<PAGE>
REPUBLIC
U.S. GOVERNMENT
MONEY MARKET FUND
REPUBLIC
NEW YORK TAX-FREE
MONEY MARKET FUND
[GRAPHIC OMITTED]
PROSPECTUS
FEBRUARY 1, 1997
[LOGO]
<PAGE>
REPUBLIC FUNDS:
U.S. GOVERNMENT MONEY MARKET FUND
NEW YORK TAX-FREE MONEY MARKET FUND
3435 STELZER ROAD, COLUMBUS, OHIO 43219-3035
- ------------------------------------------------------------------------------
ACCOUNT AND GENERAL INFORMATION: (888) 525-5757 (TOLL FREE)
The Republic Funds (the "Trust") is an open-end investment management company
(a mutual fund) that currently offers a selection of seven portfolios, each of
which has different and distinct investment objectives and policies. This
prospectus describes two investment portfolios offered by the Trust
(collectively, the "Funds"):
REPUBLIC U.S. GOVERNMENT MONEY MARKET FUND
REPUBLIC NEW YORK TAX-FREE MONEY MARKET FUND
An investor who is not purchasing directly from the Distributor should obtain
from his securities broker, if applicable, or Shareholder Servicing Agent, and
should read in conjunction with this Prospectus, the materials provided by the
securities broker or Shareholder Servicing Agent describing the procedures under
which shares of the Funds may be purchased and redeemed through such securities
broker or Shareholder Servicing Agent.
This Prospectus sets forth concisely the information concerning the Funds that
a prospective investor ought to know before investing. Investors should read
this Prospectus and retain it for future reference. The Trust has filed with the
Securities and Exchange Commission a Statement of Additional Information, dated
February 1, 1997, with respect to each Fund, containing additional and more
detailed information about the Fund, each of which is hereby incorporated by
reference into this Prospectus. An investor may obtain a copy of a Statement of
Additional Information without charge by contacting the Distributor or his
Shareholder Servicing Agent (see back cover for addresses and phone numbers).
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, REPUBLIC OR ANY OTHER BANK, AND THE SHARES ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT THE FUNDS
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
BECAUSE, THE NEW YORK TAX-FREE MONEY MARKET FUND WILL CONCENTRATE ITS
INVESTMENTS IN NEW YORK AND MAY CONCENTRATE A SIGNIFICANT PORTION OF ITS ASSETS
IN THE SECURITIES OF A SINGLE ISSUER, AN INVESTMENT IN THIS FUND MAY POSE
INVESTMENT RISKS GREATER THAN THOSE PRESENTED BY A MORE BROADLY DIVERSIFIED
PORTFOLIO.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 1, 1997
Republic National Bank of New York ("Republic" or the "Adviser") continuously
manages the investment portfolio of each Fund. The Trust offers two classes of
shares of each Fund, Class C Shares (the "Investor Shares") and Class Y Shares
(the "Adviser Shares"); (the Investor Shares and Adviser Shares are
collectively, the "Shares"). Investor Shares are offered to the public, to
customers of Shareholder Servicing Agents and to customers of a securities
broker that has entered into a dealer agreement with the Distributor. Adviser
Shares are being offered only to customers of Shareholder Servicing Agents.
Both Investor Shares and Adviser Shares of each Fund are continuously offered
for sale at net asset value with no sales charge by BISYS Fund Services ("BISYS"
or the "Distributor") to customers of a financial institution, such as a federal
or state-chartered bank, trust company or savings and loan association that has
entered into a shareholder servicing agreement with the Trust (collectively,
"Shareholder Servicing Agents"). At present, the only Shareholder Servicing
Agents for Adviser Shares of the Funds are Republic and its affiliates. Investor
Shares of each Fund are also continuously offered for sale at net asset value
with no sales charge by BISYS directly to the public and to customers of a
securities broker that has entered into a dealer agreement with the Distributor.
<PAGE>
HIGHLIGHTS
THE FUNDS PAGE 1
Republic U.S. Government Money Market Fund and Republic New York Tax-Free
Money Market Fund (the "Funds") are separate series (portfolios) of the Republic
Funds (the "Trust"), a Massachusetts business trust organized on April 22, 1987,
which currently consists of seven funds, each of which has different and
distinct investment objectives and policies.
INVESTMENT OBJECTIVES AND POLICIES PAGE 10
The investment objective of the U.S. Government Money Market Fund is to
provide shareholders of the Fund with liquidity and as high a level of current
income as is consistent with the preservation of capital. The Trust seeks to
achieve the investment objective of the U.S. Government Money Market Fund by
investing the assets of the Fund in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities with maturities of 397 days or
less, and repurchase agreements with respect to such obligations.
The investment objective of the New York Tax-Free Money Market Fund is to
provide shareholders of the Fund with liquidity and as high a level of current
income exempt from federal, New York State and New York City personal income
taxes as is consistent with the preservation of capital. The Trust seeks to
achieve the investment objective of the New York Tax-Free Money Market Fund by
investing the assets of the Fund primarily in a non-diversified portfolio of
short-term, high quality, fixed rate and variable rate tax-exempt money market
instruments with maturities of 397 days or less, including obligations issued by
or on behalf of the State of New York and its authorities, agencies,
instrumentalities and political subdivisions, and in participation interests
issued by banks, insurance companies or other financial institutions with
respect to such obligations.
There can be no assurance that the investment objectives of the Funds will be
achieved.
MANAGEMENT OF THE TRUST PAGE 18
Republic National Bank of New York ("Republic" or the "Adviser") acts as
investment adviser to the Funds. For its services, the Adviser receives from the
U.S. Government Money Market Fund a fee at the annual rate of 0.20% of the
Fund's average daily net assets and from the New York Tax-Free Money Market Fund
a fee at the annual rate of 0.15% of the Fund's daily net assets.
BISYS Fund Services ("BISYS" or the "Sponsor") acts as administrator and
sponsor of each of the Funds. The Sponsor provides certain management and
administrative services to each of the Funds for which it receives from the U.S.
Government Money Market Fund a fee at the annual rate of 0.10% of the Fund's
average daily net assets and from the New York Tax-Free Money Market Fund a fee
at the annual rate of 0.10% of the Fund's average daily net assets.
The Trust has also retained BISYS (the "Distributor") to distribute Investor
Shares of each of the Funds pursuant to a Distribution Plan adopted in
accordance with Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "1940 Act"). Under the Distribution Plan, the Distributor is reimbursed
from the Funds (in amounts equal to an annual rate of up to 0.25% of the average
daily net assets represented by Investor Shares outstanding of each of the Funds
during the period for which payment is being made) for marketing costs and
payments to other organizations for services rendered in distributing the
Shares. See "Management of the Trust".
PURCHASES AND REDEMPTIONS PAGES 24 AND 28
The U.S. Government Money Market Fund is a type of mutual fund commonly
referred to as a "money market fund". The New York Tax-Free Money Market Fund is
a type of mutual fund commonly referred to as a "triple tax exempt money market
fund." The net asset value of each Fund's shares is expected to remain constant
at $1.00, although this cannot be assured. See "Determination of Net Asset
Value" and "Dividends and Distributions".
Investor Shares and Adviser Shares of each of the Funds are continuously
offered for sale by the Distributor at net asset value (normally $1.00 per
share) with no sales charge to customers of a financial institution, such as a
federal or state-chartered bank, trust company or savings and loan association,
that has entered into a shareholder servicing agreement with the Trust
(collectively, "Shareholder Servicing Agents"). At present, the only Shareholder
Servicing Agents for Adviser Shares of the Funds are Republic and its
affiliates. Investor Shares of each of the Funds are also continuously offered
for sale at net asset value, normally a dollar, with no sales charges by BISYS
directly to the public and to customers of a securities broker that has entered
into a dealer agreement with the Distributor. For investors who purchase
Investor Shares directly from the Distributor or who purchase Adviser Shares of
the Funds, the minimum initial investment is $1,000 and the minimum subsequent
investment is $100. The Trust offers to buy back (redeem) Shares from
shareholders of the Funds at any time at net asset value. See "Purchase of
Shares" and "Redemption of Shares". Shares of the U.S. Government Money Market
Fund are offered in connection with tax-deferred retirement plans. See
"Retirement Plans".
DIVIDENDS AND DISTRIBUTIONS PAGE 30
The Trust declares all of each Fund's net investment income daily as a
dividend to each Fund's shareholders and distributes all such dividends
monthly. Any net realized capital gains are distributed at least annually. See
"Dividends and Distributions" .
<PAGE>
FEE TABLE
The following table provides (i) a summary of expenses relating to purchases
and sales of Investor Shares and Adviser Shares of each of the Funds, and the
aggregate annual operating expenses of Investor Shares and Adviser Shares of
each of the Funds, as a percentage of average net assets of each Fund, and (ii)
an example illustrating the dollar cost of such expenses on a $1,000 investment
in Investor Shares and Adviser Shares of each of the Funds. Historical
information in the expense table regarding investment advisory fees and expenses
has been restated to reflect expected fee waivers and expenses for the current
fiscal year.
<TABLE>
<CAPTION>
U.S. GOVERNMENT NEW YORK TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND
--------------------------------- -------------------------------
INVESTOR SHARES ADVISER SHARES INVESTOR SHARES ADVISER SHARES
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses .......... None None None None
Annual Fund Operating Expenses
Investment Advisory Fee after waiver* ... 0.10% 0.10% 0.10% 0.10%
Distribution Fee (Rule 12b-1 fee) ....... 0.04% None 0.01% None
Other Expenses .......................... 0.51% 0.30% 0.54% 0.30%
---- ---- ---- ----
-- Shareholder Servicing Fee ............ 0.21% None 0.24% None
-- Administrative Services Fee .......... 0.10% 0.10% 0.10% 0.10%
-- Other Operating Expenses ............. 0.20% 0.20% 0.20% 0.20%
Total Fund Operating Expenses after expense
limitation and fee waivers** ............ 0.65% 0.40% 0.65% 0.40%
==== ==== ==== ====
- ----------
* Investment Advisory Fee is shown net of expected waiver for the current fiscal year. Without such
waiver, the fee would be equal on an annual basis to 0.20% of the U.S. Government Money Market Fund's
average net assets and 0.15% of the New York Tax-Free Money Market Fund's average net assets.
** Total Fund Operating Expenses are shown net of a voluntary expense limitation and expected fee
waivers. Without such voluntary expense limitation and expected fee waivers, the Total Fund Operating
Expenses for the Investor Shares and Adviser Shares of the U.S. Government Money Market Fund and the
Investor Shares and Adviser Shares of the New York Tax-Free Money Market Fund would be equal on an
annual basis to 0.75%, 0.50%, 0.70%, and 0.45%, respectively, of each of the Fund's average net
assets. There can be no assurance that expenses will be reimbursed or waived in the future.
</TABLE>
<PAGE>
EXAMPLE
A shareholder of one of the Funds would pay the following expenses on a $1,000
investment in Investor Shares or Adviser Shares, assuming (1) 5% annual return
and (2) redemption at the end of:
<TABLE>
<CAPTION>
U.S. GOVERNMENT NEW YORK TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND
--------------------------------------- ---------------------------------------
INVESTOR SHARES ADVISER SHARES INVESTOR SHARES ADVISER SHARES
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
1 year ................ $ 7 $ 4 $ 7 $ 4
3 years ............... $21 $13 $21 $13
5 years ............... $36 $22 $36 $22
10 years ............... $81 $51 $81 $51
</TABLE>
The purpose of the expense table provided above is to assist investors in
understanding the various costs and expenses that a shareholder will bear
directly or indirectly. For a more detailed discussion of the costs and expenses
of investing in the Funds, see "Management of the Trust."
For Investor Shares of each of the Funds, the fees paid from the Funds to each
Shareholder Servicing Agent are determined by a formula based upon the number of
accounts serviced by such Shareholder Servicing Agent during the period for
which payment is being made, the level of activity in such accounts during such
period, and the expenses incurred by such Shareholder Servicing Agent.
Similarly, the fee from the Funds to the Distributor is in anticipation of, or
as reimbursement for, expenses incurred by the Distributor in connection with
the sale of Investor Shares of the Funds. The aggregate fees paid to Shareholder
Servicing Agents pursuant to the Administrative Services Plan and to the
Distributor pursuant to the Distribution Plan may not exceed 0.25% of the
average daily net assets of the Funds represented by Investor Shares outstanding
during the period for which payment is being made. Long- term shareholders may
pay more than the economic equivalent of the maximum distribution charges
permitted by the National Association of Securities Dealers, Inc.
Some securities brokers, if applicable, and Shareholder Servicing Agents may
impose certain conditions on their customers, subject to the terms of this
Prospectus, in addition to or different from those imposed by the Trust, such as
requiring a minimum initial investment or charging their customers a direct fee
for their services. The effect of any such fees will be to reduce the net return
on the investment of customers of that Shareholder Servicing Agent or securities
broker. Each Shareholder Servicing Agent and securities broker has agreed to
transmit to shareholders who are its customers appropriate written disclosure of
any transaction fees that it may charge them directly at least 30 days before
the imposition of any such charge.
THE EXAMPLE SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OF THE FUNDS; ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial data shown below is to assist investors in evaluating the
performance of the Investor Shares and Adviser Shares since commencement of
operations through September 30, 1996 for the U.S. Government Money Market Fund
and October 31, 1996 for the New York Tax-Free Money Market Fund. The
information for the U.S. Government Money Market Fund and New York Tax-Free
Money Market Fund for the years ended September 30, 1996 and October 31, 1996,
respectively, in the following schedules has been derived from information
audited by KPMG Peat Marwick LLP, independent auditors, whose reports on each
Fund's financial statements is incorporated by reference into the Statement of
Additional Information from each Fund's Annual Report dated September 30, 1996
for the U.S. Government Money Market Fund and October 31, 1996 for the New York
Tax-Free Money Market Fund. The Annual Report may be obtained without charge
upon request. This information should be read in conjunction with the financial
statements.
The information for the Funds for the years or periods ended September 30,
1995 or prior for the U.S. Government Money Market Fund and for the period ended
October 31, 1995 for the New York Tax-Free Money Market Fund was audited by the
Funds' former independent auditors who expressed an unqualified opinion thereon.
Republic became the U.S. Government Money Market Fund's investment adviser
effective October 14, 1994. Prior to that time, Republic Asset Management
Corporation, an affiliate of Republic, served as the Fund's adviser. Prior to
September 1, 1993, M.D. Hirsch Investment Management, Inc., also an affiliate of
Republic, was the Fund's investment adviser.
<PAGE>
SELECTED DATA FOR AN INVESTOR SHARE AND AN ADVISER SHARE OF THE U.S. GOVERNMENT
MONEY MARKET FUND OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
INVESTOR SHARES ADVISER SHARES
----------------------------------------------------------------------------------- -----------------
FOR THE PERIOD FOR THE PERIOD
MAY 3, 1990 JULY 1, 1996
(COMMENCEMENT (DATE OF INITIAL
YEARS ENDED SEPTEMBER 30, OF OPERATIONS TO OFFERING) TO
---------------------------------------------------------- SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1994 1993 1992 1991 1990 1996
---- ---- ---- ---- ---- ---- ------------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period .. $ 1.00 $ 1.00 $ 1.00 $ 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 0.061 0.031 0.012
------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations ......... 0.049 0.052 0.035 0.027 0.038 0.061 0.031 0.012
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
- -Dividends to
shareholders from net
investment income ... (0.049) (0.052) (0.035) (0.027) (0.038) (0.061) (0.031) (0.012)
------ ------ ------ ------ ------ ------ ------ ------
Total distributions . (0.049) (0.052) (0.035) (0.027) (0.038) (0.061) (0.031) (0.012)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ====== ======
Total return .......... 4.98% 5.27% 3.51% 2.70% 3.82% 6.36% 6.03%** 5.03%(a)
====== ====== ====== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of
period (in 000's) .. $246,368 $113,218 $100,443 $73,284 $46,499 $55,795 $38,017 $1,413
Ratio of expenses to
average net assets* .. 0.57% 0.58% 0.24% 0.56% 0.70% 0.70% 0.57%** 0.43%**
Ratio of net investment
income to average net
assets* .............. 4.80% 5.17% 3.50% 2.66% 3.76% 5.96% 7.85%** 4.90%**
- ----------
* Reflects a voluntary expense limitation and waivers of fees by affiliated parties of the Funds. If this limitation and these
waivers had not been in effect, the annualized ratios of net investment income and expenses to average net assets for the
Investor Shares for the years ended September 30, 1996, 1995, 1994, 1993, 1992, and 1991, and for the period from May 3,
1990 (commencement of operations) to September 30, 1990 would have been 4.62% and 0.75%, 4.97% and 0.78%, 3.08% and 0.67%,
2.28% and 0.93%, 3.54% and 0.91%, 5.68% and 0.98%, and 7.25% and 0.98%, respectively, and for the Adviser Shares for the
period from July 1, 1996 (date of initial offering) to September 30, 1996 would have been 4.72% and 0.61%, respectively.
** Annualized.
(a) Represents total return for Investor Shares for the period from October 1, 1995 to June 30, 1996 plus the total return for
the A dviser Shares for the period from July 1, 1996 to September 30, 1996.
</TABLE>
<PAGE>
SELECTED DATA FOR AN INVESTOR SHARE AND AN ADVISER SHARE OF THE NEW YORK
TAX-FREE MONEY MARKET FUND OUTSTANDING THROUGHOUT EACH PERIOD:
INVESTOR SHARES ADVISER SHARES
------------------------------- ---------------
FOR THE PERIOD
FOR THE PERIOD JULY 1, 1996
NOVEMBER 17, 1994 (DATE OF INITIAL
YEAR ENDED (COMMENCEMENT OF OFFERING) TO
OCTOBER 31, OPERATIONS TO OCTOBER 31,
1996 OCTOBER 31, 1995 1996
-------------- ---------------- ---------------
Net asset value, beginning of
period ..................... $ 1.00 $ 1.00 $ 1.00
------ ------ ------
Income from investment
operations:
Net investment income* ...... 0.030 0.033 0.010
------ ------ ------
Total from investment
operations ............... 0.030 0.033 0.010
------ ------ ------
Less distributions:
- -Dividends to shareholders
from net investment income (0.030) (0.033) (0.010)
------ ------ ------
Total distributions ....... (0.030) (0.033) (0.010)
------ ------ ------
Net asset value, end of
period .................... $ 1.00 $ 1.00 $ 1.00
====== ====== ======
Total return ................ 3.04% 3.31%(a) 1.03%(a)
==== ==== ====
Ratios/supplemental data:
Net assets, end of period
(in 000's) ............... $78,594 $56,652 $3,714
Ratio of expenses to average
net assets* ................ 0.54% 0.41%** 0.35%**
Ratio of net investment
income to average net assets* 2.97% 3.45%** 3.12%**
- ----------
*Reflects a voluntary expense limitation and waivers of fees by affiliated
parties of the Funds. If this limitation and these waivers had not been in
effect, the annualized ratios of net investment income and expenses to average
net assets for the Investor Shares for the year ended October 31, 1996 and for
the period from November 17, 1994 (commencement of operations) to October 31,
1995 would have been 2.88% and 0.63%, and 3.20% and 0.65%, respectively, and
for the Adviser Shares for the period from July 1, 1996 (date of initial
offering) to October 31, 1996 would have been 3.02% and 0.45%, respectively.
**Annualized.
(a)Not annualized.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Purchasing shares of any Fund shall not be considered a complete investment
program, but an important segment of a well-diversified program.
INVESTMENT OBJECTIVES
The investment objective of the U.S. Government Money Market Fund is to
provide shareholders of the Fund with liquidity and as high a level of current
income as is consistent with the preservation of capital. The investment
objective of the New York Tax-Free Money Market Fund is to provide shareholders
of the Fund with liquidity and as high a level of current income exempt from
federal, New York State and New York City personal income taxes as is consistent
with the preservation of capital. There can be no assurance that the investment
objectives of the Funds will be achieved. The investment objective of a Fund may
be changed without approval by the Fund's shareholders. If there is a change in
the investment objective of a Fund, shareholders should consider whether the
Fund remains an appropriate investment in light of their then-current financial
position and needs.
INVESTMENT POLICIES
U.S. GOVERNMENT MONEY MARKET FUND
The Trust seeks to achieve the investment objective of the U.S. Government
Money Market Fund by investing at least 65% of the assets of the Fund in debt
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, commitments to purchase such obligations, and repurchase
agreements collateralized by such obligations. All investments on behalf of the
Fund (i.e., 100% of the Fund's investments) mature or are deemed to mature
within 397 days from the date of acquisition and the average maturity of the
investments held in the Fund's portfolio (on a dollar-weighted basis) is 90 days
or less. The Fund may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities which are subject to repurchase
agreements with recognized securities dealers and banks.
U.S. Government Securities. The U.S. Government Money Market Fund invests in
obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities. These include issues of the U.S. Treasury, such as bills,
notes and bonds, and issues of agencies and instrumentalities established under
the authority of an Act of Congress. Some of the latter category of obligations
are supported by the "full faith and credit" of the United States, others are
supported by the right of the issuer to borrow from the U.S. Treasury, and still
others are supported only by the credit of the agency or instrumentality.
Examples of each of the three types of obligations described in the preceding
sentence are (i) obligations guaranteed by the Export-Import Bank of the United
States, (ii) obligations of the Federal National Mortgage Association, and (iii)
obligations of the Student Loan Marketing Association, respectively.
NEW YORK TAX-FREE MONEY MARKET FUND
The Trust seeks to achieve the investment objective of the New York Tax-Free
Money Market Fund by investing the assets of the Fund primarily in short-term,
high quality, fixed rate and variable rate obligations issued by or on behalf of
the State of New York, other states, territories and possessions of the United
States, and their authorities, agencies, instrumentalities and political
subdivisions, the interest on which is exempt from federal income taxes,
including participation interests issued by banks, insurance companies or other
financial institutions with respect to such obligations. (Such obligations,
whether or not the interest thereon is subject to the federal alternative
minimum tax, are referred to herein as "Municipal Obligations".) The Trust
invests on behalf of the Fund in certain Municipal Obligations of the State of
New York and its authorities, agencies, instrumentalities and political
subdivisions, and of Puerto Rico, other U.S. territories and their authorities,
agencies, instrumentalities and political subdivisions, the interest on which is
exempt from federal, New York State and New York City personal income taxes,
including participation interests issued by banks, insurance companies or other
financial institutions with respect to such obligations ("New York Municipal
Obligations"). In determining the tax status of interest on Municipal
Obligations and New York Municipal Obligations, the Adviser relies on opinions
of bond counsel who may be counsel to the issuer.
Although under normal circumstances, the Trust attempts to invest 100%, and
does invest at least 65%, of the New York Tax-Free Money Market Fund's assets in
New York Municipal Obligations, market conditions may from time to time limit
the availability of such obligations. To the extent that acceptable New York
Municipal Obligations are not available for investment, the Trust may purchase
on behalf of the Fund Municipal Obligations issued by other states, their
authorities, agencies, instrumentalities and political subdivisions, the
interest income on which is exempt from federal income tax but is subject to New
York State and New York City personal income taxes. As a fundamental policy, the
Trust will invest at least 80% of the Fund's net assets in tax exempt
obligations. The Trust may invest up to 20% of the Fund's total assets in
obligations the interest income on which is subject to federal, New York State
and New York City personal income taxes or the federal alternative minimum tax.
Uninvested cash reserves may be held temporarily for the Fund pending
investment.
The Trust may invest more than 25% of the New York Tax-Free Money Market
Fund's assets in participation interests issued by banks in industrial
development bonds and other Municipal Obligations. In view of this possible
"concentration" in bank participation interests, an investment in the Fund
should be made with an understanding of the characteristics of the banking
industry and the risks which such an investment may entail. See "Variable Rate
Instruments and Participation Interests" below.
All investments on behalf of the New York Tax-Free Money Market Fund (i.e.,
100% of the Fund's investments) mature or are deemed to mature within 397 days
from the date of acquisition and the average maturity of the investments in the
Fund's portfolio (on a dollar-weighted basis) is 90 days or less. The maturities
of variable rate instruments held in the Fund's portfolio are deemed to be the
longer of the period remaining until the next interest rate adjustment or the
period until the Fund would be entitled to payment pursuant to demand rights,
although the stated maturities may be in excess of 397 days. See "Variable Rate
Instruments and Participation Interests" below. As a fundamental policy, the
investments of the Fund are made primarily (i.e., at least 80% of its assets
under normal circumstances) in:
(1) Municipal bonds with remaining maturities of 397 days or less that at
the date of purchase are rated Aaa or Aa by Moody's Investors Service, Inc.
("Moody's"), AAA or AA by Standard & Poor's Corporation ("Standard & Poor's")
or AAA or AA by Fitch Investors Service, Inc. ("Fitch") or, if not rated by
any of these rating agencies, are of comparable quality as determined by or on
behalf of the Board of Trustees of the Trust on the basis of a credit
evaluation of the obligor on the bonds or of the bank issuing a participation
interest or guarantee or of any insurance policy issued in support of the
bonds or the participation interest;
(2) Municipal notes with remaining maturities of 397 days or less that at
the date of purchase are rated MIG 1/VMIG 1 or MIG 2/VMIG 2 by Moody's, SP-1+,
SP-1 or SP-2 by Standard & Poor's or F-1+ , F-1 or F-2 by Fitch or, if not
rated by any or these rating agencies, are of comparable quality as determined
by or on behalf of the Board of Trustees of the Trust (The principal kinds of
municipal notes are tax and revenue authorization notes, tax anticipation
notes, bond anticipation notes and revenue anticipation notes. Notes sold in
anticipation of collection of taxes, a bond sale or receipt of other revenues
are usually general obligations of the issuing municipality or agency. The
Fund's investments may be concentrated in municipal notes of New York
issuers.); and
(3) Municipal commercial paper that at the date of purchase is rated Prime-1
or Prime-2 by Moody's, A-1+ , A-1 or A-2 by Standard & Poor's or F-1+, F-1
or F-2 by Fitch or, if not rated by any of these rating agencies, is of
comparable quality as determined by or on behalf of the Board of Trustees of
the Trust. Issues of municipal commercial paper typically represent very
short-term, unsecured, negotiable promissory notes. These obligations are
often issued to meet seasonal working capital needs of municipalities or to
provide interim construction financing and are paid from general revenues of
municipalities or are refinanced with long-term debt. In most cases municipal
commercial paper is backed by letters of credit, lending agreements, note
repurchase agreements or other credit facility agreements offered by banks or
other institutions which may be called upon in the event of default by the
issuer of the commercial paper.
For a general discussion of Municipal Obligations and an explanation of the
ratings of Municipal Obligations by Moody's, Standard & Poor's and Fitch, see
Appendix A. For a comparison of yields on such Municipal Obligations and taxable
securities, see the Taxable Equivalent Yield Tables in Appendix B.
As a non-diversified investment company, the Trust is not subject to any
statutory restriction under the 1940 Act with respect to limiting the investment
of the New York Tax-Free Money Market Fund's assets in one or relatively few
issuers. Since the Trust may invest a relatively high percentage of the Fund's
assets in the obligations of a limited number of issuers, the value of shares of
the Fund may be more susceptible to any single economic, political or regulatory
occurrence than the value of shares of a diversified investment company would
be. The Trust may also invest 25% or more of the Fund's assets in obligations
that are related in such a way that an economic, business or political
development or change affecting one of the obligations would also affect the
other obligations including, for example, obligations the interest on which is
paid from revenues of similar type projects, or obligations the issuers of which
are located in the same state.
Variable Rate Instruments and Participation Interests. Variable rate
instruments that the Trust may purchase on behalf of the New York Tax-Free Money
Market Fund provide for a periodic adjustment in the interest rate paid on the
instrument and permit the holder to receive payment upon a specified number of
days' notice of the unpaid principal balance plus accrued interest either from
the issuer or by drawing on a bank letter of credit, a guarantee or an insurance
policy issued with respect to such instrument or by tendering or "putting" such
instrument to a third party.
Variable rate instruments in which the New York Tax-Free Money Market Fund's
assets may be invested include participation interests in Municipal Obligations
owned by a bank, insurance company or other financial institution or affiliated
organization. A participation interest gives the Fund an undivided interest in
the Municipal Obligation in the proportion that the Fund's participation bears
to the total principal amount of the Municipal Obligation and provides the
demand or put feature described below. Each participation interest is backed by
an insurance policy of an insurance company or by an irrevocable letter of
credit or guarantee of, or a right to put to, a bank that has been determined by
or on behalf of the Board of Trustees of the Trust to meet the prescribed
quality standards for the Fund. There is usually the right to sell the
participation interest back to the institution or draw on the letter of credit,
guarantee or insurance policy after notice (usually seven days), for all or any
part of the full principal amount of the Fund's participation in the Municipal
Obligation, plus accrued interest. If the notice period is more than seven days,
the Municipal Obligation is treated as an obligation that is not readily
marketable. In some cases, these rights may not be exercisable in the event of a
default on the underlying Municipal Obligations; in these cases the underlying
Municipal Obligations must meet the Fund's high credit standards at the time of
purchase of the participation interest. Although participation interests may be
sold, the Trust intends to hold them for the Fund until maturity, except under
certain specified circumstances. Purchase of a participation interest may
involve the risk that the Fund will not be deemed to be the owner of the
underlying Municipal Obligation for purposes of the ability to claim tax
exemption of interest paid thereon.
Because of the variable rate nature of the instruments, during periods when
prevailing interest rates decline, the New York Tax-Free Money Market Fund's
yield will decline. On the other hand, during periods when prevailing interest
rates increase, the Fund's yield will increase.
In view of the possible "concentration" of the New York Tax-Free Money Market
Fund in participation interests in Municipal Obligations secured by bank letters
of credit or guarantees, an investment in the Fund should be made with an
understanding of the characteristics of the banking industry and the risks which
such an investment may entail. Banks are subject to extensive governmental
regulations which may limit both the amounts and types of loans and other
financial commitments which may be made and interest rates and fees which may be
charged. The profitability of this industry is largely dependent upon the
availability and cost of capital funds for the purpose of financing lending
operations under prevailing money market conditions. Also, general economic
conditions play an important part in the operations of this industry and
exposure to credit losses arising from possible financial difficulties of
borrowers might affect a bank's ability to meet its obligations under a letter
of credit or guarantee.
For additional information concerning variable rate instruments and
participation interests, see "Investment Objective, Policies and Restrictions --
Variable Rate Instruments and Participation Interests" in the Statement of
Additional Information.
"When-issued" Municipal Obligations. New issues of Municipal Obligations may
be offered on a "when-issued" or "forward delivery" basis. The payment
obligation and the interest rate that will be received on the Municipal
Obligations offered on this basis are each fixed at the time the Trust commits
to the purchase for the New York Tax-Free Money Market Fund, although
settlement, i.e., delivery of and payment for the Municipal Obligations, takes
place beyond customary settlement time (but normally within 45 days of the
commitment). Between the time the Trust commits to purchase the "when-issued" or
"forward delivery" Municipal Obligation for the Fund and the time delivery and
payment are made, the "when-issued" or "forward delivery" Municipal Obligation
is treated as an asset of the Fund and the amount which the Fund is committed to
pay for that Municipal Obligation is treated as a liability of the Fund. No
interest on a "when-issued" or "forward delivery" Municipal Obligation is
accrued for the Fund until delivery occurs. Although the Trust only makes
commitments to purchase "when-issued" or "forward delivery" Municipal
Obligations for the Fund with the intention of actually acquiring them, the
Trust may sell these obligations before the settlement date if deemed advisable
by the Adviser. Purchasing Municipal Obligations on a "when-issued" or "forward
delivery" basis can involve a risk that the yields available in the market on
the settlement date may actually be higher (or lower) than those obtained in the
transaction itself and, as a result, the "when-issued" or "forward delivery"
Municipal Obligation may have a lesser (or greater) value at the time of
settlement than the Fund's payment obligation with respect to that Municipal
Obligation. Furthermore, if the Trust sells the "when-issued" or "forward
delivery" Municipal Obligation before the settlement date or if the Trust sells
other obligations from the Fund's portfolio in order to meet the payment
obligations, the Fund may realize a capital gain, which is not exempt from
federal, New York State or New York City income taxation.
For additional information concerning "when-issued" or "forward delivery"
Municipal Obligations, see "Investment Objective, Policies and Restrictions --
"When-Issued" Municipal Obligations" in the Statement of Additional Information.
Stand-By Commitments. When the Trust purchases Municipal Obligations on behalf
of the New York Tax-Free Money Market Fund it may also acquire stand-by
commitments from banks with respect to such Municipal Obligations. The Trust
also reserves the right, and may in the future, subject to receipt of an
exemptive order pursuant to the 1940 Act, acquire stand-by commitments from
broker-dealers on behalf of the Fund. There can be no assurance that such an
order will be granted. Under a stand-by commitment, a bank or broker-dealer
agrees to purchase at the Trust's option a specified Municipal Obligation at a
specified price. A stand-by commitment is the equivalent of a "put" option
acquired for the Fund with respect to a particular Municipal Obligation held for
it.
The Trust intends to acquire stand-by commitments on behalf of the New York
Tax-Free Money Market Fund solely to facilitate portfolio liquidity and does not
intend to exercise its rights thereunder for trading purposes. The purpose of
this practice is to permit the Fund to be fully invested in Municipal
Obligations, and to the extent possible New York Municipal Obligations, while
preserving the necessary liquidity to purchase Municipal Obligations on a
"when-issued" basis, to meet unusually large redemptions and to purchase at a
later date Municipal Obligations other than those subject to the stand-by
commitment.
The stand-by commitments that the Trust may enter into on behalf of the New
York Tax-Free Money Market Fund are subject to certain risks, which include the
ability of the issuer of the commitment to pay for the Municipal Obligations at
the time the commitment is exercised, the fact that the commitment is not
marketable by the Trust, and the fact that the maturity of the underlying
Municipal Obligation will generally be different from that of the commitment.
For additional information concerning stand-by commitments, see "Investment
Objective, Policies and Restrictions -- Stand-by Commitments" in the Statement
of Additional Information.
Risk Factors Affecting Investments in New York Municipal Obligations. The
Trust intends to invest a high proportion of the New York Tax-Free Money Market
Fund's assets in New York Municipal Obligations. Payment of interest and
preservation of principal is dependent upon the continuing ability of New York
issuers and/or obligors of state, municipal and public authority debt
obligations to meet their obligations thereunder. Investors should consider the
greater risk inherent in the Fund's concentration in such obligations versus the
safety that comes with a less geographically concentrated investment portfolio
and should compare the yield available on a portfolio of New York issues with
the yield of a more diversified portfolio including out-of-state issues before
making an investment decision. The Adviser believes that by maintaining the
Fund's investment portfolio in liquid, short-term, high quality Municipal
Obligations, including participation interests and other variable rate
instruments that have high quality credit support from banks, insurance
companies or other financial institutions, the Fund is somewhat insulated from
the credit risks that may exist for long-term New York Municipal Obligations.
New York State and other issuers of New York Municipal Obligations have
historically experienced periods of financial difficulties which have caused the
credit ratings of certain of their obligations to be downgraded by certain
rating agencies. There can be no assurance that credit ratings on obligations of
New York State and New York City and other New York Municipal Obligations will
not be downgraded further. See "Investment Objective, Policies and Restrictions
- -- Special Factors Affecting New York" in the Statement of Additional
Information.
Subject to the fundamental policy described on page 11, the Trust is
authorized to invest on behalf of the New York Tax-Free Money Market Fund in
taxable securities (such as U.S. Government obligations or certificates of
deposit of domestic banks). If the Trust invests on behalf of the Fund in
taxable securities, such securities will, in the opinion of the Adviser, be of
comparable quality and credit risk with the Municipal Obligations described
above. See the Statement of Additional Information for a description, including
specific rating criteria, of such taxable securities.
REPURCHASE AGREEMENTS
A repurchase agreement arises when a buyer purchases an obligation and
simultaneously agrees with the vendor to resell the obligation to the vendor at
an agreed-upon price and time, which is usually not more than seven days from
the date of purchase. The resale price of a repurchase agreement is greater than
the purchase price, reflecting an agreed-upon market rate which is effective for
the period of time the buyer's funds are invested in the obligation and which is
not related to the coupon rate on the purchased obligation. Obligations serving
as collateral for each repurchase agreement are delivered to each Fund's
custodian bank either physically or in book entry form and the collateral is
marked to the market daily to ensure that each repurchase agreement is fully
collateralized at all times. A buyer of a repurchase agreement runs a risk of
loss if, at the time of default by the issuer, the value of the collateral
securing the agreement is less than the price paid for the repurchase agreement.
If the vendor of a repurchase agreement becomes bankrupt, the Trust might be
delayed, or may incur costs or possible losses of principal and income, in
selling the collateral on behalf of a Fund. The Trust may enter into repurchase
agreements on behalf of the Funds only with a vendor which is a member bank 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
restrictions and procedures described above which govern the investment of each
Fund's assets in repurchase obligations are designed to minimize a Fund's risk
of losses from those investments. Repurchase agreements are considered
collateralized loans under the 1940 Act.
GENERAL
The Trust may, in the future, seek to achieve the investment objective of a
Fund by investing all of its assets in a no-load, open-end management investment
company having the same investment objective and policies and substantially the
same investment restrictions as those applicable to the Fund. In such event, a
Fund's Investment Advisory Contract would be terminated and the administrative
services fees paid by the Fund would be reduced. Such investment would be made
only if the Trustees of the Trust believe that the aggregate per share expenses
of a Fund and such other investment company will be less than or approximately
equal to the expenses which the Fund would incur if the Trust were to continue
to retain the services of an investment adviser for the Fund and the assets of
the Fund were to continue to be invested directly in portfolio securities.
The investment policies of the Funds as described above may be changed by the
Board of Trustees of the Trust without approval by the shareholders of the
Funds. Each Fund's Statement of Additional Information includes a further
discussion of investment policies and a listing of the specific investment
restrictions which govern the investment policies of the Fund, including a
restriction that not more than 10% of each Fund's net assets may be invested in
securities that are not readily marketable, such as repurchase agreements
maturing in more than seven days. Although the Trust currently does not borrow
on behalf of the Funds for the purpose of leveraging, these restrictions permit
the Trust to borrow money on behalf of each Fund for certain other purposes in
amounts up to 33 1/3% of the Fund's net assets (although no securities will be
purchased for the Fund at any time at which borrowings exceed 5% of that Fund's
total assets taken at market value). These specific investment restrictions, as
well as the fundamental policy described above for the New York Tax-Free Money
Market Fund, may not be changed without the approval of a Fund's shareholders.
If a percentage restriction (other than a restriction as to borrowing) or a
rating restriction on investment or utilization of assets is adhered to at the
time an investment is made, or assets are so utilized, a later change in
percentage resulting from changes in the value of each Fund's portfolio
securities is not considered a violation of policy.
MANAGEMENT OF THE TRUST
The business and affairs of the Funds are managed under the direction of the
Board of Trustees of the Trust. The Trustees are Frederick C. Chen, Alan S.
Parsow, Larry M. Robbins and Michael Seely. Additional information about the
Trustees, as well as the Trust's executive officers, may be found in the
Statement of Additional Information under the caption "Management of the Trust
- -- Trustees and Officers".
THE ADVISER
Republic serves as investment adviser to the Funds. Prior to October 14, 1994
Republic Asset Management Corporation advised the U.S. Government Money Market
Fund. The Adviser manages the investment and reinvestment of the assets of the
Funds and continuously reviews, supervises and administers the investments of
each Fund pursuant to an Investment Advisory Contract (the "Investment Advisory
Contract"). Subject to such policies as the Board of Trustees may determine, the
Adviser places orders for the purchase and sale of a Fund's investments directly
with brokers or dealers selected by it in its discretion. The Adviser does not
place orders with the Distributor. For its services under the Investment
Advisory Contract, the Adviser receives fees, payable monthly, from the U.S.
Government Money Market Fund and the New York Tax-Free Money Market Fund at the
annual rate of 0.20% and 0.15%, respectively, of each Fund's average daily net
assets.
Republic is a wholly-owned subsidiary of Republic New York Corporation, a
registered bank holding company. As of March 31, 1996, Republic was the 11th
largest bank holding company in the United States measured by deposits and the
14th largest commercial bank measured by shareholder equity. Republic or an
affiliate of Republic serves as investment adviser to the other series of the
Trust. Republic currently provides investment advisory services for individuals,
trusts, estates and institutions.
Republic and its affiliates may have deposit, loan and other commercial
banking relationships with issuers of obligations purchased for the Funds,
including outstanding loans to such issuers which may be repaid in whole or in
part with the proceeds of obligations so purchased. Republic and its affiliates
deal, trade and invest for their own accounts in U.S. Government and Municipal
obligations and are dealers of various types of U.S. Government and Municipal
obligations. Republic and its affiliates may sell U.S. Government and Municipal
obligations to, and purchase them from, other investment companies sponsored by
BISYS. The Adviser does not invest any U.S. Government Money Market Fund assets
in any U.S. Government obligation or any New York Tax-Free Money Market Fund
assets in any Municipal Obligations purchased from itself or any affiliate,
although under certain circumstances such obligations may be purchased from
other members of an underwriting syndicate in which Republic or an affiliate is
a non-principal member. This restriction should not limit the amount or type of
U.S. Government or Municipal obligations available to be purchased for the Funds
The Adviser has informed the Trust that, in making its investment decisions, it
does not obtain or use material inside information in the possession of any
division or department of Republic or in the possession of any affiliate of
Republic.
Based upon the advice of counsel, Republic believes that the performance of
investment advisory and other services for the Funds will not violate the
Glass-Steagall Act or other applicable banking laws or regulations. However,
future statutory or regulatory changes, as well as future judicial or
administrative decisions and interpretations of present and future statutes and
regulations, could prevent Republic from continuing to perform such services for
the Funds. If Republic were prohibited from acting as investment adviser to the
Funds, it is expected that the Board of Trustees would recommend to shareholders
of the Funds approval of a new investment advisory agreement with another
qualified investment adviser selected by the Board or that the Board would
recommend other appropriate action. If Republic were prohibited from acting as a
Shareholder Servicing Agent for the Funds, the Trust would seek alternative
means of providing such services.
Pursuant to a license agreement between the Trust and Republic dated October
6, 1994, the Trust may continue to use in its name "Republic" only if Republic
does not request that the Trust change its name to eliminate all reference to
"Republic" upon the expiration or earlier termination of any investment advisory
agreement between the Trust and Republic.
THE DISTRIBUTOR AND SPONSOR
BISYS, whose address is 3435 Stelzer Road, Columbus, Ohio 43219-3035, acts as
sponsor and distributor to each Fund under a Distribution Contract with the
Trust. The Distributor may, out of its own resources, make payments to
broker-dealers for their services in distributing Shares. BISYS and its
affiliates also serve as administrator or distributor to other investment
companies. BISYS is a wholly owned subsidiary of BISYS Group, Inc.
Pursuant to a Distribution Plan adopted by the Trust with respect to Investor
Shares of the Funds (the "Plan"), the Distributor is reimbursed from each Fund
monthly (subject to a limit on an annual basis of 0.25% of each Fund's average
daily net assets represented by Investor Shares outstanding during the period
for which payment is being made) for costs and expenses incurred by the
Distributor in connection with the distribution of Investor Shares and for the
provision of certain shareholder services with respect to Investor Shares.
Payments to the Distributor are for various types of activities, including: (1)
payments to broker-dealers which advise shareholders regarding the purchase,
sale or retention of Investor Shares of the Funds and which provide shareholders
with personal services and account maintenance services ("service fees"), (2)
payments to employees of the Distributor, and (3) printing and advertising
expenses. Such payments by the Distributor to broker-dealers may be in amounts
on an annual basis of up to 0.25% of each Fund's average daily net assets
represented by Investor Shares outstanding during the period for which payment
is being made. 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 on an annual basis 0.25% of
each Fund's average daily net assets represented by Investor Shares outstanding
during the period for which payment is being made. Salary expense of BISYS
personnel who are responsible for marketing shares of the various series of the
Trust may be allocated to such series on the basis of average net assets; travel
expense is allocated to, or divided among, the particular series for which it is
incurred.
Any payment by the Distributor or reimbursement of the Distributor from the
Funds made pursuant to the Plan is contingent upon the Board of Trustees'
approval. The Funds are not liable for distribution and shareholder servicing
expenditures made by the Distributor in any given year in excess of the maximum
amount (0.25% per annum of each Fund's average daily net assets represented by
Investor Shares outstanding) payable under the Plan in that year.
ADMINISTRATIVE SERVICES PLAN
The Trust has adopted an Administrative Services Plan which provides that the
Trust may obtain the services of an administrator, transfer agent, and
custodian, and, with respect to the Investor Shares of each Fund, one or more
Shareholder Servicing Agents, and may enter into agreements providing for the
payment of fees for such services.
ADMINISTRATOR
Pursuant to an Administration Agreement, BISYS provides the Trust with general
office facilities and supervises the overall administration of the Trust and the
Funds, including, among other responsibilities, the negotiation of contracts and
fees with, and the monitoring of performance and billings of, the independent
contractors and agents of the Trust; the preparation and filing of all documents
required for compliance by the Trust with applicable laws and regulations; and
arranging for the maintenance of books and records of the Trust and the Funds.
BISYS provides persons satisfactory to the Board of Trustees of the Trust to
serve as officers of the Trust. Such officers, as well as certain other
employees and Trustees of the Trust, may be directors, officers or employees of
BISYS or its affiliates. For these services and facilities, BISYS receives from
the Funds fees payable monthly at an annual rate equal to 0.10% of the first $1
billion of a Fund's average daily net assets, 0.08% of the next $1 billion of
such assets; and 0.07% of such assets in excess of $2 billion.
TRANSFER AGENT AND CUSTODIAN
The Trust has entered into Transfer Agency Agreements with Investors Bank &
Trust Company ("IBT"), pursuant to which IBT acts as transfer agent for the
Funds (the "Transfer Agent"). The Transfer Agent maintains an account for each
shareholder of the Funds (unless such account is maintained by the shareholder's
securities-broker, if applicable, or Shareholder Servicing Agent), performs
other transfer agency functions, and acts as dividend disbursing agent for the
Funds. Pursuant to Custodian Agreements, IBT also acts as the custodian of each
Fund's assets (the "Custodian"). The Custodian's responsibilities include
safeguarding and controlling each Fund's cash and securities, handling the
receipt and delivery of securities, determining income and collecting interest
on each Fund's investments, maintaining books of original entry for portfolio
and fund accounting and other required books and accounts, and calculating the
daily net asset value of shares of the Funds. Securities held for the Funds may
be deposited into the Federal Reserve-Treasury Department Book Entry System or
the Depositary Trust Company. The Custodian does not determine the investment
policies of the Funds or decide which securities will be purchased or sold for
the Funds. Assets of the Funds may, however, be invested in securities of the
Custodian and the Trust may deal with the Custodian as principal in securities
transactions for the Funds. For its services, IBT receives such compensation as
may from time to time be agreed upon by it and the Trust.
SHAREHOLDER SERVICING AGENTS
The Trust has entered into a shareholder servicing agreement (a "Servicing
Agreement") with each Shareholder Servicing Agent, including Republic, pursuant
to which a Shareholder Servicing Agent, as agent for its customers, among other
things: answers customer inquiries regarding account status and history, the
manner in which purchases and redemptions of Investor Shares and Adviser Shares
of the Funds may be effected and certain other matters pertaining to the Funds;
assists shareholders in designating and changing dividend options, account
designations and addresses; provides necessary personnel and facilities to
establish and maintain shareholder accounts and records; assists in processing
purchase and redemption transactions; arranges for the wiring of funds;
transmits and receives funds in connection with customer orders to purchase or
redeem shares; verifies and guarantees shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
furnishes (either separately or on an integrated basis with other reports sent
to a shareholder by a Shareholder Servicing Agent) monthly and year-end
statements and confirmations of purchases and redemptions; transmits, on behalf
of the Trust, proxy statements, annual reports, updated prospectuses and other
communications from the Trust to each Fund's shareholders; receives, tabulates
and transmits to the Trust proxies executed by shareholders with respect to
meetings of shareholders of each Fund or the Trust; and provides such other
related services as the Trust or a shareholder may request. With respect to
Investor Shares, each Shareholder Servicing Agent receives a fee from each Fund
for these services, which may be paid periodically, determined by a formula
based upon the number of accounts serviced by such Shareholder Servicing Agent
during the period for which payment is being made, the level of activity in
accounts serviced by such Shareholder Servicing Agent during such period, and
the expenses incurred by such 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 on an annual basis 0.25% of each Fund's average daily net assets
represented by Investor Shares outstanding during the period for which payment
is being made. Fees are not paid under the terms of the Administrative Services
Plan with respect to Adviser Shares.
The Trust understands that some Shareholder Servicing Agents also may impose
certain conditions on their customers, subject to the terms of this Prospectus,
in addition to or different from those imposed by the Trust, such as requiring a
different minimum initial or subsequent investment, account fees (a fixed amount
per transaction processed), compensating balance requirements (a minimum dollar
amount a customer must maintain in order to obtain the services offered), or
account maintenance fees (a periodic charge based on a percentage of the assets
in the account or of the dividends paid on those assets). Each Shareholder
Servicing Agent has agreed to transmit to its customers who are holders of
Shares appropriate prior written disclosure of any fees that it may charge them
directly and to provide written notice at least 30 days prior to the imposition
of any transaction fees. Conversely, the Trust understands that certain
Shareholder Servicing Agents may credit to the accounts of their customers from
whom they are already receiving other fees amounts not exceeding such other fees
or the fees received by the Shareholder Servicing Agent from the Funds with
respect to those accounts.
The Glass-Steagall Act prohibits certain financial institutions from engaging
in the business of underwriting securities of open-end investment companies,
such as shares of the Funds. The Trust engages banks as Shareholder Servicing
Agents on behalf of the Funds only to perform administrative and shareholder
servicing functions as described above. The Trust believes that the
Glass-Steagall Act should not preclude a bank from acting as a Shareholder
Servicing Agent. There is presently no controlling precedent regarding the
performance of shareholder servicing activities by banks. Future changes in
either federal statutes or regulations relating to the permissible activities of
banks, as well as future judicial or administrative decisions and
interpretations of present and future statutes and regulations, could prevent a
bank from continuing to perform all or part of its servicing activities. If a
bank were prohibited from so acting, its shareholder customers would be
permitted to remain shareholders of the Funds and alternative means for
continuing the servicing of such shareholders would be sought. In such event,
changes in the operation of the Funds might occur and a shareholder serviced by
such bank might no longer be able to avail himself of any automatic investment
or other services then being provided by such bank. The Trustees of the Trust do
not expect that shareholders of the Funds would suffer any adverse financial
consequences as a result of these occurrences.
OTHER EXPENSES
The Fund bears all costs of its operations other than expenses specifically
assumed by the Distributor or the Adviser. See "Management of the Trust --
Expenses and Expense Limits" in the Statement of Additional Information.
Expenses attributable to a particular class of shares shall be allocated to that
class of shares only. Investor Share Expenses must include payments made
pursuant to the Plan and Shareholder Servicing Agent fees paid pursuant to the
Administrative Services Plan. In the event a particular expense is not
reasonably allocable by class or to a particular class, it shall be treated as a
Fund expense or a Trust expense. Trust expenses directly attributable to a Fund
are charged to the Fund; other expenses are allocated proportionately among all
the series in the Trust in relation to the net assets of each series. For the
most recent fiscal year, the operating expenses of the Investor Shares of the
U.S. Government Money Market Fund and the New York Tax- Free Money Market Fund
equaled on an annual basis 0.57% and 0.54%, respectively, of each Fund's average
daily net assets attributable to Investor Shares, and 0.43% and 0.35%
respectively, of each Fund's average daily net assets attributable to Adviser
Shares.
CLASSES OF SHARES
The Trust currently offers two classes of shares of the Funds, the Investor
Shares and Adviser Shares, pursuant to this prospectus. Investor Shares and
Adviser shares may have different class expenses, which may affect performance.
Additionally, Adviser Shares are only being offered to customers of Shareholder
Servicing Agents, while Investor Shares are being offered to the public, to
customers of a Shareholder Servicing Agent and to customers of a securities
broker that has entered into a dealer agreement with the Distributor.
The Investor Shares and Adviser Shares each have exclusive voting rights with
respect to their respective Plan and the Shareholder Servicing Agent fees paid
pursuant to their respective Administrative Services Plan.
DETERMINATION OF NET ASSET VALUE
The net asset value for a particular share in a Fund is determined on each day
on which the New York Stock Exchange is open for trading ("Fund Business Day").
This determination is made once during each such day as of 12:00 noon, New York
time, by dividing the value of a Fund's net assets allocable to a class of share
(i.e., the value of its assets less its liabilities, including expenses payable
or accrued) by the number of shares of that class outstanding at the time the
determination is made. It is anticipated that the net asset value of each
Investor Share and Adviser Share will remain constant at $1.00 (although no
assurance can be given that it will be so constant on a continuing basis) and
specific investment policies and procedures, including the use of the amortized
cost valuation method, are being employed to accomplish this result. Income
earned on each Fund's investments is accrued daily and the Net Income, as
defined under "Dividends and Distributions" on page 30, is declared each Fund
Business Day as a dividend.
PURCHASE OF SHARES
Shares may be purchased through Shareholder Servicing Agents or, in the case
of Investor Shares only, through securities brokers that have entered into a
dealer agreement with the Distributor ("Securities Brokers"). Shares may be
purchased without a sales load at their net asset value next determined after an
order is transmitted to and accepted by the Distributor or is received by a
Shareholder Servicing Agent or a Securities Broker if it is transmitted to and
accepted by the Distributor. Purchases are therefore effected on the same day
the purchase order is received by the Distributor provided such order is
received prior to 12:00 noon, New York time, on any Fund Business Day. Shares
purchased earn dividends from and including the day the purchase is effected. It
is anticipated that the net asset value of $1.00 per share of a Fund will remain
constant, and although no assurance can be given that it will be so constant on
a continuing basis, specific investment policies and procedures are being
employed to accomplish this result. The Trust intends the Funds to be as fully
invested at all times as is reasonably practicable in order to enhance the yield
on their assets. Each Shareholder Servicing Agent or Securities Broker is
responsible for and required to promptly forward orders for shares to the
Distributor.
While there is no sales load on purchases of Investor Shares, the Distributor
may receive fees from the Funds. See "Management of the Trust -- The Distributor
and Sponsor". Other funds which have investment objectives similar to those of
the Funds but which do not pay some or all of such fees from their assets may
offer a higher yield.
All purchase payments are invested in full and fractional Shares. The Trust
reserves the right to cease offering Shares for sale at any time or to reject
any order for the purchase of Shares.
An investor may purchase Investor Shares through the Distributor directly or
by authorizing his Shareholder Servicing Agent or his securities broker to
purchase such shares on his behalf through the Distributor. An investor may
purchase Adviser Shares by authorizing his Shareholder Servicing Agent to
purchase such shares on his behalf through the Distributor.
Exchange Privilege. By contacting the Transfer Agent or his Shareholder
Servicing Agent or his securities broker, a shareholder may exchange some or all
of his Shares for shares of an identical class of one or more of the following
investment companies at net asset value without a sales charge: Republic U.S.
Government Money Market Fund, Republic Bond Fund, Republic Overseas Equity Fund,
Republic Opportunity Fund, Republic New York Tax-Free Bond Fund, Republic New
York Tax-Free Money Market Fund, Republic Equity Fund, and such other Republic
Funds or other registered investment companies for which Republic serves as
investment adviser as Republic may determine. An exchange may result in a change
in the number of Shares held, but not in the value of such Shares immediately
after the exchange. Each exchange involves the redemption of the Shares to be
exchanged and the purchase of the shares of the other Republic Fund.
The exchange privilege (or any aspect of it) may be changed or discontinued
upon 60 days' written notice to shareholders and is available only to
shareholders in states in which such exchanges may be legally made. A
shareholder considering an exchange should obtain and read the prospectus of the
other Republic Fund and consider the differences in investment objectives and
policies before making any exchange.
DIRECTLY THROUGH THE DISTRIBUTOR
For each shareholder who purchases Investor Shares directly through the
Distributor, the Trust, as the shareholder's agent, establishes an open account
to which all Investor Shares purchased are credited together with any dividends
and capital gains distributions which are paid in additional Investor Shares.
See "Dividends and Distributions". The minimum initial investment is $1,000,
except that the minimum initial investment for an Individual Retirement Account
is $250. The minimum subsequent investment is $100. Initial and subsequent
purchases may be made by writing a check (in U.S. dollars) payable to The
Republic Funds -- U.S. Government Money Market Fund or The Republic Funds -- New
York Tax-Free Money Market Fund and mailing it to:
The Republic Funds
c/o Investors Bank & Trust Company
P.O. Box 1537 MFD23
Boston, Massachusetts 02205-1537
In the case of an initial purchase, the check must be accompanied by a
completed Purchase Application.
In the case of subsequent purchases, a shareholder may transmit purchase
payments by wire directly to the custodian bank of the Funds at the following
address:
Investors Bank & Trust Company
Boston, Massachusetts
Attn: Transfer Agent
ABA # 011001438
Acct. #5999-99451
For further credit to the Republic Funds (U.S. Government Money Market Fund
or New York Tax-Free Money Market Fund, Investor, account name, account #)
The wire order must specify the Fund, the account name, number, confirmation
number, address, amount to be wired, name of the wiring bank and name and
telephone number of the person to be contacted in connection with the order.
Automatic Investment Plan. The Trust offers a plan for regularly investing
specified dollar amounts ($25.00 minimum in monthly, quarterly, semi-annual or
annual intervals) in a Fund. If an Automatic Investment Plan is selected,
subsequent investments will be automatic and will continue until such time as
the Trust and the investor's bank are notified to discontinue further
investments. Due to the varying procedures to prepare, process and to forward
bank withdrawal information to the Trust, there may be a delay between the time
of the bank withdrawal and the time the money reaches the Fund. The investment
in a Fund will be made at the net asset value per share determined on the day
that both the check and the bank withdrawal data are received in required form
by the Distributor. Further information about the plan may be obtained from IBT
at the telephone number listed on the back cover.
For further information on how to purchase Investor Shares from the
Distributor, an investor should contact the Distributor directly (see back cover
for address and phone number).
THROUGH A SHAREHOLDER SERVICING AGENT OR A SECURITIES BROKER
Investor Shares of each Fund are being offered to the public, to customers of
a Shareholder Servicing Agent and to customers of a securities broker that has
entered into a dealer agreement with the Distributor. Adviser Shares of each
Fund are only being offered to customers of Shareholder Servicing Agents.
Shareholder Servicing Agents and securities brokers, if applicable, may offer
services to their customers, including specialized procedures for the purchase
and redemption of Shares, such as pre-authorized or automatic purchase and
redemption programs and "sweep" checking programs. Each Shareholder Servicing
Agent and securities broker may establish its own terms, conditions and charges,
including limitations on the amounts of transactions, with respect to such
services. Charges for these services may include fixed annual fees, account
maintenance fees and minimum account balance requirements. The effect of any
such fees will be to reduce the net return on the investment of customers of
that Shareholder Servicing Agent or securities broker. Conversely, certain
Shareholder Servicing Agents may (although they are not required by the Trust to
do so) credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from each Fund, which will have the effect of
increasing the net return on the investment of such customers of those
Shareholder Servicing Agents.
Shareholder Servicing Agents and securities brokers may transmit purchase
payments on behalf of their customers by wire directly to a Fund's custodian
bank by following the procedures described above.
For further information on how to direct a securities broker, if applicable,
or a Shareholder Servicing Agent to purchase Shares, an investor should contact
his securities broker or his Shareholder Servicing Agent.
RETIREMENT PLANS
Shares of the U.S. Government Money Market Fund are offered in connection with
tax-deferred retirement plans. Application forms and further information about
these plans, including applicable fees, are available from the Trust or the
Sponsor upon request. Recently enacted federal tax legislation has substantially
affected the tax treatment of contributions to certain retirement plans. Before
investing in the Fund through one or more of these plans, an investor should
consult his or her tax adviser.
INDIVIDUAL RETIREMENT ACCOUNTS
Shares of the U.S. Government Money Market Fund may be used as a funding
medium for an IRA. An Internal Revenue Service-approved IRA plan may be
available from an investor's Shareholder Servicing Agent. In any event, such a
plan is available from the Sponsor naming IBT as custodian. The minimum initial
investment for an IRA is $250; the minimum subsequent investment is $100. IRAs
are available to individuals who receive compensation or earned income and their
spouses whether or not they are active participants in a tax-qualified or
Government-approved retirement plan. An IRA contribution by an individual who
participates, or whose spouse participates, in a tax-qualified or
Government-approved retirement plan may not be deductible depending upon the
individual's income. Individuals also may establish an IRA to receive a
"rollover" contribution of distributions from another IRA or a qualified plan.
Tax advice should be obtained before planning a rollover.
DEFINED CONTRIBUTION PLANS
Investors who are self-employed may purchase shares of the U.S. Government
Money Market Fund for retirement plans for self-employed persons which are known
as Defined Contribution Plans (formerly Keogh or H.R. 10 Plans). Republic offers
a prototype plan for Money Purchase and Profit Sharing Plans.
SECTION 457 PLAN, 401(K) PLAN, 403(B) PLAN
The U.S. Government Money Market Fund may be used as a vehicle for certain
deferred compensation plans provided for by Section 457 of the Internal Revenue
Code of 1986, as amended, (the "Code") with respect to service for state
governments, local governments, rural electric cooperatives and political
subdivisions, agencies, instrumentalities and certain affiliates of such
entities. The Fund may also be used as a vehicle for both 401(k) plans and
403(b) plans.
REDEMPTION OF SHARES
A shareholder may redeem all or any portion of the Shares in his account at
any time at the net asset value (normally $1.00 per share) next determined after
a redemption order in proper form is furnished by the shareholder to the
Transfer Agent, with respect to Shares purchased directly through the
Distributor, or to his securities broker or his Shareholder Servicing Agent, and
is transmitted to and received by the Transfer Agent. Redemptions are effected
on the same day the redemption order is received by the Transfer Agent provided
such order is received prior to 12:00 noon, New York time, on any Fund Business
Day. Shares redeemed earn dividends up to and including the day prior to the day
the redemption is effected.
The proceeds of a redemption are normally paid from a Fund in federal funds on
the next Fund Business Day following the date on which the redemption is
effected, but in any event within seven days. The right of any shareholder to
receive payment with respect to any redemption may be suspended or the payment
of the redemption proceeds postponed during any period in which the New York
Stock Exchange is closed (other than weekends or holidays) or trading on such
Exchange is restricted or, to the extent otherwise permitted by the 1940 Act, if
an emergency exists. To be in a position to eliminate excessive expenses, the
Trust reserves the right to redeem upon not less than 30 days' notice all Shares
in an account which has a value below $50. However, a shareholder will be
allowed to make additional investments prior to the date fixed for redemption to
avoid liquidation of the account.
Unless Shares have been purchased directly from the Distributor, a shareholder
may redeem Shares only by authorizing his securities broker, if applicable, or
his Shareholder Servicing Agent to redeem such Shares on his behalf (since the
account and records of such a shareholder are established and maintained by his
securities broker or his Shareholder Servicing Agent). For further information
as to how to direct a securities broker or a Shareholder Servicing Agent to
redeem Shares, a shareholder should contact his securities broker or his
Shareholder Servicing Agent.
SYSTEMATIC WITHDRAWAL PLAN
Any shareholder who owns Shares with an aggregate value of $10,000 or more may
establish a Systematic Withdrawal Plan under which they redeem at net asset
value the number of full and fractional shares which will produce the monthly,
quarterly, semi-annual or annual payments specified (minimum $50.00 per
payment). Depending on the amounts withdrawn, systematic withdrawals may deplete
the investor's principal. Investors contemplating participation in this Plan
should consult their tax advisers. No additional charge to the shareholder is
made for this service.
REDEMPTION OF INVESTOR SHARES PURCHASED DIRECTLY THROUGH THE DISTRIBUTOR
Redemption by Letter. Redemptions may be made by letter to the Transfer Agent
specifying the dollar amount or number of Investor Shares to be redeemed,
account number and the Fund. The letter must be signed in exactly the same way
the account is registered (if there is more than one owner of the Shares all
must sign). In connection with a written redemption request, all signatures of
all registered owners or authorized parties must be guaranteed by an Eligible
Guarantor Institution, which includes a domestic bank, broker, dealer, credit
union, national securities exchange, registered securities association, clearing
agency or savings association. A Fund's transfer agent, however, may reject
redemption instructions if the guarantor is neither a member or not a
participant in a signature guarantee program (currently known as "STAMP",
"SEMP", or "NYSE MPS"). Corporations, partnerships, trusts or other legal
entities may be required to submit additional documentation.
An investor may redeem Investor Shares in any amount by written request mailed
to the Transfer Agent at the following address:
The Republic Funds
c/o Investors Bank & Trust Company
P.O. Box 1537 MFD23
Boston, Massachusetts 02205-1537
Checks for redemption proceeds normally will be mailed within seven days, but
will not be mailed until all checks in payment for the purchase of the Investor
Shares to be redeemed have been cleared, which may take up to 15 days or more.
Unless other instructions are given in proper form, a check for the proceeds of
a redemption will be sent to the shareholder's address of record.
Redemption by Wire or Telephone. An investor may redeem Investor Shares by
wire or by telephone if he has checked the appropriate box on the Purchase
Application or has filed a Telephone Authorization Form with the Trust. These
redemptions may be paid from the applicable Fund by wire or by check. The Trust
reserves the right to refuse telephone wire redemptions and may limit the amount
involved or the number of telephone redemptions. The telephone redemption
procedure may be modified or discontinued at any time by the Trust. Instructions
for wire redemptions are set forth in the Purchase Application. The Trust
employs reasonable procedures to confirm that instructions communicated by
telephone are genuine. For instance, the following information must be verified
by the shareholder or securities broker at the time a request for a telephone
redemption is effected: (1) shareholder's account number; (2) shareholder's
social security number; and (3) name and account number of shareholder's
designated securities broker or bank. If the Trust fails to follow these or
other established procedures, it may be liable for any losses due to
unauthorized or fraudulent instructions.
Check Redemption Service. Shareholders may redeem Investor Shares by means of
a Check Redemption Service. If Investor Shares are held in book credit form and
the Check Redemption Service has been elected on the Purchase Application on
file with the Trust, redemptions of shares may be made by using redemption
checks provided by the Trust. There is no charge for this service. Checks must
be written for amounts of $250 or more, may be payable to anyone and negotiated
in the normal way. If more than one shareholder owns the Investor Shares, all
must sign the check unless an election has been made to require only one
signature on checks and that election has been filed with the Trust.
Investor Shares represented by a redemption check continue to earn daily
dividends until the check clears the banking system. When honoring a redemption
check, the Trust causes the redemption of exactly enough full and fractional
Investor Shares of a Fund from an account to cover the amount of the check. The
Check Redemption Services may be terminated at any time by the Trust.
If the Check Redemption Service is requested for an account in the name of a
corporation or other institution, additional documents must be submitted with
the application, i.e., corporations (Certification of Corporate Resolution),
partnerships (Certification of Partnership) and trusts (Certification of
Trustees). In addition, since the share balance of each Fund account is changing
on a daily basis, the total value of a Fund account cannot be determined in
advance and a Fund account cannot be closed or entirely redeemed by check.
DIVIDENDS AND DISTRIBUTIONS
The net income of a Fund, as defined below, is determined each Fund Business
Day (and on such other days as the Trustees deem necessary in order to comply
with Rule 22c-1 under the 1940 Act). This determination is made once during each
such day as of 12:00 noon, New York time. All the net income of the Fund so
determined is declared in shares of the Fund as a dividend to shareholders of
record at the time of such determination. Shares begin accruing dividends on the
day they are purchased. Dividends are distributed monthly. Unless a shareholder
elects to receive dividends in cash (subject to the policies of the
shareholder's Shareholder Servicing Agent or securities broker), dividends are
distributed in the form of additional shares of the Fund at the rate of one
share (and fraction thereof) of the Fund for each one dollar (and fraction
thereof) of dividend income.
For this purpose the net income of each Fund (from the time of the immediately
preceding determination thereof) consists of (i) all income accrued, less the
amortization of any premium, on the assets of the Fund, less (ii) all actual and
accrued expenses determined in accordance with generally accepted accounting
principles. Interest income includes discount earned (including both original
issue and market discount) on discount paper accrued ratably to the date of
maturity and any net realized gains or losses on the assets of the Fund.
Obligations held in a Fund's portfolio are valued at amortized cost, which the
Trustees of the Trust have determined in good faith constitutes fair value for
the purposes of complying with the 1940 Act. This method provides certainty in
valuation, but may result in periods during which the stated value of an
obligation held for a Fund is higher or lower than the price the Fund would
receive if the obligation were sold. This valuation method will continue to be
used until such time as the Trustees of the Trust determine that it does not
constitute fair value for such purposes.
Since the net income of a Fund is declared as a dividend each time the net
income of the Fund is determined, the net asset value per share of a Fund is
expected to remain at $1.00 per share immediately after each such determination
and dividend declaration. Any increase in the value of a shareholder's
investment in a Fund, representing the reinvestment of dividend income, is
reflected by an increase in the number of Shares in his account.
It is expected that each Fund will have a positive net income at the time of
each determination thereof. If, for any reason, the net income of a Fund
determined at any time is a negative amount, which could occur, for instance,
upon default by an issuer of an obligation held in the Fund's portfolio, the
negative amount with respect to each shareholder account would first be offset
from the dividends declared during the month with respect to each such account.
If and to the extent that such negative amount exceeds such declared dividends
at the end of the month, the number of outstanding Fund Shares would be reduced
by treating each shareholder as having contributed to the capital of the Fund
that number of full and fractional Shares in the account of such shareholder
which represents his proportion of the amount of such excess. Each shareholder
will be deemed to have agreed to such contribution in these circumstances by his
investment in the Fund. Thus, the net asset value per Share is expected to be
maintained at a constant $1.00.
TAX MATTERS
This discussion is intended for general information only. An investor should
consult with his or her own tax advisor as to the tax consequences of an
investment in the Funds including the status of distributions from the New York
Tax-Free Money Market Fund under applicable state or local law and the possible
applicability of a federal alternative minimum tax to a portion of the
distributions of this Fund.
FEDERAL INCOME TAXES
Each year, the Trust intends to qualify the Funds and elect that each Fund be
treated as a separate "regulated investment company" under Subchapter M of the
Code. To so qualify, the Funds must meet certain income, distribution and
diversification requirements. Provided such requirements are met and all
investment company taxable income and net realized capital gains of the Funds
are distributed to shareholders in accordance with the timing requirements
imposed by the Code, generally no federal (or, in the case of the New York
Tax-Free Money Market Fund, New York State and New York City) income or excise
taxes will be paid by the Funds on amounts so distributed.
U.S. Government Money Market Fund. At the end of each calendar year, each
shareholder receives information for tax purposes on the dividends and any
realized net capital gains distributions received during that calendar year
including the portion taxable as ordinary income, the portion taxable as capital
gains, and the amount of dividends eligible for the dividends-received deduction
for corporations. However, since no portion of the U.S. Government Money Market
Fund's income is expected to consist of dividends paid by U.S. corporations, no
portion of the dividends paid by the Fund is expected to qualify for the
dividends-received deduction for corporations.
The Trust may be required to withhold federal income tax at the rate of 31%
from all taxable distributions payable to shareholders who do not provide the
Trust with their correct taxpayer identification number or make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder's federal
income tax liability.
New York Tax-Free Money Market Fund. After the end of each calendar year, each
shareholder receives a statement setting forth the federal, New York State and
New York City personal income tax status of all dividends and capital gains
distributions, if any, made during that calendar year.
In accordance with the New York Tax-Free Money Market Fund's investment
objective, it is expected that most of the Fund's net income will be
attributable to interest from Municipal Obligations and, as a result, most of
the dividends to Fund shareholders will be designated by the Trust as "exempt-
interest dividends" under the Code, which may be treated as items of interest
excludible from a shareholder's gross income. Since the preservation of capital
and liquidity are important aspects of the Fund's investment objective, the
Trust may from time to time invest a portion of the Fund's assets in short-term
obligations the interest on which is not exempt from federal income taxes.
Moreover, dividends attributable to interest on certain Municipal Obligations
which may be purchased for the Fund may be treated as a tax preference item for
shareholders potentially subject to an alternative minimum tax and all
exempt-interest dividends may increase a corporate shareholder's alternative
minimum tax. Although it is not intended, it is possible that the Fund may
realize short-term or long-term capital gains or losses from its portfolio
transactions. Any distributions from net short-term capital gains would be
taxable to shareholders as ordinary income and any distributions from net
long-term capital gains would be taxable to shareholders as long-term capital
gains regardless of how long they have held their shares.
The Code provides that interest on indebtedness incurred, or continued, to
purchase or carry shares of the New York Tax-Free Money Market Fund is not
deductible. Further, exempt-interest dividends are taken into account in
calculating the amount of social security and railroad retirement benefits that
may be subject to federal income tax. Finally, entities or persons who may be
"substantial users" (or persons related to "substantial users") of facilities
financed by industrial development bonds should consult their tax advisors
before purchasing shares of the Fund.
STATE AND LOCAL TAXES
U.S. Government Money Market Fund. Distributions which are derived from
interest on obligations of the U.S. Government and certain of its agencies and
instrumentalities (but generally not from capital gains realized upon the
disposition of such obligations) may be exempt from state and local taxes in
certain states. In other states, arguments can be made on the basis of a U.S.
Supreme Court decision to the effect that such distributions should be exempt
from state and local taxes. Shareholders of the U.S. Government Money Market
Fund are advised of the proportion of its distributions which consists of such
interest.
New York Tax-Free Money Market Fund. The exemption for federal income tax
purposes of dividends derived from interest on Municipal Obligations does not
necessarily result in an exemption under the income or other tax laws of any
state or local taxing authority. However, to the extent that dividends are
derived from interest on New York Municipal Obligations, the dividends will also
be excluded from the gross income of a New York individual resident shareholder
for New York State and New York City personal income tax purposes.
DIVIDENDS FROM THE NEW YORK TAX-FREE MONEY MARKET FUND ARE NOT EXCLUDED IN
DETERMINING NEW YORK STATE OR NEW YORK CITY FRANCHISE TAXES ON CORPORATIONS
AND FINANCIAL INSTITUTIONS.
Dividends and capital gains distributions, if any, paid to shareholders are
treated in the same manner for federal and, in the case of the New York Tax-
Free Money Market Fund, New York State and New York City income tax purposes
whether received in cash or reinvested in additional shares of the Funds.
The Trust is organized as a Massachusetts business trust and, under current
law, is not liable for any income or franchise tax in the Commonwealth of
Massachusetts as long as each series of the Trust (including the Funds)
qualifies as a "regulated investment company" under the Code.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional Investor Shares and Adviser Shares of Beneficial
Interest (par value $0.001 per share) and to divide or combine the shares into a
greater or lesser number of shares without thereby changing the proportionate
beneficial interests in the Trust. The shares of each series participate equally
in the earnings, dividends and assets of the particular series. Currently, the
Trust has seven series of shares, each of which constitutes a separately managed
fund. The Trust reserves the right to create additional series of shares. The
Trust may authorize the creation of multiple classes of shares of separate
series of the Trust. Currently, each Fund is divided into two classes of shares.
Each share of each class of the Funds represents an equal proportionate
interest in the Fund with each other share of that class. Shares have no
preference, pre-emptive, conversion or similar rights. Shares when issued are
fully paid and non-assessable, except as set forth below. Shareholders are
entitled to one vote for each share held on matters on which they are entitled
to vote. Each Shareholder Servicing Agent has agreed to transmit all proxies and
voting materials from the Trust to their customers who are beneficial owners of
the Fund and such Shareholder Servicing Agents have agreed to vote as instructed
by such customers. The Trust is not required and has no current intention to
hold annual meetings of shareholders, although the Trust will hold special
meetings of Fund shareholders when in the judgment of the Trustees of the Trust
it is necessary or desirable to submit matters for a shareholder vote.
Shareholders of each series generally vote separately, for example, to approve
investment advisory agreements or changes in fundamental investment policies or
restrictions, but shareholders of all series may vote together to the extent
required under the 1940 Act, such as in the election or selection of Trustees,
principal underwriters and accountants for the Trust. Shares of each class of a
series represent an equal pro rata interest in such series and, generally, have
identical voting, dividend, liquidation, and other rights, preferences, powers,
terms and conditions, except that: (a) each class shall have a different
designation; (b) each class of shares shall bear any class expenses; and (c)
each class shall have exclusive voting rights on any matter submitted to
shareholders that relate solely to its distribution arrangement, and each class
shall have separate voting rights on any matter submitted to shareholders in
which the interests of one class differ from the interests of any other class.
Shareholders of the Funds have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees by a
specified number of shareholders) the right to communicate with other
shareholders of the Trust in connection with requesting a meeting of
shareholders of the Trust for the purpose of removing one or more Trustees.
Shareholders of the Trust also have the right to remove one or more Trustees
without a meeting by a declaration in writing subscribed to by a specified
number of shareholders. Upon liquidation or dissolution of a Fund, shareholders
of the Fund would be entitled to share pro rata in the net assets of the Fund
available for distribution to shareholders.
The Trust's Declaration of Trust provides that, at any meeting of shareholders
of the Funds or the Trust, a Shareholder Servicing Agent may vote any shares as
to which such Shareholder Servicing Agent is the agent of record and which are
otherwise not represented in person or by proxy at the meeting, proportionately
in accordance with the votes cast by holders of all shares otherwise represented
at the meeting in person or by proxy as to which such Shareholder Servicing
Agent is the agent of record. Any shares so voted by a Shareholder Servicing
Agent will be deemed represented at the meeting for purposes of quorum
requirements.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust". Under Massachusetts law, shareholders of such a business trust may,
under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
PERFORMANCE INFORMATION
From time to time the Trust may provide annualized "yield" and "effective
yield" quotations for the U.S. Government Money Market Fund and annualized
"yield", "effective yield", and "tax equivalent yield" quotations for the New
York Tax-Free Money Market Fund in advertisements, shareholder reports or other
communications to shareholders and prospective investors. The methods used to
calculate a Fund's yield, effective yield and tax equivalent yield are mandated
by the Securities and Exchange Commission. The "yield" of a Fund refers to the
income generated by an investment in the Fund over a seven day period (which
period will be stated in any such advertisement or communication). This income
is then "annualized". That is, the amount of income generated by the investment
during that seven day period is assumed to be generated each week over a 365 day
period and is shown as a percentage of the investment. The "effective yield" is
calculated similarly, but when annualized the income earned by the investment
during that seven day period is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment. With respect to the New York Tax-Free Money Market Fund,
the "tax equivalent yield" refers to the yield that a fully taxable money market
fund would have to generate, given a stated aggregate state and local income tax
rate, in order to produce an after-tax yield equivalent to that of the Fund. The
use of a tax equivalent yield allows investors to compare the yield of the Fund,
all or a significant portion of which is exempt from federal, New York State and
New York City personal income taxes, with yields of funds which are not so tax
exempt.
Since these yield, effective yield and tax equivalent yield quotations are
based on historical earnings and since a Fund's yield, effective yield and tax
equivalent yield fluctuate from day to day, these quotations should not be
considered as an indication or representation of a Fund's yield, effective yield
or tax equivalent yield, if applicable, in the future. Any performance
information should be considered in light of a Fund's investment objective and
policies, characteristics and quality of the Fund's portfolio and the market
quotations during the time period indicated, and should not be considered to be
representative of what may be achieved in the future. From time to time the
Trust may also use comparative performance information in such an advertisement
or communication, including the performance of unmanaged indices, the
performance of the Consumer Price Index (as a measure for inflation), and data
from Lipper Analytical Services, Inc., Bank Rate Monitor(tm) , IBC/Donoghue's
Money Fund Report and other industry publications.
Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the yield of a Fund varies based on the type, quality and
maturities of the obligations held for the Fund, fluctuations in short-term
interest rates, and changes in the expenses of the Fund. These factors and
possible differences in the methods used to calculate yields should be
considered when comparing the yield of a Fund to yields published for other
investment companies or other investment vehicles.
A Shareholder Servicing Agent or a securities broker, if applicable, may
charge its customers direct fees in connection with an investment in the Funds,
which will have the effect of reducing the net return on the investment of
customers of that Shareholder Servicing Agent or that securities broker.
Conversely, the Trust has been advised that certain Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Funds, which will have the effect of
increasing the net return on the investment of such customers of those
Shareholder Servicing Agents. Such customers may be able to obtain through their
Shareholder Servicing Agent or securities broker quotations reflecting such
decreased or increased return.
The yield and effective yield of the U.S. Government Money Market Fund and the
yield, effective yield and tax equivalent yield of the New York Tax-Free Money
Market Fund are not fixed or guaranteed, and an investment in the Funds is not
insured. The Trust's Statements of Additional Information with respect to the
Funds include more detailed information concerning the calculation of yield,
effective yield and tax equivalent yield, if applicable, quotations for the
Funds.
SHAREHOLDER INQUIRIES
All shareholder inquiries should be directed to the Trust, 3435 Stelzer Road,
Columbus, Ohio 43219-3035.
GENERAL AND ACCOUNT INFORMATION (888) 525-5757 (TOLL FREE)
--------------------
The Trust's Statement of Additional Information, dated February 1, 1997, with
respect to each Fund contains more detailed information about the Fund,
including information related to (i) the Fund's investment restrictions, (ii)
the Trustees and officers of the Trust and the Adviser and Sponsor of the Fund,
(iii) portfolio transactios, (iv) the Fund's shares, including rights and
liabilities of shareholders, and (v) additional yield information, including the
method used to calculate the annualized yield, effective yield and tax
equivalent yield, if applicable, of the Fund.
<PAGE>
APPENDIX A
DESCRIPTION OF MUNICIPAL OBLIGATIONS
There are four major varieties of state and municipal notes: Tax and Revenue
Anticipation Notes ("TRANs"); Tax Anticipation Notes ("TANs"); Revenue
Anticipation Notes ("RANs"); and Bond Anticipation Notes ("BANs").
TRANs, TANs and RANs are issued by states, municipalities and other tax-exempt
issuers to finance short-term cash needs or, occasionally, to finance
construction. Most TRANs, TANs and RANs are general obligations of the issuing
entity payable from taxes or designated revenues, respectively, expected to be
received within the related fiscal period.
BANs are issued with the expectation that principal and interest of the
maturing notes will be paid out of proceeds from notes or bonds to be issued
concurrently or at a later date. BANs are issued by both general obligation and
revenue bond issuers usually to finance such items as land acquisition, facility
acquisition and/or construction and capital improvement projects.
Municipal bonds are debt obligations of states, cities, counties,
municipalities and municipal agencies and authorities (all of which are
generally referred to as "municipalities") which generally have a maturity at
the time of issue of one year or more and which are issued to raise funds for
various public purposes such as construction of a wide range of public
facilities, to refund outstanding obligations and to obtain funds for
institutions and facilities.
The two principal classifications of municipal bonds are "general obligation"
and "revenue" bonds. General obligation bonds are secured by the issuer's pledge
of its full faith, credit and taxing power for the payment of principal and
interest. Issuers of general obligation bonds include states, counties, cities,
towns and other governmental units. The principal of, and interest on, revenue
bonds are payable from the income of specific projects or authorities and
generally are not supported by the issuer's general power to levy taxes. In some
cases, revenues derived from specific taxes are pledged to support payments on a
revenue bond.
In addition, certain kinds of industrial development bonds ("IDBs") are issued
by or on behalf of public authorities to provide funding for various privately
operated industrial facilities such as warehouse, office, plant and store
facilities, and environmental and pollution control facilities. Interest on the
IDBs is generally exempt, with certain exceptions, from federal income tax
pursuant to Section 103(a) of the Internal Revenue Code, provided the issuer and
corporate obligor thereof continue to meet certain conditions. IDBs are, in most
cases, revenue bonds and do not generally constitute the pledge of the credit of
the issuer of such bonds. The payment of the principal and interest on IDBs
usually depends solely on the ability of the user of the facilities financed by
the bonds or other guarantor to meet its financial obligations and, in certain
instances, the pledge of real and personal property as security for payment. In
the case of many IDBs, there is no established secondary market for their
purchase or sale and therefore they may not be readily marketable. However, the
IDBs or the participation interests in IDBs purchased by the Fund will have
liquidity because they generally will be supported by demand features to "high
quality" banks, insurance companies or other financial institutions which may be
exercised by the Fund. In some cases, these demand features may not be
exercisable in the event of a default on the underlying IDB. (See "Investment
Objective, Policies and Restrictions -- Variable Rate Instruments and
Participation Interests" in the Statement of Additional Information.)
DESCRIPTION OF RATINGS*
The ratings of Moody's Investors Service, Inc., Standard & Poor's Corporation
and Fitch Investors Service, Inc. represent their opinions as to the quality of
various debt obligations. It should be emphasized, however, that ratings are not
absolute standards of quality. Consequently, Municipal Obligations with the same
maturity, coupon and rating may have different yields while Municipal
Obligations of the same maturity and coupon with different ratings may have the
same yield.
- ----------
*As described by the rating agencies. Ratings are generally given to securities
at the time of issuance. While the rating agencies may from time to time revise
such ratings, they undertake no obligation to do so.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
TWO HIGHEST LONG-TERM DEBT RATINGS:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and generally are referred to as
"gilt edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
Note: Those bonds in the Aa group which Moody's believes
possess the strongest investment attributes are
designated by the symbol Aa 1.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S TWO HIGHEST
RATINGS OF STATE AND MUNICIPAL NOTES:
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade ("MIG"). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors affecting
the liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk, such
as long-term secular trends, may be less important over the short run. A
short-term rating may also be assigned on an issue having a demand feature. Such
ratings will be designated as "VMIG" or, if the demand feature is not rated, as
"NR". Short-term ratings on issues with demand features are differentiated by
the use of the "VMIG" symbol to reflect such characteristics as payment upon
periodic demand rather than fixed maturity dates and payment relying on external
liquidity. Additionally, investors should be alert to the fact that the source
of payment may be limited to the external liquidity with no or limited legal
recourse to the issuer in the event the demand is not met. Symbols used are as
follows:
MIG 1/VMIG 1 -- Notes bearing this designation are of the best quality, with
strong protection from established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2 -- Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding group.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S
TWO HIGHEST COMMERCIAL PAPER RATINGS:
Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually senior short-term debt obligations not having an original
maturity in excess of one year.
Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of senior short-term debt obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: (1)
leading market positions in well established industries; (2) high rates of
return on funds employed; (3) conservative capitalization structures with
moderate reliance on debt and ample asset protection; (4) broad margins in
earnings coverage of fixed financial charges and high internal cash generation;
and (5) well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S
TWO HIGHEST LONG-TERM DEBT RATINGS:
AAA -- Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA -- Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
Plus (+) or Minus (-): The AA rating may be modified by the addition of a plus
or minus sign to show relative standing within the AA rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S TWO HIGHEST
RATINGS OF STATE AND MUNICIPAL NOTES:
A Standard & Poor's note rating reflects the liquidity concerns and market
access risks unique to notes. Notes due in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in making
that assessment:
-- Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
-- Source of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
Note rating symbols are as follows:
SP-1 -- Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics
are given a plus (+) designation.
SP-2 -- Satisfactory capacity to pay principal and interest.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S
TWO HIGHEST COMMERCIAL PAPER RATINGS:
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.
A -- Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1 -- This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2 -- Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S DUAL RATINGS:
Standard & Poor's assigns "dual" ratings to all long-term debt issues that
have as part of their provisions a demand or double feature.
The first rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols are used to denote the put
option (for example, "AAA/A-1+"). For demand notes, the note rating symbols are
used with the commercial paper symbols (for example, "SP-1+/A-1+").
DESCRIPTION OF FITCH INVESTORS SERVICE, INC.'S
TWO HIGHEST BOND RATINGS:
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the issuer's
future financial strength and credit quality.
AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA -- Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated "AAA". Because bonds rated in the
"AAA" and "AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+".
Plus (+) or Minus (-): The AA rating may be modified by the addition of a plus
or minus sign to show relative standing within the AA rating category.
DESCRIPTION OF FITCH INVESTORS SERVICE, INC'S THREE HIGHEST
RATINGS OF STATE AND MUNICIPAL NOTES:
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+ -- Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 -- Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+".
F-2 -- Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned "F-1+" and "F-1" ratings.
DESCRIPTION OF FITCH INVESTORS SERVICE, INC.'S
THREE HIGHEST COMMERCIAL PAPER RATINGS:
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+ -- Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 -- Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+".
F-2 -- Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned "F-1+" and "F-1" ratings.
<PAGE>
APPENDIX B
TAXABLE EQUIVALENT YIELD TABLES
The tables below show the approximate taxable yields which are equivalent to
tax-exempt yields, for the ranges indicated, under (i) federal and New York
State personal income tax laws, and (ii) federal, New York State and New York
City personal income tax laws, in each case based upon the applicable 1996
rates. Such yields may differ under the laws applicable to subsequent years if
the effect of any such law is to change any tax bracket or the amount of taxable
income which is applicable to a tax bracket. Separate calculations, showing the
applicable taxable income brackets, are provided for investors who file single
returns and for those investors who file joint returns. For cases in which two
or more state (or city) brackets fall within a federal bracket, the highest
state (or city) bracket is combined with the federal bracket. The combined
income tax brackets shown reflect the fact that state and city income taxes are
currently deductible as an itemized deduction for federal tax purposes (however,
a taxpayer's itemized deductions may be subject to an overall limitation, the
effect of which has not been taken into account in preparing these tables).
<TABLE>
<CAPTION>
FEDERAL AND NEW YORK STATE TABLE
- -----------------------------------------------------------------------------------------------------------------------------------
TAXABLE INCOME* TAX-EXEMPT YIELD
- ---------------------------------------- INCOME --------------------------------------------------------------------------
SINGLE JOINT TAX 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
RETURN RETURN BRACKET** EQUIVALENT TAXABLE YIELD
- ----------------- ------------------ --------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-$ 24,000 $ 0-$ 40,100 21.06% 2.53% 3.17% 3.80% 4.43% 5.07% 5.70% 6.33% 6.97% 7.60% 8.23%
$ 24,001-$ 58,150 $ 40,101-$ 96,900 33.13% 2.99% 3.74% 4.49% 5.23% 5.98% 6.73% 7.48% 8.22% 8.97% 9.72%
$ 58,151-$121,300 $ 96,901-$147,700 35.92% 3.12% 3.90% 4.68% 5.46% 6.24% 7.02% 7.80% 8.58% 9.36% 10.14%
$121,301-$263,750 $147,701-$263,750 40.56% 3.36% 4.21% 5.05% 5.89% 6.73% 7.57% 8.41% 9.25% 10.09% 10.94%
Over $263,750 Over $263,750 43.90% 3.57% 4.46% 5.35% 6.24% 7.13% 8.02% 8.91% 9.80% 10.70% 11.59%
- ----------
* Net amount subject to federal and New York State personal income tax after deductions and exemptions.
** Effective combined federal and state tax bracket. This table does not take into account: (i) any taxes other than the regular
federal income tax and the regular New York State personal income tax; or (ii) the New York State tax table benefit recapture
tax. Also, it is assumed that: (i) there are no federal or New York State minimum taxes applicable; (ii) a shareholder has no
net capital gain; and (iii) a shareholder's taxable income for federal income tax purposes is the same as his or her taxable
income for New York State income tax purposes. Also, this table does not reflect the fact that, due to factors including the
federal phase-out of personal exemptions and reduction of certain itemized deductions for taxpayers whose adjusted gross
income exceed specified thresholds, a shareholder's effective marginal tax rate may differ from his or her tax bracket rate.
<CAPTION>
FEDERAL, NEW YORK STATE AND NEW YORK CITY TABLE
- -----------------------------------------------------------------------------------------------------------------------------------
TAXABLE INCOME* TAX-EXEMPT YIELD
- ---------------------------------------- INCOME --------------------------------------------------------------------------
SINGLE JOINT TAX 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
RETURN RETURN BRACKET** EQUIVALENT TAXABLE YIELD
- ----------------- ----------------- --------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 $ 24,000 $ 0-$ 40,100 24.79% 2.66% 3.32% 3.99% 4.65% 5.32% 5.98% 6.65% 7.31% 7.98% 8.64%
$ 24,001-$ 50,000 $ 40,101-$ 96,900 36.30% 3.14% 3.92% 4.71% 5.49% 6.28% 7.06% 7.85% 8.63% 9.42% 10.20%
$ 50,001-$121,300 $ 96,901-$147,700 39.00% 3.28% 4.10% 4.92% 5.74% 6.56% 7.38% 8.20% 9.02% 9.84% 10.66%
$121,301-$263,750 $147,701-$263,750 43.42% 3.53% 4.42% 5.30% 6.19% 7.07% 7.95% 8.84% 9.72% 10.60% 11.49%
Over $263,750 Over $263,750 46.60% 3.75% 4.68% 5.62% 6.55% 7.49% 8.43% 9.36% 10.30% 11.24% 12.17%
- ---------
*Net amount subject to federal, New York State and New York City personal income tax after deductions and exemptions.
**Effective combined federal, state and city tax bracket. This table does not take into account: (i) any taxes other than the
regular federal income tax, the regular New York State personal income tax, and the regular New York City personal income tax
(including the temporary tax surcharge and the additional tax); or (ii) the New York State tax table benefit recapture tax.
Also, it is assumed that: (i) there are no federal, state or city minimum taxes applicable; (ii) a shareholder has no net
capital gain; and (iii) a shareholder's taxable income for federal income tax purposes is the same as his or her income for
state and city tax purposes. Also, this table does not reflect the fact that, due to factors including the federal phase-out
of personal exemptions and reduction of certain itemized deductions for taxpayers whose adjusted gross income exceed
specified thresholds, a shareholder's effective marginal tax rate may differ from his or her tax bracket rate.
</TABLE>
While it is expected that most of the dividends paid to the shareholders of
the Fund will be exempt from federal, New York State and New York City personal
income taxes, portions of such dividends from time to time may be subject to
such taxes.
<PAGE>
REPUBLIC
U.S. GOVERNMENT
MONEY MARKET FUND
REPUBLIC
NEW YORK TAX-FREE
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
3435 Stelzer Road
Columbus, OH 43219
CUSTODIAN AND TRANSFER AGENT
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
(800) 782-8183
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
REPUBLIC FAMILY OF FUNDS:
CUSTOMER SERVICE
Republic National Bank of New York
452 Fifth Avenue
New York, NY 10018
(888) 525-5757
(212) 525-7833
FOR NON-REPUBLIC CLIENTS
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
(800) 782-8183
RFFMM (2/97)
