<PAGE>
PRESIDENT'S MESSAGE
November 1995
DEAR SHAREHOLDER:
We are very pleased to present you with the Republic U.S. Government Money
Market Fund (the "Fund") annual report for the year ended September 30, 1995.
In this report, we have provided you with a detailed investment review of the
twelve-month period from Republic National Bank of New York, the Fund's
adviser.
We hope you find this letter and accompanying financial summary
informative. As always, we would be delighted to hear from you to answer any
questions you might have or to provide you with additional information.
Audited financial statements and portfolio holdings of the Fund at
September 30, 1995 follow. We look forward to serving your financial needs and
appreciate your continued support.
Respectfully submitted,
/s/ Philip W. Coolidge
Philip W. Coolidge
President
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
ANNUAL REPORT -- SEPTEMBER 30, 1995
TABLE OF CONTENTS
PAGE
----
President's Message ................................................... 1
Letter to Shareholders from Investment Adviser ........................ 3
Statement of Net Assets ............................................... 4
Statement of Operations ............................................... 6
Statement of Changes in Net Assets .................................... 7
Financial Highlights .................................................. 8
Notes to Financial Statements ......................................... 9
Report of Ernst & Young LLP, Independent Auditors ..................... 12
<PAGE>
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
November 1995
DEAR SHAREHOLDER:
It is our pleasure to present you with the annual report for the fiscal year
ended September 30, 1995.
The Federal Reserve reversed course in July when it lowered the Fed Funds
rate by one-quarter of a percentage point in an effort to head off a recession.
However, the resilience of the U.S. economy during the summer discouraged the
Federal Reserve from taking additional steps at subsequent policy meetings. Some
investors still expect the Federal Reserve to reduce interest rates at least one
more time this cycle due to the economy's improved inflation outlook and
Congressional progress on the U.S. budget.
The Republic U.S. Government Money Market Fund returned 5.27% for the fiscal
year ending September 30, 1995, compared to 5.12% for the Lipper U.S. Government
Money Market Fund Average. During the quarter, the Fund's maturity structure
remained considerably below the 90 day limit permitted by its guidelines. At
year-end, the portfolio was invested in the highest quality issues, consisting
of 48.0% U.S. Treasury Bills, 39.1% U.S. Government Repurchasing Agreements, and
13.3% U.S. Government Agencies. The Fund's annualized compound 7-day yield
through September 30, 1995 was 5.45%.
Audited financial statements and portfolio holdings at September 30, 1995
follow. We appreciate your continued support.
Respectfully submitted,
Republic National Bank of New York
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF NET ASSETS -- SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL MATURITY VALUE
AMOUNT DESCRIPTION DATE (NOTE 2)
--------- ----------- ---------- --------
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS -- (61.3% OF NET ASSETS)
<C> <C> <C>
$ 1,000,000 Federal Farm Credit Bank 5.73% ........................ 11/01/95 $ 1,000,000
1,000,000 Federal Farm Credit Bank 5.70% ........................ 12/01/95 1,000,000
3,000,000 Student Loan Marketing Assn. 6.08% .................... 07/01/96** 3,000,327
5,000,000 Student Loan Marketing Assn. 5.48% .................... 09/28/98* 4,998,438
5,000,000 Student Loan Marketing Assn. 5.48% .................... 11/10/98* 4,998,047
5,000,000 U.S. Treasury Bills 5.74% ............................. 10/19/95 4,985,650
5,000,000 U.S. Treasury Bills 5.78% ............................. 10/26/95 4,979,931
5,000,000 U.S. Treasury Bills 5.415% ............................ 10/26/95 4,981,198
5,000,000 U.S. Treasury Bills 5.41% ............................. 10/26/95 4,981,215
5,000,000 U.S. Treasury Bills 5.715% ............................ 11/16/95 4,963,487
5,000,000 U.S. Treasury Bills 5.38% ............................. 01/11/96 4,923,783
5,000,000 U.S. Treasury Bills 5.40% ............................. 01/18/96 4,918,250
5,000,000 U.S. Treasury Bills 5.405% ............................ 01/18/96 4,918,174
10,000,000 U.S. Treasury Bills 5.40% ............................. 01/18/96 9,836,500
5,000,000 U.S. Treasury Bills 5.40% ............................. 02/08/96 4,902,500
-----------
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS ................................................... 69,387,500
-----------
<PAGE>
<CAPTION>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF NET ASSETS -- SEPTEMBER 30, 1995 (CONTINUED)
PRINCIPAL VALUE
AMOUNT DESCRIPTION (NOTE 2)
--------- ----------- --------
<S> <C> <C>
REPURCHASE AGREEMENTS -- (39.1% OF NET ASSETS)
$ 5,200,000 Repurchase Agreement with Oppenheimer & Co. dated 9/29/95 due 10/2/95,
6.50% (collateralized by $5,350,000 U.S. Treasury Notes 7.125%,
due 9/30/99, repurchase proceeds of $5,202,817) ...................... $ 5,200,000
6,500,000 Repurchase Agreement with Oppenheimer & Co. dated 9/28/95 due 10/2/95,
6.50% (collateralized by $6,687,500 U.S. Treasury Notes 7.125%,
due 9/30/99, repurchase proceeds of $6,504,586) ...................... 6,500,000
9,500,000 Repurchase Agreement with Oppenheimer & Co. dated 9/27/95 due 10/2/95,
6.50% (collateralized by $9,697,500 U.S. Treasury Notes 7.50%,
due 10/31/99, repurchase proceeds of $9,508,233) ..................... 9,500,000
23,023,200 Repurchase Agreement with Yamaichi Securities dated 9/29/95 due 10/2/95,
6.45% (collateralized by $23,505,388 U.S. Treasury Bills 5.38%,
due 8/22/96, repurchase proceeds of $23,035,575) ..................... 23,023,200
------------
TOTAL REPURCHASE AGREEMENTS ............................................ 44,223,200
------------
TOTAL INVESTMENTS AT AMORTIZED COST*** ................................. 113,610,700
INTEREST RECEIVABLE ................................................................. 120,937
DIVIDENDS PAYABLE ................................................................... (439,930)
ADVISORY FEE PAYABLE (NOTE 3) ....................................................... (8,503)
ADMINISTRATIVE SERVICE FEE PAYABLE (NOTE 3) ......................................... (10,203)
DISTRIBUTION EXPENSE PAYABLE (NOTE 3) ............................................... (39,762)
OTHER ASSETS LESS LIABILITIES ....................................................... (15,197)
------------
NET ASSETS .......................................................................... $113,218,042
============
Represented by:
Paid-in capital ................................................................... $113,196,899
Undistributed net investment income ............................................... 21,143
------------
NET ASSETS -- Applicable to 113,218,042 shares of beneficial interest outstanding
(unlimited number of shares authorized) ............................... $113,218,042
============
Net Asset Value, Offering Price and Redemption Price Per Share ...................... $1.00
=====
* Variable rate notes. Interest resets weekly.
** Variable rate notes. Interest resets annually.
*** Represents the aggregate cost of securities for federal income tax purposes.
</TABLE>
See accompanying notes to financial statements
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS -- YEAR ENDED SEPTEMBER 30, 1995
Investment income (note 2) ..................................... $6,377,771
Expenses:
Advisory fee (note 3) ......................... $221,919
Transfer agent ................................ 48,010
Distribution fees (note 3) .................... 98,839
Shareholder servicing fee (note 3) ............ 99,906
Administrative services fee (note 3) .......... 221,919
Fund accounting ............................... 44,463
Audit ......................................... 16,395
Reports to shareholders ....................... 10,300
Custodian fees and expenses ................... 49,766
Legal ......................................... 5,751
Registration fees ............................. 19,499
Trustees' fees (note 3) ....................... 6,700
Insurance ..................................... 8,834
Miscellaneous ................................. 2,634
Amortization of organization expenses (note 2) 3,943
--------
Total expenses before waiver .................... 858,878
Waiver of fees (note 4) ......................... (215,883)
--------
Net expenses ............................................... 642,995
----------
Net investment income .......................................... $5,734,776
==========
See accompanying notes to financial statements
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Net investment income ........................ $ 5,734,776 $ 3,153,023
------------ ------------
Net increase in net assets resulting from
operations ................................. 5,734,776 3,153,023
------------ ------------
Dividends to shareholders from net investment
income ..................................... (5,727,567) (3,160,232)
------------ ------------
Capital share transactions at net asset value
of $1.00 per share:
Proceeds from sales of shares ............ 366,028,959 204,861,966
Net asset value of shares issued in
connection with reinvestment
of distributions ....................... 3,048,453 419,603
Cost of shares repurchased ............... (356,309,344) (178,115,402)
------------ ------------
Net increase in net assets from capital share
transactions ............................... 12,768,068 27,166,167
------------ ------------
Total Increase in Net Assets ................. 12,775,277 27,158,958
Net Assets:
Beginning of year ........................ 100,442,765 73,283,807
------------ ------------
End of year (including undistributed net
investment income of $21,143
and $28,443, respectively) ............. $113,218,042 $100,442,765
============ ============
See accompanying notes to financial statements
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of year ...... $ 1.000000 $ 1.000000 $ 1.000000 $ 1.000000 $ 1.000000
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income ................. 0.051501 0.034570 0.026678 0.037513 0.061880
---------- ---------- ---------- ---------- ----------
Total from investment operations .... 0.051501 0.034570 0.026678 0.037513 0.061880
---------- ---------- ---------- ---------- ----------
Less dividends:
Dividends to shareholders from net
investment income ................... (0.051501) (0.034570) (0.026678) (0.037513) (0.061880)
---------- ---------- ---------- ---------- ----------
Total distributions ................. (0.051501) (0.034570) (0.026678) (0.037513) (0.061880)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ............ $ 1.000000 $ 1.000000 $ 1.000000 $ 1.000000 $ 1.000000
========== ========== ========== ========== ==========
Total return ............................ 5.27% 3.51% 2.70% 3.82% 6.36%
Ratios/supplemental data:
Net assets, end of period (in 000's) .. $113,218 $100,443 $73,284 $46,499 $55,795
Ratio of expenses to average net assets* 0.58% 0.24% 0.56% 0.70% 0.70%
Ratio of net investment income to
average net assets* ................. 5.17% 3.50% 2.66% 3.76% 5.96%
- --------------------------------------------------------------------------------------------------------------------------------
* Reflects a voluntary expense limitation and waiver of fees by affiliated parties of the Fund. If this limitation and waiver
had not been in effect, the ratios of net investment income and expenses to average net assets for the years ended September
30, 1995, 1994, 1993, 1992, and 1991 would have been 4.97% and 0.78%, 3.08% and 0.67%, 2.28% and 0.93%, 3.54% and 0.91%, and
5.68% and 0.98%, respectively.
</TABLE>
See accompanying notes to financial statements
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 1995
1. DESCRIPTION AND SHARES OF THE FUND. Republic U.S. Government Money Market
Fund (the "Fund") is a separate series (portfolio) of Republic Funds (the
"Trust"), a Massachusetts business trust organized on April 22, 1987,
which currently consists of six portfolios, each of which has different
investment objectives and policies. The financial statements for five of
the portfolios are presented separately. The Fund's investment objective
is liquidity and high income consistent with preservation of capital. The
Declaration of Trust permits the Trustees to create additional portfolios.
The Trust is registered under the Investment Company Act of 1940, as
amended, (the "Act"), as an open-end, diversified management investment
company.
The Trust retains Republic National Bank of New York (formerly
Republic Asset Management Corporation) ("Republic") as Investment Adviser
("Adviser") and Signature Broker-Dealer Services, Inc. ("Signature") as
Administrator, Distributor and Sponsor ("Sponsor").
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the Fund's
significant accounting policies:
(A) Security Valuation. Money market instruments are valued at
amortized cost, which the Trustees have determined in good faith
constitutes fair value. The Fund's use of amortized cost is subject to
compliance with certain conditions as specified under Rule 2a-7 of the
Act.
(B) Security Transactions and Investment Income. Investment
transactions are accounted for on the trade date. Interest income is
accrued as earned. Identified cost of investments sold is used to
calculate gains and losses for both financial statement and federal income
tax purposes.
(C) Expense Allocation. The Fund bears all costs of its operations
other than expenses specifically assumed by the Adviser or Sponsor.
Expenses directly attributable to the Fund are charged to the Fund.
Expenses incurred by the Trust with respect to any two or more of the
Trust's six portfolios are allocated in proportion to the net asset levels
of each portfolio, except where allocations of direct expenses to each
portfolio can otherwise be made fairly.
(D) Organization Expenses. Costs incurred in connection with the
organization and initial registration of the Fund have been deferred and
are being amortized on a straight-line basis over a five-year period
beginning with the commencement of operations for the Fund. At September
30, 1995, all organization expenses of the Fund were fully amortized.
(E) Federal Income Taxes. The Fund is treated as a separate taxable
entity for federal tax purposes. The Fund has qualified and intends to
continue to qualify as a "regulated investment company" under Subchapter M
of the Internal Revenue Code, as amended, and to distribute substantially
all of its taxable income, including any net realized gains, to its
shareholders. Accordingly, no provision for federal income or excise tax
is required.
(F) Distributions to Shareholders. Dividends and Distributions to
shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for amortizing organization expenses.
Permanent book and tax differences relating to shareholder
distributions will result in reclassifications to paid-in capital.
Undistributed net investment income may include temporary book and tax
differences which will reverse in a subsequent period. Any taxable gain or
income remaining at fiscal year end is distributed in the following year.
(G) Repurchase Agreements. The Fund's custodian takes possession,
through the Federal book-entry system, of securities collateralizing
repurchase agreements. Collateral is marked-to-market daily to ensure that
the market value of the underlying assets remains sufficient to protect
the Fund in the event of default by the seller. In connection with
transactions in repurchase agreements, if the seller defaults and the
collateral declines in value, or if the seller enters an insolvency
proceeding, realization of the collateral by the Fund may be limited or
delayed.
3. ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
(A) Advisory Fees. The Fund retains Republic to act as Investment
Adviser. Republic is responsible for the investment management of the
Fund's assets, including the responsibility for making investment
decisions and placing orders for the purchase and sale of the Fund's
investments directly with the issuers or with brokers or dealers selected
by it in its discretion. Republic also furnishes to the Board of Trustees,
which has overall responsibility for the business affairs of the Trust,
periodic reports on the investment performance of the Fund. For its
services as investment adviser, Republic receives from the Fund a fee,
payable monthly, at the annual rate of 0.20% of average daily net assets.
During the year ended September 30, 1995, the advisory fee was $221,919,
of which $110,959 was waived (note 4).
(B) Administration. The Fund retains Signature to serve as
Administrator, Distributor and Sponsor. Signature provides management and
administrative services necessary for the operation of the Fund, furnishes
office space and facilities required for conducting the business of the
Fund and pays the compensation of the Fund's officers. For these services,
Signature receives from the Fund a fee, payable monthly, at the annual
rate of 0.20% of the Fund's average daily net assets. During the year
ended September 30, 1995, the administration fee was $221,919 of which
$104,924 was waived (note 4).
(C) Rule 12b-1 Plan Expenses. The Fund has adopted a noncompensatory
Distribution Plan and Agreement (the "Plan") pursuant to Rule 12b-1 of the
Act. The Plan provides for a monthly payment by the Fund to the Sponsor in
amounts representing actual expenses incurred by the Sponsor for marketing
costs and services rendered in distributing Fund shares at a rate not to
exceed 0.25% of the average daily net assets of the Fund. During the year
ended September 30, 1995, the Fund reimbursed Signature for distribution
expenses of $98,839.
(D) Shareholder Servicing Expenses. The Fund has entered into a
Shareholder Servicing Agreement with each shareholder servicing agent
pursuant to the Administrative Services Plan. Each shareholder servicing
agent receives a fee from the Fund, which may be paid periodically,
determined by a formula based upon the number of accounts serviced, the
level of activity in such accounts and the expenses incurred by the
shareholder servicing agent. It is currently intended that the aggregate
fees paid to the Distributor pursuant to the Plan and to shareholder
servicing agents pursuant to the Administrative Services Plan will not
exceed 0.20% per annum of the Fund's average daily net assets. During the
year ended September 30, 1995, shareholder servicing fees were $99,906.
(E) Trustees' Fees. The fees paid and the amount of out-of-pocket
expenses reimbursed to the Trustees amounted to $6,700 for the year ended
September 30, 1995.
4. WAIVER OF FEES. The Adviser and Sponsor have voluntarily agreed to waive
a portion of their fees. There can be no assurance that fees will be
waived in the future. For the year ended September 30, 1995, the Adviser
and Sponsor waived fees aggregating $215,883.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Trustees of Republic Funds:
We have audited the accompanying statement of net assets of Republic U.S.
Government Money Market Fund (the "Fund", one of the portfolios constituting
Republic Funds, the "Trust") as of September 30, 1995, the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended and the financial highlights for
each of the four years in the period then ended. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the year
ended September 30, 1991 were audited by other auditors whose report dated
November 25, 1991, expressed an unqualified opinion on those financial
highlights.
We conducted our audits 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 the amounts and disclosures in the financial
statements. Our procedures included confirmaton of securities owned as of
September 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Republic U.S. Government Money Market Fund of Republic Funds at September 30,
1995, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the four years in the period then ended, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Boston, Massachusetts
November 10, 1995
<PAGE>
- ---------------
REPUBLIC
US GOVERNMENT
MONEY MARKET
FUND
INVESTMENT ADVISER
Republic National Bank of New York
452 Fifth Avenue
New York, NY 10018
ADMINISTRATOR, DISTRIBUTOR AND SPONSOR
Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, MA 02116
CUSTODIAN AND TRANSFER AGENT
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
INDEPENDENT AUDITORS
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
LEGAL COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
SHAREHOLDER SERVICING AGENTS:
Republic National Bank of New York
Republic Bank for Savings
452 Fifth Avenue
New York, NY 10018
(800) 522-5214
FOR NON-REPUBLIC CLIENTS:
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
(800) 782-8183
---------------
REPUBLIC
U.S. GOVERNMENT
MONEY MARKET
FUND
ANNUAL REPORT
SEPTEMBER 30, 1995
