MALACHI MILLENNIUM INCOME TRUST
ANNUAL REPORT
SEPTEMBER 30, 2000
TREASURERS' GOVERNMENT MONEY MARKET FUND
<PAGE>
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES - SEPTEMBER 30, 2000
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ASSETS
Investments in securities, at cost and value (Note 2) $ 11,099,797
Investment in repurchase agreements (Note 2) 6,156,152
Receivable from Investment Manager (Note 3) 84,141
Interest receivable 4,142
Other assets 8,062
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Total Assets 17,352,294
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LIABILITIES
Dividends payable 64,909
Other accrued expenses 34,925
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Total Liabilities 99,834
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NET ASSETS $ 17,252,460
============
NET ASSETS CONSIST OF:
Paid-in capital $ 17,274,315
Accumulated net realized losses from
security transactions (21,855)
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NET ASSETS $ 17,252,460
============
SHARES OF BENEFICIAL INTEREST OUTSTANDING (UNLIMITED
NUMBER OF SHARES AUTHORIZED, NO PAR VALUE) 17,274,315
============
NET ASSET VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE (NOTE 2) $ 1.00
============
See accompanying notes to financial statements.
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MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2000
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INVESTMENT INCOME
Interest income $ 1,564,779
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EXPENSES
Investment management fees (Note 3) 52,928
Administration, fund accounting, shareholder services
and transfer agent fees (Note 3) 45,875
Professional fees 45,573
S & P rating expense 22,000
Custodian fees 13,042
Trustees' fees and expenses 10,902
Insurance expense 9,854
Registration and filing fees 2,146
Reports to shareholders 250
Other expenses 658
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Total Expenses 203,228
Fees waived and expenses reimbursed by the
Investment Manager (Note 3) (137,070)
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Net Expenses 66,158
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NET INVESTMENT INCOME 1,498,621
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NET REALIZED LOSSES FROM SECURITY TRANSACTIONS (2,476)
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NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,496,145
============
See accompanying notes to financial statements.
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MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
------------------ ------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 1,498,621 $ 1,587,947
Net realized losses from securities investments (2,476) (19,379)
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Net increase in net assets resulting from operations 1,496,145 1,568,568
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DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (1,498,621) (1,587,947)
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FROM CAPITAL SHARE TRANSACTIONS (a)
Proceeds from shares sold 161,219,242 171,492,461
Net asset value of shares issued in reinvestment
of distributions to shareholders 544,133 841,401
Payments for shares redeemed (210,049,213) (140,481,515)
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Net increase (decrease) in net assets from
capital share transactions (48,285,838) 31,852,347
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Total increase (decrease) in net assets (48,288,314) 31,832,968
NET ASSETS
Beginning of year 65,540,774 33,707,806
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End of year $ 17,252,460 $ 65,540,774
============= =============
</TABLE>
(a) Capital share transactions are identical to the dollar value shown.
See accompanying notes to financial statements.
<PAGE>
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
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Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
PER SHARE DATA
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<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income 0.057 0.049 0.053 0.051 0.052
Dividends from net investment income (0.057) (0.049) (0.053) (0.051) (0.052)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
TOTAL RETURN 5.89% 5.03% 5.33% 5.06% 5.27%
========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA
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Net assets at end of year (000's) $ 17,252 $ 65,541 $ 33,708 $ 111 $ 132
Ratios net of fees waived and expenses
reimbursed by Investment Manager (Note 3)
Ratio of net expenses to average net assets 0.25% 0.25% 0.22% 0.00% 0.00%
Ratio of net investment income to average
net assets 5.67% 4.92% 5.33% 5.06% 5.25%
Ratios assuming no fees waived and expenses
reimbursed by Investment Manager (Note 3)
Ratio of expenses to average net assets 0.77% 0.69% 0.80% 30.19% 14.42%
Ratio of net investment income to average
net assets 5.15% 4.48% 4.74% -25.13% -9.17%
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MALACHI MILLENNIUM INCOME TRUST
Treasurers' Government Money Market Fund
SCHEDULE OF PORTFOLIO INVESTMENTS - September 30, 2000
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PAR VALUE
------------ ------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 64.3%
Federal Home Loan Bank,
5.125%, due 11/17/2000 $ 100,000 $ 99,775
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Federal Home Loan Mortgage Corporation
discount note, due 10/5/2000 2,690,000 2,688,081
discount note, due 10/10/2000 5,329,000 5,320,474
discount note, due 10/17/2000 3,000,000 2,991,467
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TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS $ 11,099,797
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REPURCHASE AGREEMENTS (a) - 35.7%
FACE AMOUNT
------------
Lehman Brothers,
6.54%, dated 9/29/2000, due 10/2/2000,
with a collateral value of $6,159,507 $ 6,156,152 $ 6,156,152
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TOTAL INVESTMENTS AT VALUE (AMORTIZED COST $17,255,949) - 100.0% $ 17,255,949
Liabilities in Excess of Other Assets - (0.0%) (3,489)
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NET ASSETS - 100.0% $ 17,252,460
============
(a) Repurchase agreements are fully collateralized by U.S. Government agency
securities.
See accompanying notes to financial statements.
<PAGE>
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2000
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1. ORGANIZATION
The Malachi Millennium Income Trust, formerly the Millennium Income Trust,
(the "Trust") is registered under the Investment Company Act of 1940, as
amended, as an open-end diversified management investment company. The
Trust was established as a Massachusetts business trust under a Declaration
of Trust dated August 19, 1994. The Trust consists of one series, the
Treasurers' Government Money Market Fund (the "Fund"). The Fund's
investment objective is to seek high current income, consistent with
protection of capital. The Fund is expecting to maintain a constant net
asset value.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Fund's significant accounting policies:
SECURITY VALUATION - Securities are valued on an amortized cost basis,
which approximates market value. This involves initially valuing a security
at its original cost and thereafter assuming a constant amortization to
maturity of any discount or premium.
SHARE VALUATION - The net asset value per share of the Fund is calculated
daily by dividing the total value of the Fund's assets, less liabilities,
by the number of shares outstanding.
INVESTMENT INCOME - Interest income is accrued as earned and includes,
where applicable, the pro-rata amortization of premium or accretion of
discount.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income are
declared daily and paid on the last business day of each month. Net
realized short-term capital gains, if any, may be distributed throughout
the year and net realized long-term capital gains, if any, are distributed
at least once each year. Income distributions and capital gain
distributions are determined in accordance with income tax regulations.
SECURITY TRANSACTIONS - Investment transactions are accounted for on the
trade date. Securities sold are determined on a specific identification
basis.
REPURCHASE AGREEMENTS - Repurchase agreements are collateralized by U.S.
Government securities and are valued at cost, which, together with accrued
interest, approximates market. Collateral for repurchase agreements is held
in safekeeping in the Fund's custodian customer-only account at the Federal
Reserve Bank of Cleveland. At the time the Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will be equal to or exceed the face amount of
the repurchase agreement. In the event of a bankruptcy or other default of
the seller of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying security and losses. These losses would equal
the face amount of the repurchase agreement(s) and accrued interest, net of
any proceeds received in liquidation of the underlying securities. To
minimize the possibility of loss, the Fund enters into repurchase
agreements only with institutions deemed to be creditworthy under
guidelines established by the Board of Trustees.
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MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2000
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ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements and the reported amount
of income and expenses during the reporting period. Actual results could
differ from these estimates.
FEDERAL INCOME TAX - It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the
income distributed. Accordingly, no provision for income taxes has been
made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as
dividends in each calendar year at least 98% of its net investment income
(earned during the calendar year) and 98% of its net realized capital gains
(earned during the twelve months ended October 31) plus undistributed
amounts from prior years.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The President of the Trust is the chairman and controlling shareholder of
Trias Capital Management, Inc. ("Trias"), the Trust's investment manager.
INVESTMENT MANAGEMENT AGREEMENT
The Fund's investments are managed by Trias pursuant to the terms of a
management agreement. Under the terms of the management agreement, the Fund
pays Trias a fee, which is computed and accrued daily and paid monthly at
the annual rate of .20% of its average daily net assets. In order to
voluntarily reduce operating expenses during the year ended September 30,
2000, Trias agreed to reimburse the Fund the amount by which its total
operating expenses exceeded .25% of average daily net assets. For the year
ended September 30, 2000, the total of such reimbursements were $137,070.
MUTUAL FUND SERVICES AGREEMENT
Under the terms of a Mutual Fund Services Agreement, effective July 24,
2000, Ultimus Fund Solutions, LLC ("Ultimus") provides administrative, fund
accounting and pricing, and transfer agent and shareholder services to the
Fund. For these services, Ultimus receives a base fee of $5,000 per month,
plus an asset-based fee equal to the annual rate of 0.10% of the Fund's
average net assets in excess of $50 million but less than $250 million;
0.075% of such assets in excess of $250 million but less than $500 million;
and 0.05% of such assets in excess of $500 million. During the year ended
September 30, 2000, Ultimus was paid $11,250 of fees under the Agreement.
<PAGE>
MALACHI MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2000
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Prior to July 24, 2000, administrative services were provided by Millennium
Financial LLC ("MFL"). In addition, prior to July 24, 2000, fund accounting
services and transfer agent services were provided to the Fund by
Integrated Fund Services ("Integrated"). Under the terms of an Accounting
Services Agreement with the Fund, Integrated received a monthly fee of
$2,000 per month. Pursuant to the terms of a Transfer, Dividend Disbursing,
Shareholder Service and Plan Agency Agreement with the Fund, Integrated
received a fee from the Fund at an annual rate of $20 per shareholder
account, subject to a minimum monthly fee not to exceed $1,500. In
addition, the Fund paid Integrated's out-of-pocket expenses including, but
not limited to, postage and supplies.
<PAGE>
Report of Independent Public Accountants
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To the Shareholders and Board of Trustees of
the Malachi Millennium Income Trust:
We have audited the statement of assets and liabilities, including the schedule
of portfolio investments, of the Treasurers' Government Money Market Fund (the
Fund) of the Malachi Millennium Income Trust as of September 30, 2000, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
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.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits 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 September 30, 2000, 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 the
Treasurers' Government Money Market Fund as of September 30, 2000, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and its financial highlights for
each of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States.
/s/ Arthur Andersen LLP
Cincinnati, Ohio
October 13, 2000
