proportion to each series' average daily net assets. Each
share of each class of a Fund represents an undivided, proportionate interest in
the Fund. The Fund's class-specific expenses include administration fees,
transfer agency fees and certain expenses determined by the Trust's Board.
Institutional Service Shares, Institutional Shares, and Investor Shares incur
shareholder servicing fees and Investor Shares incur distribution fees. In
addition, there are differences between the classes of shares with respect to
the minimum investment required.
SECURITIES TRANSACTIONS, INTEREST INCOME AND REALIZED GAIN AND LOSS Securities
transactions are recorded on trade date. Interest income is accrued as earned
and realized gain and loss on investments sold are recorded on the basis of
identified cost.
FEDERAL TAXES Each Fund intends to continue to qualify each year as a regulated
investment company and distribute all its net investment income. In addition, by
distributing in each calendar year substantially all its net investment income,
capital gain and certain other amounts, each Fund will not be subject to a
federal excise tax. Therefore, no federal income or excise tax provision is
required.
DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders of net investment
income are declared daily and paid monthly. Net capital gain, if any, is
distributed to shareholders at least annually. Distributions are based on
amounts calculated in accordance with applicable income tax regulations, which
may differ from accounting principles generally accepted in the United States of
America. These differences are due primarily to differing treatments of income
and gain on various investment securities held by each Fund, timing differences
and differing characterizations of distributions made by the Fund.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER Forum Investment Advisors, LLC (the "Adviser") serves as 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 those Funds ("Total Fund
Assets") that is calculated on a cumulative basis at the following annual rates:
0.06% for the first $200 million of Total Fund Assets, 0.04% of the next $300
million of Total Fund Assets and 0.03% of the remaining Total Fund Assets. 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 Forum Administrative Services, LLC (the
"Administrator") and its affiliates provide certain administration, portfolio
accounting and transfer agency services to each Fund.
SHAREHOLDER SERVICES The Funds pay 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. These fees are
paid to various financial institutions that provide shareholder services.
DISTRIBUTION Forum Fund Services, LLC is the Trust's distributor (the
"Distributor"). The Distributor is not affiliated with the Adviser or with the
Administrator or its affiliated companies. Under a Distribution Plan adopted
pursuant to Rule 12b-1 under the Act, the Trust pays the Distributor a fee at an
annual rate of 0.25% of the average daily net assets of Investor Shares of each
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.
17
MONARCH FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
February 29, 2004
NOTE 4. WAIVER OF FEES / REIMBURSEMENT OF EXPENSES
The Adviser, the Administrator, and the Distributor voluntarily waived a portion
of their fees and assumed certain expenses of the Funds. For the period ended
February 29, 2004, 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
-------------- ----------------- ----------------- -------------
Investment Adviser $ -- $ 5,794 $ -- $ --
Administration 11,692 12,627 196,440 10,794
Shareholder Service 33,878 -- 46,669 74,434
Transfer Agency 34,189 8,409 26,269 30,277
Distribution 614 -- -- --
Portfolio Accounting -- 18,429 -- --
Reimbursed Expenses -- 5,237 -- --
---------- ---------- --------- ----------
Total $ 80,373 $ 50,496 $269,378 $115,505
========== ========== ========= ==========
NOTE 5. REORGANIZATIONS
On June 9, 2003, Daily Assets Treasury Fund, Daily Assets Government Fund and
Daily Assets Cash Fund (the "Monarch Funds") acquired all the net assets of
Daily Assets Treasury Obligations Fund, Daily Assets Government Obligations Fund
and Daily Assets Cash Fund (the "Forum Funds"), respectively. Under the
reorganization plan, shareholders of Forum Funds received shares of
corresponding series of Monarch Funds with a value equal to their holdings in
Forum Funds. The transaction was structured for tax purposes to qualify as a
tax-free reorganization under the Internal Revenue Code. After the
reorganization plan was consummated, each Fund redeemed its investment in its
respective Portfolio and began investing directly in investment securities. A
summary of shares outstanding and net assets immediately before and after the
reorganization is as follows:
BEFORE REORGANIZATION AFTER REORGANIZATION
---------------------------------- -----------------
DAILY ASSETS DAILY ASSETS
TREASURY TREASURY TREASURY
CASH FUND OBLIGATIONS FUND FUND
------------- ------------------- -----------------
Universal Shares
Shares Outstanding 105,259 -- 136,900,707
Net Assets $ 105,259 -- $136,900,088
Institutional Service Shares
Shares Outstanding 23,982,275 7,158,341 31,140,616
Net Assets $ 23,990,029 $ 7,158,960 $ 31,148,989
Institutional Shares
Shares Outstanding -- 136,795,448 --
Net Assets -- $136,794,829 --
Investor Shares
Shares Outstanding 125,118,384 -- 125,118,384
Net Assets $125,127,133 -- $125,127,133
Shareholders of Institutional Shares and Institutional Service Shares of Daily
Assets Treasury Obligations Fund received Universal Shares and Institutional
Service Shares, respectively, of Daily Assets Treasury Fund.
18
MONARCH FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
February 29, 2004
BEFORE REORGANIZATION AFTER REORGANIZATION
---------------------------------- --------------------
DAILY ASSETS DAILY ASSETS
GOVERNMENT GOVERNMENT GOVERNMENT
CASH FUND OBLIGATIONS FUND FUND
------------- -------------------- --------------------
Preferred Shares
Shares Outstanding 1,001 -- 1,001
Net Assets $ 1,001 -- $ 1,001
Universal Shares
Shares Outstanding 70,662,649 -- 135,902,860
Net Assets $ 70,622,707 -- $135,863,240
Institutional Service Shares
Shares Outstanding 63,244,369 63,244,369 --
Net Assets $ 63,244,162 $ 63,244,162 --
Institutional Shares
Shares Outstanding 93,296,961 65,240,211 93,296,961
Net Assets $ 93,301,899 $ 65,240,533 $ 93,301,899
Investor Shares
Shares Outstanding 63,310,358 695,485 64,005,843
Net Assets $ 63,315,472 $ 695,432 $ 64,010,904
Shareholders of Institutional Shares and Investor Shares of Daily Assets
Government Obligations Fund received Universal Shares and Investor Shares,
respectively, of Daily Assets Government Fund.
BEFORE REORGANIZATION AFTER REORGANIZATION
---------------------------------- --------------------
DAILY ASSETS DAILY ASSETS
CASH FUND CASH FUND CASH FUND
------------- -------------------- --------------------
Preferred Shares
Shares Outstanding 3,938,289 -- 3,938,289
Net Assets $ 3,938,387 -- $ 3,938,387
Universal Shares
Shares Outstanding 94,445,145 -- 136,878,293
Net Assets $ 94,442,900 -- $136,875,355
Institutional Service Shares
Shares Outstanding -- 29,756,777 29,756,777
Net Assets -- $ 29,757,106 $ 29,757,106
Institutional Shares
Shares Outstanding 106,837,539 42,433,148 106,837,539
Net Assets $106,836,012 $ 42,432,455 $106,836,012
Investor Shares
Shares Outstanding 358,133,508 1,292,578 359,426,086
Net Assets $358,131,496 $ 1,292,555 $359,424,051
Shareholders of Institutional Shares and Investor Shares of Daily Assets Cash
Fund received Universal Shares and Investor Shares, respectively, of Daily
Assets Cash Fund.
19
MONARCH FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
February 29, 2004
On July 22, 2003, Daily Assets Government Fund, (the "Forum Fund"), reorganized
into Daily Assets Government Obligations Fund, a newly created Monarch series,
and transferred its assets and liabilities to Daily Assets Government
Obligations Fund. As a result, Universal Shares of the Fund acquired the net
assets of the Institutional Shares class of the Forum Fund. Financial
information reported in the financial statements prior to July 23, 2003,
reflects the history of the Forum Fund. A summary of shares outstanding and net
assets immediately before and after the reorganization is as follows:
BEFORE REORGANIZATION AFTER REORGANIZATION
----------------------------- --------------------
DAILY ASSETS DAILY ASSETS
GOVERNMENT GOVERNMENT OBLIGATIONS
FUND FUND
----------------------------- --------------------
Universal Shares
Shares Outstanding -- 26,349,971
Net Assets -- $26,338,017
Institutional Shares
Shares Outstanding 26,349,971 --
Net Assets $26,338,017 --
Shareholders of Institutional Shares of Daily Assets Government Fund received
Universal Shares of Daily Assets Government Obligations Fund.
NOTE 6. PROXY VOTING INFORMATION
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 Web site at http://www.sec.gov.
20
FOR MORE INFORMATION MONARCH
FUNDS
DAILY ASSETS
TREASURY FUND
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
DAILY ASSETS
GOVERNMENT FUND
DAILY ASSETS CASH FUND
TRANSFER AGENT
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
DISTRIBUTOR
Forum Fund Services, LLC
Two Portland Square
Portland, Maine 04101
MONARCH FUNDS
This report is authorized for distribution only to P.O. Box 446
shareholders and to others who have received a Portland, Maine 04112
copy of an applicable Monarch Funds prospectus. (800) 754-8757
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.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 10. CONTROLS AND PROCEDURES (a) The registrant's President and Treasurer
have concluded that the registrant's disclosure controls and procedures (as
defined in rule 30a-3(c) under the Act) are effective, 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
the registrant's last fiscal half year that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(Exhibit filed herewith).
(a)(3) Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Exhibit filed herewith).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant MONARCH FUNDS
By /s/ STACEY E. HONG
-------------------------
Stacey E. Hong, Treasurer
Date MAY 5, 2004
-------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/DAVID I. GOLDSTEIN
-----------------------------
David I. Goldstein, President
Date MAY 5, 2004
-----------------------------
By /s/ STACEY E. HONG
-------------------------
Stacey E. Hong, Treasurer
Date MAY 5, 2004
-----------------------------