<PAGE>
PRESIDENT'S MESSAGE
December 1996
Dear Shareholder:
We are very pleased to present you with the Republic Equity Fund (the
"Fund") annual report for the period ending October 31, 1996. In this report we
have provided you with a letter from the Fund's Investment Manager, Republic
National Bank of New York.
We hope you find this letter and accompanying financial summaries
informative and as always we would be delighted to hear from you to answer any
questions you might have or provide you with additional information.
Audited financial statements and portfolio holdings of 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 EQUITY FUND
ANNUAL REPORT -- OCTOBER 31, 1996
TABLE OF CONTENTS
PAGE
----
President's Message ............................................. 1
Letter to Shareholders from Investment Manager .................. 3
Schedule of Investments ......................................... 6
Statement of Assets & 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 the annual report for the Republic Equity Fund
(the "Fund") covering the fiscal year ended October 31, 1996. For the
twelve-month period, the Fund produced an average annual total return of 18.30%
(Class C Shares), compared to 21.39% for the Lipper Growth & Income Fund Index
and 23.73% for the Russell 1000 Value Index. Since inception (August 1, 1995),
the Fund's average annual return was 16.66% (Class C Shares), while the Lipper
Average and Russell Index returned 19.15% and 22.39%, respectively.
Uncertainty regarding the direction of interest rates prevailed through much
of the year, which began with signs of a softening U.S. economy and expectations
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 portfolio lagged its benchmarks for the full fiscal year; however, the
more recent performance trend has been favorable. The Fund recently increased
its weighting in the financial and utility groups, and reduced its weighting in
the basic industry and consumer cyclical sectors. These shifts away from
economically sensitive companies reflect an anticipated decline in interest
rates over the next several quarters and a moderation in economic growth. The
Fund anticipates that market leadership in the coming period will be centered in
interest rate sensitive sectors including a broad spectrum of financial
companies, and in consumer non-cyclical companies, such as food, household
products and healthcare.
As of October 31, 1996, the Fund's portfolio held 56 companies. The top
sector weightings were approximately 27.1% Financials, 14.4% Technology and
Communications, 10.7% Energy and 9.2% Consumer Cyclical. Overall, the portfolio
was overweighted vs. the Russell Index in consumer noncyclicals, underweighted
in the economically-sensitive category and close to neutrally weighted in the
interest-sensitive and energy sectors.
Although the overall market indices are currently near their all-time highs,
downside risk over the next twelve months appears modest. The macro environment
remains positive and the Fund continues to invest in reasonably priced companies
which we believe are most able to produce superior earnings gains for the next
several years.
We thank you for your continued support.
Sincerely,
Republic National Bank of New York
Lipper Growth & Income Fund Average: an equally weighted average of the 30
largest mutual funds within this investment objective.
Russell 1000 Value Index: an unmanaged index comprised of 1,000 large U.S.
companies as determined by market capitalization.
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.
The total return 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 such instances, and without waiver of fees, total return would have
been lower.
The composition of the portfolio is subject to change.
<PAGE>
COMPARISON OF $10,000 INVESTMENT IN THE
EQUITY FUND (CLASS C SHARES) AND
RUSSELL 1000 VALUE INDEX
- --------------------------------------------------------------------------------
- ---------------------------
AVERAGE ANNUAL TOTAL RETURN
- ---------------------------
Fiscal Year Inception
to Date to 10/31/96
10/31/96 (Annualized)
- ---------------------------
18.30% 16.66%
- ---------------------------
EQUITY FUND (CLASS C SHARES) RUSSELL 1000 VALUE INDEX
8/ 1/95 10.00 10.00
10/31/95 10.28 10.40
4/30/96 11.57 11.89
10/31/96 12.16 12.84
Past performance is not predictive of future performance
- --------------------------------------------------------------------------------
BISYS FUND SERVICES, INC. IS THE DISTRIBUTOR OF THE REPUBLIC EQUITY 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
EQUITY FUND (CLASS Y SHARES) AND
RUSSELL 1000 VALUE INDEX
- --------------------------------------------------------------------------------
- ---------------------------
AVERAGE ANNUAL TOTAL RETURN
- ---------------------------
Inception to 10/31/96
- ---------------------------
4.72%
- ---------------------------
EQUITY FUND (CLASS Y SHARES) RUSSELL 1000 VALUE INDEX
7/ 1/96 10.00 10.00
10/31/96 10.47 10.51
Past performance is not predictive of future performance
- --------------------------------------------------------------------------------
BISYS FUND SERVICES, INC. IS THE DISTRIBUTOR OF THE REPUBLIC EQUITY 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 EQUITY FUND
SCHEDULE OF INVESTMENTS -- OCTOBER 31, 1996
- ------------------------------------------------------------------------------
VALUE
SHARES DESCRIPTION (NOTE 2)
- ----- -------- -------------
COMMON STOCK -- 97.1%
AEROSPACE & AIRCRAFT -- 1.5%
5,900 Boeing Company ................................ $ 562,713
-----------
AUTOMOTIVE -- 4.0%
9,000 Ford Motor Company ............................ 281,250
10,100 General Motors Corporation .................... 544,138
15,000 Genuine Parts Company ......................... 656,250
-----------
1,481,638
-----------
BANKING -- 15.8%
17,000 Bank of Boston Corporation .................... 1,088,000
10,400 BankAmerica Corporation ....................... 951,600
10,000 Chase Manhattan Corporation ................... 857,500
12,000 Comerica Incorporated ......................... 637,500
13,800 First Union Corporation ....................... 1,003,950
13,500 Great Western Financial Corporation ........... 378,000
11,900 H.F. Ahmanson & Company ....................... 373,362
12,000 KeyCorp ....................................... 559,500
-----------
5,849,412
-----------
CHEMICALS -- 3.0%
9,000 Air Products & Chemicals Incorporated ......... 540,000
7,200 Dow Chemical Company .......................... 559,800
-----------
1,099,800
-----------
COMMUNICATIONS -- 10.9%
6,300 AT&T Corporation .............................. 219,713
18,500 Altel Corporation ............................. 564,250
13,600 Bell Atlantic Corporation ..................... 819,400
21,800 BellSouth Corporation ......................... 888,350
1 Lucent Technologies Incorporated .............. 34
27,900 MCI Communications Corporation ................ 700,988
17,700 SBC Communications Incorporated ............... 860,663
-----------
4,053,398
-----------
CONGLOMERATES -- 1.5%
7,200 Minnesota Mining & Manufacturing Company ...... 551,700
-----------
CONSUMER PRODUCTS -- 2.8%
13,700 ConAgra Incorporated .......................... 683,288
4,000 Philip Morris Companies Incorporated .......... 370,500
-----------
1,053,788
-----------
CONTAINERS -- 1.4%
18,800 Sonoco Products Company ....................... 500,550
-----------
DRUGS -- 5.0%
3,800 Bristol-Myers Squibb Company ................. 401,850
11,500 SmithKline Beecham PLC ADR .................... 720,187
11,200 Warner-Lambert Company ........................ 712,600
-----------
1,834,637
-----------
ELECTRICAL EQUIPMENT -- 3.2%
13,300 Emerson Electric Company ...................... 1,183,700
-----------
FOOD & BEVERAGES -- 1.1%
10,200 H.J. Heinz Company ............................ 362,100
1,000 Hershey Foods Corporation ..................... 48,375
-----------
410,475
-----------
FOREST PRODUCTS -- 6.5%
25,300 James River Corporation of Virginia ........... 796,950
10,258 Kimberly-Clark Corporation .................... 956,558
22,600 Westvaco Corporation .......................... 644,100
-----------
2,397,608
-----------
HOUSEHOLD GOODS -- APPLIANCES & FURNISHINGS -- 1.3%
10,500 Whirlpool Corporation ......................... 496,125
-----------
INDUSTRIAL MACHINERY -- 1.4%
12,600 Deere & Co. ................................... 526,050
-----------
INSURANCE -- 11.3%
5,300 Aetna Incorporated ............................ 354,437
4,600 CIGNA Corporation ............................. 600,300
19,400 Chubb Corporation ............................. 970,000
12,000 Providian Corporation ......................... 564,000
26,100 Safeco Corporation ............................ 985,275
9,600 Transamerica Corporation ...................... 728,400
-----------
4,202,412
-----------
OIL & GAS -- 10.7%
10,000 Amoco Corporation ............................. 757,500
11,800 Chevron Corporation ........................... 775,850
14,300 Coastal Corporation ........................... 614,900
12,500 Exxon Corporation ............................. 1,107,812
6,000 Mobil Corporation ............................. 700,500
-----------
3,956,562
-----------
RETAIL -- 3.9%
8,200 May Department Stores Company ................. 388,475
31,300 Toys "R" Us Incorporated(b) ................... 1,060,287
-----------
1,448,762
-----------
TECHNOLOGY -- 3.5%
5,900 Digital Equipment Corporation(b) .............. 174,050
8,700 International Business Machines Corporation ... 1,122,300
-----------
1,296,350
-----------
UTILITIES -- 8.3%
24,500 Baltimore Gas & Electric Company .............. 667,625
20,000 Carolina Power & Light Company ................ 722,500
27,000 Central & Southwest Corporation ............... 715,500
23,300 CINergy Corporation ........................... 771,813
6,000 Nicor Incorporated ............................ 209,250
-----------
3,086,688
-----------
TOTAL COMMON STOCK (Cost $32,311,161) ......... 35,992,368
-----------
TOTAL INVESTMENTS -- 97.1%
(Cost $32,311,161)(a).................................... 35,992,368
OTHER ASSETS LESS LIABILITIES -- 2.9% ..................... 1,081,089
-----------
NET ASSETS -- 100.0% ...................................... $37,073,457
===========
(a) The aggregate identified cost for federal income tax purposes is $32,319,860
resulting in gross unrealized appreciation and depreciation of $4,098,678
and $426,170, or net unrealized appreciation of $3,672,508.
(b) Represents non-income producing securities.
See notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES -- OCTOBER 31, 1996
ASSETS:
Investments, at value (Cost $32,311,161) ........................ $35,992,368
Cash ............................................................ 1,287,401
Interest receivable and dividend receivable ..................... 86,736
Receivable for capital shares issued ............................ 13,015
Receivable from brokers for investments sold .................... 49,839
Prepaid expenses and other assets ............................... 17,440
-----------
Total Assets .............................................. 37,446,799
-----------
LIABILITIES:
Payable to brokers for investments purchased .................... 301,221
Accrued expenses and other payables:
Investment advisory fees ...................................... 9,746
Administration fees ........................................... 3,099
Accounting and transfer agent fees ............................ 6,688
Shareholder service fees -- Class C ........................... 6,858
Other ......................................................... 45,730
-----------
Total Liabilities ......................................... 373,342
-----------
NET ASSETS:
Capital ......................................................... 32,637,117
Undistributed net investment income ............................. 73,168
Net unrealized appreciation from investments .................... 3,681,207
Accumulated undistributed net realized gains on investments ..... 681,965
-----------
Net Assets ................................................ $37,073,457
===========
NET ASSETS:
Class C ....................................................... $ 3,918,122
Class Y ....................................................... 33,155,335
-----------
Total ..................................................... $37,073,457
===========
Outstanding units of beneficial interest (shares)
Class C ....................................................... 328,468
Class Y ....................................................... 2,779,322
-----------
Total ..................................................... 3,107,790
===========
Net Asset Value:
Class C ....................................................... $11.93
======
Class Y ....................................................... $11.93
======
See notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
STATEMENT OF OPERATIONS -- YEAR ENDED OCTOBER 31, 1996
INVESTMENT INCOME:
Interest income (Note 2) ......................................... $ 62,469
Dividend income (Note 2) ......................................... 856,870
----------
Total income ................................................. 919,339
EXPENSES:
Investment advisory fees (Note 3) ..................... $156,654
Administrative services fees (Note 3) ................. 62,662
Distribution fees (Class C) (Note 3) .................. 19,030
Shareholder servicing fees (Class C) (Note 3) ......... 1,865
Transfer agent fees ................................... 33,254
Fund accounting fees .................................. 36,529
Audit fees ............................................ 17,598
Reports to shareholders ............................... 20,083
Custodian fees and expenses ........................... 25,483
Registration fees ..................................... 37,672
Trustees' fees (Note 3) ............................... 4,859
Insurance expense ..................................... 2,102
Other expenses ........................................ 16,743
--------
Total expenses before voluntary fee waivers ....... 434,534
Voluntary fee waivers (Note 3) ........................ (97,857)
--------
Net expenses ................................................. 336,677
----------
Net investment income ............................................ $ 582,662
----------
REALIZED/UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investments ................................ 689,415
Net change in unrealized appreciation ............................ 3,526,849
----------
Net realized/unrealized gain on investments ...................... 4,216,264
----------
Change in net assets resulting from operations ................... $4,798,926
==========
See notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD
AUGUST 1, 1995
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ................... $ 582,662 $ 55,623
Net realized gains (losses) on
investments ........................... 689,415 (7,450)
Net change in unrealized appreciation ... 3,526,849 154,358
----------- -----------
Net increase in net assets resulting from
operations ............................ 4,798,926 202,531
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class C Shares ........................ (356,031) (45,346)
Class Y Shares ........................ (163,740) --
----------- -----------
Total Dividends to Shareholders ... (519,771) (45,346)
----------- -----------
CAPITAL TRANSACTIONS:
Capital share transactions at
net asset value:
Proceeds from sales of shares ......... 48,945,127 21,934,564
Net asset value of shares issued in
connection with reinvestment of
distributions ....................... 23,919 651
Cost of shares repurchased ............ (38,267,144) --
----------- -----------
Net increase in net assets from capital
share transactions .................... 10,701,902 21,935,215
----------- -----------
TOTAL INCREASE IN NET ASSETS ............ 14,981,057 22,092,400
NET ASSETS:
Beginning of period ................... 22,092,400 --
----------- -----------
End of period (including undistributed
net investment income of $73,168 and
$10,277, respectively) .............. $37,073,457 $22,092,400
=========== ===========
See notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
PERIOD ENDED OCTOBER 31,
------------------------
1996 1995(a)
-------- --------
NET ASSET VALUE, BEGINNING OF PERIOD ................ $ 10.24 $ 10.00
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................. 0.19 0.04
Net realized and unrealized gain (loss) on
investments ..................................... 1.67 0.24
-------- --------
Total from Investment Operations ................ 1.86 0.28
-------- --------
LESS DIVIDENDS:
Investment income ................................. (0.17) (0.04)
-------- --------
Total distributions ............................. (0.17) (0.04)
-------- --------
Net asset value, end of period .................... $ 11.93 $ 10.24
======== ========
TOTAL RETURN ........................................ 18.30% 2.75%(a)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, at end of period (000) ................ $ 3,918 $22,092
Ratio of expenses to average net assets ........... 1.28% 1.47%(b)
Ratio of net investment income to average net
assets .......................................... 1.83% 1.59%(b)
Ratio of expenses to average net assets* .......... 1.59% 2.44%(b)
Ratio of net investment income to average net
assets* ......................................... 1.51% 0.62%(b)
Portfolio turnover (%)(c) ......................... 86.18% 2.00%
Average commission(d) ............................. 0.0599 NA
- ------------------------------------------------------------------------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) For the period from August 1, 1995 (commencement of operations) to October
31, 1995.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
(d) Represents the total amount of commissions paid on security transactions
divided by total number of shares purchased and sold by the Fund for which
commissions were charged.
See notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
FINANCIAL HIGHLIGHTS -- CLASS Y SHARES
PERIOD ENDED
OCTOBER 31, 1996(a)
-------------------
NET ASSET VALUE, BEGINNING OF PERIOD ...................... $ 11.49
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................... 0.08
Net realized and unrealized gains ....................... 0.42
-------
Total from Investment Operations ...................... 0.50
-------
LESS DIVIDENDS:
Investment income ....................................... (0.06)
-------
Total Distributions ................................... (0.06)
-------
Net asset value, end of period .......................... $ 11.93
=======
TOTAL RETURN .............................................. 4.72%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) ...................... $33,155
Ratio of expenses to average net assets ................. 0.66%(c)
Ratio of net investment income to average net assets .... 1.93%(c)
Ratio of expenses to average net assets* ................ 0.97%(c)
Ratio of net investment income to average net assets* ... 1.62%(c)
Portfolio turnover rate(d) .............................. 86.18%
Average commission(e) ................................... 0.0599
- ------------------------------------------------------------------------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) For the period from July 1, 1996 (date of initial offering) to October 31,
1996.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
(e) Represents the total dollar amount of commissions paid on security
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
See notes to financial statements
<PAGE>
REPUBLIC EQUITY FUND
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 1996
1. ORGANIZATION: Republic Equity Fund (the "Fund") is a separate 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 seek long-term growth of capital and income
without excessive fluctuations in market value by investing in securities
selling at reasonable prices in relation to value. The Fund will normally
invest in common stocks of large, seasoned companies in sound financial
condition which are expected to show above average price appreciation. The
Trust is registered under the Investment Company Act of 1940, as amended
(the "Act"), as an open-end, management investment company.
The Fund is authorized to issue two classes of shares, Class C Shares,
and as of July 1, 1996, Class Y Shares (Advisor Class). Each class of shares
in the Fund has identical rights and privileges except with respect to fees
paid under shareholder servicing or distribution plans, expenses exclusively
allocable 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 Manager
("Manager"). 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:
The value of each security is based either on the last sale price on a
national securities exchange, or, in the absence of recorded sales, at the
closing bid price on such exchanges, or at the quoted bid price in the
over-the-counter market. Securities or other assets for which market
quotations are not readily available are valued at fair value in accordance
with procedures established by the Board of Trustees. All debt portfolio
securities with a remaining maturity of less than 60 days are valued at
amortized cost, which approximates market value.
SECURITY TRANSACTIONS AND RELATED INCOME:
Securities transactions are recorded on a trade date basis. Securities gains
or losses are determined on the identified cost basis. Dividend income is
recorded on the ex-dividend date. Interest income, including original issue
discount, where applicable, is recorded on the accrual basis.
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 monthly and paid quarterly
and distributable net realized capital gains, if any, are declared and
distributed at least annually for the Fund.
Dividends from net investment income and net realized capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
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:
INVESTMENT MANAGER:
The Fund retains Republic to act as Investment Manager. 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 manager, Republic
receives from the Fund a fee, payable monthly, at the annual rate of 0.175%
of average daily net assets. During the year ended October 31, 1996, the
advisory fee was $54,829, of which the entire amount was voluntarily waived.
SUB-ADVISER:
Lord Abbett manages the investment portfolio of the Fund, subject to the
supervision of the Investment Manager, pursuant to a Sub-Advisory Agreement
with the Manager. Lord Abbett is responsible for the investment management
of the Fund's assets, including the responsibility for making investment
decisions and placing orders for the purchase and sale of the Fund's
investments directly with the issuers or with brokers or dealers selected by
it in its discretion. For its services as Sub-Adviser, Lord Abbett receives
a fee computed daily, at the annual rate of 0.325% of the Fund's average
daily net assets up to $50 million, 0.25% of net assets over $50 million up
to $100 million, 0.20% of the net assets over $100 million up to $200
million, and 0.15% of net assets over $200 million. For the period ended
October 31, 1996, Sub-Advisory fees aggregated $101,825.
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 first $100 million of the Fund's average daily
net assets; 0.17% of the next $100 million of such assets; 0.13% of the next
$300 million of such assets; and 0.10% of such assets in excess of $500
million. During the year ended October 31, 1996, the administrative services
fee was $62,662, of which $43,028 was voluntarily waived.
RULE 12B-1 PLAN EXPENSES:
The Fund has adopted a noncompensatory Distribution Plan and Agreement (the
"Plan") pursuant to Rule 12b-1 of the Act. The Plan provides for a monthly
payment by the Fund to the Sponsor in amounts representing actual expenses
incurred by the Sponsor for marketing costs and services rendered in
distributing Fund shares at a rate not to exceed 0.25% of the average daily
net assets of the Class C Shares. During the year ended October 31, 1996,
the Fund reimbursed Signature and BISYS for distribution expenses of
$19,030.
SHAREHOLDER SERVICING EXPENSES:
The Fund has entered into a Shareholder Servicing Agreement with each
shareholder servicing agent pursuant to the Administrative Services Plan.
Each shareholder servicing agent receives a fee from the Fund, which may be
paid periodically, determined by a formula based upon the number of accounts
serviced, the level of activity in such accounts and the expenses incurred
by the shareholder servicing agent. It is currently intended that the
aggregate fees paid to the Distributor pursuant to the Plan and to
shareholder servicing agents pursuant to the Administrative Services Plan
will not exceed 0.20% per annum of the Fund's average daily net assets
attributable to Class C Shares. During the year ended October 31, 1996,
shareholder servicing fees were $1,865.
TRUSTEES' FEES:
The fees paid and the amount of out-of-pocket expenses reimbursed to the
Trustees amounted to $4,859 for the year ended October 31, 1996.
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 ...................... 1,245,027 3,059,785
Shares reinvested .................. 2,061 38
Redeemed ........................... (3,075,874) (280,502)
------------ -----------
Net increase (decrease) ........ (1,828,786) 2,779,321
============ ===========
Proceeds from shares issued ........ $ 13,938,178 $35,006,949
Dividends reinvested ............... 23,486 433
Cost of shares redeemed ............ (35,185,178) (3,081,966)
------------ -----------
Net increase (decrease) ........ $(21,223,514) $31,925,416
============ ===========
(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 exlcuding
short-term securities for the Fund for the year ended October 31, 1996 were
$15,495,227 and $24,531,704, respectively.
6. FEDERAL INCOME TAX INFORMATION (UNAUDITED):
The fund designates the following eligible distributions for the dividends
received deduction for corporations:
Dividend Income .................................... $587,127
Dividend Income per Class C Shares ................. $0.13
Dividend Income per Class Y Shares ................. $0.05
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
Republic Funds:
We have audited the accompanying statement of assets and liabililties of
Republic Equity 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 August 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
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our 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 the Republic Equity 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>
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REPUBLIC
EQUITY
FUND
INVESTMENT MANAGER
Republic National Bank of New York
452 Fifth Avenue
New York, NY 10018
SUB-ADVISER
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
ADMINISTRATOR, DISTRIBUTOR AND SPONSOR
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
EQUITY
FUND
ANNUAL REPORT
OCTOBER 31, 1996
