February 2000
Dear Shareholder:
We are pleased to present this annual report of the Declaration Money Market
Fund for the year ended December 31, 1999. It contains valuable information on
the Funds, including a complete list of portfolio holdings, performance and
financial information.
Thank you for your investments in the Declaration Money Market Fund.
Sincerely,
Terence P. Smith
President
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THE DECLARATION MONEY MARKET FUND SCHEDULE OF INVESTMENTS - December 31, 1999
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PRINCIPAL VALUE
--------- -----
REPURCHASE AGREEMENTS --99.59%
Merrill Master Repo, 4.11%, dated 12/31/99,
due 1/03/00, repurchase price $57,121
(collateralized by U.S. Treasury Note,
11.625%, 11/15/04, market value $57,121)
(Cost $57,101) 57,101 $ 57,101
TOTAL INVESTMENTS (Cost $57,101)* -- 99.59%
Other Assets less Liabiliites, net -- 0.41% 233
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NET ASSETS -- 100.00% $ 57,334
==========
*Cost of securities for federal tax purposes is $57,101.
See notes to financial statements.
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THE DECLARATION MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
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ASSETS:
Investments, at market (identified cost $57,101) $ 57,101
Receivables:
Interest 376
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Total assets 57,477
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LIABILITIES:
Payables:
Due to advisor 66
Accrued expenses 77
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Total liabilities 143
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NET ASSETS $ 57,334
==========
NET ASSETS CONSIST OF:
Common stock (unlimited shares of no par value authorized,
57,334 shares outstanding) $ 57,334
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Net Asset Value, offering and redemption price per share $ 1.00
==========
See notes to financial statements.
<PAGE>
THE DECLARATION MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD AUGUST 3, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999
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INVESTMENT INCOME:
Interest $ 3,126
----------
Total investment income 3,126
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EXPENSES:
Investment advisory fees 185
Distribution fees 185
Service fees 363
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Total expenses 733
----------
Net investment income $ 2,393
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See notes to financial statements.
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THE DECLARATION MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD AUGUST 3, 1999 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1999
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Operations:
Net investment income $ 2,393
-----------
Net Increase in net assets resulting from operations 2,393
-----------
Distributions to shareholders from:
Net investment income (2,393)
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Capital Share Transactions (1):
Proceeds from shares sold 1,316,785
Proceeds from shares issued to holders
in reinvestment of dividends 1,414
Cost of shares redeemed (1,260,865)
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Net increase in net assets from Fund share transactions 57,334
-----------
Increase in net assets 57,334
NET ASSETS:
Beginning of period --
-----------
End of period $ 57,334
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(1) Also represents transactions in fund shares.
See notes to financial statements.
<PAGE>
THE DECLARATION MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
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Per Share Data (For a Share Outstanding from August 3, 1999 (commencement of
operations) through December 31, 1999
For the Period
August 3, 1999
(commencement of
operations) to
December 31, 1999
-----------------
NET ASSET VALUE - BEGINNING OF PERIOD $ 1.00
--------
Investment Operations:
Net investment income 0.01
--------
Total from investment operations 0.01
--------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.01)
--------
Total distributions (0.01)
--------
NET ASSET VALUE - END OF PERIOD $ 1.00
========
TOTAL RETURN 1.28%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $ 57
Ratio of expenses to average net assets 0.99%(1)
Ratio of net investment income to average net assets 3.23%(1)
(1) Annualized
See notes to financial statements.
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THE DECLARATION MONEY MARKET FUND
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NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Declaration Money Market Fund, (the "Fund") is series of the
Declaration Fund (the "Trust"). The Trust is registered under the Investment
Company Act of 1940 as an open-end diversified management investment company
originally incorporated in Pennsylvania on April 9, 1981 and registered with the
Commonwealth of Pennsylvania as a Pennsylvania Business Trust on May 16, 1990.
The Fund's investment strategy is to provide a high level of current income
consistent with the preservation of capital and liquidity. The Fund became
effective with the Securities and Exchange Commission April 30, 1999 and
commenced operations on August 3, 1999.
The following is a summary of significant accounting policies consistently
followed by the Fund.
a) Investment Valuation--Short-term instruments (those with remaining maturities
of 60 days or less) are valued at amortized cost, which approximates market.
b) Repurchase agreements--The Fund's custodian takes possession through the
Federal Reserve Book Entry System of the collateral pledged for investments in
repurchase agreements. The underlying collateral is valued daily on a
mark-to-market basis to ensure that the value, including accrued interest, is at
least equal to the repurchase price. In the event of default of the obligation
to repurchase, liquidation and/or retention of the collateral may be subject to
legal proceeding.
c) Federal income taxes--The Fund's intention is to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly no provision for Federal income taxes is required in the
accompanying financial statements.
d) Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates
2. ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
The Fund has entered into an Advisory Agreement with Declaration Investment
Advisors, Inc. (the "Advisor") to provide investment management services to the
Fund. Pursuant to the Advisory Agreement, the Advisor is entitled to receive a
fee, calculated daily and payable monthly at the annual rate of 0.25% as applied
to the Fund's daily net assets. For the period August 3, 1999 (commencement of
operations) to December 31, 1999, the Advisor received fees of $185.
<PAGE>
THE DECLARATION MONEY MARKET FUND
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NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
2. ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS (CONTINUED)
The Fund has entered into an Operating Services Agreement (the "Servicing
Agreement") with the Advisor to provide or arrange for day-to-day operational
services to the Fund. Pursuant to the Servicing Agreement, the Advisor is
entitled to receive a fee, calculated daily and payable monthly at the annual
rate of 0.49% as applied to the Fund's daily net assets. For the period August
3, 1999 (commencement of operations) to December 31, 1999 the Advisor received
fees of $363.
The Fund and the Advisor have entered into an Investment Company Services
Agreement (the "ICSA") with Declaration Service Company to provide day-to-day
operational services to the Fund including, but not limited to, accounting,
administrative, transfer agent, dividend disbursing, registrar and recordkeeping
services.
The Fund and the Advisor have entered into a Distribution Agreement with
Declaration Distributors, Inc. to provide distribution services to the Fund.
Declaration Distributors, Inc. serves as underwriter/distributor of the Fund.
The effect of the Advisory Agreement and the Servicing Agreement is to
place a "cap" on the Funds' normal operating expenses at 0.99%. The only other
expenses incurred by the Fund are distribution fees, brokerage fees, taxes, if
any, legal fees relating to Fund litigation, and other extraordinary expenses.
The Fund has adopted a Plan of Distribution under which it may finance
activities primarily intended to sell shares. Under the Plan, the Advisor,
Declaration Investment Advisors, Inc. is paid a distribution fee at an annual
rate of 0.25% of average daily net assets of the Fund for distributing shares of
the Fund and for providing certain shareholder services. For the period August
3, 1999 (commencement of operations) to December 31, 1999, the Advisor received
fees of $185.
Certain directors and officers of the Fund are directors and officers of
the Advisor.
3. CLOSURE OF FUND
On February 25, 2000 the Board of Trustees voted to close the Fund.
Currently, there were no shareholders in the Fund.
<PAGE>
REPORT OF INDEPENDENT AUDITOR
We have audited the accompanying statement of assets and liabilities of The
Declaration Money Market Fund (the "Fund"), a series of The Declaration Fund,
including the schedule of investments, as of December 31, 1999, and the related
statements of operations, the statement of changes in net assets, and the
financial highlights for the period August 3, 1999 (commencement of operations)
to December 31, 1999. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999, by
correspondence with the custodian. 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
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Declaration Money Market Fund as of December 31, 1999, and the results of its
operations, the changes in its net assets, and the financial highlights for the
period August 3, 1999 (commencement of operations) to December 31, 1999, in
conformity with generally accepted accounting principles.
Abington, Pennsylvania
February 15, 2000, except Note 3 Sanville & Company
As to which date is February 25, 2000 Certified Public Accountants
