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[Graphic Omitted]
REPUBLIC
NEW YORK TAX-FREE
MONEY MARKET
FUND
ANNUAL REPORT
OCTOBER 31, 1998
<PAGE>
PRESIDENT'S MESSAGE
December 1998
Dear Shareholder:
We are very pleased to present you with the annual report for the Republic
New York Tax-Free Money Market Fund (the "Fund") for the year ended October
31, 1998.
In this report we have provided you with a commentary from the Fund's
Investment Adviser, Republic National Bank of New York. We hope you find this
commentary informative and as always we would be delighted to hear from you to
answer any questions you might have or provide you with additional
information.
Financial statements, including portfolio holdings for the Republic New
York Tax-Free Money Market Fund for the fiscal year ended October 31, 1998
also follow. We look forward to servicing your financial needs and appreciate
your continued support.
Respectfully submitted,
/s/ Walter B. Grimm
Walter B. Grimm
President
<PAGE>
REPUBLIC NEW YORK TAX FREE MONEY MARKET FUND
ANNUAL REPORT -- OCTOBER 31, 1998
TABLE OF CONTENTS
PAGE
President's Message .................................................... 1
Commentary from the Investment Adviser ................................. 3
Statement of Net Assets ................................................ 4
Statement of Operations ................................................ 8
Statements of Changes in Net Assets .................................... 9
Notes to Financial Statements .......................................... 10
Financial Highlights ................................................... 14
Report of KPMG Peat Marwick LLP, Independent Auditors .................. 17
<PAGE>
COMMENTARY FROM THE INVESTMENT ADVISER --
REPUBLIC NATIONAL BANK OF NEW YORK
We are pleased to present you with the annual report for the Republic New
York Tax-Free Money Market Fund for the fiscal year ended October 31, 1998.
The close of the fiscal year was characterized by an unprecedented flight
to quality as nervous investors, foreign as well as domestic, sought a safe
haven from a simultaneous sell-off in global equity markets. As a result long
term U.S. Treasury rates hit record lows (4.96%) for the 30-year bond during
that period. In light of declining expectations for the domestic economy, the
Federal Open Market Committee took an active stance and cut the federal funds
rate by 25 basis points in September. Investors, expecting a greater easing,
deemed this cut as a compromise between inflationary fears and conditions in
financial markets. Subsequently, the Fed surprised the markets by cutting the
federal funds rate, as well as the discount rate, by an additional 25 basis
points between meetings of the Federal Open Market Committee in October.
The Republic New York Tax-Free Money Market Fund returned 2.95%(1) for
Class A (Investor Shares), for the twelve months ended October 31, 1998,
compared to 2.95% for the Lipper NY Money Market Fund Average.(2) For the
period from inception (November 17, 1994) to October 31, 1998 the Fund
outperformed the average annual return for the Lipper NY Money Market Fund
Average, returning 3.11%(3) (Class A) versus 3.06%.
Prices for high grade municipal notes rose substantially during the last
quarter of the fiscal year. Yields on one-year notes went from an average of
3.50% in June 1998 to 3.00% in October 1998. Even with the dramatic drop in
yields, there was still strong demand for municipal notes, and it was
difficult to buy these types of securities at a reasonable level. As a result,
the fund's average maturity has been shortened, and the percentages in
floating rate securities and commercial paper were increased. Money Market
Funds usually experience large outflows at year-end and at that point, more
municipal notes should become available at more attractive levels. As of
October 31, 1998, the fund's average maturity was 50 days and the portfolio
consisted of 49% Floating Rate Demand Notes, 33% Tax Exempt Commercial Paper,
16% Fixed Rate Notes and 2% Cash & Cash Equivalents.(4) The Fund's annualized
compounded 7-day yield through October 31 was 2.63%(5) for Class A, 1.94% for
Class B Shares and 2.88% for Class Y.
(1) Total return for Class B Shares for the period from April 29, 1998 to
October 31, 1998 and Class Y (Adviser Shares) for the fiscal year ended
October 31, 1998 is 1.24% and 3.21%, respectively.
(2) The Lipper NY Money Market Fund Average measures the performance of funds
which invest principally in municipal obligation of New York state with
dollar-weighted average maturities of less than 90 days.
(3) The average annual return for the Class B Shares for the period from
inception of the Fund (November 17, 1994) to October 31, 1998 is 2.93%.
This represents the average annual return for Class A Shares for the period
from November 17, 1994 to April 28, 1998 plus the average annual return for
the Class B Shares for the period April 29, 1998 to October 31, 1998.
The average annual return for the Class Y (Adviser Shares) for the period
from inception of the Fund (November 17, 1994) to October 31, 1998 is
3.26%. This represents the average annual return for Class A Shares for the
period from November 17, 1994 to June 30, 1996 plus the average annual
return for the Class Y Shares for the period July 1, 1996 to October 31,
1998.
(4) Portfolio composition is subject to change.
(5) Past performance is not predictive of future performance as yields on money
market funds fluctuate daily. Some of the fees of the Fund are currently
being waived, resulting in higher yields than would occur if full fees were
charged. If full fees had been charged, the 7 day yield for Class A Shares,
Class B Shares and Class Y Shares would have been 2.55%, 1.86% and 2.80%,
respectively, as of October 31, 1998.
An investment in the Fund is neither insured nor guaranteed by the FDIC or any
other Government Agency. Although the Fund seeks to preserve the value of your
investment at $1.00 it is possible to lose money by investing in this Fund.
This material must be preceded or accompanied by a current prospectus.
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<TABLE>
REPUBLIC NEW YORK TAX FREE MONEY MARKET FUND
STATEMENT OF NET ASSETS -- OCTOBER 31, 1998
<CAPTION>
PRINCIPAL MOODY'S/ VALUE
AMOUNT DESCRIPTION RATE MATURITY S&P(b) (NOTE 2)
------ ----------- ---- -------- ------ --------
<S> <C> <C> <C> <C> <C>
NEW YORK TAX FREE NOTES AND COMMERCIAL PAPER -- 97.9% (a)
NEW YORK TAX FREE MUNICIPAL NOTES -- 15.7%(a)
$2,880,000 Battery Park City Authority .... 7.70% 05/01/99 Aaa/AAA $ 2,976,754
1,700,000 Chatauqua County, New York, GO . 4.00% 12/22/98 NR/SP1+ 1,701,009
1,000,000 Erie Cnty, New York, GO ........ 4.00% 10/13/99 Mig1/NR 1,009,228
3,000,000 Galway, CSD, New York, GO ...... 4.00% 03/16/99 A2/NR 3,003,704
3,000,000 Half Hollow Hills New York,
CSD, GO ...................... 3.90% 06/25/99 Mig1/NR 3,006,583
1,500,000 Huntington, New York, UFSD ..... 3.75% 06/29/99 Mig1/NR 1,502,314
1,250,000 Manhasset, New York, UFSD ...... 7.30% 01/01/99 Aa1/NR 1,257,753
2,000,000 Nassau County, New York, GO .... 4.25% 05/18/99 Mig1/SP1 2,006,226
3,350,000 Pearl River, New York, UFSD .... 3.90% 06/22/99 A1/NR 3,355,168
2,000,000 Smithtown, New York, CSD, GO ... 3.90% 06/25/99 Mig1/NR 2,003,757
2,000,000 Suffolk County, New York, GO ... 4.00% 09/09/99 Mig1/SP1+ 2,010,776
2,000,000 Westchester County, New York, GO 3.59% 12/29/98 Mig1/NR 2,000,059
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TOTAL NEW YORK TAX FREE MUNICIPAL NOTES .................................. 25,833,331
------------
NEW YORK TAX FREE COMMERCIAL PAPER -- 32.7%(a)
3,000,000 Long Island Power Authority .... 2.95% 01/29/99 Vmig1/A1+ 3,000,000
3,000,000 Metropolitan Transport Authority 3.10% 01/15/99 P1/A1+ 3,000,000
1,915,000 Monroe County, New York ........ 3.40% 11/25/98 P1/A1+ 1,915,000
2,000,000 Monroe County, New York ........ 3.30% 11/25/98 P1/A1+ 2,000,000
2,000,000 New York City, GO .............. 3.30% 11/10/98 P1/A1+ 2,000,000
2,500,000 New York City, GO .............. 3.35% 12/11/98 P1/A1+ 2,500,000
2,200,000 New York City, Municipal Water
Authority .................... 3.60% 11/05/98 P1/A1+ 2,200,000
4,000,000 New York City, Municipal Water
Authority .................... 3.25% 01/21/99 P1/A1+ 4,000,000
3,000,000 New York State, Dormitory
Authority, Columbia
University ................... 3.20% 01/22/99 P1/A1+ 3,000,000
1,000,000 New York State, Dormitory
Authority, Memorial Sloan
Kettering Hospital ........... 3.30% 12/04/98 Vmig1/A1+ 1,000,000
3,000,000 New York State, Dormitory
Authority, Memorial Sloan
Kettering Hospital ........... 3.10% 01/22/99 Vmig1/A1+ 3,000,000
1,800,000 New York State, Dormitory
Authority, Memorial Sloan
Kettering Hospital ........... 2.90% 02/12/99 Vmig1/A1+ 1,800,000
5,100,000 New York State, Environmental
Authority .................... 3.10% 11/03/98 P1/A1+ 5,100,000
3,000,000 New York State, Environmental
Authority .................... 3.30% 11/04/98 P1/A1+ 3,000,000
3,000,000 New York State, GO ............. 3.25% 11/10/98 Vmig1/P1 3,000,000
3,000,000 New York State, GO ............. 2.95% 01/22/99 Vmig1/P1 3,000,000
2,350,000 New York State, GO ............. 3.25% 02/11/99 Vmig1/P1 2,350,000
3,000,000 New York State, Power Authority 3.40% 11/19/98 P1/A1 3,000,000
1,000,000 New York State, Power Authority 3.45% 12/09/98 P1/A1 1,000,000
1,785,000 Port Authority of New York and
New Jersey, SO 3.30% 12/04/98 P1/A1+ 1,785,000
2,000,000 Westchester County Health ...... 3.40% 11/13/98 P1/A1+ 2,000,000
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TOTAL NEW YORK TAX FREE COMMERCIAL PAPER ................................. 53,650,000
------------
VARIABLE RATE DEMAND NOTES(c) -- 49.5%(a)
5,500,000 Babylon, New York, IDA ......... 3.65% 12/01/24 Vmig1/A1+ 5,500,000
2,000,000 Babylon, New York, IDA ......... 2.75% 01/01/19 NR/A1+ 2,000,000
100,000 Dutchess County, New York ...... 3.25% 10/01/15 NR/NR 100,000
1,000,000 Hempstead, New York, IDA, Nassau
Energy ....................... 3.05% 09/15/15 NR/A1+ 1,000,000
1,200,000 Long Island Power Authority .... 3.60% 05/01/33 Vmig1/A1+ 1,200,000
3,000,000 Long Island Power Authority .... 3.00% 05/01/33 Vmig1/A1+ 3,000,000
6,500,000 Municipal Assistance Corporation 2.70% 07/01/08 Vmig1/A1+ 6,500,000
2,200,000 Nassau County, New York, Cold
Spring Harbour, Laboratory
Project ...................... 3.70% 07/01/19 NR/A1+ 2,200,000
1,000,000 Nassau County, New York,
Winthrop Hospital ............ 3.70% 03/01/28 NR/A1+ 1,000,000
1,850,000 New York City, GO .............. 3.70% 08/15/05 Vmig1/A1+ 1,850,000
2,000,000 New York City, GO .............. 3.70% 08/01/15 Vmig1/A1+ 2,000,000
2,000,000 New York City, GO .............. 3.00% 02/15/16 Vmig1/A1+ 2,000,000
2,000,000 New York City, GO .............. 3.60% 08/15/22 Vmig1/A1+ 2,000,000
2,000,000 New York City, Housing
Development Authority 2.80% 02/01/07 NR/A1+ 2,000,000
2,000,000 New York City, Health and
Hospital Corporation 2.80% 02/15/26 Vmig1/A1+ 2,000,000
3,000,000 New York City, IDA ............. 3.40% 11/01/24 Vmig1/A1+ 3,000,000
800,000 New York City, Municipal Water
Authority .................... 3.70% 06/15/22 Vmig1/A1+ 800,000
2,900,000 New York City, Municipal Water
Authority .................... 3.70% 06/15/25 Vmig1/A1+ 2,900,000
2,800,000 New York City, Trust Cultural
Revenue, Museum of
Broadcasting, LOC Kredit Bank 2.80% 05/01/14 Vmig1/A1+ 2,800,000
2,000,000 New York State, Energy, Niagra
Mohawk ....................... 3.70% 12/01/25 Aa2/NR 2,000,000
3,000,000 New York State, Energy, Hudson . 2.80% 11/01/20 P1/NR 3,000,000
2,000,000 New York State, Energy, Brooklyn 3.05% 12/01/20 Vmig1/A1+ 2,000,000
3,000,000 New York State, Energy, Niagara
Mohawk ....................... 3.70% 12/01/25 Aa2/NR 3,000,000
1,100,000 New York State, Energy, Niagara
Mohawk ....................... 3.70% 03/01/27 P1/NR 1,100,000
4,400,000 New York State, Energy, Research
and Development .............. 3.60% 06/01/29 Vmig1/A1+ 4,400,000
5,000,000 New York State, Housing Finance
Authority .................... 2.85% 03/15/08 Vmig1/A1+ 5,000,000
2,000,000 New York State, Housing Finance
Authority .................... 2.75% 05/15/15 Vmig1/A1+ 2,000,000
2,900,000 New York State, Local Government
Assistance ................... 2.95% 04/01/25 Vmig1/A1+ 2,900,000
2,545,000 New York State, Power Authority 3.45% 03/01/99 Vmig1/A1 2,545,000
600,000 Port Authority of New York and
New Jersey, SO ............... 3.70% 08/01/24 Vmig1/A1+ 600,000
1,000,000 Suffolk County, New York, IDA .. 3.05% 12/01/12 Vmig1/NR 1,000,000
3,000,000 Suffolk County, New York, Water
Authority .................... 2.80% 02/08/01 Vmig1/NR 3,000,000
5,000,000 Triborough Bridge and Tunnel
Authority, New York .......... 3.50% 01/01/24 Vmig1/A1+ 5,000,000
------------
TOTAL VARIABLE RATE DEMAND NOTES ......................................... $ 81,395,000
------------
TOTAL NEW YORK TAX FREE BONDS, NOTES AND
COMMERCIAL PAPER ....................................................... 160,878,331
------------
SHARES OTHER MUNICIPAL -- 1.9% (a)
------
MUTUAL FUNDS
3,189,000 Provident New York Tax Free Money Market Fund .................... 3,189,000
------------
TOTAL INVESTMENTS AT AMORTIZED COST }D{ ............................................... 164,067,331
CASH .................................................................................. 305
INTEREST RECEIVABLE ................................................................... 856,267
DEFERRED ORGANIZATION EXPENSE ......................................................... 6,800
DIVIDENDS PAYABLE ..................................................................... (347,441)
SHAREHOLDER SERVICES FEES PAYABLE ..................................................... (83,031)
INVESTMENT ADVISORY FEES PAYABLE ...................................................... (57,809)
PROFESSIONAL FEES PAYABLE ............................................................. (44,949)
ADMINISTRATION FEE PAYABLE ............................................................ (34,170)
REGISTRATION AND FILING FEES PAYABLE .................................................. (7,826)
OTHER LIABILITIES IN EXCESS OF ASSETS ................................................. (4,102)
------------
NET ASSETS ............................................................................ $164,351,375
============
Represented by:
Paid-in capital ..................................................................... $164,362,981
Undistributed net investment income ................................................. 19,053
Accumulated net realized losses on investments ...................................... (30,659)
------------
NET ASSETS ............................................................................ $164,351,375
============
REPUBLIC NEW YORK TAX-FREE MONEY MARKET FUND
STATEMENT OF NET ASSETS -- OCTOBER 31, 1998 (CONTINUED)
VALUE
(NOTE 2)
--------
NET ASSETS:
Class A (Investor Shares) - Applicable to 153,602,074 shares of beneficial interest
outstanding ......................................................................... $153,592,044
Class B - Applicable to 10 shares of beneficial interest outstanding .................. 10
Class Y (Adviser Shares) - Applicable to 10,760,898 shares of beneficial interest
outstanding ......................................................................... 10,759,321
------------
Net Assets ............................................................................ $164,351,375
============
Net Asset Value, Offering Price and Redemption Price Per Share
(Class A (Investor Shares), Class B Shares and Class Y (Adviser Shares)) ............ $1.00
=====
(a) Percentages indicated are based on net assets.
(b) The Moody's or Standard & Poor's rating indicated are believed to be the most recent ratings
available at October 31, 1998 for the securities listed. Ratings are generally ascribed to securities
at the time of issuance. While 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, 1998. These ratings are unaudited.
(c) Interest rates reset daily or weekly. Interest rate disclosed represents current rate at October 31,
1998.
(d) For Federal income tax purposes, the cost of securities owned at October 31, 1998 was substantially
the same as the cost of securities for financial statement purposes.
CSD -- Central School District
GO -- General Obligations
IDA -- Industrial Development Agency
LOC -- Letter of Credit
N/R -- Not rated
SO -- Special Obligation
UFSD -- Union Free School District
See notes to financial statements
</TABLE>
<PAGE>
REPUBLIC NEW YORK TAX-FREE MONEY MARKET FUND
STATEMENT OF OPERATIONS -- FOR THE YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Interest income ............................................ $5,049,611
----------
EXPENSES:
Shareholder service fees -- (Class A and Class B) $ 316,450
Advisory fees .................................... 217,204
Administrative service fees ...................... 144,706
Custodian fees and expenses ...................... 48,817
Fund accounting fees ............................. 44,828
Transfer agent fees .............................. 29,842
Legal fees ....................................... 25,192
Audit fees ....................................... 16,154
Registration fees ................................ 15,980
Reports to shareholders .......................... 8,424
Insurance expense ................................ 3,300
Trustees fees .................................... 2,198
Other expenses ................................... 35,148
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Total expenses ............................... 908,243
Voluntary fee reductions ......................... (116,131)
---------
Total net expenses ...................................... 792,112
----------
NET INVESTMENT INCOME ......................................... 4,257,499
----------
REALIZED LOSSES ON INVESTMENTS:
Net realized losses on investment transactions .............. (1,486)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........... $4,256,013
==========
See notes to financial statements
<PAGE>
<TABLE>
REPUBLIC NEW YORK TAX-FREE MONEY MARKET FUND
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
------------------------------------
1998 1997
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income .......................... $ 4,257,499 $ 2,941,757
Net realized losses on investment transactions . (1,486) (9,911)
------------ ------------
Net Increase in net assets resulting from
operations ................................... 4,256,013 2,931,846
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (Investor) Shares .................... (3,680,864) (2,637,696)
Class B Shares(a) ............................ (824) --
Class Y (Adviser) Shares ..................... (575,811) (304,270)
------------ ------------
Net Decrease in net assets from shareholder
distributions .................................. (4,257,499) (2,941,966)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued .................. 881,805,614 456,818,399
Dividends reinvested ......................... 3,435,465 2,449,643
Cost of shares redeemed ...................... (852,886,536) (409,567,308)
------------ ------------
Net Increase in net assets from capital share
transactions ................................. 32,354,543 49,700,734
------------ ------------
NET INCREASE IN NET ASSETS ..................... 32,353,057 49,690,614
NET ASSETS:
Beginning of year ............................ 131,998,318 82,307,704
------------ ------------
End of year (including distributions in excess
of income of $0 and $209, respectively) .... $164,351,375 $131,998,318
============ ============
(a) The Fund commenced offering Class B Shares on April 29, 1998.
See notes to financial statements
</TABLE>
<PAGE>
REPUBLIC NEW YORK TAX-FREE MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 1998
1. ORGANIZATION: Republic New York Tax-Free Money Market Fund (the "Fund") is a
separate series of Republic Funds (the "Trust"), a Massachusetts business
trust organized on April 22, 1987, which as of October 31, 1998 consisted of
seven funds, each of which has different and distinct investment objectives
and policies. This report contains the financial statements for the Republic
New York Tax-Free Money Market Fund only. Financial statements for the other
six funds are published separately. The Trust is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company.
The investment objective of the Fund is to provide its shareholders 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 Fund is authorized to issue three classes of shares, Class A Shares
("Investor Shares"), Class B Shares and Class Y Shares ("Adviser Shares").
Prior to February 1, 1998, the Investor Shares were known as Class C Shares.
Each class of shares in the Fund has identical rights and privileges except
with respect to fees paid under shareholder servicing or distribution plans,
expenses allocable exclusively to each class of shares, voting rights on
matters affecting a single class of shares, and the exchange privilege of
each class of shares.
The Trust retains Republic National Bank of New York ("Republic") as
Investment Adviser ("Adviser") and Custodian ("Custodian") and BISYS Funds
Services, Inc., ("BISYS") as Administrator, Distributor and Sponsor
("Sponsor").
2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles. The preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expenses for the year. Actual results could differ from those
estimates.
SECURITIES VALUATION:
Investments of the Fund are valued at amortized cost, which approximates
market value. Under the amortized cost method, discount or premium is
accreted or amortized, respectively, on a constant ("straight-line") basis to
the maturity of the security. In addition, the Fund may not (a) purchase any
instrument with a remaining maturity greater than 397 days unless such
investment is subject to a demand or put feature, or (b) maintain a
dollar-weighted average portfolio maturity which exceeds 90 days.
SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is purchased
or sold ("trade date"). Interest income is recognized on the accrual basis
and includes, where applicable, the amortization of premium or accretion of
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 a fund
are charged to the fund. Expenses incurred by the Trust with respect to any
two or more the Trust's seven funds are allocated in proportion to the net
asset levels of each fund, except where allocations of direct expenses to
each fund can otherwise be made fairly. Expenses are allocated to each class
in proportion to their respective net asset levels except for expenses
allocable exclusively to a particular class.
FEDERAL INCOME TAXES:
The Fund is a separate taxable entity for federal income tax purposes. The
Fund has qualified and intends to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code, as
amended and to distribute substantially all of its taxable income and net
realized gains, if any, to its shareholders. Accordingly, no provision for
federal income or excise tax is required.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly.
Distributions from net capital gains, if any, are declared and paid at least
annually by the Fund.
REPURCHASE AGREEMENTS:
The Fund may enter into 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 Funds' custodian, either physically or in book
entry form.
DEFERRED ORGANIZATION EXPENSES:
The Fund incurred certain costs in connection with its organization. Such
costs have been deferred and are being amortized by the Fund on a constant
("straight-line") basis over a five year period from the commencement of
operations.
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 the business
affairs of the Trust, periodic reports on the investment performance of the
Fund. For its services as investment adviser, Republic receives from the Fund
a fee, payable monthly, at the annual rate of 0.15% of average daily net
assets. For the year ended October 31, 1998, the advisory fee was $217,204 of
which $116,131 was voluntarily waived.
ADMINISTRATION:
The Fund retains BISYS to serve as Administrator, Distributor and Sponsor.
BISYS provides management and administrative services necessary for the
operation of the Fund, furnishes office space and facilities required for
conducting the business of the Fund and pays the compensation of the Fund's
officers. For those services, BISYS receives from the Fund a fee payable
monthly at an annual rate of 0.10% of the first $1 billion of the Fund's
average daily net assets; 0.08% of the next $1 billion of the Fund's average
daily net assets; and 0.07% of such assets in excess of $2 billion. For the
year ended October 31, 1998, the administration fees were $144,706.
CUSTODY:
The custody function was transferred to Republic National Bank of New York
effective from December 1, 1997. For the year ended October 31, 1998 the
custody fee was $48,817.
DISTRIBUTION PLAN:
The Trust 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 for amounts representing actual expenses
incurred by the Sponsor for marketing costs and services rendered in
distributing the Funds shares at a rate not to exceed 0.25% and 0.75% of the
average daily net assets of Class A and Class B Shares of the Fund,
respectively.
SHAREHOLDER SERVICING PLANS:
The Trust has entered into a Shareholder Servicing agreement with its
Shareholder Servicing Agents (which currently consists of Republic and its
affiliates) for providing various shareholder services. The aggregate fees
paid to the Distributor pursuant to the Distribution Plan and to Shareholder
Servicing Agents pursuant to the Shareholder Servicing agreement historically
have not exceeded 0.25% and 1.00% per annum of the Funds' average daily net
assets of Class A shares and Class B shares, respectively. For the year ended
October 31, 1998, the shareholder servicing fees were $316,062 and $388 for
Class A and Class B shares, respectively.
4. CAPITAL SHARE TRANSACTIONS:
All capital share transactions have been effected at a value of $1 per share.
Transactions in dollars and shares of beneficial interest for the Fund were
as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, 1998
-------------------------------------------------------
CLASS A CLASS Y
(INVESTOR) CLASS B (ADVISER)
SHARES SHARES(a) SHARES
-------- -------- --------
<S> <C> <C> <C>
Shares issued .................................................. 620,474,727 105,074 261,225,813
Shares reinvested .............................................. 3,329,003 47 106,415
Shares redeemed ................................................ (593,534,570) (105,111) (259,246,855)
----------- -------- -----------
Net increase ............................................... 30,269,160 10 2,085,373
============ ======== ============
<CAPTION>
YEAR ENDED OCTOBER 31, 1997
----------------------------------
CLASS A CLASS Y
(INVESTOR) (ADVISER)
SHARES SHARES
-------- --------
<S> <C> <C>
Shares issued ...................................................................... 285,607,214 171,211,185
Shares reinvested .................................................................. 2,398,796 50,847
Shares redeemed .................................................................... (243,267,094) (166,300,214)
------------ ------------
Net increase ................................................................... 44,738,916 4,961,818
============ ============
(a) For the period from April 29, 1998 (date of initial offering) to October 31, 1998.
</TABLE>
5. CONCENTRATION OF CREDIT RISK:
The Fund invests primarily in debt obligations issued by the State of New
York and its respective political subdivisions, agencies and public
authorities. The Fund is more susceptible to economic and political factors
adversely affecting issuers of New York specific municipal securities than
are money market funds that are not concentrated in these issuers to the same
extent.
6. YEAR 2000 (UNAUDITED):
The services provided to the Fund by its various service providers depend on
the smooth functioning of their computer systems. Many computer software
systems in use today cannot recognize the year 2000, but revert to 1900 or
some other date, due to the manner in which dates were encoded and
calculated. That failure could have a negative impact on the handling of
securities trades, pricing and account services. The Fund has been advised
that its service providers have been working actively on necessary changes to
their own computer systems to prepare for the year 2000 and expect that their
systems will be adapted before that date, but there can be no assurance that
they will be successful, or that interaction with other non-complying
computer systems will not impair their services at that time. In addition, no
assurance can be given that the Fund's service providers have anticipated
every step necessary to avoid any adverse effect on the Fund attributable to
the Year 2000 problem.
7. FEDERAL TAX INFORMATION (UNAUDITED):
The Fund paid 100% of net investment income dividends as exempt interest
dividends.
As of October 31, 1998, the Fund had capital loss carryovers available to
offset future capital gains as follows:
AMOUNT INCURRED EXPIRES
------ -------- -------
$13,869 10/31/95 10/31/2003
5,393 10/31/96 10/31/2004
9,911 10/31/97 10/31/2005
1,486 10/31/98 10/31/2006
-------
$30,659
-------
<PAGE>
REPUBLIC NEW YORK TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS -- CLASS A (INVESTOR) SHARES
<TABLE>
<CAPTION>
FOR THE
PERIOD
NOVEMBER 17,
1994
(COMMENCEMENT
FOR THE YEAR ENDED OCTOBER 31, OF OFFERING) TO
---------------------------------------------------- OCTOBER 31,
1998 1997 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE,
BEGINNING OF PERIOD.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........... 0.029 0.030 0.030 0.033
Net realized losses on investment
transactions .................. 0.000* 0.000* -- --
------- ------- ------- -------
Total income from investment
operations .................... 0.029 0.030 0.030 0.033
------- ------- ------- -------
Less dividends:
Dividends to shareholders from
net investment income ......... (0.029) (0.030) (0.030) (0.033)
------- ------- ------- -------
Net asset value per share, end of
period ........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
TOTAL RETURN ...................... 2.95% 3.01% 3.04% 3.31%(c)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's) $153,592 $123,324 $78,594 $52,652
Ratio of expenses to average net
assets ........................ 0.58% 0.60% 0.54% 0.41%(b)
Ratio of net investment income to
average net assets ............ 2.90% 2.98% 2.97% 3.45%(b)
Ratio of expenses to average net
assets(a) ..................... 0.66% 0.72% 0.63% 0.65%(b)
Ratio of net investment income to
average net assets(a) ......... 2.82% 2.86% 2.88% 3.20%(b)
- ----------
(a) During the year, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios
would have been as indicated.
(b) Annualized.
(c) Not annualized.
* Less than $0.001 per share.
See notes to financial statements
</TABLE>
<PAGE>
REPUBLIC NEW YORK TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS -- CLASS B
CLASS B SHARES
---------------
FOR THE PERIOD
APRIL 29, 1998
(COMMENCEMENT
OF OFFERING) TO
OCTOBER 31,
1998
---------------
NET ASSET VALUE PER SHARE, BEGINNING OF PERIOD ........... $ 1.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................................. 0.012
Net realized losses on investment transactions ......... 0.000*
-------
Total income from investment operations ................ 0.000
-------
Less dividends:
Dividends to shareholders from net investment income ... (0.012)
-------
Net asset value per share, end of period ............... $ 1.00
=======
TOTAL RETURN ............................................. 1.24%(c)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period ............................ $ 10
Ratio of expenses to average net assets ................ 1.33%(b)
Ratio of net investment income to average net assets ... 2.15%(b)
Ratio of expenses to average net assets(a) ............. 1.41%(b)
Ratio of net investment income to average net assets(a) 2.07%(b)
- ----------
(a) During the year, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(b) Annualized.
(c) Not annualized.
* Less than $0.001 per share.
See notes to financial statements
<PAGE>
REPUBLIC NEW YORK TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS -- CLASS Y (ADVISER) SHARES
<TABLE>
<CAPTION>
ADVISER SHARES
---------------------------------------------------------
FOR THE
PERIOD
JULY 1, 1996
FOR THE YEAR ENDED (COMMENCEMENT
OCTOBER 31, OF OFFERING) TO
------------------------------ OCTOBER 31,
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE PER SHARE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ...................... 0.031 0.032 0.010
Net realized losses on investment
transactions ............................. 0.000* 0.000* --
------- ------- -------
Total income from investment operations .... 0.031 0.032 0.010
------- ------- -------
Less dividends:
Dividends to shareholders from net
investment income ........................ (0.031) (0.032) (0.010)
------- ------- -------
Net asset value per share, end of period ... $ 1.00 $ 1.00 $ 1.00
======= ======= =======
TOTAL RETURN ................................. 3.21% 3.27% 1.03%(c)
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000's) ........ $10,759 $8,674 $3,714
Ratio of expenses to average net assets .... 0.33% 0.35% 0.35%(b)
Ratio of net investment income to average
net assets ............................... 3.15% 3.23% 3.12%(b)
Ratio of expenses to average net assets(a) . 0.41% 0.47% 0.45%(b)
Ratio of net investment income to average
net assets(a) ............................ 3.07% 3.13% 3.02%(b)
- ----------
(a) During the year, certain fees were voluntarily reduced. If such voluntary fee reductions had not
occurred, the ratios would have been as indicated.
(b) Annualized.
(c) Not annualized.
* Less than $0.001 per share.
See notes to financial statements
</TABLE>
<PAGE>
KPMG Peat Marwick LLP
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
Republic Funds:
We have audited the accompanying statement of net assets of Republic New
York Tax-Free Money Market Fund (the "Fund"), as of October 31, 1998 and the
related statement of operations for the year then ended, statements of changes
in net assets for each of the years in the two-year period then ended and
financial highlights for each of the years or periods in the three-year period
ended October 31, 1998. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for Class A (Investor) Shares
for the period from November 17, 1994 (commencement of operations) to October
31, 1995 were audited by other auditors whose report thereon, dated December
8, 1995, expressed an unqualified opinion on those financial highlights.
We conducted our audits 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 and financial highlights. Our procedures included
confirmation of securities as of October 31, 1998 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Republic New York Tax-Free Money Market Fund as of October 31, 1998, the
results of its operations for the year then ended and changes in its net
assets for each of the years in the two-year period then ended and financial
highlights for each of the years or periods in the three-year period ended
October 31, 1998 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
December 18, 1998
<PAGE>
REPUBLIC
NEW YORK TAX-FREE
MONEY MARKET
FUND
INVESTMENT ADVISER AND CUSTODIAN
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
(614) 470-8000
TRANSFER AGENT
Investors Bank & Trust Company
200 Clarendon Street
16th Floor
Boston, MA 02116
(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
Republic Bank for Savings
452 Fifth Avenue
New York, NY 10018
(800) 522-5214
FOR NON-REPUBLIC CLIENTS:
Investors Bank & Trust Company
200 Clarendon Street
16th Floor
Boston, MA 02116
(800) 782-8183 12/98
