-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O5r4L7oDz5GegSYQ9VCjV80GNIjmq+fAQktlLGaIDz1ojKcl4tqRffWNLvpmPh8Z yTip9p3GQhprNOA75L7U/Q== 0001193125-07-236173.txt : 20071106 0001193125-07-236173.hdr.sgml : 20071106 20071106110412 ACCESSION NUMBER: 0001193125-07-236173 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070831 FILED AS OF DATE: 20071106 DATE AS OF CHANGE: 20071106 EFFECTIVENESS DATE: 20071106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONARCH FUNDS CENTRAL INDEX KEY: 0000889509 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06742 FILM NUMBER: 071216458 BUSINESS ADDRESS: STREET 1: CITIGROUP GLOBAL TRANSACTION SVCS STREET 2: TWO PORTLAND SQUARE CITY: PORTLAND STATE: ME ZIP: 04101-4049 BUSINESS PHONE: (800)754-8757 MAIL ADDRESS: STREET 1: CITIGROUP GLOBAL TRANSACTION SVCS STREET 2: TWO PORTLAND SQUARE CITY: PORTLAND STATE: ME ZIP: 04101-4049 0000889509 S000004574 Monarch Daily Assets Cash Fund C000012507 Institutional Shares MCIXX C000012508 Institutional Service Shares FACXX C000012509 Investor Shares MCVXX C000012510 Preferred Shares MCEXX C000012511 B Shares MHBXX C000012512 C Shares MHCXX C000012513 Universal Shares MOCXX 0000889509 S000004575 Monarch Daily Assets Government Obligations Fund C000012514 Universal Shares DGIXX 0000889509 S000004576 Monarch Daily Assets Government Fund C000012515 Institutional Shares MGIXX C000012516 Institutional Service Shares DGAXX C000012517 Investor Shares MGVXX C000012518 Preferred Shares MGEXX C000012519 Universal Shares MGCXX 0000889509 S000004577 Monarch Daily Assets Treasury Fund C000012520 Institutional Service Shares MOIXX C000012521 Investor Shares MTVXX N-CSR 1 dncsr.txt MONARCH FUNDS AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 6, 2007 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6742 MONARCH FUNDS TWO PORTLAND SQUARE PORTLAND, MAINE 04101 207-879-1900 JACK J. SINGER MONARCH INVESTMENT ADVISORS, LLC 950 CORONADO DRIVE ARCADIA, CA 91007 626-447-4717 Date of fiscal year end: August 31 Date of reporting period: September 1, 2006 - August 31, 2007 ITEM 1. REPORT TO STOCKHOLDERS. AUGUST 31, 2007 DAILY ASSETS TREASURY FUND DAILY ASSETS GOVERNMENT OBLIGATIONS FUND DAILY ASSETS GOVERNMENT FUND DAILY ASSETS CASH FUND ANNUAL REPORT MONARCH FUNDS [GRAPHIC] MONARCH FUNDS - -------------------------------------------------------------------------------- A MESSAGE TO OUR SHAREHOLDERS August 31, 2007 Dear Shareholders: Since our February, 2007 semi-annual report, Federal Reserve monetary policy has changed considerably. The Federal Reserve has gone from holding the Fed Funds rate stable at 5 1/4% to lowering the rate to 4 3/4% as of September 18th. This action was taken due to concerns that the domestic economy may be impacted due to the collapse of the sub-prime mortgage market and the wide ranging financial dislocations this may have. We view this as a positive for the domestic economy and that over the coming months the initial effects of the mortgage market dislocations will dissipate. Our investment approach throughout the recent volatile fixed income market time period has been and will continue to be focused on seeking to maintain the highest credit quality in our portfolios consistent with providing our investors with a competitive return. Since the inception of the Monarch Funds fifteen years ago, we have remained committed to maintaining a $1.00 Net Asset Value per share, providing daily liquidity and competitive returns through the skilled and prudent portfolio management our shareholders have come to expect. We thank all of our investors and the financial intermediaries we serve for their continued support. Please feel free to call us with your questions or comments at (800) 754-8757. Monarch Funds ALTHOUGH MONEY MARKET FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THEM. AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT ENDORSED OR GUARANTEED BY ANY BANK OR ANY AFFILIATE OF A BANK. FORESIDE FUND SERVICES, LLC, DISTRIBUTOR. 1 MONARCH FUNDS - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Trustees and Shareholders Monarch Funds: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the Daily Assets Treasury Fund, Daily Assets Government Obligations Fund, Daily Assets Government Fund, and Daily Assets Cash Fund (collectively, the "Funds"), each a series of the Monarch Funds, as of August 31, 2007, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Company'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 the standards of the Public Company Accounting Oversight Board (United States). 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 August 31, 2007, by correspondence with custodians. 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 Daily Assets Treasury Fund, Daily Assets Government Obligations Fund, Daily Assets Government Fund, and Daily Assets Cash Fund as of August 31, 2007, and the results of their operations for the year then ended, the changes in their net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP October 25, 2007 2 MONARCH FUNDS - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS - DAILY ASSETS TREASURY FUND August 31, 2007
FACE AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE - ----------- -------------------------------------------------------------------------- ------------ -------- ----------- U.S. TREASURY BILLS # - 36.0% $21,000,000 U.S. Treasury Bills 3.09% - 3.91% 09/20/07 $20,960,607 6,000,000 U.S. Treasury Bill 3.35 11/01/07 5,966,145 ----------- 26,926,752 ----------- REPURCHASE AGREEMENTS - 64.1% 14,872,000 Bank of America Securities, dated 08/31/07, to be repurchased at $14,880,180; collateralized by various U.S. Treasury Obligations 4.95 09/04/07 14,872,000 11,000,000 Citigroup, dated 08/31/07, to be repurchased at $11,005,806; collateralized by various U.S. Treasury Obligations 4.75 09/04/07 11,000,000 11,000,000 Deutsche Bank Securities, Inc., dated 08/31/07, to be repurchased at $11,006,233; collateralized by various U.S. Treasury Obligations 5.10 09/04/07 11,000,000 11,000,000 Merrill Lynch, dated 08/31/07, to be repurchased at $11,005,989; collateralized by various U.S. Treasury Obligations 4.90 09/04/07 11,000,000 ----------- Total Repurchase Agreements 47,872,000 ----------- Total Investments at Amortized Cost* - 100.1% $74,798,752 Other Assets and Liabilities, Net - (0.1%) (44,245) ----------- NET ASSETS - 100.0% $74,754,507 =========== PORTFOLIO HOLDINGS % OF TOTAL INVESTMENTS Repurchase Agreements 64.0% U.S. Treasury Bills 36.0% # Rates shown are annualized yields at time of purchase. * Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements. 3 MONARCH FUNDS - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT OBLIGATIONS FUND August 31, 2007
FACE AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE - ----------- -------------------------------------------------------------------------- ---- -------- ----------- U.S. GOVERNMENT SECURITY - 92.5% GOVERNMENT BOND # - 92.5% $ 2,000,000 Federal Home Loan Bank - Discount Note 5.17% 09/05/07 $ 1,998,856 15,000,000 Federal Home Loan Bank - Discount Note 4.82 11/21/07 14,839,350 ----------- Total U.S. Government Securities 16,838,206 ----------- SHARES - ----------- MONEY MARKET FUND - 7.2% 1,300,000 Dreyfus Treasury Prime Cash Management Fund 3.52 1,300,000 ----------- Total Investments at Amortized Cost* - 99.7% $18,138,206 Other Assets and Liabilities, Net - 0.3% 57,677 ----------- NET ASSETS - 100.0% $18,195,883 =========== PORTFOLIO HOLDINGS % OF TOTAL INVESTMENTS U.S. Government Security 92.8% Money Market Fund 7.2% # Rates shown are annualized yields at time of purchase. * Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements. 4 MONARCH FUNDS - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS - DAILY ASSETS GOVERNMENT FUND August 31, 2007
FACE AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE - ------------ -------------------------------------------------------------------------- ---- -------- ------------ U.S. GOVERNMENT SECURITIES - 68.5% GOVERNMENT BOND # - 65.3% $100,000,000 Federal Home Loan Bank - Discount Note 4.50% 09/04/07 $ 99,962,500 150,000,000 Federal Home Loan Bank - Discount Note 4.90 09/06/07 149,897,917 ------------ Total Government Bond 249,860,417 ------------ SMALL BUSINESS ADMINISTRATION (+/-) - 3.2% 598,018 Pool #502150 6.25 02/25/18 600,777 1,172,318 Pool #503152 5.88 11/25/20 1,172,318 860,859 Pool #503461 6.00 09/25/21 861,228 1,033,643 Pool #503553 5.88 11/25/21 1,034,282 860,646 Pool #503909 5.75 10/25/22 860,408 3,202,812 Pool #504366 5.63 02/25/24 3,196,529 2,234,546 Pool #504719 5.88 07/25/24 2,234,546 787,429 Pool #504727 5.88 09/25/24 787,429 605,244 Pool #504765 5.88 10/25/09 604,825 796,609 Pool #504769 5.88 10/25/24 796,609 ------------ Total Small Business Administration 12,148,951 ------------ Total U.S. Government Securities 262,009,368 ------------ REPURCHASE AGREEMENTS - 31.3% 19,770,000 Bank of America Securities, dated 08/31/07, to be repurchased at $19,781,423; collateralized by various U.S. Government Agency Obligations 5.20 09/04/07 19,770,000 50,000,000 Citigroup, dated 08/31/07, to be repurchased at $50,029,167; collaterized by various U.S. Government Agency Obligations 5.25 09/04/07 50,000,000 50,000,000 Deutsche Bank Securities, Inc., dated 8/31/07, to be repurchased at $50,030,000; collaterized by various U.S. Government Agency Obligations 5.40 09/04/07 50,000,000 ------------ Total Repurchase Agreements 119,770,000 ------------ Total Investments at Amortized Cost* - 99.8% $381,779,368 Other Assets and Liabilities, Net - 0.2% 576,451 ------------ NET ASSETS - 100.0% $382,355,819 ============ PORTFOLIO HOLDINGS % OF TOTAL INVESTMENTS U.S. Government Securities 68.6% Repurchase Agreements 31.4% # Rates shown are annualized yields at time of purchase. (+/-)Certain securities are deemed to have a maturity remaining until the next adjustment of the interest rate, or the longer of the demand period or time to next readjustment. The interest rates shown reflect the rate in effect on August 31, 2007. * Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements. 5 MONARCH FUNDS - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS - DAILY ASSETS CASH FUND August 31, 2007
FACE AMOUNT SECURITY DESCRIPTION RATE MATURITY VALUE - ----------- -------------------------------------------------------------------------- ---- -------- ------------ COMMERCIAL PAPER # - 17.5% $25,000,000 Citigroup Funding, Inc. 5.38% 10/01/07 $ 24,888,542 25,000,000 International Lease Finance Corp. 5.27 09/07/07 24,978,167 25,000,000 Proctor & Gamble International Finance 5.29 10/19/07 24,825,666 25,000,000 UBS Finance Delaware, LLC 5.30 09/04/07 24,989,010 ------------ Total Commercial Paper 99,681,385 ------------ CORPORATE NOTES (+/-) - 38.5% 25,000,000 AllState Life Global Funding Trust^ 5.44 04/14/08 25,016,563 15,000,000 American Express Credit Co. 5.62 01/15/08 15,002,175 25,000,000 American Honda Finance Corp.^ 5.59 11/15/07 25,003,036 24,750,000 ASIF Global Financing XXI^ 5.71 03/14/08 24,800,172 8,450,000 CIT Group, Inc. 5.59 09/20/07 8,451,081 8,000,000 CIT Group, Inc. 5.57 02/21/08 7,998,855 20,000,000 Deutsche Bank of New York 5.36 06/19/08 20,006,018 25,000,000 General Electric Capital Corp. 5.42 01/03/08 25,008,356 25,000,000 JP Morgan Chase & Co. 5.43 01/25/08 25,009,653 6,050,000 Lehman Brothers Holdings, Inc. 5.54 05/29/08 6,052,164 10,000,000 Merrill Lynch & Co., Inc. 5.49 10/19/07 10,002,158 8,085,000 Morgan Stanley 5.41 03/07/08 8,088,250 12,000,000 Royal Bank of Scotland Plc^ 5.37 04/11/08 12,003,079 7,393,000 Wells Fargo & Co. 5.42 09/28/07 7,393,581 ------------ Total Corporate Notes 219,835,141 ------------ GOVERNMENT BONDS # - 17.3% 40,000,000 Federal Farm Credit - Discount Note 4.90 09/05/07 39,978,222 20,000,000 Federal Farm Credit - Discount Note 4.90 09/06/07 19,986,389 38,658,000 Federal Home Loan Bank - Discount Note 4.50 09/04/07 38,643,503 ------------ Total Government Bonds 98,608,114 ------------ REPURCHASE AGREEMENTS - 26.5% 45,500,000 Bank of America Securities, dated 08/31/07, to be repurchased at $45,526,289; collateralized by various U.S. Government Agency Obligations 5.20 09/04/07 45,500,000 55,740,000 Citigroup, dated 08/31/07, to be repurchased at $55,772,515; collateralized by various U.S. Government Agency Obligations 5.25 09/04/07 55,740,000 50,000,000 Deutsche Bank Securities, Inc., dated 08/31/07, to be repurchased at $50,030,000; collateralized by various U.S. Government Agency Obligations 5.40 09/04/07 50,000,000 ------------ Total Repurchase Agreements 151,240,000 ------------ Total Investments at Amortized Cost* - 99.8% $569,364,640 Other Assets and Liabilities, Net - 0.2% 1,224,879 ------------ NET ASSETS - 100.0% $570,589,519 ============ PORTFOLIO HOLDINGS % OF TOTAL INVESTMENTS Corporate Notes 38.6% Repurchase Agreements 26.6% Commercial Paper 17.5% Government Bonds 17.3% # Rates shown are annualized yields at time of purchase. (+/-)Certain securities are deemed to have a maturity remaining until the next adjustment of the interest rate, or the longer of the demand period or time to next readjustment. The interest rates shown reflect the rate in effect on August 31, 2007. ^ Security exempt from registration under Rule 144A under the Securities Act of 1933. At the period end, the value of these securities amounted to $86,822,850 or 15.2% of net assets. * Cost for federal income tax purposes is the same as for financial statement purposes.
See Notes to Financial Statements. 6 MONARCH FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES August 31, 2007
DAILY ASSETS DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS TREASURY OBLIGATIONS GOVERNMENT CASH FUND FUND FUND FUND ------------ ------------ ------------ ------------ Assets Investments: Securities at amortized cost $26,926,752 $18,138,206 $262,009,368 $418,124,640 Repurchase agreements 47,872,000 -- 119,770,000 151,240,000 Cash 40,150 147,544 98,514 98,525 Receivables: Dividends -- 3,033 -- -- Interest 6,551 -- 138,590 1,654,216 Investment securities sold -- -- 613,970 -- Other receivables 7,890 -- -- 8,723 Prepaid expenses and other assets 5,841 7,814 25,655 73,245 ----------- ----------- ------------ ------------ Total Assets 74,859,184 18,296,597 382,656,097 571,199,349 ----------- ----------- ------------ ------------ Liabilities Payables: Dividends 26,644 74,765 51,410 298,607 Accrued expenses: Payable to adviser 2,823 778 13,685 19,333 Other expenses and other liabilities 75,210 25,171 235,183 291,890 ----------- ----------- ------------ ------------ Total Liabilities 104,677 100,714 300,278 609,830 ----------- ----------- ------------ ------------ Net Assets $74,754,507 $18,195,883 $382,355,819 $570,589,519 =========== =========== ============ ============ Components of Net Assets Paid-in capital $74,746,000 $18,196,905 $382,373,388 $570,588,588 Undistributed (distributions in excess of) net investment income 11 409 (31,721) 1,501 Accumulated net realized gain (loss) 8,496 (1,431) 14,152 (570) ----------- ----------- ------------ ------------ Net Assets $74,754,507 $18,195,883 $382,355,819 $570,589,519 =========== =========== ============ ============ Net Assets by Class of Shares Preferred Shares $ -- $ -- $140,173,371 $ 69,354,332 Universal Shares -- 18,195,883 29,134,194 102,838,108 Institutional Service Shares 8,767,514 -- 37,480,386 54,799,333 Institutional Shares -- -- 74,905,354 104,420,329 Investor Shares 65,986,993 -- 100,662,514 236,992,777 B Shares -- -- -- 490,201 C Shares -- -- -- 1,694,439 ----------- ----------- ------------ ------------ Net Assets $74,754,507 $18,195,883 $382,355,819 $570,589,519 =========== =========== ============ ============ Shares of Beneficial Interest for each Class of Shares Preferred Shares -- -- 140,169,045 69,351,641 Universal Shares -- 18,216,138 29,172,353 102,839,768 Institutional Service Shares 8,762,113 -- 37,479,308 54,797,940 Institutional Shares -- -- 74,898,244 104,419,994 Investor Shares 65,983,896 -- 100,654,451 236,994,712 B Shares -- -- -- 490,188 C Shares -- -- -- 1,694,380 Net Asset Value Per Share (Offering and Redemption Price per Share) for each Class of Shares $ 1.00 $ 1.00 $ 1.00 $ 1.00
See Notes to Financial Statements. 7 MONARCH FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS Year Ended August 31, 2007
DAILY ASSETS DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS TREASURY OBLIGATIONS GOVERNMENT CASH FUND FUND FUND FUND ------------ ------------ ------------ ------------ Investment Income: Interest income $4,153,155 $ 938,913 $20,606,211 $31,316,835 Dividend income 12,153 33,581 -- -- ---------- --------- ----------- ----------- Total Investment Income 4,165,308 972,494 20,606,211 31,316,835 ---------- --------- ----------- ----------- Expenses: Investment adviser fees 31,390 9,360 148,264 226,022 Administrator fees Preferred Shares -- -- 129,135 171,903 Universal Shares -- 20,591 79,502 79,603 Institutional Service Shares 16,452 -- 35,573 62,820 Institutional Shares -- -- 82,099 105,965 Investor Shares 72,528 -- 97,595 220,404 B Shares -- -- -- 23,986 C Shares -- -- -- 24,718 Shareholder service fees Institutional Service Shares 29,912 -- 64,680 114,219 Institutional Shares -- -- 149,271 192,665 Investor Shares 131,870 -- 177,447 400,738 B Shares -- -- -- 564 C Shares -- -- -- 2,226 Distribution fees Investor Shares 164,836 -- 221,806 500,917 B Shares -- -- -- 1,692 C Shares -- -- -- 6,677 Compliance services fees 10,283 6,879 11,055 3,652 Transfer agency fees Preferred Shares -- -- 14,840 21,320 Universal Shares -- 24,118 51,165 53,621 Institutional Service Shares 27,929 -- 46,800 73,297 Institutional Shares -- -- 171,150 211,115 Investor Shares 154,177 -- 201,681 426,907 B Shares -- -- -- 15,551 C Shares -- -- -- 16,899 Custodian fees 8,446 1,947 41,000 60,722 Professional fees 40,635 35,817 34,850 45,867 Accountant fees 51,142 38,847 99,989 123,737 Registration fees 5,811 6,016 35,173 60,244 Trustees' fees and expenses 7,262 1,962 47,769 60,831 Miscellaneous expenses 24,089 1,317 49,101 66,353 ---------- --------- ----------- ----------- Total Expenses 776,762 146,854 1,989,945 3,375,235 Expenses reimbursed and fees waived (152,372) (108,669) (373,005) (512,078) ---------- --------- ----------- ----------- Net Expenses 624,390 38,185 1,616,940 2,863,157 ---------- --------- ----------- ----------- Net Investment Income 3,540,918 934,309 18,989,271 28,453,678 ---------- --------- ----------- ----------- Net Realized Gain on Investments 8,496 3,790 14,150 13,702 ---------- --------- ----------- ----------- Increase in Net Assets from Operations $3,549,414 $ 938,099 $19,003,421 $28,467,380 ========== ========= =========== ===========
See Notes to Financial Statements. 8 MONARCH FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS DAILY ASSETS TREASURY FUND GOVERNMENT OBLIGATIONS FUND -------------------------------- ------------------------------ YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 31, 2007 AUGUST 31, 2006 AUGUST 31, 2007 AUGUST 31, 2006 --------------- --------------- --------------- --------------- Operations Net investment income $ 3,540,918 $ 2,619,720 $ 934,309 $ 763,875 Net realized gain on investments 8,496 -- 3,790 -- --------------- --------------- ------------ ------------ Increase in Net Assets from Operations 3,549,414 2,619,720 938,099 763,875 --------------- --------------- ------------ ------------ Distributions to Shareholders from Net investment income--Universal Shares -- -- (934,308) (763,875) Net investment income--Institutional Service Shares (704,968) (511,144) -- -- Net investment income--Investor Shares (2,835,952) (2,108,577) -- -- --------------- --------------- ------------ ------------ Total Distributions to Shareholders (3,540,920) (2,619,721) (934,308) (763,875) --------------- --------------- ------------ ------------ Capital Share Transactions (in dollars and shares) Sale of shares--Universal Shares -- -- 16,200,785 17,890,345 Sale of shares--Institutional Service Shares 59,251,693 56,995,099 -- -- Sale of shares--Investor Shares 1,099,309,749 1,027,908,338 -- -- Reinvestment of distributions--Universal Shares -- -- 10,616 10,377 Reinvestment of distributions--Institutional Service Shares 543,453 426,729 -- -- Reinvestment of distributions--Investor Shares 2,818,966 2,107,066 -- -- Redemption of shares--Universal Shares -- -- (16,862,876) (16,479,139) Redemption of shares--Institutional Service Shares (66,160,159) (54,166,582) -- -- Redemption of shares--Investor Shares (1,094,960,263) (1,018,150,465) -- -- --------------- --------------- ------------ ------------ Increase (Decrease) from Capital Transactions 803,439 15,120,185 (651,475) 1,421,583 --------------- --------------- ------------ ------------ Increase (Decrease) in Net Assets 811,933 15,120,184 (647,684) 1,421,583 --------------- --------------- ------------ ------------ Net Assets Beginning of Period 73,942,574 58,822,390 18,843,567 17,421,984 --------------- --------------- ------------ ------------ End of Period $ 74,754,507 $ 73,942,574 $ 18,195,883 $ 18,843,567 =============== =============== ============ ============ Undistributed (distributions in excess of) Net Investment Income $ 11 $ 13 $ 409 $ 408 =============== =============== ============ ============
See Notes to Financial Statements. 9 MONARCH FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
DAILY ASSETS GOVERNMENT FUND --------------------------------- YEAR ENDED YEAR ENDED AUGUST 31, 2007 AUGUST 31, 2006 --------------- ---------------- Operations Net investment income (loss) $ 18,989,271 $ 56,933,808 Net realized gain (loss) on investments 14,150 -- --------------- ---------------- Increase (Decrease) in Net Assets from Operations 19,003,421 56,933,808 --------------- ---------------- Distributions to Shareholders from Net investment income--Preferred Shares (6,134,632) (46,380,538) Net investment income--Universal Shares (3,713,783) (1,758,977) Net investment income--Institutional Service Shares (1,582,715) (2,557,679) Net investment income--Institutional Shares (3,564,712) (3,863,892) Net investment income--Investor Shares (3,996,725) (2,372,632) Net investment income--B Shares -- -- Net investment income--C Shares -- -- --------------- ---------------- Total Distributions to Shareholders (18,992,567) (56,933,718) --------------- ---------------- Capital Share Transactions (in dollars and shares) Sale of shares--Preferred Shares 1,242,343,346 13,961,573,134 Sale of shares--Universal Shares 463,703,586 261,380,787 Sale of shares--Institutional Service Shares 223,481,697 406,813,980 Sale of shares--Institutional Shares 742,566,876 1,101,577,846 Sale of shares--Investor Shares 1,233,465,393 1,183,921,865 Sale of shares--B Shares -- -- Sale of shares--C Shares -- -- Reinvestment of distributions--Preferred Shares 5,634,900 46,189,852 Reinvestment of distributions--Universal Shares 3,699,021 1,761,741 Reinvestment of distributions--Institutional Service Shares 1,575,394 2,557,455 Reinvestment of distributions--Institutional Shares 3,162,004 3,318,919 Reinvestment of distributions--Investor Shares 3,984,410 2,359,987 Reinvestment of distributions--B Shares -- -- Reinvestment of distributions--C Shares -- -- Redemption of shares--Preferred Shares (1,219,729,132) (13,917,158,610) Redemption of shares--Universal Shares (480,793,053) (245,398,091) Redemption of shares--Institutional Service Shares (234,450,705) (417,918,604) Redemption of shares--Institutional Shares (744,668,649) (1,087,896,148) Redemption of shares--Investor Shares (1,204,536,860) (1,181,095,338) Redemption of shares--B Shares -- -- Redemption of shares--C Shares -- -- --------------- ---------------- Increase (Decrease) from Capital Transactions 39,438,228 121,988,775 --------------- ---------------- Increase (Decrease) in Net Assets 39,449,082 121,988,865 --------------- ---------------- Net Assets Beginning of Period 342,906,737 220,917,872 --------------- ---------------- End of Period $ 382,355,819 $ 342,906,737 =============== ================ Undistributed (distributions in excess of) Net Investment Income $ (31,721) $ (28,425) =============== ================
DAILY ASSETS CASH FUND -------------------------------- YEAR ENDED YEAR ENDED AUGUST 31, 2007 AUGUST 31, 2006 --------------- --------------- Operations Net investment income (loss) $ 28,453,678 $ 17,852,956 Net realized gain (loss) on investments 13,702 (687) --------------- --------------- Increase (Decrease) in Net Assets from Operations 28,467,380 17,852,269 --------------- --------------- Distributions to Shareholders from Net investment income--Preferred Shares (8,193,071) (2,675,457) Net investment income--Universal Shares (3,734,857) (2,592,894) Net investment income--Institutional Service Shares (2,804,839) (1,365,993) Net investment income--Institutional Shares (4,615,665) (2,748,374) Net investment income--Investor Shares (9,062,066) (8,454,554) Net investment income--B Shares (8,381) (3,648) Net investment income--C Shares (33,052) (11,722) --------------- --------------- Total Distributions to Shareholders (28,451,931) (17,852,642) --------------- --------------- Capital Share Transactions (in dollars and shares) Sale of shares--Preferred Shares 1,479,999,002 690,893,357 Sale of shares--Universal Shares 711,452,056 739,799,611 Sale of shares--Institutional Service Shares 367,725,335 352,393,100 Sale of shares--Institutional Shares 1,049,036,474 899,609,574 Sale of shares--Investor Shares 2,852,482,706 3,944,036,139 Sale of shares--B Shares 499,657 414,954 Sale of shares--C Shares 2,505,898 1,663,874 Reinvestment of distributions--Preferred Shares 4,167,357 364,322 Reinvestment of distributions--Universal Shares 3,352,850 2,331,253 Reinvestment of distributions--Institutional Service Shares 2,797,725 1,355,076 Reinvestment of distributions--Institutional Shares 4,427,997 2,507,112 Reinvestment of distributions--Investor Shares 8,420,806 7,735,675 Reinvestment of distributions--B Shares 8,381 3,647 Reinvestment of distributions--C Shares 33,051 11,735 Redemption of shares--Preferred Shares (1,516,318,866) (629,499,253) Redemption of shares--Universal Shares (690,668,285) (702,705,553) Redemption of shares--Institutional Service Shares (370,491,479) (326,119,193) Redemption of shares--Institutional Shares (1,048,368,336) (859,445,718) Redemption of shares--Investor Shares (2,831,373,592) (3,981,055,792) Redemption of shares--B Shares (340,991) (125,545) Redemption of shares--C Shares (1,712,222) (844,167) --------------- --------------- Increase (Decrease) from Capital Transactions 27,635,524 143,324,208 --------------- --------------- Increase (Decrease) in Net Assets 27,650,973 143,323,835 --------------- --------------- Net Assets Beginning of Period 542,938,546 399,614,711 --------------- --------------- End of Period $ 570,589,519 $ 542,938,546 =============== =============== Undistributed (distributions in excess of) Net Investment Income $ 1,501 $ (246) =============== ===============
See Notes to Financial Statements. 10 MONARCH FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS These financial highlights reflect selected data for an outstanding share of each class of each Fund during the periods indicated.
SELECTED DATA FOR A SINGLE SHARE Net ------------------------------------------------------------------------- Assets at Beginning Net Distributions Distributions Ending End of Year Ended Net Asset Net Realized from Net from Net Net Asset Period August 31, Value Per Investment Gain on Investment Realized Value Total (000's (except as noted) Share Income Investments Income Gains Per Share Return Omitted) - ----------------- --------- ---------- ----------- ------------- ------------- --------- ------ --------- - - - - - - - - - - DAILY ASSETS TREASURY FUND Institutional Service Shares/(b)/ - ------------------------------------------------------------------------------------------------------------ 2007 $1.00 $0.05/(c)/ --/(d)/ $(0.05) -- $1.00 4.79% $ 8,768 2006 1.00 0.04/(c)/ -- (0.04) -- 1.00 4.06% 15,131 2005 1.00 0.02/(c)/ --/(d)/ (0.02) -- 1.00 2.03% 11,876 2004 1.00 0.01 -- (0.01) -- 1.00 0.59% 15,552 2003 1.00 0.01 -- (0.01) -- 1.00 0.84% 35,074 Investor Shares - ------------------------------------------------------------------------------------------------------------ 2007 1.00 0.04/(c)/ --/(d)/ (0.04) -- 1.00 4.39% 65,987 2006 1.00 0.04/(c)/ -- (0.04) -- 1.00 3.65% 58,811 2005 1.00 0.02/(c)/ --/(d)/ (0.02) -- 1.00 1.64% 46,946 2004 1.00 --/(d)/ -- --/(d)/ -- 1.00 0.20% 56,217 2003 1.00 --/(d)/ -- --/(d)/ -- 1.00 0.45% 96,827 DAILY ASSETS GOVERNMENT OBLIGATIONS FUND Universal Shares/(e)/ - ------------------------------------------------------------------------------------------------------------ 2007 1.00 0.05/(c)/ --/(d)/ (0.05) -- 1.00 5.10% 18,196 2006 1.00 0.04/(c)/ -- (0.04) -- 1.00 4.30% 18,844 2005 1.00 0.02/(c)/ -- (0.02) -- 1.00 2.27% 17,422 2004 1.00 0.01 --/(d)/ (0.01) -- 1.00 0.91% 20,383 2003 1.00 0.01 -- (0.01) -- 1.00 1.18% 24,752
RATIOS/SUPPLEMENTAL DATA - -------------------------------- Ratios to Average Net Assets - -------------------------------- Net Net Gross Investment Expenses Expenses/(a)/ Income - --------------------------------- - ---------------------------------- 0.45% 0.71% 4.71% 0.45% 0.82% 4.01% 0.45% 0.69% 1.92% 0.45% 0.56% 0.57% 0.45% 0.67% 0.84% - ---------------------------------- 0.84% 1.02% 4.30% 0.84% 1.02% 3.61% 0.84% 0.97% 1.61% 0.84% 0.89% 0.18% 0.84% 0.90% 0.45% - ---------------------------------- 0.20% 0.78% 4.99% 0.20% 0.81% 4.24% 0.20% 0.75% 2.22% 0.20% 0.70% 0.86% 0.20% 0.48% 1.14%
(a)Reflects the expense ratio excluding any waivers and/or reimbursements. (b)On April 23, 2003, Institutional Shares were renamed Institutional Service Shares. (c)Calculated based on average shares outstanding during the period. (d)Less than $0.01 per share. (e)On July 22, 2003, Institutional Shares were redesignated as Universal Shares. See Notes to Financial Statements. 11 MONARCH FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS These financial highlights reflect selected data for an outstanding share of each class of each Fund during the periods indicated.
SELECTED DATA FOR A SINGLE SHARE Net ------------------------------------------------------------------------- Assets at Beginning Net Distributions Distributions Ending End of Year Ended Net Asset Net Realized from Net from Net Net Asset Period August 31, Value Per Investment Gain on Investment Realized Value Total (000's (except as noted) Share Income Investments Income Gains Per Share Return/(b)/ Omitted) - ----------------- --------- ---------- ----------- ------------- ------------- --------- ---------- --------- - - - - - - - - - - DAILY ASSETS GOVERNMENT FUND Preferred Shares - ----------------------------------------------------------------------------------------------------------------- 2007 $1.00 $0.05/(d)/ --/(f)/ $(0.05) -- $1.00 5.35% $140,173 2006 1.00 0.04/(d)/ -- (0.04) -- 1.00 4.57% 111,921 2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 2.52% 21,316 2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 1.04% 23,386 2003 1.00 0.01 -- (0.01) -- 1.00 1.40% 11,549 Universal Shares - ----------------------------------------------------------------------------------------------------------------- 2007 1.00 0.05/(d)/ --/(f)/ (0.05) -- 1.00 5.26% 29,134 2006 1.00 0.04/(d)/ -- (0.04) -- 1.00 4.49% 42,523 2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 2.43% 24,779 2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.96% 113,881 2003 1.00 0.01 -- (0.01) -- 1.00 1.29% 114,173 Institutional Service Shares - ----------------------------------------------------------------------------------------------------------------- 2007 1.00 0.05/(d)/ --/(f)/ (0.05) -- 1.00 5.01% 37,480 2006 1.00 0.04/(d)/ -- (0.04) -- 1.00 4.23% 46,873 2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 2.18% 55,420 2004 1.00 --/(f)/ --/(f)/ --/(f)/ -- 1.00 0.71% 55,142 2003/(e)/ 1.00 --/(f)/ -- --/(f)/ -- 1.00 0.16% 76,273 Institutional Shares - ----------------------------------------------------------------------------------------------------------------- 2007 1.00 0.05/(d)/ --/(f)/ (0.05) -- 1.00 4.88% 74,905 2006 1.00 0.04/(d)/ -- (0.04) -- 1.00 4.11% 73,843 2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 2.06% 56,843 2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.59% 73,575 2003 1.00 0.01 -- (0.01) -- 1.00 0.91% 90,740 Investor Shares - ----------------------------------------------------------------------------------------------------------------- 2007 1.00 0.05/(d)/ --/(f)/ (0.05) -- 1.00 4.60% 100,663 2006 1.00 0.04/(d)/ -- (0.04) -- 1.00 3.83% 67,747 2005 1.00 0.02/(d)/ -- (0.02) -- 1.00 1.78% 62,560 2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.32% 64,028 2003 1.00 0.01 -- (0.01) -- 1.00 0.64% 47,383
RATIOS/SUPPLEMENTAL DATA - -------------------------------- Ratios to Average Net Assets/(a)/ - -------------------------------- Net Net Gross Investment Expenses Expenses/(c)/ Income - --------------------------------- - ---------------------------------- 0.12% 0.23% 5.22% 0.12% 0.18% 4.34% 0.12% 0.18% 2.56% 0.12% 0.18% 1.06% 0.11% 0.25% 1.05% - ---------------------------------- 0.20% 0.31% 5.14% 0.20% 0.30% 4.36% 0.20% 0.25% 2.12% 0.20% 0.26% 0.95% 0.20% 0.28% 1.26% - ---------------------------------- 0.45% 0.57% 4.89% 0.45% 0.51% 4.20% 0.45% 0.50% 2.10% 0.45% 0.51% 0.69% 0.45% 0.58% 0.70% - ---------------------------------- 0.57% 0.67% 4.78% 0.57% 0.61% 4.03% 0.57% 0.61% 2.05% 0.57% 0.62% 0.58% 0.57% 0.63% 0.92% - ---------------------------------- 0.84% 0.91% 4.50% 0.84% 0.88% 3.80% 0.84% 0.87% 1.74% 0.84% 0.86% 0.32% 0.84% 0.89% 0.63%
See Notes to Financial Statements. 12 MONARCH FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SINGLE SHARE Net --------------------------------------------------------------------------- Assets at Beginning Net Distributions Distributions Ending End of Year Ended Net Asset Net Realized from Net from Net Net Asset Period August 31, Value Per Investment Gain on Investment Realized Value Total (000's (except as noted) Share Income Investments Income Gains Per Share Return/(b)/ Omitted) - ----------------- --------- ---------- ----------- ------------- ------------- --------- ---------- --------- - - - - - - - - - - DAILY ASSETS CASH FUND Preferred Shares - ------------------------------------------------------------------------------------------------------------------- 2007 $1.00 $0.05/(d)/ --/(f)/ $(0.05) -- $1.00 5.37% $ 69,354 2006 1.00 0.05/(d)/ --/(f)/ (0.05) -- 1.00 4.56% 101,504 2005 1.00 0.03/(d)/ (0.01) (0.02) -- 1.00 2.49% 39,746 2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 1.04% 19,166 2003 1.00 0.01 -- (0.01) -- 1.00 1.37% 2,979 Universal Shares - ------------------------------------------------------------------------------------------------------------------- 2007 1.00 0.05/(d)/ --/(f)/ (0.05) -- 1.00 5.29% 102,838 2006 1.00 0.04/(d)/ --/(f)/ (0.04) -- 1.00 4.48% 78,698 2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 2.41% 39,274 2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.96% 35,892 2003 1.00 0.01 -- (0.01) -- 1.00 1.29% 104,842 Institutional Service Shares - ------------------------------------------------------------------------------------------------------------------- 2007 1.00 0.05/(d)/ --/(f)/ (0.05) -- 1.00 5.02% 54,799 2006 1.00 0.04/(d)/ --/(f)/ (0.04) -- 1.00 4.22% 54,766 2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 2.15% 27,137 2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.71% 26,423 2003/(e)/ 1.00 --/(f)/ -- --/(f)/ -- 1.00 0.18% 36,876 Institutional Shares - ------------------------------------------------------------------------------------------------------------------- 2007 1.00 0.05/(d)/ --/(f)/ (0.05) -- 1.00 4.90% 104,420 2006 1.00 0.04/(d)/ --/(f)/ (0.04) -- 1.00 4.10% 99,321 2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 2.03% 56,650 2004 1.00 0.01 --/(f)/ (0.01) -- 1.00 0.59% 95,985 2003 1.00 0.01 -- (0.01) -- 1.00 0.92% 92,186 Investor Shares - ------------------------------------------------------------------------------------------------------------------- 2007 1.00 0.05/(d)/ --/(f)/ (0.05) -- 1.00 4.62% 236,993 2006 1.00 0.04/(d)/ --/(f)/ (0.04) -- 1.00 3.82% 207,458 2005 1.00 0.02/(d)/ --/(f)/ (0.02) -- 1.00 1.76% 236,742 2004 1.00 --/(f)/ --/(f)/ --/(f)/ -- 1.00 0.32% 394,665 2003 1.00 0.01 -- (0.01) -- 1.00 0.64% 303,389 B Shares - ------------------------------------------------------------------------------------------------------------------- 2007 1.00 0.04/(d)/ --/(f)/ (0.04) -- 1.00 3.78% 490 2006 1.00 0.03/(d)/ --/(f)/ (0.03) -- 1.00 2.99% 323 2005/(e)/ 1.00 0.01/(d)/ --/(f)/ (0.01) -- 1.00 0.92% 30 C Shares - ------------------------------------------------------------------------------------------------------------------- 2007 1.00 0.04/(d)/ --/(f)/ (0.04) -- 1.00 3.78% 1,694 2006 1.00 0.03/(d)/ --/(f)/ (0.03) -- 1.00 2.99% 868 2005/(e)/ 1.00 0.01/(d)/ --/(f)/ (0.01) -- 1.00 0.93% 36
RATIOS/SUPPLEMENTAL DATA - -------------------------------- Ratios to Average Net Assets/(a)/ - -------------------------------- Net Net Gross Investment Expenses Expenses/(c)/ Income - --------------------------------- - ---------------------------------- 0.12% 0.23% 5.24% 0.12% 0.23% 4.61% 0.12% 0.32% 2.64% 0.12% 0.31% 1.06% 0.12% 0.30% 1.39% - ---------------------------------- 0.20% 0.30% 5.16% 0.20% 0.29% 4.41% 0.20% 0.34% 2.32% 0.20% 0.27% 0.94% 0.20% 0.28% 1.24% - ---------------------------------- 0.45% 0.54% 4.91% 0.45% 0.56% 4.27% 0.45% 0.60% 2.04% 0.45% 0.54% 0.71% 0.45% 0.58% 0.76% - ---------------------------------- 0.57% 0.63% 4.79% 0.57% 0.65% 4.16% 0.57% 0.68% 1.97% 0.57% 0.63% 0.59% 0.57% 0.61% 1.01% - ---------------------------------- 0.84% 0.89% 4.52% 0.84% 0.88% 3.76% 0.84% 0.91% 1.71% 0.84% 0.87% 0.32% 0.84% 0.86% 0.68% - ---------------------------------- 1.65% 21.75% 3.72% 1.65% 48.98% 3.39% 1.65% 161.82% 1.20% - ---------------------------------- 1.65% 6.59% 3.71% 1.65% 15.85% 3.50% 1.64% 158.38% 1.23%
(a)Annualized for periods less than one year. (b)Not annualized for periods less than one year. (c)Reflects the expense ratio excluding any waivers and/or reimbursements. (d)Calculated based on average shares outstanding during the period. (e)See Note 1 for dates of commencement of operations. (f)Less than $0.01 per share. See Notes to Financial Statements. 13 MONARCH FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS August 31, 2007 NOTE 1. SUMMARY OF ORGANIZATION Monarch Funds (the "Trust") is a Massachusetts business trust registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "Act"). The Trust consists of four diversified investment portfolios listed below (each a "Fund" and collectively the "Funds"). The Funds are authorized under the Trust's Trust Instrument to issue an unlimited number of shares of beneficial interest without par value. The Funds and classes offered as of August 31, 2007, and the dates on which they commenced operations were as follows: COMMENCEMENT OF FUND SHARE CLASS OPERATIONS ------------------------ ------------------------ ------------------------ Daily Assets Treasury Institutional Service Fund Shares July 12, 1993 Investor Shares October 25, 1995 Daily Assets Government Obligations Universal Shares July 1, 1998 Daily Assets Government Fund Preferred Shares August 10, 2001 Universal Shares October 29, 1992 Institutional Service Shares June 9, 2003 Institutional Shares July 15, 1993 Investor Shares December 30, 1999 Daily Assets Cash Fund Preferred Shares August 10, 2001 Universal Shares December 1, 1992 Institutional Service Shares June 9, 2003 Institutional Shares July 15, 1993 Investor Shares June 16, 1995 B Shares November 22, 2004 C Shares November 17, 2004 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These financial statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets during the fiscal period. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds: SECURITY VALUATION Generally, each Fund determines its net asset value per share as of 4:00 p.m., Eastern time, on each Fund business day, utilizing the amortized cost method pursuant to Rule 2a-7 under the Act. Under this method, all investments purchased at a discount or premium are valued by accreting or amortizing, respectively, the difference between the original purchase price and the maturity value of the investment over the period to the investment's maturity. REPURCHASE AGREEMENTS Each Fund may invest in repurchase agreements. Each Fund, through its custodian, receives delivery of the underlying collateral, whose market value always exceeds or equals the repurchase price plus expected transaction costs. In the case of a tri-party agreement, the collateral is held by an agent bank. The Funds' investment adviser is responsible for determining the value of the underlying collateral. In the event of default, a Fund may have difficulties with the disposition of any such securities held as collateral. EXPENSE ALLOCATION The Trust is comprised of four active series, and it accounts separately for the assets, liabilities and operations of each series. Expenses that are directly attributable to more than one series are allocated among the respective series in proportion to each series' average daily net assets. Each share of each class of a Fund represents an undivided, proportionate interest in the Fund. The Funds' class-specific expenses include administration fees, transfer agency fees and certain expenses determined by the Trust's Board. Institutional Service Shares, Institutional Shares, Investor Shares, B Shares and C Shares incur shareholder servicing fees and Investor Shares, B Shares and C Shares incur distribution fees. In addition, there are differences between the classes of shares with respect to the minimum investment required. SECURITIES TRANSACTIONS, DIVIDEND AND INTEREST INCOME AND REALIZED GAIN AND LOSS Securities transactions are recorded on trade date. Dividend income is recorded on the ex-dividend date. Interest income is accrued as earned and realized gain and loss on investments sold are recorded on the basis of identified cost. 14 MONARCH FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS August 31, 2007 FEDERAL TAXES Each Fund intends to continue to qualify each year as a regulated investment company and distribute all its net investment income. In addition, by distributing in each calendar year substantially all its net investment income, capital gain and certain other amounts, each Fund will not be subject to a federal excise tax. Therefore, no federal income or excise tax provision is required. DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders of net investment income are declared daily and paid monthly. Net capital gain, if any, is distributed to shareholders at least annually. Distributions are based on amounts calculated in accordance with applicable income tax regulations, which may differ from U.S. generally accepted accounting principles. These differences are due primarily to differing treatments of income and gain on various investment securities held by each Fund, timing differences and differing characterizations of distributions made by each Fund. NEW ACCOUNTING PRONOUNCEMENTS In June 2006, the Financial Accounting Standards Board ("FASB") issued Financial Interpretation No. 48, "ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES" ("FIN48") which is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years no later than June 30, 2007. FIN48 prescribes a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return, and requires certain expanded disclosures. Fund management has determined that the Funds have not taken any tax positions in the current or prior reporting periods that would require reporting under FIN 48. In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 "FAIR VALUE MEASUREMENTS" ("SFAS 157") which is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Management has recently begun to evaluate the application of SFAS 157, and has not at this time determined the impact, if any, resulting from its adoption on the Funds' future financial statements. RESTRICTED SECURITIES The Funds may invest in securities that are subject to legal or contractual restrictions on resale ("restricted securities"). Restricted securities may be resold in transactions that are exempt from registration under the Federal securities laws or, if the securities are registered, to the public. The sale or other disposition of these securities may involve additional expenses and the prompt sale of these securities at an acceptable price may be difficult. Information regarding restricted securities held by the Funds is included in the Schedule of Investments. NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES INVESTMENT ADVISER Monarch Investment Advisors, LLC (the "Adviser"), is the investment adviser of each Fund. The Adviser receives an advisory fee from Daily Assets Treasury Fund, Daily Assets Government Fund, and Daily Assets Cash Fund based upon the total average daily net assets of the combined Funds ("Total Fund Assets") that is calculated on a cumulative basis at the following annual rates: 0.06% for the first $200 million of Total Fund Assets, 0.04% of the next $300 million of Total Fund Assets and 0.03% of the remaining Total Fund Assets. The Adviser receives an advisory fee from Daily Assets Government Obligations Fund at an annual rate of 0.05% of the average daily net assets of the Fund. ADMINISTRATION AND OTHER SERVICES Citigroup Fund Services, LLC ("Citigroup"), provides certain administration, portfolio accounting and transfer agency services to the Fund. SHAREHOLDER SERVICES The Funds pay (other than Daily Assets Government Obligations Fund) a shareholder servicing fee at an annual rate of 0.20% of the average daily net assets attributable to Institutional Service Shares, Institutional Shares and Investor Shares of each Fund and 0.25% of the average daily net assets attributable to B Shares and C Shares of Daily Assets Cash Fund. These fees are paid to various financial institutions that provide shareholder services. DISTRIBUTOR Foreside Fund Services, LLC is the Trust's distributor (the "Distributor"). Under a Distribution Plan adopted pursuant to Rule 12b-1 under the Act, the Trust pays the Distributor a distribution fee at an annual rate of 0.25% of the average daily net assets of Investor Shares of each Fund and 0.75% of the average daily net assets of B Shares and C Shares of Daily Assets Cash Fund. The Distributor pays some or all of these fees to various financial institutions that provide distribution services for these share classes. The plan obligates the Funds to pay the Distributor as compensation for its services. The Distributor is not affiliated with Citigroup or its affiliated companies. Under a Compliance Services Agreement with the Trust, the Distributor provides a Chief Compliance Officer to the Trust as well as certain additional compliance support functions. 15 MONARCH FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS August 31, 2007 TRUSTEES AND OFFICERS Certain officers of the Trust are directors, officers or employees of the aforementioned companies. NOTE 4. WAIVER OF FEES/REIMBURSEMENT OF EXPENSES The Adviser and Citigroup voluntarily waived a portion of their fees and assumed certain expenses of the Funds. For the year ended August 31, 2007, fees waived and expenses reimbursed for each Fund were as follows:
DAILY ASSETS DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS TREASURY FUND OBLIGATIONS FUND GOVERNMENT FUND CASH FUND ------------- ---------------- --------------- ------------ Advisory $ -- $ 9,360 $ -- $ -- Administration 78,556 19,998 286,878 392,153 Custody 207 74 4,068 2,506 Shareholder Service -- -- 14,546 6,080 Transfer Agency 427 12,311 44,440 -- Portfolio Accounting 6,998 8,616 -- -- Reimbursed Expenses by Citigroup 66,184 58,310 23,073 111,339 -------- -------- -------- -------- Total $152,372 $108,669 $373,005 $512,078 ======== ======== ======== ========
NOTE 5. FEDERAL INCOME TAX AND INVESTMENT TRANSACTIONS As of August 31, 2007, distributable earnings (accumulated losses) on a tax basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED LONG-TERM CAPITAL AND ORDINARY INCOME GAIN OTHER LOSSES TOTAL --------------- ------------- ------------ -------- Daily Assets Treasury Fund $ 35,151 $ -- $ -- $ 35,151 Daily Assets Government Obligations Fund 75,173 -- (1,432) 73,741 Daily Assets Government Fund 30,940 2,900 -- 33,840 Daily Assets Cash Fund 300,108 -- (570) 299,538
The tax character of distributions paid during 2007 and 2006 were as follows:
ORDINARY INCOME ----------------------- 2007 2006 ----------- ----------- Daily Assets Treasury Fund $ 3,540,920 $ 2,619,721 Daily Assets Government Obligations Fund 934,308 763,875 Daily Assets Government Fund 18,992,567 56,933,718 Daily Assets Cash Fund 28,451,931 17,852,642
The capital loss carryovers available to offset future gains, as of August 31, 2007, were as follows: Daily Assets Government Obligations Fund Expiring August 2008 $798 Expiring August 2009 632 Expiring August 2011 2 Daily Assets Cash Fund Expiring August 2014 570
16 MONARCH FUNDS - -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) August 31, 2007 PROXY VOTING GUIDELINES - A description of the policies and procedures the Funds use to determine how to vote as a shareholder of the companies whose securities are held in the Funds' portfolio is available, without charge and upon request, by calling 800-754-8757. This information is also available from the EDGAR database on the SEC's website at WWW.SEC.GOV. For the twelve months ended June 30, the Funds did not own any securities for which a shareholder meeting was called and voted on. AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE - The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds' Form N-Q are available on the SEC's website at WWW.SEC.GOV or may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330. FEDERAL TAX STATUS OF DIVIDENDS DECLARED DURING THE FISCAL YEAR For Federal income tax purposes, all of the income dividends paid by each Fund for the tax year ended August 31, 2007 were ordinary income for federal income tax purposes. The percentage of ordinary income distributions designated as Qualifying Interest Income exempt from U.S. tax for foreign shareholders ("QII") is presented below.
QII ------ Daily Assets Treasury Fund 100.00% Daily Assets Government Obligations Fund 96.48 Daily Assets Government Fund 99.41 Daily Assets Cash Fund 99.46
SHAREHOLDER EXPENSES EXAMPLE - As a shareholder of a Fund, you incur two types of costs: (1) transactions costs, including contingent deferred sales charges (loads); and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The following example is based on $1,000 invested at the beginning of the period and held for the entire period from March 1, 2007 through August 31, 2007. ACTUAL EXPENSES - The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during the period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES - The second line of the table below provides information about hypothetical account values and hypothetical expenses based on a Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not a Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in a Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as contingent deferred sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher. 17 MONARCH FUNDS - -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) August 31, 2007
BEGINNING ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING EXPENSE MARCH 1, 2007 AUGUST 31, 2007 PERIOD* RATIO ------------- --------------- ----------- ---------- DAILY ASSETS TREASURY FUND INSTITUTIONAL SERVICE SHARES Actual Return $1,000.00 $1,023.41 $2.30 0.45% Hypothetical Return $1,000.00 $1,022.94 $2.29 0.45% INVESTOR SHARES Actual Return $1,000.00 $1,021.39 $4.28 0.84% Hypothetical Return $1,000.00 $1,020.97 $4.28 0.84% DAILY ASSETS GOVERNMENT OBLIGATIONS FUND UNIVERSAL SHARES Actual Return $1,000.00 $1,025.32 $1.02 0.20% Hypothetical Return $1,000.00 $1,024.20 $1.02 0.20% DAILY ASSETS GOVERNMENT FUND PREFERRED SHARES Actual Return $1,000.00 $1,026.56 $0.61 0.12% Hypothetical Return $1,000.00 $1,024.60 $0.61 0.12% UNIVERSAL SHARES Actual Return $1,000.00 $1,026.13 $1.02 0.20% Hypothetical Return $1,000.00 $1,024.20 $1.02 0.20% INSTITUTIONAL SERVICE SHARES Actual Return $1,000.00 $1,024.86 $2.30 0.45% Hypothetical Return $1,000.00 $1,022.94 $2.29 0.45% INSTITUTIONAL SHARES Actual Return $1,000.00 $1,024.24 $2.91 0.57% Hypothetical Return $1,000.00 $1,022.33 $2.91 0.57% INVESTOR SHARES Actual Return $1,000.00 $1,022.85 $4.28 0.84% Hypothetical Return $1,000.00 $1,020.97 $4.28 0.84% DAILY ASSETS CASH FUND PREFERRED SHARES Actual Return $1,000.00 $1,026.67 $0.61 0.12% Hypothetical Return $1,000.00 $1,024.60 $0.61 0.12% UNIVERSAL SHARES Actual Return $1,000.00 $1,026.26 $1.02 0.20% Hypothetical Return $1,000.00 $1,024.20 $1.02 0.20% INSTITUTIONAL SERVICE SHARES Actual Return $1,000.00 $1,024.97 $2.30 0.45% Hypothetical Return $1,000.00 $1,022.94 $2.29 0.45% INSTITUTIONAL SHARES Actual Return $1,000.00 $1,024.36 $2.91 0.57% Hypothetical Return $1,000.00 $1,022.33 $2.91 0.57% INVESTOR SHARES Actual Return $1,000.00 $1,022.97 $4.28 0.84% Hypothetical Return $1,000.00 $1,020.97 $4.28 0.84% B SHARES Actual Return $1,000.00 $1,018.83 $8.40 1.65% Hypothetical Return $1,000.00 $1,016.89 $8.39 1.65% C SHARES Actual Return $1,000.00 $1,018.83 $8.40 1.65% Hypothetical Return $1,000.00 $1,016.89 $8.39 1.65%
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in most recent fiscal half-year divided by 365 to reflect the half-year period. 18 MONARCH FUNDS - -------------------------------------------------------------------------------- ADDITIONAL INFORMATION (UNAUDITED) August 31, 2007 TRUSTEES AND OFFICERS OF THE TRUST The Board is responsible for oversight of the management of the Trust's business affairs and exercising all the Trust's powers except those reserved for shareholders. The following table gives information about each Board member and certain officers of the Trust. The fund complex includes the Trust and Forum Funds, another registered investment company (collectively, "fund complex"), which hold themselves out to investors as related companies for purposes of investment and investor services. The Trustees and officers listed below also serve in the same capacities noted below for Forum Funds with the exception of Mr. Fischer and Mr. Singer who do not serve as officers of Forum Funds. Mr. Keffer is considered an Interested Trustee due to his affiliation with a Trust adviser and the Distributor within the past two years. Each Trustee and officer holds office until the person resigns, is removed, or replaced. Unless otherwise noted, the persons have held their principal occupations for more than five years. The addresses for all Trustees and officers is Two Portland Square, Portland, Maine 04101, unless otherwise indicated. Each Trustee oversees thirty-one portfolios in the fund complex. Each Independent Trustee is also an Independent Trustee of Forum Funds. John Y. Keffer is an Interested Trustee/Director of Forum Funds and Wintergreen Fund, Inc., another registered open-end investment company. The Fund's Statement of Additional Information includes additional information about the Trustees and is available, without charge and upon request, by calling (800) 754-8757.
NAME POSITION WITH LENGTH OF PRINCIPAL OCCUPATION(S) AND BIRTH DATE THE TRUST TIME SERVED DURING PAST 5 YEARS - -------------------- ---------------------- ------------- ------------------------------------------------- INDEPENDENT TRUSTEES J. Michael Parish Chairman of the Board; Trustee since Retired; Partner, Wolf, Block, Schorr and Solis- Born: 1943 Trustee; Chairman, 1989 Cohen, LLP (law firm) 2002-2003; Partner, Compliance Committee, (Chairman Thelen Reid & Priest LLP (law firm) 1995-2002. Nominating Committee since 2004) and Qualified Legal Compliance Committee Costas Azariadis Trustee Trustee since Professor of Economics, Washington University Born: 1943 Chairman, Valuation 1989 (effective 2006); Professor of Economics, Committee University of California-Los Angeles 1992-2006. James C. Cheng Trustee Trustee since President, Technology Marketing Associates Born: 1942 Chairman, Audit 1989 (marketing company for small-and medium-sized Committee businesses in New England). - ----------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE John Y. Keffer Trustee Trustee since President, Forum Foundation (a charitable Born: 1942 Chairman, Contracts 1989 organization) since 2005; President, Forum Trust, Committee LLC (a non-depository trust company) since 1997; President, Citigroup Fund Services, LLC ("Citigroup") 2003-2005; President, Forum Financial Group, LLC ("Forum") (a fund services company acquired by Citibank, N.A. in 2003). - ----------------------------------------------------------------------------------------------------------- OFFICERS Anthony R. Fischer President; Principal Since 2006 Co-Chairman and President, Monarch Investment Born: 1948 Executive Officer Advisors, LLC since 2006; President, Castle Asset Management, Inc. since 1992. Jack J. Singer Treasurer; Principal Since 2006 Co-Chairman and Chief Executive Officer, Born: 1944 Financial Officer Monarch Investment Advisors, LLC since 2006; Executive Director, Forum Investment Advisors, LLC 2005-2006; Senior Managing Director, Comerica Securities, Inc. 2001-2005. Beth P. Hanson Vice President; Since 2003 Relationship Manager, Citigroup since 2003; Born: 1966 Assistant Secretary Relationship Manager, Forum 1999 - 2003. Scott Hagwood Vice President Since 2007 Director and Relationship Manager, Citigroup Born: 1968 since 2007; Relationship Manager, SEI Investments, 1999-2006 Brian Eng Secretary Since 2007 Vice President and Counsel, Citigroup since Born: 1972 2007; Associate, Goodwin Proctor LLP 2005- 2007; Law Clerk, Goodwin Proctor LLP 2003- 2005; Vice President and Portfolio Strategist, Dion Money Management 2001-2002. - -----------------------------------------------------------------------------------------------------------
19 MONARCH FUNDS DAILY ASSETS TREASURY FUND DAILY ASSETS GOVERNMENT OBLIGATIONS FUND DAILY ASSETS GOVERNMENT FUND DAILY ASSETS CASH FUND MONARCH FUNDS P.O. Box 446 Portland, Maine 04112 (800) 754-8757 110-AT-0907 FOR MORE INFORMATION This report is submitted for the general information of the shareholders of the Funds. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus, which includes information regarding the Funds' risks, objectives, fees and expenses, experience of its management, and other information. ITEM 2. CODE OF ETHICS. A code of ethics has not been adopted for the registrant's principal officers, as it is not required by Rule 17j-1 of the 1940 Act. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Trustees determined that no member of the Audit Committee is an "audit committee financial expert" as that term is defined under applicable regulatory guidelines. In addition, the Board recognized that the experience of the Trustees that are members of the Audit Committee is sufficient for them to perform the services required of Audit Committee members. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Monarch Daily Assets Government Fund Monarch Daily Assets Cash Fund Monarch Daily Assets Treasury Fund Monarch Daily Assets Government Obligations Fund (a) Audit Fees - The aggregate fees billed for each of the last two fiscal years (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant for the audit of the Registrant's annual financial statements, or services that are normally provided by the principal accountant in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $74,500 in 2006 and $78,000 in 2007. (b) Audit-Related Fees - The aggregate fees billed in the Reporting Periods for assurance and related services rendered by the principal accountant that were reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item 4 were $0 in 2006 and $0 in 2007. (c) Tax Fees - The aggregate fees billed in the Reporting Periods for professional services rendered by the principal accountant to the Registrant for tax compliance, tax advice and tax planning were $12,400 in 2006 and $13,200 in 2007. These services consisted of review and/or preparation of U.S. federal, state, local and excise tax returns. (d) Other Fees - The aggregate fees billed in the Reporting Periods for products and services provided by the principal accountant to the Registrant, other than services reported in paragraphs (a) through (c) of this Item were $6,970 in 2006 and $3,650 in 2007. These services consisted of registration statement filing review. (e) (1) The Registrant's Audit Committee pre-approves all audit and permissible non-audit services rendered to the Registrant in accordance with paragraph (c)(7)(i) (c) of Rule 2-01 of Regulation S-K. (e) (2) 100.00% (f) Not applicable. (g) The aggregate non-audit fees billed by the principal accountant for services rendered to the Registrant for the Reporting Periods were $19,370 in 2006 and $16,850 in 2007. There were no fees billed in each of the Reporting Periods for non-audit services rendered by the principal accountant to the investment adviser. (h) If the Registrant's investment adviser has engaged the Registrant's auditor for non-audit services and the engagement relates directly to the operations and financial reporting of the Registrant, the Audit Committee does consider such engagement in evaluating the independence of the Registrant's auditor. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Included as part of report to shareholders under Item 1. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Registrant does not accept nominees to the board of directors from shareholders. ITEM 11.CONTROLS AND PROCEDURES (a) The registrant's Principal Executive Officer and Principal Financial Officer have concluded that the registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) are effective, based on their evaluation of these disclosure controls and procedures required by Rule 30a-3(b) as of a date within 90 days of the filing date of this report. (b) There were no changes in the registrant's internal control over financial reporting (as defined in rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12.EXHIBITS. (a)(1) Not applicable. (a)(2) Certifications pursuant to Rule 30a-2(a) of the Investment Company Act of 1940 as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith). (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(b) of the Investment Company Act of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant Monarch Funds By /s/ Anthony R. Fischer --------------------------- Anthony R. Fischer, Principal Executive Officer Date 10/24/07 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ Anthony R. Fischer --------------------------- Anthony R. Fischer, Principal Executive Officer Date 10/24/07 By /s/ Jack J. Singer --------------------------- Jack J. Singer, Principal Financial Officer Date 10/24/07 EX-99.CERT 2 dex99cert.txt CERTIFICATIONS PURSUANT TO SECTION 302 MONARCH FUNDS I, Anthony R. Fischer, certify that: 1. I have reviewed this report on Form N-CSR of Monarch Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and changes in net assets of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 10/24/07 /s/ Anthony R. Fischer ----------------------------------- Anthony R. Fischer Principal Executive Officer MONARCH FUNDS I, Jack J. Singer, certify that: 1. I have reviewed this report on Form N-CSR of Monarch Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and changes in net assets of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 10/24/07 /s/ Jack J. Singer ----------------------------------- Jack J. Singer Principal Financial Officer EX-99.906CERT 3 dex99906cert.txt CERTIFICATIONS PURSUANT TO SECTION 906 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (A) AND (B) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE) In connection with the attached Report of the Monarch Funds (the "Trust") on Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the Trust does hereby certify that, to the best of such officer's knowledge: 1. The Report fully complies with the requirements of 13(a) or 15(d) of the Securities and Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust as of, and for, the periods presented in the Report. Dated: 10/24/07 /s/ Anthony R. Fischer - --------------------------- Anthony R. Fischer Principal Executive Officer Dated: 10/24/07 /s/ Jack J. Singer - --------------------------- Jack J. Singer Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to the Trust and will be retained by the Trust and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----