<PAGE>
PRESIDENT'S MESSAGE
June 1996
Dear Shareholder:
We are very pleased to present you with the Republic Equity Fund (the
"Fund") semi-annual report for the six months ended April 30, 1996. In this
report we have provided you with a letter from the Fund's Investment Manager,
Republic National Bank of New York.
We hope you find this letter and accompanying financial summaries
informative and as always we would be delighted to hear from you to answer any
questions you might have or provide you with additional information.
Financial statements and portfolio holdings of the Fund for the six months
ended April 30, 1996 also follow. We look forward to servicing your financial
needs and appreciate your continued support.
Respectfully submitted,
/s/ Philip W. Coolidge
Philip W. Coolidge
President
<PAGE>
LETTER TO SHAREHOLDERS FROM INVESTMENT MANAGER
June 1996
DEAR SHAREHOLDER:
We are pleased to present the semi-annual report for the Republic Equity
Fund covering the six months ending April 30, 1996. The performance of the
Fund was gratifying as US stocks continued to post impressive advances. For
the six month period, the Fund produced a total return of 12.60%, compared to
14.13% for the Lipper Growth & Income Fund Index and 14.24% for the Russell
1000 Value Index.
The period began with expectations of further easings by the Federal
Reserve to stimulate what appeared to be a softening US economy. While the Fed
did lower short-term rates by 25 basis points in December 1995 and an
additional 25 basis points in January 1996, subsequently released economic
reports were brighter than expected, reducing fears of a recession and the
prospects for further Fed easings.
We anticipate that the US equity market has further upside potential in
1996 as inflation trends continue to be constructive and corporate earnings
remain reasonably strong. The portfolio maintains its fully invested position
and is structured with holdings that we believe offer attractive outlooks at
good valuations. As of April 30, 1996 the Fund's portfolio held 45 companies.
The top sector weightings were approximately 24% Consumer NonCyclicals, 24%
Financials, 11% Technology and Communications, and 10% Energy.
The Republic Equity Fund maintains its goal to invest in companies which
are most able to produce superior earnings gains for the next several years.
We are confident that this emphasis on long term value will continue to serve
our shareholders well.
We thank you for your continued support.
Sincerely,
Republic National Bank
Standardized Total Returns
Since
As of March 31, 1996 Inception*
- ------------------------------ --------
Republic Equity Fund 15.90%
Lipper Growth & Income Fund Index 14.85%
Russell 1000 Value Index 18.39%
*August 1, 1995
Lipper Growth & Income Fund Index: is an equally weighted index composed of
the 30 largest mutual funds in this universe.
Russell 1000 Value Index: contains stocks from the Russell 1000 index with
less than average growth orientation. The Russell 1000 Value Index represents
the universe of stocks from which Value managers typically select.
As with any fund, the performance data quoted represents past performance and
is no guarantee of future results.
<PAGE>
REPUBLIC EQUITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
APRIL 30, 1996
SHARES DESCRIPTION VALUE
------ ----------- -----------
COMMON STOCK -- 96.4%
AEROSPACE & AIRCRAFT -- 1.9%
7,600 Boeing Company ....................... $ 624,150
-----------
AUTOMOTIVE -- 9.9%
30,700 Cooper Tire & Rubber Company .......... 752,150
18,200 General Motors Corporation ............ 987,350
24,700 Genuine Parts ......................... 1,092,975
8,800 Goodyear Tire & Rubber Company ........ 458,700
-----------
3,291,175
-----------
BANKING -- 13.4%
31,600 Ahmanson (H.F.) & Company ............. 750,500
8,800 BankAmerica Corporation ............... 666,600
8,300 Chase Manhattan Corporation ........... 571,663
13,000 Comerica Incorporated ................. 565,500
12,400 First Chicago NBD Corporation ......... 511,500
10,300 First Union Corporation (N.E.) ........ 633,450
31,500 Great Western Financial ............... 724,500
-----------
4,423,713
-----------
CHEMICALS -- 4.6%
10,900 Dow Chemical Company .................. 968,738
12,500 Union Carbide Corporation ............. 568,750
-----------
1,537,488
-----------
COMMUNICATION -- 7.1%
17,800 AT&T Corporation ...................... 1,090,250
1,400 Lucent Technologies ................... 49,175
41,600 MCI Corporation ....................... 1,224,600
-----------
2,364,025
-----------
CONSUMER PRODUCTS -- 7.8%
18,100 American Brands Incorporated .......... 753,413
15,500 ConAgra Incorporated .................. 598,688
26,300 RJR Holdings Group Incorporated ....... 785,712
9,300 Tambrands Incorporated ................ 445,238
-----------
2,583,051
-----------
DRUGS -- 5.1%
15,100 SmithKline Beecham .................... 815,400
7,900 Warner Lambert Company ................ 882,825
-----------
1,698,225
-----------
ELECTRICAL EQUIPMENT -- 4.2%
16,500 Emerson Electric ...................... 1,379,813
-----------
FOOD & BEVERAGES -- 2.5%
11,000 Hershey Foods Corporation ............. 834,625
-----------
FOREST PRODUCTS -- 5.6%
35,500 James River Corporation of Virginia ... 949,625
12,558 Kimberly-Clark Corporation ............ 912,025
-----------
1,861,650
-----------
INDUSTRIAL MACHINERY -- 2.4%
20,700 Deere (John) & Company ................ 804,713
-----------
INSURANCE -- 10.6%
12,600 Aetna Life & Casualty ................. 897,750
4,100 CIGNA Corporation ..................... 464,837
7,500 Chubb Corporation ..................... 709,687
17,700 Safeco Corporation .................... 584,100
11,300 Transamerica Corporation .............. 858,800
-----------
3,515,174
-----------
OIL & GAS -- 9.6%
11,900 Amoco Corporation ..................... 868,700
11,300 Chevron Corporation ................... 655,400
16,700 Coastal Corporation ................... 661,738
55,000 Mobil Corporation ..................... 632,500
12,000 Ultramar Corporation .................. 376,500
-----------
3,194,838
-----------
RETAIL -- 3.7%
7,800 Sears Roebuck & Company ............... 389,025
25,700 Supervalu Incorporated ................ 822,400
-----------
1,211,425
-----------
TECHNOLOGY -- 4.3%
10,900 General Motors, Class E ............... 614,486
7,700 Hewlett-Packard Incorporated .......... 815,238
-----------
1,429,724
-----------
UTILITIES -- 3.7%
19,500 Baltimore Gas & Electric .............. 514,311
13,400 CINergy Corporation ................... 388,600
10,300 DTE Energy Company .................... 319,300
-----------
1,222,211
-----------
TOTAL COMMON STOCK (Cost $29,290,543) 31,976,000
-----------
SHORT-TERM INVESTMENTS -- 3.7%
Principal
Amount
------
$1,218,459 Investors Bank & Trust Invest Cash, 4.75%
TOTAL SHORT-TERMINVESTMENTS
(Cost $1,218,459) ................... 1,218,459
-----------
TOTAL INVESTMENTS -- 100.1%
(Cost $30,509,002)(a).................................... 33,194,459
LIABILITIES LESS OTHER ASSETS -- (0.1%) ................... (14,671)
-----------
NET ASSETS -- 100.0% ...................................... $33,179,788
===========
(a) The aggregate identified cost for federal income tax purposes is
$30,509,002 resulting in gross unrealized appreciation and depreciation of
$2,937,920 and $252,463, or net unrealized appreciation of $2,685,457.
See accompanying notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1996
ASSETS:
Investment at value (cost $30,509,002) (note 2) .. $33,194,459
Dividends receivable ............................. 36,023
Interest receivable .............................. 5,080
Deferred organization expense (note 2) ........... 23,364
-----------
Total Assets ............................. 33,258,926
-----------
LIABILITIES:
Subadvisory fees payable (note 3) ................ 31,939
Distribution expenses payable (note 3) ........... 1,355
Accrued expenses and other liabilities ........... 45,844
-----------
Total Liabilities ........................ 79,138
-----------
NET ASSETS FOR 2,896,559 SHARES OF BENEFICIAL
INTEREST OUTSTANDING (UNLIMITED NUMBER OF
SHARES AUTHORIZED) ............................. $33,179,788
===========
NET ASSETS CONSIST OF:
Paid-in capital .................................. $30,178,246
Undistributed net investment income .............. 14,853
Accumulated net realized gain on investments ..... 301,232
Net unrealized appreciation on investments ....... 2,685,457
-----------
Total .................................... $33,179,788
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE .......................................... $11.45
======
See accompanying notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 1996
INVESTMENT INCOME (NOTE 2):
Dividend income ........................................... $ 353,280
Interest income ........................................... 31,809
----------
Total investment income ............................. 385,089
EXPENSES (NOTE 2):
Sub-Advisory fees (note 3) .................... $ 45,239
Distribution expenses and shareholder service
fees (note 3) ............................... 34,799
Registration fees ............................. 30,007
Administration fees (note 3) .................. 27,839
Investment Management fees (note 3) ........... 24,360
Fund accounting fees .......................... 17,783
Transfer agent fees ........................... 14,568
Custodian fees and expenses ................... 12,655
Printing ...................................... 12,594
Audit ......................................... 11,626
Trustees' fees and expenses (note 3) .......... 4,315
Amortization of organization expenses (note 2) 2,280
Legal ......................................... 1,500
Insurance ..................................... 750
Other expenses ................................ 2,990
--------
Total expenses .......................... 243,305
Less: waiver of fees (note 3) ........... (62,547)
--------
Net expenses ........................................ 180,758
----------
NET INVESTMENT INCOME ...................................... 204,331
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions .............. 308,682
Net change in unrealized appreciation of investments ........ 2,531,099
----------
Net realized and unrealized gain on investments ............. 2,839,781
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ $3,044,112
==========
See accompanying notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE PERIOD
SIX MONTHS AUGUST 1, 1995
ENDED (COMMENCEMENT
APRIL 30, 1996 OF OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1995
------------------ --------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ............... $ 204,331 $ 55,623
Net realized gain (loss) from
investment transactions ........... 308,682 (7,450)
Net change in unrealized appreciation 2,531,099 154,358
----------- -----------
Net increase in net assets resulting
from operations ................... 3,044,112 202,531
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income ............... (199,755) (45,346)
----------- -----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Proceeds from sales of shares ....... 8,743,735 21,934,564
Net asset value of shares issued
in reinvestment of dividends ...... 4,874 651
Cost of shares redeemed ............. (505,578) --
----------- -----------
Net increase in net assets resulting
from capital share transactions ... 8,243,031 21,935,215
----------- -----------
NET INCREASE IN NET ASSETS .......... 11,087,388 22,092,400
NET ASSETS:
Beginning of period ................. 22,092,400 0
----------- -----------
End of period (including undistributed
net investment income of $14,853
and $10,277, respectively) ........ $33,179,788 $22,092,400
=========== ===========
ANALYSIS OF FUND SHARE TRANSACTIONS:
Shares sold ......................... 784,472 2,157,192
Issued in reinvestment of
dividends ........................... 426 63
Shares redeemed ..................... (45,594) 0
----------- -----------
Net increase in shares
outstanding ......................... 739,304 2,157,255
=========== ===========
See accompanying notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR THE FOR THE PERIOD
SIX MONTHS AUGUST 1, 1995
ENDED (COMMENCEMENT
APRIL 30, 1996 OF OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1995
---------- ------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
Net asset value, beginning of period ... $10.24 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................ 0.08 0.04
Net realized and unrealized gain on
investments ........................ 1.21 0.24
------ ------
Total from investment operations ... 1.29 0.28
------ ------
Less dividends from:
Net investment income ................ (0.08) (0.04)
------ ------
Total from dividends ............... (0.08) (0.04)
------ ------
Net asset value, end of period ......... $11.45 $10.24
====== ======
Total return ........................... 12.60%(a) 2.75%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) . $33,180 $22,092
Ratio of expenses to average net
assets (b) ......................... 1.30%(c) 1.47%(c)
Ratio of net investment income to
average net assets (b) ............. 1.47%(c) 1.59%(c)
Portfolio turnover (%) ............... 24%(a) 2%
Average commission rate paid per share $0.0572 --
- ------------------------------------------------------------------------------
(a) Not annualized.
(b) Reflects a voluntary expense limitation and waiver of fees by affiliated
parties of the Fund. If this limitation had not been in effect, the
annualized ratios of expenses and net investment income to average net
assets for the six months ended April 30, 1996 and the period August 1, 1995
(commencement of operations) to October 31, 1995 would have been:
Ratio of expenses to average net assets 1.74%(c) 2.44%(c)
Ratio of net investment income to
average net assets ................. 1.03%(c) 0.62%(c)
(c) Annualized.
See accompanying notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 1996 (UNAUDITED)
1. DESCRIPTION AND SHARES OF THE FUND. Republic Equity Fund (the "Fund") is a
diversified separate series (portfolio) of the Republic Funds (the "Trust"),
a Massachusetts business trust organized on April 22, 1987, which currently
consists of six portfolios, each of which has different and distinct
investment objectives and policies. The Fund commenced operations on August
1, 1995. The financial statements for the other five portfolios are
presented separately. 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 Fund's objective is to provide
shareholders of the Fund with long-term growth of capital and income without
excessive fluctuations in market value.
The Trust retains Republic National Bank of New York ("Republic" or
the "Manager") as the Investment Manager. Lord, Abbett & Co. ("Lord
Abbett" or the "Sub-Adviser") continuously manages the investment
portfolio of the Fund. Signature Broker-Dealer Services, Inc. ("Signature"
or the "Distributor" or the "Sponsor") acts as Administrator, Distributor,
and Sponsor.
2. SIGNIFICANT ACCOUNTING POLICIES. 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. The following is a summary of the Fund's significant accounting
policies:
(A) Security Valuation. The value of each security is based either on
the last sale price on a national securities exchange, or, in the absence
of recorded sales, at the closing bid price on such exchanges, or at the
quoted bid price in the over-the-counter market. Debt securities are
valued by a pricing service which determines valuations based upon market
transactions for normal, institutional-size trading units of similar
securities. Securities or other assets for which market quotations are not
readily available are valued at fair value in accordance with procedures
established by the Board of Trustees. All debt portfolio securities with a
remaining maturity of less than 60 days are valued at amortized cost,
which approximates market value.
(B) Security Transactions and Investment Income. Securities
transactions are recorded on a trade date basis. Securities gains or
losses are determined on the identified cost basis. Dividend income is
recorded on the ex-dividend date. Interest income, including original
issue discount, where applicable, is recorded on the accrual basis.
(C) Federal Income Taxes. The Fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code, as amended (the "Code"). By so qualifying, the Fund will be exempt
from regular federal income taxes to the extent that it distributes
substantially all of its net investment income and net realized capital
gains to its shareholders. As of April 30, 1996, the Fund had approximate
net tax basis capital loss carryforwards, which may be applied against any
net taxable gains, of $7,450 which expire in 2003.
(D) Dividends and Distributions. Dividends substantially equal to all
of the Fund's net investment income earned are distributed quarterly to
Fund shareholders of record. Unless a shareholder elects to receive
dividends in cash, dividends are reinvested in additional shares of the
Fund.
The Fund's net realized short-term and long-term capital gains, if
any, are distributed to shareholders annually. Additional distributions
are also made to the Fund's shareholders to the extent necessary to avoid
application of the 4% non-deductible federal excise tax on certain
undistributed net investment income and net capital gains, if any.
(E) 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 level
of each portfolio, except where allocations of direct expenses to each
portfolio can otherwise be made fairly.
(F) 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. The amount of
such cost aggregated $25,952.
3. TRANSACTIONS WITH AFFILIATES.
(A) Investment Manager. Republic serves as investment manager to the
Fund. Republic 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
Manager, Republic receives a fee payable monthly, at the annual rate of
0.175% of the Fund's average daily net assets. For the six months ended
April 30, 1996, investment management fees aggregated $24,360, of which
the entire amount was waived.
(B) Sub-Adviser. Lord Abbett manages the investment portfolio of the
Fund, subject to the supervision of the Investment Manager, pursuant to a
Sub-Advisory Agreement with the Manager. Lord Abbett 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. For its services
as Sub-Adviser, Lord Abbett receives a fee computed daily, at the annual
rate of 0.325% of the Fund's average daily net assets up to $50 million,
0.25% of net assets over $50 million up to $100 million, 0.20% of the net
assets over $100 million up to $200 million, and 0.15% of net assets over
$200 million. For the six months ended April 30, 1996, Sub-Advisory fees
aggregated $45,239.
(C) Administration. The Trust retains Signature to serve as
Administrator. Signature provides management and administrative services
necessary for the operation of the Fund, furnishes office space and
facilities required for conducting business of the Fund and pays the
compensation of the Fund's officers.
Pursuant to an Administrative Services Contract, Signature receives
from the Fund a fee, payable monthly, at an annual rate of 0.20% of the
first $100 million of the Fund's average daily net assets; 0.17% of the
next $100 million of such assets; 0.13% of the next $300 million of such
assets; and 0.10% of such assets in excess of $500 million. During the six
months ended April 30, 1996, the total administration fees aggregated
$27,839, of which $16,532 was waived.
(D) Distribution expenses and Shareholder Service Fees. The Trust has
adopted a non-compensatory Distribution Plan and Agreement (the "Plan")
pursuant to Rule 12b-1 of the Act. Pursuant to the Plan, Signature, the
distributor is reimbursed by the Fund for marketing costs and services
rendered in distributing the Fund. The Fund has also entered into a
shareholder servicing agreement pursuant to which shareholder servicing
agents may be paid for certain services provided to its customers. It is
currently intended that distribution expenses and shareholder service fees
in the aggregate not exceed, on an annual basis, 0.25% of average daily
net assets which, for the six months ended April 30, 1996, totaled
$34,799. Of this amount Signature was reimbursed $11,092 for distribution
expenses, $2,052 was paid to unaffiliated shareholder servicing agents and
the balance of $21,655 was waived.
(E) Trustees' Fees. The fees paid and the amount of out-of-pocket
expenses reimbursed to the Trustees amounted to $4,315 for the six months
ended April 30, 1996.
4. INVESTMENT TRANSACTIONS. Purchases and proceeds from sales and maturities of
investments excluding short-term securities for the Fund for the six months
ended April 30, 1996 were $14,688,066 and $6,524,371, respectively.
5. SUBSEQUENT EVENT. On January 15, 1996, the Trustees approved a Multiple
Class Plan pursuant to Rule 18f-3 under the 1940 Act, pursuant to which the
Fund is authorized to issue two classes of shares, Class C shares and Class
Y shares, effective May 22, 1996. The existing shares of the Fund have been
designated as Class C shares. The Class C shares are subject to the terms of
the Distribution and Administration Services Plans previously adopted by the
Board pursuant to Rule 12b-1 under the 1940 Act for the existing shares of
the Fund.
<PAGE>
- -----
REPUBLIC
EQUITY
FUND
INVESTMENT ADVISER
Republic National Bank of New York
452 Fifth Avenue
New York, NY 10018
SUB-ADVISER
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
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
KPMG Peat Marwick LLP
99 High Street
Boston, MA 02110
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) 782-8183
FOR NON-REPUBLIC CLIENTS:
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
(800) 782-8183
- -----
REPUBLIC
EQUITY
FUND
SEMI-ANNUAL REPORT
APRIL 30, 1996
