As filed with the Securities and Exchange Commission on May 4, 2005
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
Carl A. Bright, President
Two Portland Square
Portland, Maine 04101
207-879-1900
Date of fiscal year end: August 31, 2005
Date of reporting period: September 1, 2004 - February 28, 2005
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 28, 2005 (UNAUDITED)
DAILY ASSETS TREASURY FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
[GRAPHIC]
MONARCH FUNDS
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A MESSAGE TO OUR SHAREHOLDERS
February 28, 2005
Dear Shareholders:
During the past year, the Federal Reserve has focused its efforts on moving the
economy forward, encouraging job growth and combating potential inflationary
spikes. In seeking to reach this goal, the Fed increased the Federal Funds rate
five times in 2004, to 2.25%. While the Gross Domestic Product has been vibrant
over the last 6 months, job growth still remains a point of focus. This rise of
rates in the short end of the market has allowed our Portfolio Management team
to continue to shorten average maturities of the funds' portfolios without
sacrificing yield. We believe the Federal Reserve Bank will continue to raise
the Fed Funds rate for the foreseeable future. With our short average
maturities, we are well positioned to take advantage of these increases.
We are pleased to report that Monarch Daily Assets Government Fund, our oldest
fund and performance leader, continued to exhibit relatively strong performance
for the six months ended February 28, 2005. For the ten-year period ended as of
that date, the Fund's Universal Shares held the number 3 spot out of 48 funds
within the Government and Agencies Institutional category tracked by iMoneyNet,
Inc.*
For more than twelve 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.
Monarch Funds
*PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. UNIVERSAL SHARES OF DAILY ASSETS GOVERNMENT FUND, RANKED 8 OUT
OF 162, 6 OUT OF 99, AND 3 OUT OF 49 WITHIN THE GOVERNMENT AND AGENCIES
INSTITUTIONAL CATEGORY FOR THE 1-, 5- AND 10-YEAR PERIODS AS OF MARCH 31, 2005.
RANKINGS ARE BASED ON TOTAL RETURN AND WILL VARY FOR OTHER SHARE CLASSES.
FORESIDE FUND SERVICES, LLC, DISTRIBUTOR.
ALTHOUGH MONEY MARKET FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT
$1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THEM. AN
INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT
ENDORSED OR GUARANTEED BY ANY BANK OR ANY AFFILIATE OF A BANK.
1
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS TREASURY FUND
February 28, 2005
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ----- -------- -----------
REPURCHASE AGREEMENTS - 100.2%
$ 4,735,000 Bank of America, dated 2/28/05, to be repurchased at $4,735,325;
collateralized by various U.S. Treasury Obligations 2.47% 3/1/05 $ 4,735,000
14,000,000 Citigroup, dated 2/28/05, to be repurchased at $14,000,972; collateralized
by various U.S. Treasury Obligations 2.50 3/1/05 14,000,000
15,000,000 Deutsche Bank Securities, Inc., dated 2/28/05, to be repurchased at
$15,001,083; collateralized by various U.S. Treasury Obligations 2.60 3/1/05 15,000,000
14,000,000 Goldman Sachs & Co., dated 2/28/05, to be repurchased at $14,000,980;
collateralized by various U.S. Treasury Obligations 2.52 3/1/05 14,000,000
14,730,000 Merrill Lynch & Co., Inc., dated 2/28/05, to be repurchased at
$14,731,043; collateralized by various U.S. Treasury Obligations 2.55 3/1/05 14,730,000
-----------
Total Repurchase Agreements 62,465,000
-----------
Total Investments at Amortized Cost* - 100.2% $62,465,000
Other Assets and Liabilities - (0.2)% (113,833)
-----------
NET ASSETS - 100.0% $62,351,167
===========
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Repurchase Agreements 100.0%
* Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements.
2
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
February 28, 2005
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ---------- -------------------------------------------------------------------------- ---- -------- -----------
U.S. GOVERNMENT SECURITIES - 95.8%
FEDERAL HOME LOAN BANK - DISCOUNT NOTES # - 95.8%
$9,175,000 FHLB 2.42% 03/11/05 $ 9,168,813
4,880,000 FHLB 2.39 03/18/05 4,874,515
3,050,000 FHLB 2.45 03/28/05 3,044,419
-----------
Total U.S. Government Securities 17,087,747
-----------
SHARES
- ----------
MONEY MARKET FUND - 4.0%
707,713 Dreyfus Prime Treasury Cash Management Fund 707,713
-----------
Total Investments at Amortized Cost* - 99.8% $17,795,460
Other Assets and Liabilities - 0.2% 31,133
-----------
NET ASSETS - 100.0% $17,826,593
===========
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
U.S. Government Securities 96.0%
Money Market Fund 4.0%
# 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 FUND
February 28, 2005
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ---------- -------------------------------------------------------------------------- ---- -------- -----------
U.S. GOVERNMENT SECURITIES - 17.5%
SMALL BUSINESS ADMINISTRATION POOLS (+/-) - 17.5%
$ 28,245 Pool #500536 4.25% 5/25/13 $ 28,700
138,236 Pool #501690 3.37 12/25/16 138,236
375,536 Pool #501733 3.25 2/25/17 378,188
194,791 Pool #501077 3.75 11/25/14 194,791
113,815 Pool #501308 3.75 10/25/15 113,815
732,031 Pool #501543 3.62 7/25/16 732,031
375,900 Pool #501898 3.50 7/25/17 375,900
402,056 Pool #501989 3.37 10/25/12 405,067
1,466,969 Pool #502150 3.25 2/25/18 1,475,352
58,708 Pool #502161 3.25 2/25/18 58,708
584,991 Pool #502208 3.25 2/25/18 586,945
52,396 Pool #502306 3.25 2/25/18 52,396
43,510 Pool #502613 3.25 4/25/19 43,510
51,364 Pool #502914 3.25 3/25/15 51,687
296,696 Pool #503058 3.12 7/25/15 296,696
406,754 Pool #503082 3.12 9/25/20 406,754
265,740 Pool #503120 3.12 10/25/20 265,740
666,188 Pool #503121 3.12 9/25/15 668,267
2,457,232 Pool #503152 2.88 11/25/20 2,457,232
356,425 Pool #503232 2.88 12/25/15 356,425
299,525 Pool #503278 2.88 2/25/21 299,542
572,255 Pool #503429 3.00 6/25/16 573,040
283,432 Pool #503431 3.00 7/25/21 283,508
1,324,896 Pool #503461 3.00 9/25/21 1,325,564
253,431 Pool #503472 3.00 8/25/21 253,431
1,152,642 Pool #503553 2.88 11/25/21 1,153,480
1,851,894 Pool #503614 2.88 1/25/22 1,851,894
817,575 Pool #503671 2.88 3/25/22 817,575
797,775 Pool #503754 2.88 5/25/22 798,444
59,932 Pool #503780 2.88 3/25/22 59,979
871,915 Pool #503882 2.75 9/25/22 871,282
233,833 Pool #503892 2.88 7/25/22 234,065
1,523,683 Pool #503909 2.75 10/25/22 1,523,192
803,998 Pool #504015 2.75 1/25/23 803,888
884,138 Pool #504062 2.75 2/25/23 884,138
796,396 Pool #504074 2.75 2/25/23 796,396
423,799 Pool #504203 2.88 7/25/13 424,334
254,968 Pool #504269 2.88 5/25/15 255,307
414,434 Pool #504345 2.88 5/25/18 414,434
8,623,379 Pool #504366 2.63 2/25/24 8,603,896
4,829,334 Pool #504719 2.88 7/25/24 4,829,334
1,276,298 Pool #504727 2.88 9/25/24 1,276,298
2,100,115 Pool #504765 2.88 10/25/09 2,096,969
2,099,648 Pool #504769 2.88 10/25/24 2,099,648
349,067 Pool #505204 3.00 9/25/25 348,992
591,451 Pool #505205 3.06 9/25/07 591,399
-----------
Total Small Business Administration 42,556,469
-----------
Total U.S. Government Securities 42,556,469
-----------
See Notes to Financial Statements.
4
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT FUND
February 28, 2005
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- ------------
REPURCHASE AGREEMENTS - 81.7%
$34,428,000 Bank of America Securities, dated 2/28/05, to be repurchased at
$34,430,420; collateralized by various U.S. Government Agency Obligations 2.53% 3/1/05 $ 34,428,000
58,465,000 Bear Stearns & Co., Inc., dated 2/28/05, to be repurchased at $58,469,304;
collateralized by various U.S. Government Agency Obligations 2.65 3/1/05 58,465,000
55,000,000 Deutsche Bank Securities, Inc., dated 2/28/05, to be repurchased at
$55,004,003; collateralized by various U.S. Government Agency Obligations 2.62 3/1/05 55,000,000
50,000,000 Merrill Lynch, dated 2/28/05, to be repurchased at $50,003,611;
collateralized by various U.S. Government Agency Obligations 2.60 3/1/05 50,000,000
------------
Total Repurchase Agreements 197,893,000
------------
SHARES
- -----------
MONEY MARKET FUND - 0.4%
944,000 Dreyfus Government Cash Management Fund 944,000
------------
Total Investments at Amortized Cost* - 99.6% $241,393,469
Other Assets and Liabilities - 0.4% 873,259
------------
NET ASSETS - 100.0% $242,266,728
============
PORTFOLIO HOLDINGS
% OF TOTAL PORTFOLIO INVESTMENTS
Repurchase Agreements 82.0%
U. S. Government Securities 17.6%
Money Market Fund 0.4%
(+/-)Certain securities are deemed to have a maturity remaining until the next adjustment of the
interest rate, or the longer of the demand period or time to next readjustment. The interest
rates shown reflect the rate in effect on February 28, 2005.
* Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements.
5
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS CASH FUND
February 28, 2005
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- ------------
COMMERCIAL PAPER # - 41.1%
$15,000,000 Citigroup Global Markets 2.52% 03/22/05 $ 14,978,037
15,000,000 Deutsche Bank Financial 2.52 03/22/05 14,978,038
20,000,000 Edison Asset Securitization, LLC ^ 2.54 03/07/05 19,991,567
15,000,000 Goldman Sachs Group, Inc. 2.70 07/29/05 15,000,000
20,000,000 International Lease Finance Corp. 2.52 03/09/05 19,988,844
20,000,000 Societe Generale North America 2.50 03/04/05 19,995,833
20,000,000 UBS Finance Delaware, LLC 2.51 03/07/05 19,991,667
15,000,000 Wells Fargo & Company 2.51 03/24/05 14,976,042
20,000,000 Windmill Funding Corp. ^ 2.56 03/28/05 19,961,750
------------
Total Commercial Paper 159,861,778
------------
CORPORATE NOTES (+/-) - 12.5%
18,000,000 Bank of America NA 2.55 08/08/05 18,000,000
15,000,000 Bear Stearns & Co., Inc. 3.21 07/15/05 15,032,365
15,590,000 Lehman Brothers Holdings 2.79 07/22/05 15,597,958
------------
Total Corporate Notes 48,630,323
------------
ASSET-BACKED SECURITY (+/-), ^ - 3.3%
12,788,608 Grand Central CDO Ltd. 2.61 12/10/05 12,788,608
------------
REPURCHASE AGREEMENTS - 43.2%
27,255,000 Bank of America, dated 2/28/05, to be repurchased at $27,256,915;
collateralized by various U.S. Government Agency Obligations 2.53 03/01/05 27,255,000
60,000,000 Bear Stearns & Co., Inc., dated 2/28/05, to be repurchased at $60,004,417;
collateralized by various U.S. Government Agency Obligations 2.65 03/01/05 60,000,000
50,000,000 Deutsche Bank Securities, Inc., dated 2/28/05, to be repurchased at
$50,003,639; collateralized by various U.S. Government Agency Obligations 2.62 03/01/05 50,000,000
30,450,000 Merrill Lynch, dated 2/28/05, to be repurchased at $30,452,199;
collateralized by various U.S. Government Agency Obligations 2.60 03/01/05 30,450,000
------------
Total Repurchase Agreements 167,705,000
------------
Total Investments at Amortized Cost* - 100.1% $388,985,709
Other Assets and Liabilities - (0.1)% (527,311)
------------
NET ASSETS - 100.0% $388,458,398
============
PORTFOLIO HOLDINGS
% OF TOTAL PORTFOLIO INVESTMENTS
Repurchase Agreements 43.1%
Commercial Paper 41.1%
Corporate Notes 12.5%
Asset-Backed Security 3.3%
# Rates shown are annualized yields at time of purchase.
(+/-)Certain securities are deemed to have a maturity remaining until the next adjustment of the
interest rate, or the longer of the demand period or time to next readjustment. The interest rates
shown reflect the rate in effect on February 28, 2005.
^ Securities that may be resold to "qualified institutional buyers" under Rule 144A of the Securities
Act of 1933, as amended. At period end, these securities amounted to $52,741,925 or 13.6% of Net
Assets.
* 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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STATEMENTS OF ASSETS AND LIABILITIES
February 28, 2005
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
------------ ------------ ------------ ------------
Assets
Investments:
Securities at amortized cost $ -- $17,795,460 $ 43,500,469 $221,280,709
Repurchase agreements 62,465,000 -- 197,893,000 167,705,000
Cash 28,620 69,670 40,861 38,876
Receivables:
Interest 4,404 1,609 227,062 247,656
Investment securities sold -- -- 1,261,597 --
Receivable from administrator -- -- -- 9,269
Prepaid expenses and other assets 11,680 3,438 22,805 72,618
----------- ----------- ------------ ------------
Total Assets 62,509,704 17,870,177 242,945,794 389,354,128
----------- ----------- ------------ ------------
Liabilities
Payables:
Dividends 90,086 30,492 381,901 620,937
Accrued expenses:
Payables to related parties 16,118 -- 50,833 70,003
Other expenses and other liabilities 52,333 13,092 246,332 204,790
----------- ----------- ------------ ------------
Total Liabilities 158,537 43,584 679,066 895,730
----------- ----------- ------------ ------------
Net Assets $62,351,167 $17,826,593 $242,266,728 $388,458,398
=========== =========== ============ ============
Components of Net Assets
Paid in capital $62,351,286 $17,850,405 $242,295,243 $388,471,192
Undistributed (distributions in excess of) net investment
income (83) 408 (28,666) (559)
Accumulated net realized gain (loss) (36) (24,220) 151 (12,235)
----------- ----------- ------------ ------------
Net Assets $62,351,167 $17,826,593 $242,266,728 $388,458,398
=========== =========== ============ ============
Net Assets by Class of Shares
Preferred Shares $ -- $ -- $ 26,488,987 $ 12,063,839
Universal Shares -- 17,826,593 22,607,664 21,652,375
Institutional Service Shares 14,953,304 -- 59,098,486 31,343,341
Institutional Shares -- -- 54,444,341 57,583,152
Investor Shares 47,397,863 -- 79,627,250 265,749,945
B Shares -- -- -- 29,843
C Shares -- -- -- 35,903
----------- ----------- ------------ ------------
Net Assets $62,351,167 $17,826,593 $242,266,728 $388,458,398
=========== =========== ============ ============
Shares of Beneficial Interest for each Class of
Shares
Preferred Shares -- -- 26,488,194 12,064,256
Universal Shares -- 17,850,638 22,647,091 21,671,550
Institutional Service Shares 14,949,047 -- 59,098,566 31,348,575
Institutional Shares -- -- 54,439,286 57,598,651
Investor Shares 47,402,250 -- 79,622,117 265,799,087
B Shares -- -- -- 29,843
C Shares -- -- -- 35,903
Net Asset Value Per Share
(Offering and Redemption Price per Share)
for each Class of Shares $ 1.00 $ 1.00 $ 1.00 $ 1.00
See Notes to Financial Statements.
7
MONARCH FUNDS
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STATEMENTS OF OPERATIONS
Six Months Ended February 28, 2005
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
------------ ------------ ------------ ------------
Investment Income:
Interest income $1,775,516 $175,106 $13,166,514 $4,128,245
Dividend income 32,595 6,063 31,698 21,259
---------- -------- ----------- ----------
Total Investment Income 1,808,111 181,169 13,198,212 4,149,504
---------- -------- ----------- ----------
Expenses:
Investment adviser fees 33,046 4,658 221,996 71,391
Administrator fees
Preferred Shares -- -- 504,468 9,193
Universal Shares 61,635 10,248 65,435 20,361
Institutional Service Shares 8,838 -- 45,225 19,435
Institutional Shares -- -- 30,963 36,873
Investor Shares 31,202 -- 39,893 134,283
B Shares -- -- -- 7,756
C Shares -- -- -- 8,103
Shareholder service fees
Institutional Service Shares 16,069 -- 82,230 35,337
Institutional Shares -- -- 56,295 67,041
Investor Shares 56,730 -- 72,533 244,151
B Shares -- -- -- 20
C Shares -- -- -- 24
Distribution fees
Investor Shares 70,913 -- 90,666 305,186
B Shares -- -- -- 61
C Shares -- -- -- 73
Transfer agency fees
Preferred Shares -- -- 16,007 4,933
Universal Shares 34,541 13,077 37,521 16,003
Institutional Service Shares 13,574 -- 49,534 24,567
Institutional Shares -- -- 63,327 75,991
Investor Shares 68,021 -- 80,725 266,758
B Shares -- -- -- 4,377
C Shares -- -- -- 4,571
Custodian fees 11,554 1,165 77,950 25,018
Professional fees 13,328 11,713 31,114 15,384
Accountant fees 33,339 16,610 72,780 52,260
Trustees' fees and expenses 1,804 195 20,009 4,454
Miscellaneous expenses 23,893 10,500 64,078 59,844
---------- -------- ----------- ----------
Total Expenses 478,487 68,166 1,722,749 1,513,448
Expenses reimbursed and fees waived (88,294) (49,165) (378,864) (161,941)
---------- -------- ----------- ----------
Net Expenses 390,193 19,001 1,343,885 1,351,507
---------- -------- ----------- ----------
Net Investment Income (Loss) 1,417,918 162,168 11,854,327 2,797,997
---------- -------- ----------- ----------
Net Realized Gain (Loss) on Investments -- -- -- (594)
---------- -------- ----------- ----------
Increase (Decrease) in Net Assets from Operations $1,417,918 $162,168 $11,854,327 $2,797,403
========== ======== =========== ==========
See Notes to Financial Statements.
8
MONARCH FUNDS
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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 28, 2005/(A)/ AUGUST 31, 2004 FEBRUARY 28, 2005 AUGUST 31, 2004
--------------------- --------------- ----------------- ---------------
Operations
Net investment income (loss) $ 1,417,918 $ 1,380,983 $ 162,168 $ 190,750
Net realized gain (loss) on investments -- -- -- 32
------------- --------------- ----------- ------------
Increase (Decrease) in Net Assets from Operations 1,417,918 1,380,983 162,168 190,782
------------- --------------- ----------- ------------
Distributions to Shareholders from
Net investment income--Universal Shares (985,929) (1,090,584) (162,168) (200,674)
Net investment income--Institutional Service Shares (120,158) (135,993) -- --
Net investment income--Investor Shares (311,831) (164,100) -- --
------------- --------------- ----------- ------------
Total Distributions to Shareholders (1,417,918) (1,390,677) (162,168) (200,674)
------------- --------------- ----------- ------------
Capital Share Transactions
Sale of shares--Universal Shares 143,522,719 286,622,339 7,251,236 18,831,339
Sale of shares--Institutional Service Shares 115,746,257 343,639,316 -- --
Sale of shares--Investor Shares 497,517,701 1,655,597,362 -- --
Reinvestment of distributions--Universal Shares 171,170 664 2,322 4,082
Reinvestment of distributions--Institutional Service
Shares 59,790 73,446 -- --
Reinvestment of distributions--Investor Shares 244,728 164,012 -- --
Redemption of shares--Universal Shares (230,453,376) (340,004,807) (9,809,607) (23,194,936)
Redemption of shares--Institutional Service Shares (116,402,458) (363,233,772) -- --
Redemption of shares--Investor Shares (506,574,419) (1,696,367,845) -- --
------------- --------------- ----------- ------------
Increase (Decrease) from Capital Transactions (96,167,888) (113,509,285) (2,556,049) (4,359,515)
------------- --------------- ----------- ------------
Increase (Decrease) in Net Assets (96,167,888) (113,518,979) (2,556,049) (4,369,407)
------------- --------------- ----------- ------------
Net Assets
Beginning of Period 158,519,055 272,038,034 20,382,642 24,752,049
------------- --------------- ----------- ------------
End of Period $ 62,351,167 $ 158,519,055 $17,826,593 $ 20,382,642
============= =============== =========== ============
Undistributed (Distributions in Excess of) Net
Investment Income $ (83) $ (83) $ 408 $ 408
------------- --------------- ----------- ------------
(a)On February 24, 2005, Universal Shares of Daily Assets Treasury Fund ceased
operations.
See Notes to Financial Statements.
9
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS DAILY ASSETS
TREASURY FUND GOVERNMENT OBLIGATIONS FUND
------------------------------------ --------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2005/(A)/ AUGUST 31, 2004 FEBRUARY 28, 2005 AUGUST 31, 2004
--------------------- --------------- ----------------- ---------------
Share Transactions
Sale of shares--Universal Shares 143,522,720 286,622,338 7,251,235 18,831,340
Sale of shares--Institutional Service Shares 115,746,257 343,639,316 -- --
Sale of shares--Investor Shares 497,517,701 1,655,597,362 -- --
Reinvestment of distributions--Universal Shares 171,170 664 2,322 4,082
Reinvestment of distributions--Institutional Service
Shares 59,790 73,446 -- --
Reinvestment of distributions--Investor Shares 244,728 164,012 -- --
Redemption of shares--Universal Shares (230,453,376) (340,004,807) (9,809,607) (23,194,936)
Redemption of shares--Institutional Service Shares (116,402,458) (363,233,772) -- --
Redemption of shares--Investor Shares (506,574,419) (1,696,367,845) -- --
------------ -------------- ---------- -----------
Increase (Decrease) in Shares (96,167,887) (113,509,286) (2,556,050) (4,359,514)
============ ============== ========== ===========
(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 DAILY ASSETS
GOVERNMENT FUND CASH FUND
--------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2005 AUGUST 31, 2004 FEBRUARY 28, 2005 AUGUST 31, 2004
` ----------------- --------------- ----------------- ---------------
Operations
Net investment income (loss) $ 11,854,327 $ 8,781,091 $ 2,797,997 $ 2,595,618
Net realized gain (loss) on investments -- 1,250 (594) (333)
--------------- --------------- --------------- ---------------
Increase (Decrease) in Net Assets from Operations 11,854,327 8,782,341 2,797,403 2,595,285
--------------- --------------- --------------- ---------------
Distributions to Shareholders from
Net investment income--Preferred Shares (9,176,302) (6,598,646) (161,446) (99,959)
Net investment income--Universal Shares (1,086,697) (1,071,470) (341,872) (802,986)
Net investment income--Institutional Service Shares (706,650) (464,263) (282,533) (205,357)
Net investment income--Institutional Shares (422,106) (432,700) (489,350) (561,597)
Net investment income--Investor Shares (462,573) (213,682) (1,522,679) (926,265)
Net investment income--B Shares -- -- (54) --
Net investment income--C Shares -- -- (63) --
--------------- --------------- --------------- ---------------
Total Distributions to Shareholders (11,854,328) (8,780,761) (2,797,997) (2,596,164)
--------------- --------------- --------------- ---------------
Capital Share Transactions
Sale of shares--Preferred Shares 6,016,000,528 8,137,440,578 72,274,503 157,487,629
Sale of shares--Universal Shares 263,704,322 510,810,226 444,055,308 1,013,494,516
Sale of shares--Institutional Service Shares 278,885,580 349,941,112 158,330,966 313,903,413
Sale of shares--Institutional Shares 290,630,738 661,445,829 454,052,449 943,789,517
Sale of shares--Investor Shares 592,283,917 979,714,457 2,943,938,310 5,071,433,156
Sale of shares--B Shares -- -- 29,810 --
Sale of shares--C Shares -- -- 86,325 --
Reinvestment of distributions--Preferred Shares 9,108,591 6,548,329 105,502 42,043
Reinvestment of distributions--Universal Shares 598,442 482,630 167,576 435,925
Reinvestment of distributions--Institutional Service
Shares 344,026 179,970 216,171 172,099
Reinvestment of distributions--Institutional Shares 168,947 247,736 367,802 386,917
Reinvestment of distributions--Investor Shares 359,745 213,409 1,025,479 835,744
Reinvestment of distributions--B Shares -- -- 33 --
Reinvestment of distributions--C Shares -- -- 38 --
Redemption of shares--Preferred Shares (6,022,005,764) (8,132,153,056) (79,481,814) (141,343,256)
Redemption of shares--Universal Shares (355,575,604) (511,585,416) (458,462,976) (1,082,878,630)
Redemption of shares--Institutional Service Shares (275,272,730) (371,253,091) (153,627,065) (324,528,053)
Redemption of shares--Institutional Shares (309,930,799) (678,858,529) (492,821,770) (940,377,890)
Redemption of shares--Investor Shares (577,044,839) (963,282,301) (3,073,878,486) (4,980,992,461)
Redemption of shares--B Shares -- -- -- --
Redemption of shares--C Shares -- -- (50,459) --
--------------- --------------- --------------- ---------------
Increase (Decrease) Decrease from Capital Transactions (87,744,900) (10,108,117) (183,672,298) 31,860,669
--------------- --------------- --------------- ---------------
Increase (Decrease) in Net Assets (87,744,901) (10,106,537) (183,672,892) 31,859,790
--------------- --------------- --------------- ---------------
Net Assets
Beginning of Period 330,011,629 340,118,166 572,131,290 540,271,500
--------------- --------------- --------------- ---------------
End of Period $ 242,266,728 $ 330,011,629 $ 388,458,398 $ 572,131,290
=============== =============== =============== ===============
Undistributed (Distributions in Excess of)
Net Investment Income $ (28,666) $ (28,665) $ (559) $ (559)
--------------- --------------- --------------- ---------------
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 28, 2005 AUGUST 31, 2004 FEBRUARY 28, 2005 AUGUST 31, 2004
----------------- --------------- ----------------- ---------------
Share Transactions
Sale of shares--Preferred Shares 6,016,000,528 8,137,440,578 72,274,503 157,487,629
Sale of shares--Universal Shares 263,704,320 510,810,227 444,055,308 1,013,494,518
Sale of shares--Institutional Service Shares 278,885,580 349,941,112 158,330,967 313,903,413
Sale of shares--Institutional Shares 290,630,738 661,445,830 454,052,450 943,789,517
Sale of shares--Investor Shares 592,283,917 979,714,457 2,943,938,309 5,071,433,157
Sale of shares--B Shares -- -- 29,810 --
Sale of shares--C Shares -- -- 86,324 --
Reinvestment of distributions--Preferred Shares 9,108,591 6,548,329 105,502 42,043
Reinvestment of distributions--Universal Shares 598,442 482,630 167,576 435,925
Reinvestment of distributions--Institutional Service
Shares 344,026 179,970 216,171 172,099
Reinvestment of distributions--Institutional Shares 168,947 247,735 367,802 386,917
Reinvestment of distributions--Investor Shares 359,745 213,409 1,025,479 835,744
Reinvestment of distributions--B Shares -- -- 33 --
Reinvestment of distributions--C Shares -- -- 38 --
Redemption of shares--Preferred Shares (6,022,005,764) (8,132,153,056) (79,481,814) (141,343,256)
Redemption of shares--Universal Shares (355,575,604) (511,585,416) (458,462,976) (1,082,878,630)
Redemption of shares--Institutional Service Shares (275,272,730) (371,253,091) (153,627,065) (324,528,053)
Redemption of shares--Institutional Shares (309,930,799) (678,858,529) (492,821,770) (940,377,890)
Redemption of shares--Investor Shares (577,044,839) (963,282,301) (3,073,878,486) (4,980,992,461)
Redemption of shares--B Shares -- -- -- --
Redemption of shares--C Shares -- -- (50,459) --
-------------- -------------- -------------- --------------
Increase (Decrease) in Shares (87,744,902) (10,108,116) (183,672,298) 31,860,672
============== ============== ============== ==============
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
Net Asset Net Realized from Net from Net Net Asset Period
Year Ended August 31, Value Per Investment Gain on Investment Realized Value Total (000's
(except as noted) Share Income Investments Income Gains Per Share Return/(b)/ Omitted)
- --------------------- --------- ---------- ----------- ------------- ------------- --------- ---------- ---------
- - - - - - - - - -
DAILY ASSETS TREASURY FUND
Institutional Service Shares/(e)/
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 $1.00 $0.01 -- $(0.01) -- $1.00 0.75% $ 14,953
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
2001 1.00 0.05 -- (0.05) -- 1.00 4.92% 50,554
2000 1.00 0.05 -- (0.05) -- 1.00 5.47% 30,480
Investor Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 1.00 0.01 -- (0.01) -- 1.00 0.55% 47,398
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
2001 1.00 0.04 -- (0.04) -- 1.00 4.52% 233,138
2000 1.00 0.05 -- (0.05) -- 1.00 5.06% 314,305
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Universal Shares/(f)/
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 1.00 0.01 -- (0.01) -- 1.00 0.87% 17,827
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
2001 1.00 0.05 -- (0.05) -- 1.00 5.26% 29,100
2000 1.00 0.06 -- (0.06) -- 1.00 5.93% 39,777
RATIOS/SUPPLEMENTAL DATA
- --------------------------------
Ratios to Average Net Assets/(a)/
- --------------------------------
Net
Net Gross Investment
Expenses Expenses/(c)/ Income
- ---------------------------------
- ----------------------------------
0.45% 0.64% 1.46%
0.45% 0.56% 0.57%
0.45% 0.67% 0.84%
0.45% 0.62% 1.68%
0.45% 0.61% 4.57%
0.45% 0.62% 5.30%
- ----------------------------------
0.84% 0.92% 1.07%
0.84% 0.89% 0.18%
0.84% 0.90% 0.45%
0.85% 0.87% 1.22%
0.84% 0.84% 4.52%
0.84% 0.85% 5.01%
- ----------------------------------
0.20% 0.73% 1.73%
0.20% 0.70% 0.86%
0.20% 0.48% 1.14%
0.20% 0.71% 1.97%
0.20% 0.57% 5.24%
0.20% 0.65% 5.78%
(a)Annualized for periods less than one year.
(b)Not annualized for periods less than one year.
(c)The ratio of Gross Expenses to Average Net Assets reflects the expense ratio
excluding any fee waivers and/or expense reimbursements.
(d)Less than $0.01 per share.
(e)On April 23, 2003, Institutional Shares were renamed Institutional Service
Shares.
(f)On July 22, 2003, Institutional Shares were redesignated as Universal Shares.
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
Net Asset Net Realized from Net from Net Net Asset Period
Year Ended August 31, Value Per Investment Gain on Investment Realized Value Total (000's
(except as noted) Share Income Investments Income Gains Per Share Return/(b)/ Omitted)
- - - - - - - - - -
DAILY ASSETS GOVERNMENT FUND
Preferred Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 $1.00 $0.01 -- $(0.01) -- $1.00 0.99% $ 26,489
2004 1.00 0.01 --/(e)/ (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 --/(e)/ (0.02) --/(e)/ 1.00 2.25% 12,041
2001/(d)/ 1.00 --/(e)/ -- --/(e)/ -- 1.00 0.22% 8
Universal Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 1.00 0.01 -- (0.01) -- 1.00 0.95% 22,608
2004 1.00 0.01 --/(e)/ (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 --/(e)/ (0.02) --/(e)/ 1.00 2.17% 81,426
2001 1.00 0.05 -- (0.05) -- 1.00 5.34% 164,500
2000 1.00 0.06 -- (0.06) -- 1.00 5.94% 225,697
Institutional Service Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 1.00 --/(e)/ -- --/(e)/ -- 1.00 0.82% 59,099
2004 1.00 --/(e)/ --/(e)/ --/(e)/ -- 1.00 0.71% 55,142
2003/(d)/ 1.00 --/(e)/ -- --/(e)/ -- 1.00 0.16% 76,273
Institutional Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 1.00 0.01 -- (0.01) -- 1.00 0.76% 54,444
2004 1.00 0.01 --/(e)/ (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 --/(e)/ (0.02) --/(e)/ 1.00 1.80% 117,476
2001 1.00 0.05 -- (0.05) -- 1.00 4.95% 198,324
2000 1.00 0.05 -- (0.05) -- 1.00 5.54% 400,418
Investor Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 1.00 0.01 -- (0.01) -- 1.00 0.63% 79,627
2004 1.00 0.01 --/(e)/ (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 --/(e)/ (0.02) --/(e)/ 1.00 1.52% 58,397
2001 1.00 0.05 -- (0.05) -- 1.00 4.68% 61,546
2000/(d)/ 1.00 0.04 -- (0.04) -- 1.00 3.68% 36,091
DAILY ASSETS CASH FUND
Preferred Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 1.00 0.01 --/(e)/ (0.01) -- 1.00 0.97% 12,064
2004 1.00 0.01 --/(e)/ (0.01) -- 1.00 1.04% 19,166
2003 1.00 0.01 -- (0.01) -- 1.00 1.37% 2,979
2002 1.00 0.02 -- (0.02) -- 1.00 2.21% 13,095
2001/(d)/ 1.00 --/(e)/ -- --/(e)/ -- 1.00 0.22% 8
Universal Shares
- ---------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 1.00 0.01 --/(e)/ (0.01) -- 1.00 0.92% 21,652
2004 1.00 0.01 --/(e)/ (0.01) -- 1.00 0.96% 35,892
2003 1.00 0.01 -- (0.01) -- 1.00 1.29% 104,842
2002 1.00 0.02 -- (0.02) -- 1.00 2.12% 46,833
2001 1.00 0.05 -- (0.05) -- 1.00 5.49% 37,236
2000 1.00 0.06 -- (0.06) -- 1.00 6.04% 70,451
RATIOS/SUPPLEMENTAL DATA
- --------------------------------
Ratios to Average Net Assets/(a)/
- --------------------------------
Net
Net Gross Investment
Expenses Expenses/(c)/ Income
- ---------------------------------
- ----------------------------------
0.12% 0.19% 1.99%
0.12% 0.18% 1.06%
0.11% 0.25% 1.05%
0.12% 0.22% 2.19%
0.12% 97.77% 3.64%
- ----------------------------------
0.20% 0.25% 1.81%
0.20% 0.26% 0.95%
0.20% 0.28% 1.26%
0.21% 0.25% 2.17%
0.20% 0.23% 5.29%
0.20% 0.24% 5.73%
- ----------------------------------
0.45% 0.51% 1.71%
0.45% 0.51% 0.69%
0.45% 0.58% 0.70%
- ----------------------------------
0.57% 0.61% 1.49%
0.57% 0.62% 0.58%
0.57% 0.63% 0.92%
0.57% 0.59% 2.05%
0.57% 0.58% 4.80%
0.57% 0.58% 5.41%
- ----------------------------------
0.84% 0.87% 1.27%
0.84% 0.86% 0.32%
0.84% 0.89% 0.63%
0.85% 0.85% 1.43%
0.84% 0.84% 4.51%
0.85% 0.97% 5.70%
- ----------------------------------
0.12% 0.27% 1.92%
0.12% 0.31% 1.06%
0.12% 0.30% 1.39%
0.12% 0.20% 1.88%
0.12% 91.14% 3.76%
- ----------------------------------
0.20% 0.30% 1.83%
0.20% 0.27% 0.94%
0.20% 0.28% 1.24%
0.21% 0.25% 2.03%
0.20% 0.24% 5.68%
0.20% 0.23% 5.84%
See Notes to Financial Statements.
14
MONARCH FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SINGLE SHARE
------------------------------------------------------------------------- Net
Assets at
Beginning Net Distributions Distributions Ending End of
Net Asset Net Realized from Net from Net Net Asset Period
Year Ended 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)
- - - - - - - - - -
Institutional Service Shares
- -------------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 $1.00 $0.01 --/(e)/ $(0.01) -- $1.00 0.80% 31,343
2004 1.00 0.01 --/(e)/ (0.01) -- 1.00 0.71% 26,423
2003/(d)/ 1.00 --/(e)/ -- --/(e)/ -- 1.00 0.18% 36,876
Institutional Shares
- -------------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 1.00 0.01 --/(e)/ (0.01) -- 1.00 0.74% 57,583
2004 1.00 0.01 --/(e)/ (0.01) -- 1.00 0.59% 95,985
2003 1.00 0.01 -- (0.01) -- 1.00 0.92% 92,186
2002 1.00 0.02 -- (0.02) -- 1.00 1.75% 347,469
2001 1.00 0.05 -- (0.05) -- 1.00 5.11% 736,555
2000 1.00 0.06 -- (0.06) -- 1.00 5.65% 863,603
Investor Shares
- -------------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005 1.00 0.01 --/(e)/ (0.01) -- 1.00 0.61% 265,750
2004 1.00 --/(e)/ --/(e)/ --/(e)/ -- 1.00 0.32% 394,665
2003 1.00 0.01 -- (0.01) -- 1.00 0.64% 303,389
2002 1.00 0.01 -- (0.01) -- 1.00 1.48% 646,285
2001 1.00 0.05 -- (0.05) -- 1.00 4.85% 791,138
2000 1.00 0.05 -- (0.05) -- 1.00 5.38% 994,191
B Shares
- -------------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005/(d)/ 1.00 --/(e)/ --/(e)/ --/(e)/ -- 1.00 0.18% 30
C Shares
- -------------------------------------------------------------------------------------------------------------------------
Six months ended
February 28, 2005/(d)/ 1.00 --/(e)/ --/(e)/ --/(e)/ -- 1.00 0.19% 36
RATIOS/SUPPLEMENTAL DATA
- --------------------------------
Ratios to Average Net Assets/(a)/
- --------------------------------
Net
Net Gross Investment
Expenses Expenses/(c)/ Income
- ---------------------------------
- ----------------------------------
0.45% 0.55% 1.59%
0.45% 0.54% 0.71%
0.45% 0.58% 0.76%
- ----------------------------------
0.57% 0.65% 1.45%
0.57% 0.63% 0.59%
0.57% 0.61% 1.01%
0.57% 0.58% 1.84%
0.57% 0.57% 5.07%
0.58% 0.58% 5.55%
- ----------------------------------
0.84% 0.88% 1.24%
0.84% 0.87% 0.32%
0.84% 0.86% 0.68%
0.83% 0.83% 1.51%
0.82% 0.82% 4.78%
0.83% 0.85% 5.40%
- ----------------------------------
1.65% 217.15% 0.67%
- ----------------------------------
1.65% 188.64% 0.64%
(a)Annualized for periods less than one year.
(b)Not annualized for periods less than one year.
(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 28, 2005
NOTE 1. SUMMARY OF ORGANIZATION
Monarch Funds (the "Trust") is a Massachusetts business trust registered as an
open-end management investment company under the Investment Company Act of
1940, as amended (the "Act"). The Trust consists of four diversified investment
portfolios listed below (each a "Fund" and collectively the "Funds"). The Funds
are authorized under the Trust's Trust Instrument to issue an unlimited number
of shares of beneficial interest without par value. The Funds and classes
offered as of February 28, 2005, 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
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 Government
Obligations Universal Shares (Note 5) July 1, 1998
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 which
series had the same investment objective and policies as the Funds.
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 Obligation 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.
On February 24, 2005, Universal Shares of Daily Assets Treasury Fund ceased
operations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with accounting
principles generally accepted in the United States, which require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in net
assets during the fiscal period. Actual results could differ from those
estimates. The following summarizes the significant accounting policies of the
Funds:
SECURITY VALUATION Generally, each Fund determines its net asset value per
share as of 4:00 p.m., Eastern time, on each Fund business day, utilizing the
amortized cost method pursuant to Rule 2a-7 under the Act. Under this method,
all investments purchased at a discount or premium are valued by accreting or
amortizing, respectively, the difference between the original purchase price
and the maturity value of the investment over the period to the investment's
maturity.
REPURCHASE AGREEMENTS Each Fund may invest in repurchase agreements. Each Fund,
through its custodian, receives delivery of the underlying collateral, whose
market value always exceeds or equals the repurchase price plus expected
transaction costs. In the case of a tri-party agreement, the collateral is held
by an agent bank. The Funds' investment adviser is responsible for determining
the value of the underlying collateral. In the event of default, a Fund may
have difficulties with the disposition of any such securities held as
collateral.
EXPENSE ALLOCATION The Trust is comprised of four active series, and it
accounts separately for the assets, liabilities and operations of each series.
Expenses that are directly attributable to more than one series are allocated
among the
16
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
February 28, 2005
respective series in proportion to each series' average daily net assets. Each
share of each class of a Fund represents an undivided, proportionate interest
in the Fund. The Funds' class-specific expenses include administration fees,
transfer agency fees and certain other expenses. 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.
FEDERAL TAXES Each Fund intends to continue to qualify each year as a regulated
investment company and distribute all its net investment income. In addition,
by distributing in each calendar year substantially all its net investment
income, capital gain and certain other amounts, each Fund will not be subject
to a federal excise tax. Therefore, no federal income or excise tax provision
is required.
DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders of net investment
income are declared daily and paid monthly. Net capital gain, if any, is
distributed to shareholders at least annually. Distributions are based on
amounts calculated in accordance with applicable income tax regulations, which
may differ from accounting principles generally accepted in the United States.
These differences are due primarily to differing treatments of income and gain
on various investment securities held by each Fund, timing differences and
differing characterizations of distributions made by the Fund.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER 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 Global Transaction Services,
through its various affiliates (collectively "Citigroup"), provides certain
administration, portfolio accounting and transfer agency services to the Funds.
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 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 Forum Fund Services, LLC is the Trust's distributor (the
"Distributor"). Effective March 1, 2005, the Distributor changed its name to
Foreside Fund Services, LLC. The Distributor is not affiliated with Citigroup
or its affiliated companies. 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.
17
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
February 28, 2005
NOTE 4. WAIVER OF FEES/REIMBURSEMENT OF EXPENSES
For the period ended February 28, 2005, the Adviser, the Administrator, and the
Distributor voluntarily waived a portion of their fees and assumed certain
expenses of the Funds as follows:
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY FUND OBLIGATIONS FUND GOVERNMENT FUND CASH FUND
------------- ---------------- --------------- ------------
Investment Advisory $ -- $ 4,658 $ -- $ --
Administration 22,491 9,590 304,891 18,360
Shareholder Service 35,301 -- 45,405 94,884
Transfer Agency 30,502 11,179 28,568 13,178
Portfolio Accounting -- 16,610 -- --
Expenses Reimbursed -- 7,128 -- 35,519
------- ------- -------- --------
Total $88,294 $49,165 $378,864 $161,941
======= ======= ======== ========
NOTE 5. REORGANIZATIONS
On June 9, 2003, Daily Assets Treasury Fund, Daily Assets Government Fund and
Daily Assets Cash Fund (the "Monarch Funds") acquired all the net assets of
Daily Assets Treasury Obligations Fund, Daily Assets Government Obligations
Fund and Daily Assets Cash Fund (the "Forum Funds"), respectively. Under the
reorganization plan, shareholders of the Forum Funds received shares in the
Monarch Funds with a value equal to their holdings in the Forum Funds. The
transaction was structured to qualify as a tax-free reorganization under the
Internal Revenue Code. After the reorganization was consummated, each Fund
redeemed its investment in the portfolios and began investing directly in
portfolio securities. A summary of shares outstanding and net assets
immediately before and after the reorganization is as follows:
BEFORE REORGANIZATION AFTER REORGANIZATION
----------------------------- --------------------
DAILY ASSETS
TREASURY TREASURY DAILY ASSETS
CASH FUND OBLIGATIONS FUND TREASURY 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
18
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
February 28, 2005
BEFORE REORGANIZATION AFTER REORGANIZATION
----------------------------- --------------------
DAILY ASSETS
GOVERNMENT GOVERNMENT DAILY ASSET
CASH FUND OBLIGATIONS FUND GOVERNMENT 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
BEFORE REORGANIZATION AFTER REORGANIZATION
----------------------------- --------------------
DAILY ASSETS DAILY ASSETS CASH
CASH FUND CASH FUND 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
19
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
February 28, 2005
On July 22, 2003, Daily Assets Government Fund, (the "Forum Fund"), reorganized
into the newly created Daily Assets Government Obligations Fund and transferred
its assets and liabilities to Daily Assets Government Obligations Fund. As a
result, the Fund acquired the net assets of the Forum Fund. Financial
information reported in the financial statements prior to July 23, 2003,
reflects the financial 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 FUND OBLIGATIONS 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 --
NOTE 6. 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, 2004, the
Funds did not own any securities for which a shareholder meeting was called and
voted on.
NOTE 7. AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE
The Funds file their complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Funds' Form
N-Q are available on the SEC's website at www.sec.gov or may be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
NOTE 8. SHAREHOLDER EXPENSES EXAMPLE
As a shareholder of a Fund, you incur two types of costs: (1) transaction
costs, including contingent deferred sales charges (loads) and redemption fees;
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 the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The following example is based on $1,000 invested at the beginning of the
period and held for the entire period from September 1, 2004, through February
28, 2005.
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 the Fund's actual expense ratio and an assumed rate of return
of 5% per year before expenses, which is not the 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 the 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) or redemption fees. 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.
20
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
February 28, 2005
BEGINNING ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING EXPENSE
SEPTEMBER 1, 2004 FEBRUARY 28, 2005 PERIOD RATIO
----------------- ----------------- ----------- ----------
DAILY ASSETS TREASURY FUND
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,005.53 $4.18 0.84%
Hypothetical Return $1,000.00 $1,020.63 $4.21 0.84%
INVESTOR SHARES
Actual Return $1,000.00 $1,007.47 $2.24 0.45%
Hypothetical Return $1,000.00 $1,022.56 $2.26 0.45%
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
UNIVERSAL SHARES
Actual Return $1,000.00 $1,008.69 $1.00 0.20%
Hypothetical Return $1,000.00 $1,023.80 $1.00 0.20%
DAILY ASSETS GOVERNMENT FUND
PREFERRED SHARES
Actual Return $1,000.00 $1,009.88 $0.60 0.12%
Hypothetical Return $1,000.00 $1,024.20 $0.60 0.12%
UNIVERSAL SHARES
Actual Return $1,000.00 $1,009.48 $1.00 0.20%
Hypothetical Return $1,000.00 $1,023.80 $1.00 0.20%
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,008.23 $2.24 0.45%
Hypothetical Return $1,000.00 $1,022.56 $2.26 0.45%
INSTITUTIONAL SHARES
Actual Return $1,000.00 $1,007.64 $2.84 0.57%
Hypothetical Return $1,000.00 $1,021.97 $2.86 0.57%
INVESTOR SHARES
Actual Return $1,000.00 $1,006.29 $4.18 0.84%
Hypothetical Return $1,000.00 $1,020.63 $4.21 0.84%
DAILY ASSETS CASH FUND
PREFERRED SHARES
Actual Return $1,000.00 $1,009.65 $0.60 0.12%
Hypothetical Return $1,000.00 $1,024.20 $0.60 0.12%
UNIVERSAL SHARES
Actual Return $1,000.00 $1,009.25 $1.00 0.20%
Hypothetical Return $1,000.00 $1,023.80 $1.00 0.20%
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,008.01 $2.24 0.45%
Hypothetical Return $1,000.00 $1,022.56 $2.26 0.45%
INSTITUTIONAL SHARES
Actual Return $1,000.00 $1,007.41 $2.84 0.57%
Hypothetical Return $1,000.00 $1,021.97 $2.86 0.57%
INVESTOR SHARES
Actual Return $1,000.00 $1,006.06 $4.18 0.84%
Hypothetical Return $1,000.00 $1,020.63 $4.21 0.84%
B SHARES
Actual Return $1,000.00 $1,001.82 $4.41 1.64%
Hypothetical Return $1,000.00 $1,009.02 $4.42 1.64%
C SHARES
Actual Return $1,000.00 $1,001.87 $4.60 1.63%
Hypothetical Return $1,000.00 $1,009.51 $4.62 1.63%
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.
21
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
February 28, 2005
NOTE 9. SUBSEQUENT EVENT
The Adviser is indirectly owned by John Y. Keffer, a Trustee of the Trust. Mr.
Keffer intends to sell the Adviser (the "Transaction"). The Transaction will
result in the termination of each Advisory Agreement. On March 24, 2005, the
Board of Trustees of the Trust approved, subject to shareholder approval, the
continuation of each Advisory Agreement subsequent to the change of control.
22
FOR MORE INFORMATION:
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
This report is authorized for distribution only to shareholders and to others
who have received a copy of an applicable Monarch Funds prospectus
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. 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.
Registrant does not currently 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 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/ Carl A. Bright
---------------------------
Carl A. Bright, President
Date May 4, 2005
---------------------------
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/ Carl A. Bright
-----------------------------------
Carl A. Bright, President
Date May 4, 2005
-----------------------------------
By /s/ Stacey E. Hong
-----------------------------------
Stacey E. Hong, Treasurer
Date May 4, 2005
-----------------------------------