<PAGE>
REPUBLIC
U.S. GOVERNMENT
MONEY MARKET
FUND
INVESTMENT ADVISER
Republic National Bank of New York
452 Fifth Avenue
New York, NY 10018
ADMINISTRATOR, DISTRIBUTOR AND SPONSOR
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, OH 43219
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) 522-5214
FOR NON-REPUBLIC CLIENTS:
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
(800) 782-8183
11/96
REPUBLIC
U.S. GOVERNMENT
MONEY MARKET
FUND
ANNUAL REPORT
SEPTEMBER 30, 1996
<PAGE>
PRESIDENT'S MESSAGE
November 1996
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, 1996.
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.
We look forward to serving your financial needs and appreciate your
continued support.
Respectfully submitted,
/s/ George O. Martinez
George O. Martinez
President
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
ANNUAL REPORT -- SEPTEMBER 30, 1996
TABLE OF CONTENTS
PAGE
----
President's Message ...................................................... 1
Letter to Shareholders from Investment Adviser ........................... 3
Statement of Net Assets .................................................. 4
Statement of Operations .................................................. 6
Statements of Changes in Net Assets ...................................... 7
Financial Highlights ..................................................... 8
Notes to Financial Statements ............................................ 10
Report of KPMG Peat Marwick LLP, Independent Auditors .................... 13
THIS MATERIAL MUST BE ACCOMPANIED OR PRECEDED BY A PROSPECTUS FOR THE REPUBLIC
U.S. GOVERNMENT MONEY MARKET FUND.
SHARES OF THE FUND ARE NOT DEPOSITS, OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, REPUBLIC NATIONAL BANK OF NEW YORK OR ANY OF ITS AFFILIATES, AND SHARES
ARE NOT FEDERALLY INSURED BY THE FDIC OR ANY OTHER AGENCY.
<PAGE>
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
November 1996
DEAR SHAREHOLDER:
We are pleased to present you with the annual report for the Republic U.S.
Government Money Market Fund(1) for the fiscal year ended September 30, 1996.
Uncertainty over the direction of interest rates prevailed throughout much
of the year, which began with signs of a softening U.S. economy and expectations
of Fed easing. In contrast, the fiscal third quarter experienced a rapid 4.7%
annualized economic growth (GDP) rate coupled with fears of Fed tightening. The
fiscal fourth quarter showed signs of moderation as GDP growth slowed to a more
normalized rate of 2.2%.
As the fiscal year-end approached, the Federal Reserve declined to raise
interest rates at its August and September policy meetings, in light of the
slowing growth rate of the economy and stable inflation. This has resulted in
mounting market expectation that the Federal Reserve will leave the Fed Funds
rate unchanged at 5.25%, for at least the next few months, as signs indicate
the economy will continue on a healthy and balanced course of low unemployment
and low inflation.
The Republic U.S. Government Money Market Fund returned 4.98%(2) (Class C
Shares) for the fiscal year ended September 30, 1996, compared to 4.84% for the
Lipper U.S. Government Money Market Fund Average(3) . For the period from
inception of the Fund's current objective (February 1, 1994), the Fund
outperformed the average annual return for comparable funds ranked by Lipper
Analytical Services, returning 4.78%(4) (Class C Shares) versus 4.59%.
During the quarter, the Fund's maturity structure was extended from 50 days
to 80 days, in view of a continuing environment of stable interest rates. As of
September 30, 1996, the ratings on the portfolio holdings were AAA, consisting
of 61% U.S. Treasury bills and notes, 25% U.S. Agencies and 14% Repurchase
Agreements.(5) The Fund's annualized compounded 7 day yield through September
30, 1996, was 4.73%(6) for Class C Shares and 4.93%(6) for Class Y Shares.
Audited financial statements and portfolio holdings as of September 30,
1996 follow. We appreciate your continued support.
Sincerely,
Republic National Bank of New York
- ----------
(1) An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund will be able to maintain
a stable net asset value of $1 per share.
(2) Total return for Class Y Shares for the fiscal year ended September 30, 1996
is 5.03%. This represents total return for Class C Shares for the period
from October 1, 1995 to June 30, 1996 plus the total return for the Class Y
Shares for the period from July 1, 1996 to September 30, 1996.
(3) The Lipper U.S. Government Money Market Fund Average measures the
performance of funds which invest principally in financial instruments
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities with dollar-weighted average maturities of less than 90
days.
(4) Total return for Class Y Shares for the period from inception of the Fund's
current objective (February 1, 1994) to September 30, 1996 was 4.80%. This
represents total return for Class C Shares for the period from February 1,
1994 to June 30, 1996 plus the total return for the Class Y Shares for the
period from July 1, 1996 to September 30, 1996.
(5) Portfolio composition is subject to change.
(6) Past performance is not predictive of future performance as yields on money
market funds fluctuate daily. Some of the fees of the Fund are currently
being waived, resulting in higher yields in the Fund than would occur if
full fees were charged. If full fees had been charged, the 7 day yield for
Class C Shares and Class Y Shares would have been 4.55% and 4.75%,
respectively, for the year ended September 30, 1996.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF NET ASSETS -- SEPTEMBER 30, 1996
PRINCIPAL MATURITY VALUE
AMOUNT DESCRIPTION DATE (NOTE 2)
--------- ----------- -------- --------
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS -- (86.0% OF NET ASSETS)
$ 1,000,000 Federal Farm Credit Bank 5.45% ....... 11/01/96 $ 1,000,000
1,000,000 Federal Farm Credit Bank 5.34% ....... 12/02/96 1,000,000
5,000,000 Federal Farm Credit Bank 5.53%** ..... 11/03/97 4,997,450
5,000,000 Federal Farm Credit Bank 5.53%** ..... 11/03/97 4,996,850
5,000,000 Federal Home Loan Bank 5.59% ......... 10/16/96 5,000,281
5,000,000 Federal Home Loan Bank 4.86% ......... 02/07/97 4,973,438
400,000 Student Loan Marketing Assn. 5.72%* .. 01/23/97 400,109
5,000,000 Student Loan Marketing Assn. 5.46%* .. 02/13/97 5,000,000
3,000,000 Student Loan Marketing Assn. 5.67%* .. 01/21/98 3,001,901
5,000,000 Student Loan Marketing Assn. 5.51%* .. 09/28/98 4,998,438
5,000,000 Student Loan Marketing Assn. 5.51%* .. 11/10/98 4,998,047
5,000,000 Student Loan Marketing Assn. 5.51%* .. 11/10/98 4,988,281
5,000,000 Student Loan Marketing Assn. 5.53%* .. 01/13/99 4,982,770
10,000,000 Student Loan Marketing Assn. 5.54%* .. 08/02/99 9,954,100
35,000,000 U.S. Treasury Bills 5.04% ............ 10/17/96 34,921,678
5,000,000 U.S. Treasury Bills 5.10% ............ 10/31/96 4,978,771
5,000,000 U.S. Treasury Bills 5.10% ............ 10/31/96 4,978,750
10,000,000 U.S. Treasury Bills 5.14% ............ 11/29/96 9,915,761
5,000,000 U.S. Treasury Bills 5.33% ............ 12/05/96 4,951,882
5,000,000 U.S. Treasury Bills 5.36% ............ 01/02/97 4,930,766
5,000,000 U.S. Treasury Bills 5.35% ............ 01/02/97 4,930,896
5,000,000 U.S. Treasury Bills 5.12% ............ 02/13/97 4,904,000
5,000,000 U.S. Treasury Bills 5.37% ............ 03/06/97 4,883,758
5,000,000 U.S. Treasury Bills 5.32% ............ 03/13/97 4,879,674
15,000,000 U.S. Treasury Bills 5.17% ............ 03/13/97 14,648,871
10,000,000 U.S. Treasury Bills 5.26% ............ 03/20/97 9,751,847
15,000,000 U.S. Treasury Bills 5.28% ............ 03/20/97 14,626,354
15,000,000 U.S. Treasury Bills 5.27% ............ 03/20/97 14,626,708
10,000,000 U.S. Treasury Bills 5.30% ............ 03/20/97 9,749,722
5,000,000 U.S. Treasury Notes 7.25% ............ 11/15/96 5,010,452
-----------
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS ............................. 212,981,555
-----------
Continued
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF NET ASSETS -- SEPTEMBER 30, 1996 (CONTINUED)
PRINCIPAL VALUE
AMOUNT DESCRIPTION (NOTE 2)
--------- ----------- --------
REPURCHASE AGREEMENTS -- (14.1% OF NET ASSETS)
$35,058,800 Repurchase Agreement with Yamaichi Securities
dated 9/30/96 due 10/01/96, 5.70%, repurchase
proceeds of $35,064,351 (collateralized by
$33,500,000 U.S. Treasury Notes 7.88%, dated
8/15/91 due 8/15/01, market value of
$35,789,356) ..................................... $ 35,058,800
------------
TOTAL INVESTMENTS AT AMORTIZED COST*** ........... 248,040,355
INTEREST RECEIVABLE ........................................... 719,889
DIVIDENDS PAYABLE ............................................. (851,406)
SHAREHOLDER SERVICES FEE PAYABLE (CLASS C) (NOTE 3) ........... (46,376)
DISTRIBUTION EXPENSE PAYABLE (CLASS C) (NOTE 3) .............. (46,376)
OTHER ASSETS LESS LIABILITIES ................................. (34,212)
------------
NET ASSETS .................................................... $247,781,874
============
Represented by:
Paid-in capital ............................................. $247,758,104
Undistributed net investment income ......................... 23,770
-----------
NET ASSETS .................................................... $247,781,874
============
NET ASSETS
Class C Shares -- Applicable to 246,368,496 shares of
beneficial interest outstanding ........................... $246,368,496
Class Y Shares -- Applicable to 1,413,378 shares of
beneficial interest outstanding ........................... 1,413,378
------------
$247,781,874
============
Net Asset Value, Offering Price and Redemption Price Per
Share (Class C Shares and Class Y Shares) ................... $1.00
=====
* Variable rate notes. Interest rate resets weekly.
** Variable rate notes. Interest rate resets monthly.
*** Represents the aggregate cost of securities for federal income tax
purposes.
See notes to financial statements.
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS -- YEAR ENDED SEPTEMBER 30, 1996
INVESTMENT INCOME:
Investment income (Note 2) .................................... $9,735,670
EXPENSES:
Investment advisory fees (Note 3) ................. $ 365,782
Administrative services fees Class C and Class Y
(Note 3) ........................................ 365,782
Distribution fees (Class C) (Note 3) .............. 22,415
Shareholder servicing fees (Class C) (Note 3) ..... 338,000
Transfer agent fees................................ 62,722
Fund accounting fees .............................. 41,944
Audit fees ........................................ 16,769
Reports to shareholders ........................... 15,118
Custodian fees and expenses ....................... 69,284
Registration fees ................................. 44,790
Trustees' fees (Note 3) ........................... 8,025
Insurance expense ................................. 13,449
Other expenses .................................... 2,276
---------
Total expenses .................................. 1,366,356
Voluntary fee reductions (Note 3) ................... (331,674)
---------
Net expenses ................................................ 1,034,682
----------
Net investment income ........................................... 8,700,988
----------
REALIZED GAINS ON INVESTMENTS:
Net realized gains on investments ............................. 27,879
----------
Net increase in net assets resulting from operations .......... $8,728,867
==========
See notes to financial statements.
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income .................... $ 8,700,988 $ 5,734,776
Net realized gains on investments ........ 27,879 --
----------- -----------
Net increase in net assets resulting from
operations ............................. 8,728,867 5,734,776
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class C Shares ......................... (8,678,224) (5,727,567)
Class Y Shares ......................... (28,554) --
----------- -----------
Total dividends to shareholders from
net investment income .............. (8,706,778) (5,727,567)
----------- -----------
Net realized gains:
Class C Shares ......................... (22,089) --
----------- -----------
Total distributions to shareholders .. (8,728,867) (5,727,567)
----------- -----------
CAPITAL TRANSACTIONS:
Capital share transactions at net asset
value of $1.00 per share:
Proceeds from sales of shares .......... 893,945,410 366,028,959
Net asset value of shares issued in
connection with reinvestment
of distributions ..................... 7,578,329 3,048,453
Cost of shares repurchased ............. (766,959,907) (356,309,344)
----------- -----------
Net increase in net assets from capital
share transactions ..................... 134,563,832 12,768,068
----------- -----------
Total Increase in Net Assets ............. 134,563,832 12,775,277
NET ASSETS:
Beginning of year ........................ 113,218,042 100,442,765
----------- -----------
End of year (including undistributed net
investment income of $23,770
and $21,143, respectively) ............. $247,781,874 $113,218,042
============ ============
See notes to financial statements.
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
YEARS ENDED SEPTEMBER 30,
--------------------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
NET ASSET VALUE, BEGINNING
OF YEAR ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Income from investment
operations:
Net investment income .. 0.049 0.052 0.035 0.027 0.038
------- ------- ------- ------- -------
Total from investment
operations ......... 0.049 0.052 0.035 0.027 0.038
------- ------- ------- ------- -------
Less dividends:
Net investment income .. (0.049) (0.052) (0.035) (0.027) (0.038)
------- ------- ------- ------- -------
Total distributions .. (0.049) (0.052) (0.035) (0.027) (0.038)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
YEAR ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total return 4.98% 5.27% 3.51% 2.70% 3.82%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of
year (000) ........... $246,368 $113,218 $100,443 $73,284 $46,499
Ratio of expenses to
average net assets ... 0.57% 0.58% 0.24% 0.56% 0.70%
Ratio of net investment
income to average
net assets ........... 4.80% 5.17% 3.50% 2.66% 3.76%
Ratio of expenses to
average net assets* .. 0.75% 0.78% 0.67% 0.93% 0.91%
Ratio of net investment
income to average
net assets* .......... 4.62% 4.97% 3.08% 2.28% 3.54%
- ------
*During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS -- CLASS Y SHARES
PERIOD
ENDED
SEPTEMBER 30, 1996 (A)
----------------------
NET ASSET VALUE, BEGINNING OF PERIOD ....................... $ 1.00
-------
Income from investment operations:
Net investment income .................................... 0.012
-------
Total from investment operations ..................... 0.012
-------
Less dividends:
Net investment income .................................... (0.012)
-------
Total Distributions .................................. (0.012)
-------
NET ASSET VALUE, END OF PERIOD ............................. $ 1.00
=======
Total return ............................................... 5.03%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) ....................... $ 1,413
Ratio of expenses to average net assets .................. 0.43%(c)
Ratio of net investment income to average net assets ..... 4.90%(c)
Ratios of expenses to average net assets* ................ 0.61%(c)
Ratio of net investment income to average net assets* .... 4.72%(c)
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) For the period from July 1, 1996 (date of initial offering) to September 30,
1996.
(b) Represents total return for Class C Shares for the period from October 1,
1995 to June 30, 1996 plus the total return for the Class Y Shares for the
period from July 1, 1996 to September 30, 1996.
(c) Annualized.
See notes to financial statements.
<PAGE>
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 1996
1. ORGANIZATION. Republic U.S. Government Money Market Fund (the "Fund") is a
separate diversified 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 management investment company.
The Fund is authorized to issue two classes of shares, Class C Shares,
and as of July 1, 1996, Class Y Shares (Advisor Class). Each class of
shares in the Fund has identical rights and privileges except with respect
to fees paid under shareholder servicing or distribution plans, expenses
allocable exclusively to each class of shares, voting rights on matters
affecting a single class of shares, and the exchange privilege of each
class of shares.
During the fiscal year, the Trust retained 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 significant
accounting policies followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles. The preparation of financial statements requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of income and expenses for the period. Actual
results could differ from those estimates.
SECURITIES VALUATION:
Investments of the Fund are valued at amortized cost, which approximates
market value. Under the amortized cost method, discount or premium is
amortized on a constant basis to the maturity of the security. In
addition, the Fund may not a) purchase any instrument with a remaining
maturity greater than thirteen months unless such investment is subject to
a demand feature, or b) maintain a dollar-weighted average portfolio
maturity which exceeds 90 days.
SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the
accrual basis and includes, where applicable, the amortization of premium
or discount. Gains or losses realized on sales of securities are
determined by comparing the amortized cost of the security lot sold with
the net sales proceeds.
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 seven portfolios are
allocated in proportion to the net asset levels of each portfolio, except
where equitable allocations of direct expenses to each portfolio can
otherwise be made.
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 and net
realized gains, if any, to its shareholders. Accordingly, no provision for
federal income or excise tax is required.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly
and distributable net realized capital gains, if any, are declared and
distributed at least annually by the Fund.
Dividends from net investment income and net realized capital gains
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 net operating losses, expiring
capital loss carryforwards, and deferral of certain losses.
REPURCHASE AGREEMENTS:
The Fund may acquire repurchase agreements with an entity which is a
member of the Federal Reserve System or which is a "primary dealer" (as
designated by the Federal Reserve Bank of New York) in U.S. Government
obligations. The repurchase price generally equals the price paid by the
Fund plus interest negotiated on the basis of current short-term rates,
which may be more or less than the rate on the underlying portfolio
securities. The seller, under a repurchase agreement, is required to
maintain the value of collateral held pursuant to the agreement at not
less than the repurchase price (including accrued interest). Securities
subject to repurchase agreements are held by the Fund's custodian, either
physically or in book entry form. Repurchase agreements are considered to
be loans by the Fund under the 1940 Act.
3. RELATED PARTY TRANSACTIONS.
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 at 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, 1996, the
advisory fee was $365,782, of which $182,891 was voluntarily waived.
ADMINISTRATION:
During the fiscal year, the Fund retained 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 received 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, 1996, the administrative services fee was $365,782, of
which $148,783 was voluntarily waived.
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 Class C Shares. During the year ended September
30, 1996, the Fund reimbursed Signature for distribution expenses of
$22,415.
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 of
Class C Shares. During the year ended September 30, 1996, shareholder
servicing fees were $338,000.
TRUSTEES' FEES:
The fees paid and the amount of out-of-pocket expenses reimbursed to the
Trustees amounted to $8,025 for the year ended September 30, 1996.
4. CAPITAL SHARE TRANSACTIONS. Transactions in shares of beneficial interest
for the Fund were as follows:
CLASS C SHARES
YEAR ENDED SEPTEMBER 30, CLASS Y SHARES
--------------------------------- PERIOD ENDED
1996 1995 SEPTEMBER 30, 1996(A)
---------- ----------- ---------------------
Shares issued ....... 880,109,172 366,028,959 13,836,238
Shares reinvested ... 7,578,279 3,048,453 50
Redeemed ............ (754,536,997) (356,309,344) (12,422,910)
----------- ----------- ----------
Net increase ........ 133,150,454 12,768,068 1,413,378
=========== =========== ==========
(a) For the period from July 1, 1996 (date of initial offering) to
September 30, 1996.
5. SUBSEQUENT EVENT. Effective October 1, 1996, BISYS Fund Services became the
Fund's Administrator, Distributor and Sponsor.
<PAGE>
[logo]Peat Marwick LLP
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
The Republic Funds:
We have audited the accompanying statement of net assets of the Republic U.S.
Government Money Market Fund (the "Fund"), one of the portfolios of the Republic
Funds, as of September 30, 1996 and the related statements of operations and
changes in net assets and the financial highlights for the year then ended for
Class C Shares and financial highlights for the period from July 1, 1996 (date
of initial offering) to September 30, 1996 for Class Y Shares. 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 audits. The statement of
changes in net assets for the year ended September 30, 1995 and financial
highlights for each of the years in the four-year period ended September 30,
1995 for Class C Shares were audited by other auditors whose report thereon,
dated November 10, 1995, expressed an unqualified opinion on that statement and
those financial highlights.
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 also 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
September 30, 1996 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
Republic U.S. Government Money Market Fund at September 30, 1996, the results of
its operations, changes in its net assets and financial highlights for the year
or period then ended in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
November 15, 1996
