<PAGE>
PRESIDENT'S MESSAGE
December 1996
Dear Shareholder:
We are very pleased to present you with the annual report for the Republic
New York Tax Free Bond Fund for the period ending October 31, 1996. In this
report, we have provided you with a letter from the Investment Adviser, Republic
National Bank of New York.
We hope you find this letter and accompanying financial summaries
informative and as always we would be delighted to hear from you to answer any
questions you might have or provide you with additional information.
Audited financial statements and portfolio holdings for the Fund for the
period ending October 31, 1996 also follow. We look forward to servicing your
financial needs and appreciate your continued support.
Respectfully submitted,
/s/ George O. Martinez
George O. Martinez
President
<PAGE>
REPUBLIC NEW YORK TAX FREE BOND FUND
ANNUAL REPORT -- OCTOBER 31, 1996
TABLE OF CONTENTS
PAGE
President's Message ................................................... 1
Letter to Shareholders from Investment Adviser ........................ 3
Schedule of Investments ............................................... 6
Statement of Assets and Liabilities.................................... 9
Statement of Operations ............................................... 10
Statements of Changes in Net Assets ................................... 11
Financial Highlights .................................................. 12
Notes to Financial Statements ......................................... 14
Report of KPMG Peat Marwick LLP, Independent Auditors ................. 18
<PAGE>
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
December 1996
DEAR SHAREHOLDER:
We are pleased to present you with the annual report for the Republic New
York Tax-Free Bond Fund for the fiscal year ended October 31, 1996.
The Republic New York Tax-Free Bond Fund returned 4.75% (Class C shares) for
the fiscal year ended October 31, 1996, compared to 4.65% for the Lipper NY
Municipal Bond Fund Index. The Fund continues to outpace the Lipper Average for
the period since inception (May 1, 1995), returning 7.50% (Class C shares)
versus 7.23% annualized.
Uncertainty regarding the direction of interest rates prevailed through much
of the fiscal year, which began with signs of a softening U.S. economy and
anticipation of further interest rate cuts by the Federal Reserve. By February,
the initial bullish view on interest rates changed as the picture of the U.S.
economy began to cloud. Speculation arose that the economy was growing too
strongly and that an interest rate hike was imminent to stave off inflationary
pressures. Concerns began to subside near the fiscal year-end with the release
of economic data depicting an economy in a moderate and more sustainable growth
trend.
The dominant theme in the municipal bond market during the fiscal year has
been the short supply of product -- both in the new issue and secondary markets.
As a result, municipal bond yields have trended downward and have become less
attractive relative to U.S. Treasuries. The situation helped municipal bonds
outperform U.S. Treasuries during the year, and in spite of the less favorable
municipal yields, high tax bracket investors can still benefit from investing in
tax-free securities. Our expectations for the municipal bond market remain
positive as we enter 1997, largely due to continued investor demand and limited
supply.
As of the fiscal year-end, the Fund's duration (interest rate sensitivity)
was 7.39 years. The overall quality of the portfolio was rated A1 according to
Moody's Rating Service. The Fund's annualized 30-day SEC yield was 4.64% (Class
C shares), 4.89% (Class Y shares).
Audited financial statements and portfolio holdings as of October 31, 1996
follow. We appreciate your continued support.
Sincerely,
Republic National Bank of New York
Lipper NY Municipal Bond Fund Average is an equally weighted average
composed of the 30 largest mutual funds in this universe.
The performance data quoted represents past performance and is not an
indication of future results. The investment return and Net Asset Value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than the original cost. Class (Y) Total Return for the Fiscal Year
Ended October 31, 1996 of 5.02% represents total return for Class C shares
from November 1, 1995 to June 30, 1996, plus the total return for Class Y
shares for the period from July 1, 1996 to October 31, 1996.
The performance set forth may reflect the waiver of a portion of the fund's
advisory or administrative fees for certain periods since the inception
date. In the absence of fee waivers the 30-day yield figures would have been
4.34% for Class C shares and 4.59% for Class Y shares.
The composition of the portfolio is subject to change.
<PAGE>
COMPARISON OF $10,000 INVESTMENT IN THE
N.Y. TAX-FREE BOND FUND (CLASS C SHARES) AND
LIPPER N.Y. MUNI BOND
- --------------------------------------------------------------------------------
- --------------------------
AVERAGE ANNUAL
TOTAL RETURN
- --------------------------
Fiscal Year Inception
Ended to 10/31/96
10/31/96 (Annualized)
- ----------- ------------
4.75% 7.50%
- --------------------------
N.Y. TAX-FREE BOND FUND
(CLASS C SHARES) LIPPER N.Y. MUNI BOND
5/01/95 10.00 10.00
10/31/95 10.64 10.60
4/30/96 10.71 10.65
10/31/96 11.14 11.10
Past performance is not predictive of future performance
- --------------------------------------------------------------------------------
BISYS FUND SERVICES, INC. IS THE DISTRIBUTOR OF THE REPUBLIC NEW YORK TAX FREE
BOND FUND (THE "FUND").
REPUBLIC NATIONAL BANK OF NEW YORK ("REPUBLIC") SERVES AS INVESTMENT MANAGER AND
MAKES THE FUND AVAILABLE SOLELY IN ITS CAPACITY AS SHAREHOLDER SERVICING AGENT
FOR CUSTOMERS. INVESTMENTS IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, REPUBLIC OR ANY OTHER BANK. SHARES OF THE FUND ARE
NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY.
PERFORMANCE DATA QUOTED HEREIN REPRESENTS PAST PERFORMANCE. PLEASE REMEMBER
THAT PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. FUND RETURNS
ARE NET OF FEES. ALL RETURNS ASSUME REINVESTMENT OF INCOME AND CAPITAL GAINS
AND REFLECT THE REIMBURSEMENT OF CERTAIN FUND EXPENSES AS DESCRIBED IN THE
PROSPECTUS.
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES, IS PROVIDED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE
INVESTING. YOU MAY OBTAIN ADDITIONAL COPIES OF THE PROSPECTUS BY CALLING
1-800-782-8183.
<PAGE>
COMPARISON OF $10,000 INVESTMENT IN THE
N.Y. TAX-FREE BOND FUND (CLASS Y SHARES) AND
LIPPER N.Y. MUNI BOND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURN
- --------------------------
Inception
to 10/31/96(a)
- --------------------------
5.02%
- --------------------------
N.Y. TAX-FREE BOND FUND
(CLASS Y SHARES) LIPPER N.Y. MUNI BOND
7/ 1/96 10.00 10.00
10/31/96 10.50 10.53
Past performance is not predictive of future performance
- --------------------------------------------------------------------------------
(a) REPRESENTS TOTAL RETURN FOR CLASS C SHARES FROM NOVEMBER 1, 1995 TO JUNE 30,
1996 PLUS THE TOTAL RETURN FOR CLASS Y SHARES FOR THE PERIOD JULY 1, 1996 TO
OCTOBER 31, 1996.
BISYS FUND SERVICES, INC. IS THE DISTRIBUTOR OF THE REPUBLIC NEW YORK TAX FREE
BOND FUND (THE "FUND").
REPUBLIC NATIONAL BANK OF NEW YORK ("REPUBLIC") SERVES AS INVESTMENT MANAGER AND
MAKES THE FUND AVAILABLE SOLELY IN ITS CAPACITY AS SHAREHOLDER SERVICING AGENT
FOR CUSTOMERS. INVESTMENTS IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, REPUBLIC OR ANY OTHER BANK. SHARES OF THE FUND ARE
NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY.
PERFORMANCE DATA QUOTED HEREIN REPRESENTS PAST PERFORMANCE. PLEASE REMEMBER
THAT PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. FUND RETURNS
ARE NET OF FEES. ALL RETURNS ASSUME REINVESTMENT OF INCOME AND CAPITAL GAINS
AND REFLECT THE REIMBURSEMENT OF CERTAIN FUND EXPENSES AS DESCRIBED IN THE
PROSPECTUS.
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES, IS PROVIDED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE
INVESTING. YOU MAY OBTAIN ADDITIONAL COPIES OF THE PROSPECTUS BY CALLING
1-800-782-8183.
<PAGE>
REPUBLIC NEW YORK TAX-FREE BOND FUND
SCHEDULE OF INVESTMENTS -- OCTOBER 31, 1996
<TABLE>
<CAPTION>
RATINGS
MOODY'S/
PRINCIPAL S&P(c) VALUE
AMOUNT DESCRIPTION(c) RATE MATURITY (UNAUDITED) (NOTE 2)
- --------- -------------- ---- -------- ---------- --------
<C> <S> <C> <C> <C> <C>
NEW YORK MUNICIPAL OBLIGATIONS -- 91.4%
$250,000 Erie County, New York, General
Obligation, Series B, FGIC
Insured ...................... 5.375% 6/15/07 Aaa/AAA $ 255,983
250,000 Metropolitan Transit Authority
of New York, Revenue,
Refunding, Series B, MBIA
Insured ...................... 6.250% 7/1/17 Aaa/AAA 262,933
450,000 New York City Housing
Development Corporation
Management Revenue, Refunding,
Series A, FHA Insured ........ 6.550% 10/1/15 NR/AAA 470,673
500,000 New York City Industrial
Development Agency, Civil
Facilities National Audubon
Society, Revenue, VRDN, Put @
100, LOC - Swiss Bank ........ 3.450% 12/1/14 NR/A1+ 500,000
500,000 New York City Industrial
Development Agency, Special
Facilities, Revenue, Terminal
One Group, AMT ............... 6.100% 1/1/09 A/A 515,000
250,000 New York City Industrial
Development Agency, Special
Facilities, Revenue, Terminal
One Group, AMT ............... 6.000% 1/1/19 A/A 249,823
750,000 New York City Municipal Water
and Sewer Finance Authority,
Revenue, Refunding, Series A . 5.750% 6/15/16 A/A- 750,833
400,000 New York City, General
Obligation, Refunding,
Series I ..................... 6.500% 3/15/06 Baa1/BBB+ 424,144
400,000 New York City, General
Obligation, Series B ......... 5.500% 8/15/05 Baa1/BBB+ 396,944
300,000 New York City, General
Obligation, Series D ......... 6.000% 2/15/12 Baa1/BBB+ 296,424
500,000 New York Housing Corporation,
Revenue, Refunding 5.500% 11/1/10 A1/AA 495,670
400,000 New York State Local Government
Assistance Corporation,
Revenue, Series A ............ 6.875% 4/1/19 A/A 443,016
300,000 New York State Local Government
Assistance Corporation,
Revenue, Series A ............ 6.000% 4/1/24 A/A 303,807
250,000 New York State Dormitory
Authority, City University,
Revenue, FSA Insured ......... 5.750% 7/1/07 Aaa/AAA 265,625
400,000 New York State Dormitory
Authority, City University,
Revenue, Series A ............ 5.750% 7/1/07 Baa1/BBB 405,000
500,000 New York State Dormitory
Authority, City University,
Revenue, Refunding ........... 5.750% 7/1/13 Baa1/BBB 498,365
225,000 New York State Dormitory
Authority, Revenue, Mental
Health Services Facility ..... 6.500% 8/15/11 Baa1/BBB+ 240,239
375,000 New York State Dormitory
Authority, Revenue, State
University, Educational
Facilities, Series A ......... 6.250% 5/15/17 Baa1/BBB+ 381,563
500,000 New York State Dormitory
Authority, State University
Educational Facilities Revenue 5.750% 5/15/09 Baa1/BBB+ 504,180
500,000 New York State Dormitory
Authority, Court Facilities,
Revenue, Series A ............ 5.625% 5/15/13 Baa1/BBB+ 487,650
300,000 New York State Energy Research &
Development Authority, ConEd,
MBIA Insured ................. 6.100% 8/15/20 Aaa/AAA 311,043
200,000 New York State Environmental
Facilities Corporation
Pollution Control, Revenue,
Revolving, Series E .......... 6.400% 6/15/03 Aa/A 217,062
200,000 New York State Environmental
Facilities Corporation
Pollution Control, Revenue,
Refunding, Revolving 5.875% 6/15/14 Aa/A- 204,406
250,000 New York State Housing Finance
Agency, Service Contract
Obligation, Revenue,
Refunding, Series C 5.875% 9/15/14 Baa1/BBB 243,245
500,000 New York State Housing Finance
Agency, Service Contract
Obligation, Revenue, Series A 6.000% 3/15/26 Baa1/BBB 494,175
300,000 New York State Medical Care
Facilities, Revenue, Mental
Health, FGIC Insured ......... 5.250% 2/15/08 Aaa/AAA 299,595
400,000 New York State Medical Care
Facilities, Revenue, Refunding
Hospital & Nursing Home, FHA
Insured ...................... 6.400% 8/15/14 NR/AAA 420,896
200,000 New York State Power Authority,
Revenue & General Purpose,
Series CC .................... 5.250% 1/1/18 Aa/AA- 189,118
200,000 New York State Thruway
Authority, Highway and Bridge
Trust Fund, Series A, MBIA
Insured ...................... 6.250% 4/1/06 Aaa/AAA 220,082
300,000 New York State Thruway
Authority, Highway and Bridge
Trust Fund, Revenue .......... 6.000% 4/1/05 Baa1/BBB 313,680
300,000 New York State Urban Development
Corporation, Revenue ......... 5.500% 4/1/07 Baa1/BBB 300,693
300,000 New York State Urban Development
Corporation, Revenue,
Correctional Facilities,
Series 6 ..................... 5.250% 1/1/07 Baa1/BBB 291,693
300,000 Niagara County, New York,
General Obligation, MBIA
Insured ...................... 5.900% 7/15/15 Aaa/AAA 307,971
300,000 Port Authority of New York & New
Jersey, Ninety-Eight Series .. 5.900% 8/1/07 A1/AA- 315,015
250,000 Port Authority of New York & New
Jersey, Series 71 6.500% 1/15/26 A1/AA- 263,207
250,000 Suffolk County New York Water
Authority, Series C, AMBAC
Insured ...................... 5.750% 6/1/10 Aaa/AAA 255,762
250,000 Triborough Bridge & Tunnel
Authority, New York, General
Purpose, Revenues, Series Y .. 5.750% 1/1/05 Aa/A1 285,264
250,000 Yonkers, New York, General
Obligation, FGIC Insured ..... 6.500% 2/15/12 Aaa/AAA 271,492
-----------
TOTAL NEW YORK MUNICIPAL OBLIGATIONS (COST $13,151,614) ................. 13,332,269
-----------
OTHER BONDS AND NOTES -- 6.7%(a)
250,000 Puerto Rico Commonwealth,
General Obligation, MBIA
Insured ...................... 7.500% 7/1/04 Aaa/AAA 295,045
200,000 Puerto Rico Electric Power
Authority, Revenue, Refunding
Series S, MBIA Insured ....... 7.000% 7/1/06 Aaa/AAA 233,274
400,000 Puerto Rico Public Buildings
Authority, Revenue, Series A,
AMBAC Insured ................ 6.250% 7/1/08 Aaa/AAA 442,080
-----------
TOTAL OTHER BONDS AND NOTES (COST $945,380) ............................. 970,399
-----------
SHORT-TERM INVESTMENTS -- 1.7%
256,045 Provident New York Tax Free
Money Market Fund (COST
$256,045) .................... 256,045
-----------
TOTAL INVESTMENTS -- 99.8% (COST $14,353,039)(b) ................................... 14,558,713
OTHER ASSETS LESS LIABILITIES -- 0.2% .............................................. 26,722
-----------
NET ASSETS -- 100.0% ............................................................... $14,585,435
===========
- -----------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is $14,353,039 resulting in gross
unrealized appreciation and depreciation of $228,595 and $22,921, respectively, or net unrealized
appreciation of $205,674.
(c) The Moody's or Standard & Poor's rating indicated are believed to be the most recent ratings available
at October 31, 1996 for the securities listed. Ratings are generally ascribed to securities at the time
of issuance. While the agencies may from time to time revise such ratings, they undertake no obligation to
do so, and the ratings do not necessarily represent what the agencies would ascribe to these securities at
October 31, 1996. These ratings are unaudited.
AMBAC - American Municipal Bond Assurance Corporation
AMT - Interest on security is subject to Federal Alternative Minimum Tax
FGIC - Federal Guaranty Insurance Corporation
FHA - Federal Housing Administration
FSA - Financial Security Assurance Holding
MBIA - Municipal Bond Insurance Association
VRDN - Variable Rate Discount Note - The interest rate shown, which will change periodically,
is the rate in effect at October 31, 1996
</TABLE>
<PAGE>
REPUBLIC NEW YORK TAX-FREE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES -- OCTOBER 31, 1996
ASSETS:
Investments, at value (Cost $14,353,039) .................. $14,558,713
Interest and dividends receivable ......................... 204,248
Receivable for capital shares issued ...................... 10,000
Prepaid expenses and other assets ......................... 18,781
Receivable from advisor ................................... 17,000
-----------
Total Assets ........................................ 14,808,742
-----------
LIABILITIES:
Payable for capital shares issued ......................... 145,146
Distributions payable ..................................... 27,073
Accrued expenses and other payables:
Administration fees ..................................... 1,177
Accounting and transfer agent fees ...................... 13,506
Other ................................................... 36,405
-----------
Total Liabilities ................................... 223,307
-----------
NET ASSETS:
Capital ................................................... 14,353,021
Net unrealized appreciation from investments .............. 205,674
Accumulated undistributed net realized gains on investments 26,740
-----------
Net Assets .......................................... $14,585,435
===========
NET ASSETS:
Class C ................................................. 6,352,825
Class Y ................................................. 8,232,610
-----------
Total ............................................... 14,585,435
===========
Outstanding units of beneficial interest (shares)
Class C ................................................. 616,806
Class Y ................................................. 799,293
-----------
Total ............................................... 1,416,099
===========
Net Asset Value:
Class C ................................................. $10.30
======
Class Y ................................................. $10.30
======
See notes to financial statements
<PAGE>
REPUBLIC NEW YORK TAX-FREE BOND FUND
STATEMENT OF OPERATIONS -- YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME:
Interest income (Note 2) ........................................... $525,605
EXPENSES:
Investment advisory fees (Note 3) ....................... $ 24,512
Administrative services fees (Note 3) ................... 19,609
Distribution fees (Class C) (Note 3) .................... 18,951
Shareholder servicing fees (Class C) (Note 3) ........... 1,752
Transfer agent fees ..................................... 34,538
Fund accounting fees .................................... 36,528
Audit fees .............................................. 18,001
Reports to shareholders ................................. 21,685
Custodian fees and expenses ............................. 18,684
Registration fees ....................................... 470
Trustees' fees (Note 3) ................................. 4,056
Insurance expense ....................................... 3,256
Other expenses .......................................... 15,078
--------
Total expenses before voluntary fee waivers ......... 217,120
Voluntary fee waivers (Note 3) .......................... (42,944)
Reimbursement (Note 3) .................................. (117,000)
--------
Net expenses ................................................... 57,176
--------
Net investment income .............................................. $468,429
--------
REALIZED GAINS ON INVESTMENTS:
Net realized gains on investments .................................. 27,393
Change in unrealized appreciation of investments ................... 19,308
--------
Net realized/unrealized gains on investments ....................... 46,701
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............... $515,130
========
See notes to financial statements
<PAGE>
REPUBLIC NEW YORK TAX-FREE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD
MAY 1, 1995
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ................... $ 468,429 $ 177,970
Net realized gains on investments ....... 27,393 48,739
Net change in unrealized appreciation on
investments ............................. 19,308 186,366
----------- ----------
Net increase in net assets resulting from
operations .............................. 515,130 413,075
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class C Shares ........................ (339,572) (177,970)
Class Y Shares ........................ (128,857) 0
----------- ----------
Total Dividends to Shareholders
from net investment income ....... (468,429) (177,970)
----------- ----------
Net realized gains:
Class C Shares ........................ (49,392) --
----------- ----------
Total distributions ............... (517,821) (177,970)
----------- ----------
CAPITAL TRANSACTIONS:
Capital share transactions at net asset value:
Proceeds from sales of shares ......... 16,761,193 8,334,583
Net asset value of shares issued in
connection with reinvestment of
distributions ....................... 163,232 18,315
Cost of shares repurchased ............ (9,244,353) (1,679,949)
----------- ----------
Net increase in net assets from capital
transactions .......................... 7,680,072 6,672,949
----------- ----------
TOTAL INCREASE IN NET ASSETS ............ 7,677,381 6,908,054
NET ASSETS:
Beginning of period ................... 6,908,054 0
----------- ----------
End of period ......................... $14,585,435 $6,908,054
=========== ==========
See notes to financial statements
<PAGE>
REPUBLIC NEW YORK TAX-FREE BOND FUND
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
PERIOD ENDED OCTOBER 31,
------------------------
1996 1995(a)
---------- ------------
NET ASSET VALUE, BEGINNING OF PERIOD ............... $10.38 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.54 0.25
Net realized and unrealized gain (loss) on
investments .................................... (0.01) 0.38
------ ------
Total from investment operations ............. 0.53 0.63
------ ------
LESS DIVIDENDS:
Investment income ................................ (0.54) (0.25)
Net realized gains ............................... (0.07)
------ ------
Total distributions .......................... (0.61) (0.25)
------ ------
Net asset value, end of period ................... $10.30 $10.38
====== ======
TOTAL RETURN ....................................... 4.75% 6.39%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (in 000's) .......... $6,353 $6,908
Ratio of expenses to average net assets .......... 0.58% 0.50%(b)
Ratio of net investment income to average net
assets ......................................... 4.78% 4.91%(b)
Ratio of expenses to average net assets* ......... 2.21% 2.40%(b)
Ratio of net investment income to average net
assets* ........................................ 3.15% 3.01%(b)
Portfolio turnover ............................... 178.11% 130.00%
- ------------------------------------------------------------------------------
* During the period, certain fees were voluntarily reduced or reimbursed. If
such voluntary fee reductions and reimbursements had not occurred, the
ratios would have been as indicated.
(a) For the period from May 1, 1995 (commencement of operations) to October
31, 1995.
(b) Annualized.
See notes to financial statements
<PAGE>
REPUBLIC NEW YORK TAX-FREE BOND FUND
FINANCIAL HIGHLIGHTS -- CLASS Y SHARES
PERIOD
ENDED
OCTOBER 31,
1996(a)
------------
NET ASSET VALUE, BEGINNING OF PERIOD ........................... $10.18
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................................ 0.16
Net realized and unrealized gains ............................ 0.12
------
Total from investment operations ......................... 0.28
------
LESS DIVIDENDS:
Investment income ............................................ (0.16)
------
Total distributions ...................................... (0.16)
------
Net asset value, end of period ............................... $10.30
======
TOTAL RETURN ................................................... 5.02%(c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (in 000's) ...................... $8,233
Ratio of expenses to average net assets ...................... 0.60%(b)
Ratio of net investment income to average net assets ......... 4.78%(b)
Ratio of expenses to average net assets* ..................... 2.26%(b)
Ratio of net investment income to average net assets* ........ 3.12%(b)
Portfolio turnover ........................................... 178.11%
- ------------------------------------------------------------------------------
* During the period, certain fees were voluntarily reduced or reimbursed. If
such voluntary fee reductions and reimbursements had not occurred, the
ratios would have been as indicated.
(a) For the period from July 1, 1996 (date of initial offering) to October
31, 1996.
(b) Annualized.
(c) Represents total return for Class C Shares from November 1, 1995 to June
30, 1996, plus the total return for Class Y Shares for the period from
July 1, 1996 to October 31, 1996.
See notes to financial statements
<PAGE>
REPUBLIC NEW YORK TAX-FREE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 1996
1. ORGANIZATION: Republic New York Tax-Free Bond Fund (the "Fund") is a
non-diversified series of Republic Funds (the "Trust"), a Massachusetts
business trust organized on April 22, 1987, which currently consists of
seven funds, each of which has different investment objectives and policies.
The financial statements for the other six funds are presented separately.
The Fund's investment objective is to provide monthly dividends exempt from
regular federal, New York State and New York City personal income taxes. The
Declaration of Trust permits the Trustees to create additional portfolios.
The Trust is registered under the Investment Company Act of 1940, as amended
(the "Act"), as an open-end, management investment company.
The Fund is authorized to issue two classes of shares, Class C Shares,
and as of July 1, 1996, Class Y Shares (Advisor Class). Each class of shares
in the Fund has identical rights and privileges except with respect to fees
paid under shareholder servicing or distribution plans, allocable expenses
exclusively to each class of shares, voting rights on matters affecting a
single class of shares, and the exchange privilege of each class of shares.
The Trust retained Republic National Bank of New York (formerly
Republic Asset Management Corporation) ("Republic") as Investment Adviser
("Adviser"). For the period November 1, 1995 through September 30, 1996,
the Trust retained Signature Broker-Dealer Services, Inc. ("Signature") as
Administrator, Distributor and Sponsor ("Sponsor"). Effective October 1,
1996 BISYS Fund Services, Inc. became the Fund's Administrator, Distributor
and Sponsor.
2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles. The preparation of financial statements requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of income and expenses for the period. Actual
results could differ from those estimates.
SECURITIES VALUATION:
Bonds and other fixed income securities (other than short-term obligations
but including listed issues) in the Fund's portfolio are valued on the basis
of valuations furnished by a pricing service, which utilizes both
dealer-supplied valuations and electronic data processing techniques which
take into account appropriate factors such as institutional-size trading in
similar groups of yield, quality, coupon rate, maturity, type of issue,
trading characteristics other than market data and without exclusive
reliance upon quoted prices or exchanges or over-the-counter prices, since
such valuations are believed to reflect more accurately the fair value of
such securities. Short-term debt obligations are valued at amortized cost,
which approximates market value, as determined by the Board of Trustees.
Futures Contracts are normally valued at the settlement price on the
exchange on which they are traded. Portfolio securities for which there are
no such valuations are valued at fair market value as determined in good
faith by or at the direction of the Board of Trustees.
SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the accrual
basis and includes, where applicable, the amortization of premium or
discount. Gains or losses realized on sales of securities are determined by
comparing the identified cost of the security lot sold with the net sales
proceeds.
EXPENSE ALLOCATION:
The Fund bears all costs of its operations other than expenses specifically
assumed by the Adviser or Sponsor. Expenses directly attributable to the
Fund are charged to the Fund. Expenses incurred by the Trust with respect to
any two or more of the Trust's seven portfolios are allocated in proportion
to the net asset levels of each portfolio, except where allocations of
direct expenses to each portfolio can otherwise be made fairly.
FEDERAL INCOME TAXES:
The Fund is treated as a separate taxable entity for federal tax purposes.
The Fund has qualified and intends to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code, as
amended, and plans to distribute substantially all of its taxable income and
net realized gains, if any, to its shareholders. Accordingly, no provision
for federal income or excise tax is required.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly and
distributable net realized capital gains, if any, are declared and
distributed at least annually.
Dividends from net investment income and net realized capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
REPURCHASE AGREEMENTS:
The Fund may acquire repurchase agreements with an entity which is a member
of the Federal Reserve System or which is a "primary dealer" (as designated
by the Federal Reserve Bank of New York) in U.S. Government obligations. The
repurchase price generally equals the price paid by the Fund plus interest
negotiated on the basis of current short-term rates, which may be more or
less than the rate on the underlying portfolio securities. The seller, under
a repurchase agreement, is required to maintain the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest). Securities subject to repurchase agreements are held by
the Fund's custodian, either physically or in book entry form. Repurchase
agreements are considered to be loans by the Fund under the 1940 Act.
3. RELATED PARTY TRANSACTIONS:
ADVISORY FEES:
The Fund retains Republic to act as Investment Adviser. Republic is
responsible for the investment management of the Fund's assets, including
the responsibility for making investment decisions and placing orders for
the purchase and sale of the Fund's investments directly with the issuers or
with brokers or dealers selected by it in its discretion. Republic also
furnishes to the Board of Trustees, which has overall responsibility for
business affairs of the Trust, periodic reports on the investment
performance of the Fund. For its services as investment adviser, Republic
receives from the Fund a fee, payable monthly, at the annual rate of 0.25%
of average daily net assets. During the year ended October 31, 1996, the
advisory fee was $24,512.
ADMINISTRATION:
The Fund retained Signature, then BISYS, to serve as Administrator,
Distributor, and Sponsor. Signature and BISYS provided management and
administrative services necessary for the operation of the Fund, furnished
office space and facilities required for conducting the business of the Fund
and paid the compensation of the Fund's officers. For these services,
Signature and BISYS received from the Fund a fee, payable monthly, at an
annual rate of 0.20% of the Fund's average daily net assets. During the year
ended October 31, 1996, the administrative services fee was $19,609.
RULE 12B-1 PLAN EXPENSES:
The Fund has adopted a noncompensatory Distribution Plan and Agreement (the
"Plan") pursuant to Rule 12b-1 of the Act. The Plan provides for a monthly
payment by the Fund to the Sponsor in amounts representing actual expenses
incurred by the Sponsor for marketing costs and services rendered in
distributing Fund shares at a rate not to exceed 0.25% of the average daily
net assets of the Class C Shares Fund. During the year ended October 31,
1996, the Fund reimbursed Signature for distribution expenses of $18,951.
SHAREHOLDER SERVICING EXPENSES:
The Fund has entered into a Shareholder Servicing Agreement with each
shareholder servicing agent pursuant to the Administrative Services Plan.
Each shareholder servicing agent receives a fee from the Fund, which may be
paid periodically, determined by a formula based upon the number of accounts
serviced, the level of activity in such accounts and the expenses incurred
by the shareholder servicing agent. It is currently intended that the
aggregate fees paid to the Distributor pursuant to the Plan and to
shareholder servicing agents pursuant to the Administrative Services Plan
will not exceed 0.25% per annum of the Fund's average daily net assets
attributable to Class C Shares. During the year ended October 31, 1996,
shareholder servicing fees were $1,752.
TRUSTEES' FEES:
The fees paid and the amount of out-of-pocket expenses reimbursed to the
Trustees amounted to $4,056 for the year ended October 31, 1996.
REIMBURSEMENT AND WAIVER OF EXPENSES:
The Advisor and Sponsor have voluntarily agreed to waive a portion of their
fees, and to the extent necessary, reimburse the Fund for additional
expenses. For the period ended October 31, 1996 expenses of the Fund were
voluntarily limited to no more than 0.60% of the average daily net assets on
an annualized basis. For the period ended October 31, 1996 the Advisor and
Sponsor waived fees and reimbursed expenses aggregating $159,944.
4. CAPITAL SHARE TRANSACTIONS:
Transactions in shares of beneficial interest for the Fund were as follows:
CLASS C SHARES CLASS Y SHARES
YEAR ENDED PERIOD ENDED
OCTOBER 31, 1996 OCTOBER 31, 1996(a)
Shares issued ................ 834,355 815,936
Shares reinvested ............ 15,027 811
Redeemed ..................... (897,854) (17,454)
----------- ----------
Net increase (decrease) .. (48,472) 799,293
=========== ==========
Proceeds from shares issued .. $8,530,934 $8,230,259
Dividends reinvested ......... 154,887 8,345
Cost of shares redeemed ...... (9,067,365) (176,988)
----------- ----------
$ (381,544) $8,061,616
=========== ==========
(a) For the period from July 1, 1996 (date of initial offering) to October
31, 1996.
5. INVESTMENT TRANSACTIONS:
Purchases and proceeds from sales and maturities of investments excluding
short-term securities for the Fund for the year ended October 31, 1996 were
$26,621,353 and $18,861,284, respectively.
6. CONCENTRATION OF CREDIT:
The New York Fund invests primarily in debt obligations issued by the State
of New York and its respective political subdivisions, agencies and public
authorities to obtain funds for various public purposes. The Portfolio is
more susceptible to economic and political factors adversely affecting
issuers of New York specific municipal securities than are municipal bond
funds that are not concentrated in these issuers to the same extent.
7. FEDERAL TAX STATUS -- FISCAL YEAR 1996 DISTRIBUTIONS (UNAUDITED): All
dividends paid by the Fund were paid out as short-term capital gain
dividends or net investment income dividends. For federal income tax
purposes, dividends from short-term capital gains are classified as ordinary
income.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
Republic Funds:
We have audited the accompanying statement of assets and liabilities of
Republic New York Tax-Free Bond Fund (the "Fund"), a portfolio of Republic
Funds, including the schedule of investments, as of October 31, 1996 and the
related statements of operations and changes in net assets for the year then
ended and the financial highlights for the year then ended for the Class C
shares and for the period from July 1, 1996 (date of initial offering) to
October 31, 1996 for Class Y shares. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit. The statement of changes in net assets and financial
highlights for the period from May 1, 1995 (commencement of operations) to
October 31, 1995 were audited by other auditors whose report thereon, dated
December 8, 1995, expressed an unqualified opinion on that statement and those
financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1996 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Republic New York Tax-Free Bond Fund at October 31, 1996, the
results of its operations and changes in its net assets for the year then ended
and the financial highlights for the periods indicated in the first paragraph
above in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
December 6, 1996
<PAGE>
REPUBLIC
NEW YORK
TAX-FREE
BOND FUND
INVESTMENT ADVISER
Republic National Bank of New York
452 Fifth Avenue
New York, NY 10018
ADMINISTRATOR, DISTRIBUTOR AND SPONSOR
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, OH 43219
CUSTODIAN AND TRANSFER AGENT
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
99 High Street
Boston, MA 02110
LEGAL COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
SHAREHOLDER SERVICING AGENTS:
Republic National Bank of New York
Republic Bank for Savings
452 Fifth Avenue
New York, NY 10018
(800) 782-8183
FOR NON-REPUBLIC CLIENTS:
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
(800) 782-8183
[graphic omitted]
REPUBLIC
NEW YORK
TAX-FREE
BOND FUND
ANNUAL REPORT
October 31, 1996
