As filed with the Securities and Exchange Commission on November 7, 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
Simon D. Collier, President and Principal Executive Officer
Two Portland Square
Portland, ME 04101
207-553-7110
Date of fiscal year end: August 31, 2005
Date of reporting period: August 31, 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.
ANNUAL REPORT
AUGUST 31, 2005
DAILY ASSETS TREASURY FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
MONARCH FUNDS
[GRAPHIC]
MONARCH FUNDS
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A MESSAGE TO OUR SHAREHOLDERS
August 31, 2005
Dear Shareholders:
Since our last annual report, the Federal Reserve Bank has continued its focus
on increasing the level of short term rates. During August 2005, the central
bank increased the Fed Funds rate for the 10th time since June of 2004. The Fed
Funds rate as of August 31, 2005 stood at 3.50%. At this time it appears the
Federal Reserve will continue to increase short term rates to forestall any
potential pickup in core inflation due to excess liquidity in the domestic
economy. Despite the previous rate increases, the Gross Domestic Product has
continued to grow at a rate in excess of 3% and job growth has exhibited
consistent increases albeit at lower levels than in past expansion periods. Due
to the probability that the Federal Reserve will continue to increase short
term rates our Portfolio Management team continues to seek short average
maturities of the funds' portfolios without sacrificing yield. With our short
average maturities, we are well positioned to take advantage of these
anticipated interest rate increases.
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 year ended August 31, 2005. For the ten-year period ended as of that date,
the fund's Universal Shares held the number 6 spot out of 61 funds within the
Institutional U.S. Government Money Market Funds category tracked by Lipper
Inc.*
For the past thirteen years, we have been and continue to be committed to
maintaining a $1.00 per share price through skilled and prudent portfolio
management our investors expect while providing them with a competitive return
and daily liquidity. We thank all of our investors and the financial
intermediaries who offer our funds 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 9 OUT
OF 139, 6 OUT OF 103, AND 6 OUT OF 61 WITHIN THE INSTITUTIONAL U.S. GOVERNMENT
MONEY MARKET FUNDS CATEGORY FOR THE 1-, 5- AND 10-YEAR PERIODS AS OF
SEPTEMBER 30, 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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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Shareholders and Board of Trustees
Monarch Funds:
We have audited the accompanying statements of assets and liabilities,
including the schedule of investments, of the Daily Assets Treasury Fund, Daily
Assets Government Obligations Fund, Daily Assets Government Fund and Daily
Assets Cash Fund (collectively, the "Funds"), each a series of the Monarch
Funds, as of August 31, 2005, and the related statements of operations for the
year then ended, statements of changes in net assets for each of the years in
the two-year period then ended, and financial highlights for each of the years
or periods in the five-year period then ended. These financial statements are
the responsibility of the Funds' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of material
misstatement. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Funds' internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of August 31, 2005 by correspondence with the custodian and brokers,
or by other appropriate auditing procedures when replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Daily
Assets Treasury Fund, Daily Assets Government Obligations Fund, Daily Assets
Government Fund and Daily Assets Cash Fund as of August 31, 2005, and the
results of their operations for the year then ended, changes in their net
assets for each of the years in the two-year period then ended, and financial
highlights for each of the years or periods in the five-year period then ended
in conformity with accounting principles generally accepted in the United
States of America.
[KPMG logo]
October 25, 2005
2
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SCHEDULE OF INVESTMENTS - DAILY ASSETS TREASURY FUND
August 31, 2005
FACE SECURITY
AMOUNT DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- ------------
U.S. TREASURY BILLS # - 84.9%
$50,000,000 U.S. Treasury Bill 3.47% 09/15/05 $ 49,937,347
------------
REPURCHASE AGREEMENTS - 99.0%
7,750,000 Bank of America Securities, dated 8/31/05, to be repurchased at
$7,750,749; collateralized by various U.S. Treasury Obligations 3.48 09/01/05 7,750,000
12,500,000 Bear Stearns & Co., Inc., dated 8/31/05, to be repurchased at $12,501,198;
collateralized by various U.S. Treasury Obligations 3.45 09/01/05 12,500,000
12,950,000 Deutsche Bank Securities, Inc., dated 8/31/05, to be repurchased at
$12,951,263; collateralized by various U.S. Treasury Obligations 3.51 09/01/05 12,950,000
12,500,000 Goldman Sachs & Co., dated 8/31/05, to be repurchased at $12,501,198;
collateralized by various U.S. Treasury Obligations 3.45 09/01/05 12,500,000
12,500,000 Merrill Lynch & Co., Inc., dated 8/31/05, to be repurchased at
$12,501,226; collateralized by various U.S. Treasury Obligations 3.53 09/01/05 12,500,000
------------
Total Repurchase Agreements 58,200,000
------------
MONEY MARKET FUND - 1.0%
600,000 Dreyfus Treasury Cash Management Fund 600,000
------------
Total Investments at Amortized Cost* - 184.9% $108,737,347
Other Assets and Liabilities, Net - (84.9%) (49,914,957)
------------
NET ASSETS - 100.0% $ 58,822,390
============
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Repurchase Agreements 53.5%
U.S. Treasury Bill 45.9%
Money Market Fund 0.6%
# Rates shown are annualized yields at time of purchase.
* Cost for federal income tax purposes is the same as for financial statement
purposes.
See Notes to Financial Statements.
3
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SCHEDULE OF INVESTMENTS--DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
August 31, 2005
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- -----------
U.S. GOVERNMENT SECURITIES - 89.0%
FEDERAL HOME LOAN BANK - DISCOUNT NOTES # - 89.0%
$15,500,000 FHLB 3.41% 09/02/05 $15,498,536
Total U.S. Government Securities 15,498,536
-----------
SHARES
- -----------
MONEY MARKET FUND - 10.9%
1,900,000 Dreyfus Prime Treasury Cash Management Fund 1,900,000
-----------
Total Investments at Amortized Cost* - 99.9% $17,398,536
Other Assets and Liabilities, Net - 0.1% 23,448
-----------
NET ASSETS - 100.0% $17,421,984
===========
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
U.S. Government Securities 89.1%
Money Market Fund 10.9%
# Rates shown are annualized yields at time of purchase.
* Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements.
4
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT FUND
August 31, 2005
FACE SECURITY
AMOUNT DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- -----------
U.S. GOVERNMENT SECURITIES - 40.3%
FEDERAL HOME LOAN BANK - DISCOUNT NOTES # - 22.6%
$50,000,000 FHLB 3.15% 09/01/05 $50,000,000
-----------
SMALL BUSINESS ADMINISTRATION (+/-) - 17.7%
26,807 Pool #500536 5.25 05/25/13 27,213
186,553 Pool #501077 4.75 11/25/14 186,553
109,489 Pool #501308 4.75 10/25/15 109,489
706,298 Pool #501543 4.63 07/25/16 706,298
133,520 Pool #501690 4.38 12/25/16 133,520
248,206 Pool #501733 4.25 02/25/17 249,886
329,620 Pool #501898 4.50 07/25/17 329,620
378,951 Pool #501989 4.38 10/25/12 381,602
1,422,140 Pool #502150 4.25 02/25/18 1,429,951
56,924 Pool #502161 4.25 02/25/18 56,924
567,114 Pool #502208 4.25 02/25/18 568,935
50,804 Pool #502306 4.25 02/25/18 50,804
42,326 Pool #502613 4.25 04/25/19 42,326
49,218 Pool #502914 4.25 03/25/15 49,512
284,696 Pool #503058 4.13 07/25/15 284,696
217,050 Pool #503082 4.13 09/25/20 217,050
195,661 Pool #503120 4.13 10/25/20 195,661
639,755 Pool #503121 4.13 09/25/15 641,657
2,396,767 Pool #503152 3.88 11/25/20 2,396,767
342,489 Pool #503232 3.88 12/25/15 342,489
262,799 Pool #503278 3.88 02/25/21 262,814
393,659 Pool #503429 4.00 06/25/16 394,174
276,940 Pool #503431 4.00 07/25/21 277,012
1,215,405 Pool #503461 4.00 09/25/21 1,215,999
247,664 Pool #503472 4.00 08/25/21 247,664
1,126,453 Pool #503553 3.88 11/25/21 1,127,247
1,810,666 Pool #503614 3.88 01/25/22 1,810,666
799,607 Pool #503671 3.88 03/25/22 799,607
780,466 Pool #503754 3.88 05/25/22 781,101
58,605 Pool #503780 3.88 03/25/22 58,650
756,564 Pool #503882 3.75 09/25/22 756,030
228,824 Pool #503892 3.88 07/25/22 229,044
1,432,958 Pool #503909 3.75 10/25/22 1,432,509
670,784 Pool #504015 3.75 01/25/23 670,694
742,368 Pool #504062 3.75 02/25/23 742,368
779,872 Pool #504074 3.75 02/25/23 779,872
401,511 Pool #504203 3.88 07/25/13 401,987
244,365 Pool #504269 3.88 05/25/15 244,673
395,073 Pool #504345 3.88 05/25/18 395,073
8,306,481 Pool #504366 3.63 02/25/24 8,288,212
4,739,957 Pool #504719 3.88 07/25/24 4,739,957
1,252,952 Pool #504727 3.88 09/25/24 1,252,952
1,597,728 Pool #504765 3.88 10/25/09 1,595,594
1,679,691 Pool #504769 3.88 10/25/24 1,679,691
120,481 Pool #505204 4.00 09/25/25 120,456
381,111 Pool #505205 4.06 09/25/07 381,085
-----------
Total Small Business Administration 39,086,084
-----------
Total U.S. Government Securities 89,086,084
-----------
See Notes to Financial Statements.
5
MONARCH FUNDS
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SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT FUND
August 31, 2005
FACE SECURITY
AMOUNT DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- ------------
REPURCHASE AGREEMENTS - 59.5%
$13,600,000 Bank of America Securities, dated 8/31/05, to be repurchased at
$13,601,349; collateralized by various U.S. Government Agency Obligations 3.57% 09/01/05 $ 13,600,000
50,000,000 Bear Stearns & Co., Inc., dated 8/31/05, to be repurchased at $50,005,000;
collateralized by various U.S. Government Agency Obligations 3.60 09/01/05 50,000,000
50,000,000 Deutsche Bank Securities, Inc., dated 8/31/05, to be repurchased at
$50,004,958; collateralized by various U.S. Government Agency Obligations 3.57 09/01/05 50,000,000
17,800,000 Goldman Sachs & Co., Inc., dated 8/31/05, to be repurchased at $17,801,760;
collateralized by various U.S. Government Agency Obligations 3.56 09/01/05 17,800,000
------------
Total Repurchase Agreements 131,400,000
------------
Total Investments at Amortized Cost* - 99.8% $220,486,084
Other Assets and Liabilities, Net - 0.2% 431,788
------------
NET ASSETS - 100.0% $220,917,872
============
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Repurchase Agreements 59.6%
U.S. Government Securities 40.4%
# Rates shown are annualized yields at time of purchase.
(+/-) Certain securities are deemed to have a maturity remaining until the next adjustment of the
interest rate, or the longer of the demand period or time to next readjustment. The interest
rates shown reflect the rate in effect on August 31, 2005.
* Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements.
6
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SCHEDULE OF INVESTMENTS - DAILY ASSETS CASH FUND
August 31, 2005
FACE
AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE
- ----------- -------------------------------------------------------------------------- ---- -------- ------------
U.S. GOVERNMENT SECURITIES - 12.5%
FEDERAL HOME LOAN BANK - DISCOUNT NOTES # - 12.5%
$50,000,000 FHLB 3.15% 09/01/05 $ 50,000,000
------------
Total U.S. Government Securities 50,000,000
------------
ASSET-BACKED SECURITY - 2.9%
11,716,730 Grand Central CDO Ltd. ^, (+/-) 3.48 06/10/06 11,716,730
------------
COMMERCIAL PAPER # - 19.2%
15,000,000 Deutsche Bank Financial, LLC 3.54 09/22/05 14,969,113
16,000,000 Master Funding, LLC^ 3.54 09/08/05 15,989,018
15,000,000 UBS Finance Delaware, LLC 3.51 09/19/05 14,973,750
15,000,000 WestLB AG^ 3.53 09/19/05 14,973,600
16,000,000 Windmill Funding Corp.^ 3.53 09/23/05 15,965,582
------------
Total Commercial Paper 76,871,063
------------
CORPORATE NOTES (+/-) - 25.0%
12,750,000 AllState Financial Global Funding^ 3.56 12/20/05 12,756,654
12,838,000 Bear Stearns & Co., Inc. 3.68 06/19/06 12,865,488
5,000,000 CIT Group, Inc. 3.71 04/19/06 5,003,486
10,000,000 CIT Group, Inc. 3.79 05/12/06 10,000,000
4,000,000 Countrywide Home Loan 3.68 04/12/06 4,001,092
10,000,000 Countrywide Home Loan 3.44 11/30/05 10,000,943
15,000,000 Goldman Sachs Group, Inc. 3.64 03/21/06 15,018,708
5,000,000 Merrill Lynch & Co., Inc. 3.60 06/06/06 5,010,251
10,000,000 Merrill Lynch & Co., Inc. 3.63 09/18/06 10,023,452
15,000,000 Morgan Stanley 3.75 03/27/06 15,026,836
------------
Total Corporate Notes 99,706,910
------------
REPURCHASE AGREEMENTS - 40.3%
43,780,000 Bank of America Securities, dated 8/31/05, to be repurchased at
$43,784,342; collateralized by various U.S. Government Agency Obligations 3.57 09/01/05 43,780,000
50,000,000 Bear Stearns & Co., Inc., dated 8/31/05, to be repurchased at $50,005,000;
collateralized by various U.S. Government Agency Obligations 3.60 09/01/05 50,000,000
50,000,000 Deutsche Bank Securities, Inc., dated 8/31/05, to be repurchased at
$50,004,958; collateralized by various U.S. Government Agency Obligations 3.57 09/01/05 50,000,000
17,050,000 Goldman Sachs & Co., Inc. dated 8/31/05, to be repurchased at $17,051,686;
collateralized by various U.S. Government Agency Obligations 3.56 09/01/05 17,050,000
------------
Total Repurchase Agreements 160,830,000
------------
Total Investments at Amortized Cost* - 99.9% $399,124,703
Other Assets and Liabilities, Net - 0.1% 490,008
------------
NET ASSETS - 100.0% $399,614,711
============
PORTFOLIO HOLDINGS
% OF TOTAL INVESTMENTS
Repurchase Agreements 40.3%
Corporate Notes 25.0%
Commercial Paper 19.3%
U.S. Government Securities 12.5%
Asset-Backed Security 2.9%
# Rates shown are annualized yields at time of purchase.
(+/-) Certain securities are deemed to have a maturity remaining until the next adjustment of the
interest rate, or the longer of the demand period or time to next readjustment. The interest
rates shown reflect the rate in effect on August 31, 2005.
^ Security exempt from registration under Rule 144A under the Securities Act of 1933. At the period
end, the value of these securities amounted to $71,401,584 or 17.9% of net assets.
* Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements.
7
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STATEMENTS OF ASSETS AND LIABILITIES
August 31, 2005
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
------------ ------------ ------------ ------------
Assets
Investments:
Securities at amortized cost $ 50,537,347 $17,398,536 $ 89,086,084 $238,294,703
Repurchase agreements 58,200,000 -- 131,400,000 160,830,000
Cash 65,719 77,096 88,288 66,389
Receivables:
Dividends 1,627 3,323 -- --
Interest 5,633 -- 267,442 774,846
Investment securities sold -- -- 457,217 --
Receivable from administrator 8,532 3,315 -- 9,989
Prepaid expenses and other assets 9,634 2,991 39,131 27,442
------------ ----------- ------------ ------------
Total Assets 108,828,492 17,485,261 221,338,162 400,003,369
------------ ----------- ------------ ------------
Liabilities
Payables:
Dividends 6,444 44,406 83,211 179,163
Investment securities purchased 49,937,347 -- -- --
Accrued expenses:
Payables to related parties 14,329 -- 71,446 56,693
Trustees' fees and expenses -- -- 519 --
Other expenses and other liabilities 47,982 18,871 265,114 152,802
------------ ----------- ------------ ------------
Total Liabilities 50,006,102 63,277 420,290 388,658
------------ ----------- ------------ ------------
Net Assets $ 58,822,390 $17,421,984 $220,917,872 $399,614,711
============ =========== ============ ============
Components of Net Assets
Paid in capital $ 58,822,376 $17,445,796 $220,946,385 $399,628,856
Undistributed (distributions in excess of) net investment
income (83) 408 (28,515) (560)
Accumulated net realized gain (loss) 97 (24,220) 2 (13,585)
------------ ----------- ------------ ------------
Net Assets $ 58,822,390 $17,421,984 $220,917,872 $399,614,711
============ =========== ============ ============
Net Assets by Class of Shares
Preferred Shares $ -- $ -- $ 21,316,348 $ 39,745,596
Universal Shares -- 17,421,984 24,778,936 39,273,438
Institutional Service Shares 11,876,160 -- 55,420,010 27,137,261
Institutional Shares -- -- 56,842,451 56,650,258
Investor Shares 46,946,230 -- 62,560,127 236,741,863
B Shares -- -- -- 30,084
C Shares -- -- -- 36,211
------------ ----------- ------------ ------------
Net Assets $ 58,822,390 $17,421,984 $220,917,872 $399,614,711
============ =========== ============ ============
Shares of Beneficial Interest for each Class of Shares
Preferred Shares -- -- 21,315,555 39,745,722
Universal Shares -- 17,446,029 24,818,363 39,277,836
Institutional Service Shares 11,871,880 -- 55,420,090 27,137,375
Institutional Shares -- -- 56,837,397 56,652,890
Investor Shares 46,950,506 -- 62,554,993 236,748,770
B Shares -- -- -- 30,084
C Shares -- -- -- 36,211
Net Asset Value Per Share
(Offering and Redemption Price per Share)
for each Class of Shares $ 1.00 $ 1.00 $ 1.00 $ 1.00
See Notes to Financial Statements.
8
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STATEMENTS OF OPERATIONS
Year Ended August 31, 2005
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY OBLIGATIONS GOVERNMENT CASH
FUND FUND FUND FUND
------------ ------------ ------------ ------------
Investment Income:
Interest income $2,866,771 $ 420,378 $35,410,084 $9,744,165
Dividend income 38,093 21,617 41,276 25,860
---------- --------- ----------- ----------
Total Investment Income 2,904,864 441,995 35,451,360 9,770,025
---------- --------- ----------- ----------
Expenses:
Investment adviser fees 44,636 9,101 465,725 132,398
Administrator fees
Preferred Shares -- -- 1,090,262 23,027
Universal Shares 57,626 18,749 83,845 34,506
Institutional Service Shares 14,835 -- 72,227 32,044
Institutional Shares -- -- 61,847 64,979
Investor Shares 60,961 -- 72,237 239,115
B Shares -- -- -- 19,365
C Shares -- -- -- 19,710
Shareholder service fees
Institutional Service Shares 28,807 -- 140,326 62,227
Institutional Shares -- -- 120,100 126,157
Investor Shares 118,355 -- 140,301 464,209
B Shares -- -- -- 72
C Shares -- -- -- 79
Distribution fees
Investor Shares 147,943 -- 175,374 580,256
B Shares -- -- -- 216
C Shares -- -- -- 236
Compliance Services fees 11,667 2,968 103,471 31,043
Transfer agency fees
Preferred Shares -- -- 40,306 9,449
Universal Shares 34,541 24,777 55,402 31,437
Institutional Service Shares 26,613 -- 83,153 43,662
Institutional Shares -- -- 134,896 140,417
Investor Shares 140,369 -- 157,217 486,801
B Shares -- -- -- 11,683
C Shares -- -- -- 11,897
Custodian fees 16,202 2,275 167,365 47,777
Professional fees 30,523 23,897 59,222 29,025
Accountant fees 58,664 37,110 88,021 117,171
Trustees' fees and expenses 6,025 795 52,746 16,113
Miscellaneous expenses 42,265 17,712 111,976 232,680
---------- --------- ----------- ----------
Total Expenses 840,032 137,384 3,476,019 3,007,751
Expenses reimbursed and fees waived (160,876) (100,255) (744,689) (448,402)
---------- --------- ----------- ----------
Net Expenses 679,156 37,129 2,731,330 2,559,349
---------- --------- ----------- ----------
Net Investment Income (Loss) 2,225,708 404,866 32,720,030 7,210,676
---------- --------- ----------- ----------
Net Realized Gain (Loss) on Investments 133 -- -- (1,944)
---------- --------- ----------- ----------
Increase (Decrease) in Net Assets from Operations $2,225,841 $ 404,866 $32,720,030 $7,208,732
========== ========= =========== ==========
See Notes to Financial Statements.
9
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STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS DAILY ASSETS
TREASURY FUND GOVERNMENT OBLIGATIONS FUND
-------------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2005 AUGUST 31, 2004
--------------- --------------- --------------- ---------------
Operations
Net investment income (loss) $ 2,225,708 $ 1,380,983 $ 404,866 $ 190,750
Net realized gain (loss) on investments 133 -- -- 32
--------------- --------------- ------------ ------------
Increase (Decrease) in Net Assets from Operations 2,225,841 1,380,983 404,866 190,782
--------------- --------------- ------------ ------------
Distributions to Shareholders from
Net investment income--Universal Shares (a) (985,929) (1,090,584) (404,866) (200,674)
Net investment income--Institutional Service Shares (278,559) (135,993) -- --
Net investment income--Investor Shares (961,220) (164,100) -- --
Net realized gain--Preferred Shares -- -- -- --
Net realized gain--Universal Shares -- -- -- --
Net realized gain--Institutional Service Shares -- -- -- --
Net realized gain--Institutional Shares -- -- -- --
Net realized gain--Investor Shares -- -- -- --
--------------- --------------- ------------ ------------
Total Distributions to Shareholders (2,225,708) (1,390,677) (404,866) (200,674)
--------------- --------------- ------------ ------------
Capital Share Transactions
Sale of shares--Universal Shares (a) 143,522,719 286,622,339 16,700,397 18,831,339
Sale of shares--Institutional Service Shares 137,281,165 343,639,316 -- --
Sale of shares--Investor Shares 1,106,065,389 1,655,597,362 -- --
Reinvestment of distributions--Universal Shares (a) 171,170 664 6,933 4,082
Reinvestment of distributions--Institutional Service
Shares 199,036 73,446 -- --
Reinvestment of distributions--Investor Shares 960,627 164,012 -- --
Redemption of shares--Universal Shares (a) (230,453,376) (340,004,807) (19,667,988) (23,194,936)
Redemption of shares--Institutional Service Shares (141,153,779) (363,233,772) -- --
Redemption of shares--Investor Shares (1,116,289,749) (1,696,367,845) -- --
--------------- --------------- ------------ ------------
Increase (Decrease) from Capital Transactions (99,696,798) (113,509,285) (2,960,658) (4,359,515)
--------------- --------------- ------------ ------------
Increase (Decrease) in Net Assets (99,696,665) (113,518,979) (2,960,658) (4,369,407)
--------------- --------------- ------------ ------------
Net Assets
Beginning of Period 158,519,055 272,038,034 20,382,642 24,752,049
--------------- --------------- ------------ ------------
End of Period $ 58,822,390 $ 158,519,055 $ 17,421,984 $ 20,382,642
=============== =============== ============ ============
Share Transactions
Sale of shares--Universal Shares (a) 143,522,720 286,622,338 16,700,396 18,831,340
Sale of shares--Institutional Service Shares 137,281,165 343,639,316 -- --
Sale of shares--Investor Shares 1,106,065,388 1,655,597,362 -- --
Reinvestment of distributions--Universal Shares (a) 171,170 664 6,933 4,082
Reinvestment of distributions--Institutional Service
Shares 199,036 73,446 -- --
Reinvestment of distributions--Investor Shares 960,627 164,012 -- --
Redemption of shares--Universal Shares (a) (230,453,376) (340,004,807) (19,667,988) (23,194,936)
Redemption of shares--Institutional Service Shares (141,153,779) (363,233,772) -- --
Redemption of shares--Investor Shares (1,116,289,749) (1,696,367,845) -- --
--------------- --------------- ------------ ------------
Increase (Decrease) in Shares (99,696,798) (113,509,286) (2,960,659) (4,359,514)
=============== =============== ============ ============
Undistributed (Distributions in Excess of)
Net Investment Income $ (83) $ (83) $ 408 $ 408
--------------- --------------- ------------ ------------
(a)Daily Assets Treasury Fund Universal Shares ceased operations on February
24, 2005.
See Notes to Financial Statements.
10
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS
GOVERNMENT FUND
---------------------------------
YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004
---------------- ---------------
Operations
Net investment income (loss) $ 32,720,030 $ 8,781,091
Net realized gain (loss) on investments -- 1,250
---------------- ---------------
Increase (Decrease) in Net Assets from Operations 32,720,030 8,782,341
---------------- ---------------
Distributions to Shareholders from
Net investment income--Preferred Shares (27,064,461) (6,598,646)
Net investment income--Universal Shares (1,725,437) (1,071,470)
Net investment income--Institutional Service Shares (1,476,445) (464,263)
Net investment income--Institutional Shares (1,233,938) (432,700)
Net investment income--Investor Shares (1,219,599) (213,682)
Net investment income--B Shares -- --
Net investment income--C Shares -- --
Net realized gain--Universal Shares (149) --
---------------- ---------------
Total Distributions to Shareholders (32,720,029) (8,780,761)
---------------- ---------------
Capital Share Transactions
Sale of shares--Preferred Shares 13,457,887,243 8,137,440,578
Sale of shares--Universal Shares 495,568,211 510,810,226
Sale of shares--Institutional Service Shares 423,309,543 349,941,112
Sale of shares--Institutional Shares 628,209,101 661,445,829
Sale of shares--Investor Shares 1,101,652,154 979,714,457
Sale of shares--B Shares -- --
Sale of shares--C Shares -- --
Reinvestment of distributions--Preferred Shares 27,064,464 6,548,329
Reinvestment of distributions--Universal Shares 1,279,994 482,630
Reinvestment of distributions--Institutional Service Shares 1,200,078 179,970
Reinvestment of distributions--Institutional Shares 833,140 247,736
Reinvestment of distributions--Investor Shares 1,214,233 213,409
Reinvestment of distributions--B Shares -- --
Reinvestment of distributions--C Shares -- --
Redemption of shares--Preferred Shares (13,487,020,990) (8,132,153,056)
Redemption of shares--Universal Shares (585,949,775) (511,585,416)
Redemption of shares--Institutional Service Shares (424,231,220) (371,253,091)
Redemption of shares--Institutional Shares (645,775,244) (678,858,529)
Redemption of shares--Investor Shares (1,104,334,690) (963,282,301)
Redemption of shares--B Shares -- --
Redemption of shares--C Shares -- --
---------------- ---------------
Increase (Decrease) Decrease from Capital Transactions (109,093,758) (10,108,117)
---------------- ---------------
Increase (Decrease) in Net Assets (109,093,757) (10,106,537)
---------------- ---------------
Net Assets
Beginning of Period 330,011,629 340,118,166
---------------- ---------------
End of Period $ 220,917,872 $ 330,011,629
================ ===============
Undistributed (Distributions in Excess of)
Net Investment Income $ (28,515) $ (28,665)
---------------- ---------------
DAILY ASSETS
CASH FUND
--------------------------------
YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004
--------------- ---------------
Operations
Net investment income (loss) $ 7,210,676 $ 2,595,618
Net realized gain (loss) on investments (1,944) (333)
--------------- ---------------
Increase (Decrease) in Net Assets from Operations 7,208,732 2,595,285
--------------- ---------------
Distributions to Shareholders from
Net investment income--Preferred Shares (589,768) (99,959)
Net investment income--Universal Shares (776,984) (802,986)
Net investment income--Institutional Service Shares (634,583) (205,357)
Net investment income--Institutional Shares (1,240,847) (561,597)
Net investment income--Investor Shares (3,967,761) (926,265)
Net investment income--B Shares (347) --
Net investment income--C Shares (387) --
Net realized gain--Universal Shares -- --
--------------- ---------------
Total Distributions to Shareholders (7,210,677) (2,596,164)
--------------- ---------------
Capital Share Transactions
Sale of shares--Preferred Shares 235,742,194 157,487,629
Sale of shares--Universal Shares 556,966,206 1,013,494,516
Sale of shares--Institutional Service Shares 317,798,401 313,903,413
Sale of shares--Institutional Shares 972,584,819 943,789,517
Sale of shares--Investor Shares 5,641,350,655 5,071,433,156
Sale of shares--B Shares 91,308 --
Sale of shares--C Shares 100,722 --
Reinvestment of distributions--Preferred Shares 192,222 42,043
Reinvestment of distributions--Universal Shares 578,709 435,925
Reinvestment of distributions--Institutional Service Shares 614,454 172,099
Reinvestment of distributions--Institutional Shares 1,123,763 386,917
Reinvestment of distributions--Investor Shares 3,613,494 835,744
Reinvestment of distributions--B Shares 348 --
Reinvestment of distributions--C Shares 387 --
Redemption of shares--Preferred Shares (215,354,337) (141,343,256)
Redemption of shares--Universal Shares (554,163,851) (1,082,878,630)
Redemption of shares--Institutional Service Shares (317,698,752) (324,528,053)
Redemption of shares--Institutional Shares (1,013,042,784) (940,377,890)
Redemption of shares--Investor Shares (5,802,886,123) (4,980,992,461)
Redemption of shares--B Shares (61,571) --
Redemption of shares--C Shares (64,898) --
--------------- ---------------
Increase (Decrease) Decrease from Capital Transactions (172,514,634) 31,860,669
--------------- ---------------
Increase (Decrease) in Net Assets (172,516,579) 31,859,790
--------------- ---------------
Net Assets
Beginning of Period 572,131,290 540,271,500
--------------- ---------------
End of Period $ 399,614,711 $ 572,131,290
=============== ===============
Undistributed (Distributions in Excess of)
Net Investment Income $ (560) $ (559)
--------------- ---------------
See Notes to Financial Statements.
11
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS DAILY ASSETS
GOVERNMENT FUND CASH FUND
------------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2005 AUGUST 31, 2004
--------------- --------------- --------------- ---------------
Share Transactions
Sale of shares--Preferred Shares 13,457,887,242 8,137,440,578 235,742,195 157,487,629
Sale of shares--Universal Shares 495,568,212 510,810,227 556,966,206 1,013,494,518
Sale of shares--Institutional Service Shares 423,309,542 349,941,112 317,798,401 313,903,413
Sale of shares--Institutional Shares 628,209,101 661,445,830 972,584,819 943,789,517
Sale of shares--Investor Shares 1,101,652,156 979,714,457 5,641,350,654 5,071,433,157
Sale of shares--B Shares -- -- 91,307 --
Sale of shares--C Shares -- -- 100,722 --
Reinvestment of distributions--Preferred Shares 27,064,464 6,548,329 192,222 42,043
Reinvestment of distributions--Universal Shares 1,279,993 482,630 578,709 435,925
Reinvestment of distributions--Institutional Service
Shares 1,200,078 179,970 614,454 172,099
Reinvestment of distributions--Institutional Shares 833,140 247,735 1,123,763 386,917
Reinvestment of distributions--Investor Shares 1,214,233 213,409 3,613,494 835,744
Reinvestment of distributions--B Shares -- -- 348 --
Reinvestment of distributions--C Shares -- -- 387 --
Redemption of shares--Preferred Shares (13,487,020,990) (8,132,153,056) (215,354,760) (141,343,256)
Redemption of shares--Universal Shares (585,949,775) (511,585,416) (554,178,721) (1,082,878,630)
Redemption of shares--Institutional Service Shares (424,231,220) (371,253,091) (317,703,982) (324,528,053)
Redemption of shares--Institutional Shares (645,775,244) (678,858,529) (1,013,055,861) (940,377,890)
Redemption of shares--Investor Shares (1,104,334,690) (963,282,301) (5,802,929,163) (4,980,992,461)
Redemption of shares--B Shares -- -- (61,571) --
Redemption of shares--C Shares -- -- (64,898) --
--------------- -------------- -------------- --------------
Increase (Decrease) in Shares (109,093,758) (10,108,116) (172,591,275) 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 Value Per Investment Gain on Investment Realized Value Total (000's
31, (except as noted) Share Income Investments Income Gains Per Share Return Omitted)
- --------------------- --------- ---------- ----------- ------------- ------------- --------- ------ ---------
- - - - - - - - - -
DAILY ASSETS TREASURY FUND
Institutional Service Shares/(b)/
- ----------------------------------------------------------------------------------------------------------------
2005 $1.00 $0.02/(c)/ --/(d)/ $(0.02) -- $1.00 2.03% 11,876
2004 1.00 0.01 -- (0.01) -- 1.00 0.59% 15,552
2003 1.00 0.01 -- (0.01) -- 1.00 0.84% 35,074
2002 1.00 0.02 --/(d)/ (0.02) --/(d)/ 1.00 1.57% 20,068
2001 1.00 0.05 -- (0.05) -- 1.00 4.92% 50,554
Investor Shares
- ----------------------------------------------------------------------------------------------------------------
2005 1.00 0.02/(c)/ --/(d)/ (0.02) -- 1.00 1.64% 46,946
2004 1.00 --/(d)/ -- --/(d)/ -- 1.00 0.20% 56,217
2003 1.00 --/(d)/ -- --/(d)/ -- 1.00 0.45% 96,827
2002 1.00 0.01 --/(d)/ (0.01) --/(d)/ 1.00 1.17% 133,758
2001 1.00 0.04 -- (0.04) -- 1.00 4.52% 233,138
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Universal Shares/(e)/
- ----------------------------------------------------------------------------------------------------------------
2005 1.00 0.02/(c)/ -- (0.02) -- 1.00 2.27% 17,422
2004 1.00 0.01 --/(d)/ (0.01) -- 1.00 0.91% 20,383
2003 1.00 0.01 -- (0.01) -- 1.00 1.18% 24,752
2002 1.00 0.02 -- (0.02) -- 1.00 1.97% 25,760
2001 1.00 0.05 -- (0.05) -- 1.00 5.26% 29,100
RATIOS/SUPPLEMENTAL DATA
- --------------------------------
Ratios to Average Net Assets
- --------------------------------
Net
Net Gross Investment
Expenses (a) Expenses Income
- --------------------------------
- ---------------------------------
0.45% 0.69% 1.92%
0.45% 0.56% 0.57%
0.45% 0.67% 0.84%
0.45% 0.62% 1.68%
0.45% 0.61% 4.57%
- ---------------------------------
0.84% 0.97% 1.61%
0.84% 0.89% 0.18%
0.84% 0.90% 0.45%
0.85% 0.87% 1.22%
0.84% 0.84% 4.52%
- ---------------------------------
0.20% 0.75% 2.22%
0.20% 0.70% 0.86%
0.20% 0.48% 1.14%
0.20% 0.71% 1.97%
0.20% 0.57% 5.24%
(a)Reflects the expense ratio excluding any waivers and/or reimbursements.
(b)On April 23, 2003, Institutional Shares were renamed Institutional Service
Shares.
(c)Calculated based on average shares outstanding during the period.
(d)Less than $0.01 per share.
(e)On July 22, 2003, Institutional Shares were redesignated as Universal Shares.
See Notes to Financial Statements.
13
MONARCH FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
These financial highlights reflect selected data for an outstanding share of
each class of each Fund during the periods indicated.
SELECTED DATA FOR A SINGLE SHARE Net
--------------------------------------------------------------------------- Assets
Beginning Net Distributions Distributions Ending at End
Net Asset Net Realized from Net from Net Net Asset of Period
Year Ended August Value Per Investment Gain on Investment Realized Value Total (000's
31, (except as noted) Share Income Investments Income Gains Per Share Return/(b)/ Omitted)
- --------------------- --------- ---------- ----------- ------------- ------------- --------- ---------- ---------
- - - - - - - - - -
DAILY ASSETS GOVERNMENT FUND
Preferred Shares
- -----------------------------------------------------------------------------------------------------------------------
2005 $1.00 $0.02/(d)/ -- $(0.02) -- $1.00 2.52% $ 21,316
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 1.04% 23,386
2003 1.00 0.01 -- (0.01) -- 1.00 1.40% 11,549
2002 1.00 0.02 --/(f)/ (0.02) --/(f)/ 1.00 2.25% 12,041
2001/(e)/ 1.00 --/(f)/ -- --/(f)/ -- 1.00 0.22% 8
Universal Shares
- -----------------------------------------------------------------------------------------------------------------------
2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 2.43% 24,779
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.96% 113,881
2003 1.00 0.01 -- (0.01) -- 1.00 1.29% 114,173
2002 1.00 0.02 --/(f)/ (0.02) --/(f)/ 1.00 2.17% 81,426
2001 1.00 0.05 -- (0.05) -- 1.00 5.34% 164,500
Institutional Service Shares
- -----------------------------------------------------------------------------------------------------------------------
2005 1.00 0.02(d) -- (0.02) -- 1.00 2.18% 55,420
2004 1.00 --/(f)/ --/(f)/ --/(f)/ -- 1.00 0.71% 55,142
2003/(e)/ 1.00 --/(f)/ -- --/(f)/ -- 1.00 0.16% 76,273
Institutional Shares
- -----------------------------------------------------------------------------------------------------------------------
2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 2.06% 56,843
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.59% 73,575
2003 1.00 0.01 -- (0.01) -- 1.00 0.91% 90,740
2002 1.00 0.02 --/(f)/ (0.02) --/(f)/ 1.00 1.80% 117,476
2001 1.00 0.05 -- (0.05) -- 1.00 4.95% 198,324
Investor Shares
- -----------------------------------------------------------------------------------------------------------------------
2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 1.78% 62,560
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.32% 64,028
2003 1.00 0.01 -- (0.01) -- 1.00 0.64% 47,383
2002 1.00 0.02 --/(f)/ (0.02) --/(f)/ 1.00 1.52% 58,397
2001 1.00 0.05 -- (0.05) -- 1.00 4.68% 61,546
DAILY ASSETS CASH FUND
Preferred Shares
- -----------------------------------------------------------------------------------------------------------------------
2005 1.00 0.03/(d)/ (0.01) (0.02) -- 1.00 2.49% 39,746
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 1.04% 19,166
2003 1.00 0.01 -- (0.01) -- 1.00 1.37% 2,979
2002 1.00 0.02 -- (0.02) -- 1.00 2.21% 13,095
2001/(e)/ 1.00 --/(f)/ -- --/(e)/ -- 1.00 0.22% 8
Universal Shares
- -----------------------------------------------------------------------------------------------------------------------
2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 2.41% 39,274
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.96% 35,892
2003 1.00 0.01 -- (0.01) -- 1.00 1.29% 104,842
2002 1.00 0.02 -- (0.02) -- 1.00 2.12% 46,833
2001 1.00 0.05 -- (0.05) -- 1.00 5.49% 37,236
Institutional Service Shares
- -----------------------------------------------------------------------------------------------------------------------
2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 2.15% 27,137
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.71% 26,423
2003/(e)/ 1.00 --/(f)/ -- --/(f)/ -- 1.00 0.18% 36,876
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------
Ratios to Average Net Assets/(a)/
- ---------------------------------
Net
Net Gross Investment
Expenses Expenses Income
- ---------------------------------
- ----------------------------------
0.12% 0.18% 2.56%
0.12% 0.18% 1.06%
0.11% 0.25% 1.05%
0.12% 0.22% 2.19%
0.12% 97.77% 3.64%
- ----------------------------------
0.20% 0.25% 2.12%
0.20% 0.26% 0.95%
0.20% 0.28% 1.26%
0.21% 0.25% 2.17%
0.20% 0.23% 5.29%
- ----------------------------------
0.45% 0.50% 2.10%
0.45% 0.51% 0.69%
0.45% 0.58% 0.70%
- ----------------------------------
0.57% 0.61% 2.05%
0.57% 0.62% 0.58%
0.57% 0.63% 0.92%
0.57% 0.59% 2.05%
0.57% 0.58% 4.80%
- ----------------------------------
0.84% 0.87% 1.74%
0.84% 0.86% 0.32%
0.84% 0.89% 0.63%
0.85% 0.85% 1.43%
0.84% 0.84% 4.51%
- ----------------------------------
0.12% 0.32% 2.64%
0.12% 0.31% 1.06%
0.12% 0.30% 1.39%
0.12% 0.20% 1.88%
0.12% 91.14% 3.76%
- ----------------------------------
0.20% 0.34% 2.32%
0.20% 0.27% 0.94%
0.20% 0.28% 1.24%
0.21% 0.25% 2.03%
0.20% 0.24% 5.68%
- ----------------------------------
0.45% 0.60% 2.04%
0.45% 0.54% 0.71%
0.45% 0.58% 0.76%
See Notes to Financial Statements.
14
MONARCH FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SINGLE SHARE Net
------------------------------------------------------------------------- Assets
Beginning Net Distributions Distributions Ending at End
Net Asset Net Realized from Net from Net Net Asset of Period
Year Ended August Value Per Investment Gain on Investment Realized Value Total (000's
31, (except as noted) Share Income Investments Income Gains Per Share Return/(b)/ Omitted)
- --------------------- --------- ---------- ----------- ------------- ------------- --------- ---------- ---------
- - - - - - - - - -
Institutional Shares
- ---------------------------------------------------------------------------------------------------------------------
2005 $1.00 $0.02/(d)/ --/(f)/ $(0.02) -- $1.00 2.03% $ 56,650
2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.59% 95,985
2003 1.00 0.01 -- (0.01) -- 1.00 0.92% 92,186
2002 1.00 0.02 -- (0.02) -- 1.00 1.75% 347,469
2001 1.00 0.05 -- (0.05) -- 1.00 5.11% 736,555
Investor Shares
- ---------------------------------------------------------------------------------------------------------------------
2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 1.76% 236,742
2004 1.00 --/(f)/ --/(f)/ --/(f)/ -- 1.00 0.32% 394,665
2003 1.00 0.01 -- (0.01) -- 1.00 0.64% 303,389
2002 1.00 0.01 -- (0.01) -- 1.00 1.48% 646,285
2001 1.00 0.05 -- (0.05) -- 1.00 4.85% 791,138
B Shares
- ---------------------------------------------------------------------------------------------------------------------
2005/(e)/ 1.00 0.01/(d)/ --/(f)/ (0.01) -- 1.00 0.92% 30
C Shares
- ----------------------------------------------------------------------------------------------------------------------
2005/(e)/ 1.00 0.01/(d)/ --/(f)/ (0.01) -- 1.00 0.93% 36
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------
Ratios to Average Net Assets/(a)/
- ---------------------------------
Net
Net Gross Investment
Expenses Expenses Income
- ---------------------------------
- ----------------------------------
0.57% 0.68% 1.97%
0.57% 0.63% 0.59%
0.57% 0.61% 1.01%
0.57% 0.58% 1.84%
0.57% 0.57% 5.07%
- ----------------------------------
0.84% 0.91% 1.71%
0.84% 0.87% 0.32%
0.84% 0.86% 0.68%
0.83% 0.83% 1.51%
0.82% 0.82% 4.78%
- ----------------------------------
1.65% 161.82% 1.20%
- ---------------------------------
1.64% 158.38% 1.23%
(a)Annualized for periods less than one year.
(b)Not annualized for periods less than one year.
(c)Reflects the expense ratio excluding any waivers and/or reimbursements.
(d)Calculated based on average shares outstanding during the period.
(e)See Note 1 for dates of commencement of operations.
(f)Less than $0.01 per share.
See Notes to Financial Statements.
15
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 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 August 31, 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
Daily Assets Treasury Fund Universal Shares ceased operations on February 24,
2005.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with accounting
principles generally accepted in the United States, which require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in net
assets during the fiscal period. Actual results could differ from those
estimates. The following summarizes the significant accounting policies of the
Funds:
SECURITY VALUATION Generally, each Fund determines its net asset value per
share as of 4:00 p.m., Eastern time, on each Fund business day, utilizing the
amortized cost method pursuant to Rule 2a-7 under the Act. Under this method,
all investments purchased at a discount or premium are valued by accreting or
amortizing, respectively, the difference between the original purchase price
and the maturity value of the investment over the period to the investment's
maturity.
REPURCHASE AGREEMENTS Each Fund may invest in repurchase agreements. Each Fund,
through its custodian, receives delivery of the underlying collateral, whose
market value always exceeds or equals the repurchase price plus expected
transaction costs. In the case of a tri-party agreement, the collateral is held
by an agent bank. The Funds' investment adviser is responsible for determining
the value of the underlying collateral. In the event of default, a Fund may
have difficulties with the disposition of any such securities held as
collateral.
EXPENSE ALLOCATION The Trust is comprised of four active series, and it
accounts separately for the assets, liabilities and operations of each series.
Expenses that are directly attributable to more than one series are allocated
among the respective series in proportion to each series' average daily net
assets. Each share of each class of a Fund represents an undivided,
proportionate interest in the Fund. The Funds' class-specific expenses include
administration fees, transfer agency fees and certain expenses determined by
the Trust's Board. Institutional Service Shares, Institutional Shares, Investor
Shares, B Shares and C Shares incur shareholder servicing fees and Investor
Shares, B Shares and C Shares incur distribution fees. In addition, there are
differences between the classes of shares with respect to the minimum
investment required.
16
MONARCH FUNDS
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NOTES TO FINANCIAL STATEMENTS
August 31, 2005
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 Monarch Investment Advisors, LLC, formerly known as Forum
Investment Advisors, LLC (the "Adviser"), is the investment adviser of each
Fund. The Adviser receives an advisory fee from the Daily Assets Treasury Fund,
Daily Assets Government Fund, and Daily Assets Cash Fund based upon the total
average daily net assets of the Funds ("Total Fund Assets") that is calculated
on a cumulative basis at the following annual rates: 0.06% for the first $200
million of Total Fund Assets, 0.04% of the next $300 million of Total Fund
Assets and 0.03% of the remaining Total Fund Assets. The Adviser receives an
advisory fee from Daily Assets Government Obligations Fund at an annual rate of
0.05% of the average daily net assets of the Fund.
ADMINISTRATION AND OTHER SERVICES Citigroup Fund Services, LLC ("Citigroup"),
provides certain administration, portfolio accounting and transfer agency
services to the 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 Foreside Fund Services, LLC is the Trust's distributor (the
"Distributor"). Under a Distribution Plan adopted pursuant to Rule 12b-1 under
the Act, the Trust pays the Distributor a distribution fee at an annual rate of
0.25% of the average daily net assets of Investor Shares of each Fund and 0.75%
of the average daily net assets of B Shares and C Shares of Daily Assets Cash
Fund. The Distributor pays some or all of these fees to various financial
institutions that provide distribution services for Investor Shares. The plan
obligates the Funds to pay the Distributor as compensation for its services.
The Distributor is not affiliated with Citigroup or its affiliated companies.
The certifying officers of the Trust are also principals of the Distributor.
Under a Compliance Services Agreement with the Trust, the Distributor provides
a Chief Compliance Officer, Principal Executive Officer and Principal Financial
Officer to the Trust as well as certain additional compliance support functions.
TRUSTEES AND OFFICERS Certain Trustees and Officers of the Trust are directors,
officers or employees of the aforementioned companies.
17
MONARCH FUNDS
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NOTES TO FINANCIAL STATEMENTS
August 31, 2005
NOTE 4. WAIVER OF FEES/REIMBURSEMENT OF EXPENSES
The Adviser and Citigroup voluntarily waived a portion of their fees and
assumed certain expenses of the Funds. For the period ended August 31, 2005,
fees waived and expenses reimbursed for each of the Funds were as follows:
DAILY ASSETS
DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
TREASURY FUND OBLIGATIONS FUND GOVERNMENT FUND CASH FUND
------------- ---------------- --------------- ------------
Advisory $ -- $ 9,101 $ -- $ --
Administration 46,400 18,524 656,886 91,964
Shareholder Service 64,585 -- 58,730 117,130
Transfer Agency 48,133 23,126 29,073 29,189
Portfolio Accounting -- 34,940 -- --
Reimbursed Expenses by Citigroup 1,758 14,564 -- 210,119
-------- -------- -------- --------
Total $160,876 $100,255 $744,689 $448,402
======== ======== ======== ========
NOTE 5. FEDERAL INCOME TAX AND INVESTMENT TRANSACTIONS
As of August 31, 2005, distributable earnings (accumulated losses) on a tax
basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED CAPITAL AND
ORDINARY INCOME CAPITAL GAIN OTHER LOSSES TOTAL
--------------- ------------- ------------ --------
Daily Assets Treasury Fund $ 6,458 $-- $ -- $ 6,458
Daily Assets Government Obligations Fund 44,813 -- (24,221) 20,592
Daily Assets Government Fund 14,094 -- -- 14,094
Daily Assets Cash Fund 178,603 -- (13,585) 165,018
The tax character of distributions paid during 2005 and 2004 were as follows:
ORDINARY INCOME
----------------------
2005 2004
----------- ----------
Daily Assets Treasury Fund $ 2,225,708 $1,390,677
Daily Assets Government Obligations Fund 404,866 200,674
Daily Assets Government Fund 32,720,029 8,780,761
Daily Assets Cash Fund 7,210,677 2,596,164
The capital loss carryovers available to offset future gains, as of August 31,
2005, were as follows:
Daily Assets Government Obligations Fund Expiring August 2006 $18,999
Expiring August 2007 986
Expiring August 2008 3,602
Expiring August 2009 632
Expiring August 2011 2
Daily Assets Cash Fund Expiring August 2010 232
Expiring August 2011 9,421
Expiring August 2012 1,655
Expiring August 2013 333
For tax purposes, the Daily Assets Cash Fund has a current year deferred
post-October loss of $1,944. This loss will be recognized for tax purposes on
the first day of the following tax year.
NOTE 6. SUBSEQUENT EVENT (UNAUDITED)
The Board of Trustees of the Trust has called a special meeting of the
shareholders of each Fund, to approve a new investment advisory agreement (the
"New Agreement") between the Trust and the Adviser, with respect to the Funds.
The New Agreement contains the same terms and conditions as the current
investment advisory agreements.
18
MONARCH FUNDS
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NOTES TO FINANCIAL STATEMENTS
August 31, 2005
The Adviser is a wholly owned subsidiary of Forum Trust, LLC ("Forum Trust").
Forum Trust intends to sell all of its ownership interest in the Adviser to
Anthony R. Fischer, Jr., the Funds' portfolio manager and Jack J. Singer,
Executive Director, Vice President, Secretary and Assistant Treasurer of the
Adviser, on or about November 1, 2005 (the "Sale"). Pursuant to the terms of
the Current Agreements, the Sale will operate to automatically terminate the
Current Agreements. The Board of Trustees of the Trust unanimously approved the
New Agreement with respect to each Fund subsequent to the Sale, subject to the
approval of each Fund's shareholders. The meeting is scheduled to be held on
November 1, 2005.
19
MONARCH FUNDS
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ADDITIONAL INFORMATION (UNAUDITED)
August 31, 2005
INVESTMENT ADVISORY AGREEMENT APPROVAL On March 24, 2005, the Board met and
discussed the Sale and its possible effect on the Trust, each Fund and its
respective shareholders. In evaluating the New Agreement, the Board reviewed
materials furnished by the Adviser and the Fund's administrator. Specifically,
the Board considered: (1) the nature, extent and quality of the services to be
provided to the Funds by the Adviser, including investment performance; (2) the
advisory fees and total expense ratios of the Funds compared to relevant peer
groups of funds; (3) the costs of the services to be provided and profits
realized by the Adviser with respect to its relationship with the Funds;
(4) the extent to which economies of scale would be realized as the Funds grow
and whether the advisory fee reflects these economies of scale for the benefit
of Fund investors; and (5) other benefits received by the Adviser from its
relationship with the Funds. In its deliberations, the Board did not identify
any particular information that was all-important or controlling, and the Board
attributed different weights to the various factors. In particular, the Board
focused on the factors discussed below.
The Board met with Messrs. Fischer and Singer and discussed how the Sale would
affect the Adviser's services. The Proposed Adviser represented that the Sale
would not cause any diminution or disruption to the quality or extent of
services provided to the Funds and that they would continue to provide the same
services. The Board then considered the financial solvency of the Adviser and
its proposed Errors and Omissions Insurance coverage. Based on the foregoing,
the Board concluded that the Adviser was sufficiently capitalized to be
economically viable during the coming year and possessed the resources
necessary to meet its investment mandate. In considering the nature, extent and
quality of the services provided to the Funds by the Adviser, the Board
observed that Mr. Fischer, the Funds' portfolio manager since their inception,
is one of the prospective owners and would continue to manage the Funds after
the Sale. In addition, Mr. Singer, the other prospective owner, was previously
employed by Imperial Bank, and its successor, Comerica Bank, whose customers
comprised the majority of the Funds' shareholder base. Mr. Singer was the
Funds' primary point of contact with respect to Fund business at this
intermediary since the Funds' inception. The Board also considered the Funds'
performance, noting that the Institutional Service, Institutional, Preferred,
and Universal share classes each outperformed its Lipper Inc. peer group for
the 3-month, 6-month, 1-year, 3-year, and 5-year periods ending December 31,
2004 with respect to total return and that the Funds' performance should not be
affected by the Sale since Mr. Fischer will continue to serve as each Fund's
portfolio manager. Based upon its review of these factors, the Board concluded
that it was satisfied with the nature, extent and quality of services to be
provided to the Funds by the Adviser.
The Board considered the Adviser's proposed compensation for providing advisory
services to the Funds and analyzed comparative information on fees and total
expenses of similar mutual funds. The Board noted that the actual advisory fee
for the Funds was lower than comparable advisory fees for funds in their Lipper
Inc. peer group and would not increase as a result of the Sale. The Board also
considered the Funds' total expenses, noting that almost half of the Funds'
share classes had lower total expense ratios than the mean total expense ratios
of their Lipper Inc. peer groups.
The Board also considered the costs of services and profits of the Adviser. The
Board considered that the Adviser provides office space, administrative and
other services as will be necessary for the Funds' operations. With respect to
the Adviser's projected profitability on services rendered to the Funds, the
Board determined that the anticipated level of profits were not excessive in
light of the services to be provided. The Board concluded that the Adviser's
proposed advisory fees were fair and reasonable.
The Board then considered whether the Funds would benefit from any economies of
scale and noted that the investment advisory fees for the Funds contain
breakpoints.
The Board noted that following the Sale, the Funds will maintain their existing
contracts with the Fund's custodian, transfer agent, fund accountant,
distributor and administrator. Thus, there will be no change in the agreements
for those service providers. The Board also noted that Mr. Fischer and
Mr. Singer will bear all of the costs of the shareholder meeting including the
preparation, printing and mailing of a proxy statement and ballot cards and
proxy tabulation.
The Board noted that the Sale would satisfy the terms of Section 15(f) of the
1940 Act, which requires that 75% of the Board continue to consist of
independent trustees after the Sale and for the next three years. The Board
concluded that the approval of the New Agreement subsequent to the Sale would
not result in: (1) an increase in the Funds' advisory fee or total expenses;
(2) a change in advisory services, portfolio management personnel or other
service provider services; or (3) costs to the Funds in order to seek
shareholder approval of the New Agreement.
The Board concluded that other benefits received by the Adviser from its
relationship with the Funds were not a material factor to consider in approving
and recommending to each Fund's shareholders the approval of the New Agreement
subsequent to the Sale.
20
MONARCH FUNDS
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ADDITIONAL INFORMATION (UNAUDITED)
August 31, 2005
Based upon its review, the Board concluded that the approval of the New
Agreement subsequent to the Sale was reasonable, fair and in the best interests
of each Fund and its respective shareholders.
PROXY VOTING GUIDELINES
A description of the policies and procedures the Funds use to determine how to
vote as a shareholder of the companies whose securities are held in the Funds'
portfolio is available, without charge and upon request, by calling
800-754-8757. This information is also available from the EDGAR database on the
SEC's website at www.sec.gov. For the twelve months ended June 30, the Funds
did not own any securities for which a shareholder meeting was called and voted
on.
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE
The Funds file their complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Funds' Form
N-Q are available on the SEC's website at WWW.SEC.GOV or may be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
FEDERAL TAX STATUS OF DIVIDENDS DECLARED DURING THE FISCAL YEAR
All of the income dividends paid by each Fund for the tax year ended August 31,
2005 were ordinary income for federal income tax purposes.
SHAREHOLDER EXPENSES EXAMPLE
As a shareholder of a Fund, you incur two types of costs: (1) transactions
costs, including contingent deferred sales charges (loads); and (2) ongoing
costs, including management fees; distribution (12b-1) fees; and other Fund
expenses. This example is intended to help you understand your ongoing costs
(in dollars) of investing in a Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The following example is based on $1,000 invested at the beginning of the
period and held for the entire period from March 1, 2005, through August 31,
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 a Fund's actual expense ratio and an assumed rate of return
of 5% per year before expenses, which is not a Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing cost of investing in a Fund and other funds.
To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
contingent deferred sales charges (loads). Therefore, the second line of the
table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
21
MONARCH FUNDS
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ADDITIONAL INFORMATION (UNAUDITED)
August 31, 2005
BEGINNING ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING EXPENSE
MARCH 1, 2005 AUGUST 31, 2005 PERIOD* RATIO
------------- --------------- ----------- ----------
DAILY ASSETS TREASURY FUND
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,012.76 $2.28 0.45%
Hypothetical Return $1,000.00 $1,022.94 $2.29 0.45%
INVESTOR SHARES
Actual Return $1,000.00 $1,010.77 $4.26 0.84%
Hypothetical Return $1,000.00 $1,020.97 $4.28 0.84%
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
UNIVERSAL SHARES
Actual Return $1,000.00 $1,013.91 $1.02 0.20%
Hypothetical Return $1,000.00 $1,024.20 $1.02 0.20%
DAILY ASSETS GOVERNMENT FUND
PREFERRED SHARES
Actual Return $1,000.00 $1,015.12 $0.61 0.12%
Hypothetical Return $1,000.00 $1,024.60 $0.61 0.12%
UNIVERSAL SHARES
Actual Return $1,000.00 $1,014.70 $1.02 0.20%
Hypothetical Return $1,000.00 $1,024.20 $1.02 0.20%
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,013.44 $2.28 0.45%
Hypothetical Return $1,000.00 $1,022.94 $2.29 0.45%
INSTITUTIONAL SHARES
Actual Return $1,000.00 $1,012.83 $2.89 0.57%
Hypothetical Return $1,000.00 $1,022.33 $2.91 0.57%
INVESTOR SHARES
Actual Return $1,000.00 $1,011.46 $4.26 0.84%
Hypothetical Return $1,000.00 $1,020.97 $4.28 0.84%
DAILY ASSETS CASH FUND
PREFERRED SHARES
Actual Return $1,000.00 $1,015.10 $0.61 0.12%
Hypothetical Return $1,000.00 $1,024.60 $0.61 0.12%
UNIVERSAL SHARES
Actual Return $1,000.00 $1,014.68 $1.02 0.20%
Hypothetical Return $1,000.00 $1,024.20 $1.02 0.20%
INSTITUTIONAL SERVICE SHARES
Actual Return $1,000.00 $1,013.42 $2.28 0.45%
Hypothetical Return $1,000.00 $1,022.94 $2.29 0.45%
INSTITUTIONAL SHARES
Actual Return $1,000.00 $1,012.81 $2.89 0.57%
Hypothetical Return $1,000.00 $1,022.33 $2.91 0.57%
INVESTOR SHARES
Actual Return $1,000.00 $1,011.43 $4.26 0.84%
Hypothetical Return $1,000.00 $1,020.97 $4.28 0.84%
B SHARES
Actual Return $1,000.00 $1,007.35 $8.30 1.64%
Hypothetical Return $1,000.00 $1,016.94 $8.34 1.64%
C SHARES
Actual Return $1,000.00 $1,007.37 $8.30 1.64%
Hypothetical Return $1,000.00 $1,016.94 $8.34 1.64%
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the
average account value over the period, multiplied by the number of days in
most recent fiscal half-year/365 (to reflect the half-year period).
22
MONARCH FUNDS
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ADDITIONAL INFORMATION (UNAUDITED)
August 31, 2005
TRUSTEES AND OFFICERS OF THE TRUST
The Board is responsible for managing the Trust's business affairs and
exercising all the Trust's powers except those reserved for shareholders. The
following table gives information about each Board member and certain officers
of the Trust. The fund complex includes the Trust and two other investment
companies (collectively, "fund complex"), which hold themselves out to
investors as related companies for purposes of investment and investor
services. Mr. Keffer is considered an Interested Trustee due to his affiliation
with a Trust adviser and the Distributor within the past two years. Each
Trustee and officer holds office until the person resigns, is removed, or
replaced. Unless otherwise noted, the persons have held their principal
occupations for more than five years. The addresses for all Trustees and
officers is Two Portland Square, Portland, Maine 04101, unless otherwise
indicated. Each Trustee oversees thirty portfolios in the fund complex. No
Trustee is a director of any other public company or registered investment
company except for John Y. Keffer, who is an Interested Trustee of Wintergreen
Fund, Inc. The Funds' Statement of Additional Information includes additional
information about the Trustees and is available, without charge and upon
request, by calling (800) 754-8757.
PRINCIPAL
LENGTH OF OCCUPATION(S)
NAME POSITION WITH THE TIME DURING
AND BIRTH DATE TRUST SERVED PAST 5 YEARS
- ----------------------- ------------------- ---------- -------------------------------------------------
INDEPENDENT TRUSTEES
J. Michael Parish Chairman of the Trustee Retired; Partner, Wolfe, Block, Schorr and Solis-
Born: November 9, 1943 Board; Trustee; since 1989 Cohen, LLP (law firm) 2002-2003; Partner, Thelen
Chairman, (Chairman Reid & Priest LLP (law firm) 1995-2002.
Compliance of the
Committee, Board
Nominating since
Committee and 2004)
Qualified Legal
Compliance
Committee
Costas Azariadis Trustee Trustee Professor of Economics, University of California-
Born: February 15, 1943 Chairman, Valuation since 1989 Los Angeles; Visiting Professor of Economics,
Committee Athens University of Economics and Business
1998-1999.
James C. Cheng Trustee Trustee President, Technology Marketing Associates
Born: July 26, 1942 Chairman, Audit since 1989 (marketing company for small-and medium-sized
Committee businesses in New England).
- --------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
John Y. Keffer Trustee Trustee President, Forum Trust, LLC (a non-depository
Born: July 15, 1942 Chairman, Contracts since 1989 trust company) since 1997; President, Citigroup
Committee 2003-2005; President, Forum Financial Group,
LLC ("Forum") (a fund services company acquired
by Citigroup in 2003).
- --------------------------------------------------------------------------------------------------------
23
MONARCH FUNDS
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
August 31, 2005
PRINCIPAL
LENGTH OF OCCUPATION(S)
NAME POSITION WITH THE TIME DURING
AND BIRTH DATE TRUST SERVED PAST 5 YEARS
- ------------------------ ------------------- ---------- ---------------------------------------------------
OFFICERS
Simon D. Collier President and Since 2005 Managing Director and Principal Executive
Born: October 22, 1961 Principal Executive Officer, Foreside Fund Services, LLC, the Trust's
Officer Distributor since 2005; Chief Operating Officer
and Managing Director, Global Fund Services,
Citibank, N.A. 2003-2005; Managing Director,
Global Securities Services for Investors, Citibank,
N.A. 1999-2003.
Carl A. Bright Principal Financial Since 2005 President, Foreside Fund Services, LLC, the
Born: December 20, 1957 Officer Trust's Distributor since 2004; Consultant,
Foreside Solutions, LLC 2000-2003 (mutual fund
development company).
Beth P. Hanson Vice President/ Since 2003 Relationship Manager, Citigroup since 2003;
Born: July 15, 1966 Assistant Secretary Relationship Manager, Forum 1999-2003.
Sara M. Morris Vice President Since 2004 Director and Relationship Manager, Citigroup
Born: September 18, 1963 since 2004; Chief Financial Officer, The VIA
Group, LLC (strategic marketing company)
2000-2003.
Trudance L. Bakke Treasurer Since 2005 Senior Manager, Citigroup since 2003; Senior
Born: August 11, 1971 Manager of Corporate Finance, Forum 1999-2003.
David M. Whitaker Secretary Since 2004 Senior Manager, Citigroup since 2004; Assistant
Born: September 6, 1971 Counsel, PFPC, Inc. (a fund services company)
2000-2004.
- -----------------------------------------------------------------------------------------------------------
24
MONARCH FUNDS
DAILY ASSETS TREASURY FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
MONARCH FUNDS
P.O. Box 446
Portland, Maine 04112
(800) 754-8757
FOR MORE INFORMATION
This report is 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.
A code of ethics has not been adopted for the registrant's principal officers,
as it is not required by Rule 17j-1 of the 1940 Act.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees determined that no member of the Audit Committee is an
"audit committee financial expert" as that term is defined under applicable
regulatory guidelines. In addition, the Board recognized that the experience of
the Trustees that are members of the Audit Committee is sufficient for them to
perform the services required of Audit Committee members.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Monarch Daily Assets Government Fund
Monarch Daily Assets Cash Fund
Monarch Daily Assets Treasury Fund
Monarch Daily Assets Government Obligations Fund
(a) Audit Fees - The aggregate fees billed for each of the last two fiscal years
(the "Reporting Periods") for professional services rendered by the Registrant's
principal accountant for the audit of the Registrant's annual financial
statements, or services that are normally provided by the principal accountant
in connection with the statutory and regulatory filings or engagements for the
Reporting Periods, were $71,000 in 2004 and $74,500 in 2005.
(b) Audit-Related Fees - The aggregate fees billed in the Reporting Periods for
assurance and related services rendered by the principal accountant that were
reasonably related to the performance of the audit of the Registrant's financial
statements and are not reported under paragraph (a) of this Item 4 were $5,032
in 2004 and $0 in 2005. These services consisted of out-of-pocket expenses.
(c) Tax Fees - The aggregate fees billed in the Reporting Periods for
professional services rendered by the principal accountant to the Registrant for
tax compliance, tax advice and tax planning were $10,600 in 2004 and $11,100 in
2005. These services consisted of review and/or preparation of U.S. federal,
state, local and excise tax returns.
(d) Other Fees - The other fees billed in the Reporting Periods for products and
services provided to the Registrant by the principal accountant were $2,500 in
2004 and $5,000 in 2005.
(e) (1) The Registrant's Audit Committee pre-approves all audit and permissible
non-audit services rendered to the Registrant in accordance with paragraph
(c)(7)(i) (c) of Rule 2-01 of Regulation S-K.
(e) (2) 100.00%
(f) Not applicable
(g) The aggregate non-audit fees billed by the principal accountant for services
rendered to the Registrant for the Reporting Periods were $10,600 in 2004 and
$11,100 in 2005. There were no fees billed in each of the Reporting Periods for
non-audit services rendered by the principal accountant to the investment
adviser.
(h) If the Registrant's investment adviser has engaged the Registrant's auditor
for non-audit services and the engagement relates directly to the operations and
financial reporting of the Registrant, the Audit Committee does consider such
engagement in evaluating the independence of the Registrant's auditor.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Included as part of report to shareholders under Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not
applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant does not accept nominees to the board of directors from
shareholders.
ITEM 11. CONTROLS AND PROCEDURES
(a) The registrant's President and Treasurer have concluded that the
registrant's disclosure controls and procedures (as defined in rule 30a-3(c)
under the Investment Company Act of 1940 (the "Act")) are effective, based on
their evaluation of these disclosure controls and procedures required by Rule
30a-3(b) as of a date within 90 days of the filing date of this report.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in rule 30a-3(d) under the Act) that occurred during the
registrant's last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to 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/ Simon D. Collier
---------------------------
Simon D. Collier, President and Principal Executive Officer
Date November 7, 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/ Simon D. Collier
-----------------------------------
Simon D. Collier, President and Principal Executive Officer
Date November 7, 2005
-----------------------------------
By /s/ Carl A. Bright
-----------------------------------
Carl A. Bright, Principal Financial Officer
Date November 7, 2005
-----------------------------------