- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
------------------------
F O R U M F U N D S
------------------------
ANNUAL REPORT
------------------------
August 31, 1997
------------------------
[Picture collage of
calendar, compass,
trees and a border]
DAILY ASSETS
TREASURY FUND
DAILY ASSETS
CASH FUND
[Forum logo]
<PAGE>
Table of Contents
A Message to Our Shareholders.............................................. 1
FINANCIAL STATEMENTS OF FORUM FUNDS
Statements of Assets and Liabilities....................................... 2
Statements of Operations................................................... 3
Statements of Changes in Net Assets....................................... 4
Financial Highlights....................................................... 6
Notes to Financial Statements.............................................. 7
Independent Auditors' Report............................................... 9
FINANCIAL STATEMENTS OF CORE TRUST (DELAWARE)
Schedules of Investments:
Treasury Portfolio..................................................... 13
Cash Portfolio......................................................... 14
Statements of Assets and Liabilities....................................... 15
Statements of Operations................................................... 16
Statements of Changes in Net Assets....................................... 17
Notes to Financial Statements.............................................. 19
Independent Auditors' Report............................................... 22
<PAGE>
FORUM FUNDS(R)
- --------------------------------------------------------------------------------
DAILY ASSETS TREASURY FUND [Forum logo]
DAILY ASSETS CASH FUND
ANNUAL REPORT
- --------------------------------------------------------------------------------
Dear Shareholders:
The management of Forum Funds is happy to present this 1997 annual report to
shareholders for the year ended August 31, 1997. We are pleased that these two
money market funds continue to serve our investors well and have now grown to
more than $56 million in combined assets.
Since inception on October 1, 1996, Daily Assets Cash Fund has provided
investors with a total return of 4.70%, or 5.15% on an annualized basis. As of
August 31, 1997, the Fund had seven-day and thirty-day simple yields of 5.19%
and 5.20% respectively. Daily Assets Treasury Fund, which invests only in U.S.
Treasury and Agency securities, had a total return of 4.82% for the one year
period and 2.01% for the period from April 1, 1997 to August 31, 1997. At the
end of our fiscal year on August 31, 1997, the seven-day and thirty-day simple
yields were 4.76% and 4.76% respectively. While past performance is not
indicative of future results, we believe the funds are positioned well for the
coming year.
Given a strong economy with a low rate of inflation, the portfolios of the two
funds have been maintained at relatively short average maturities. The Federal
Reserve has been able to maintain a fairly steady interest rate policy which has
allowed the funds to deliver high, stable yields. Our relatively short average
maturity has been guided by an expectation that the Federal Reserve will raise
rates at least one more time in this economic cycle, with a likely increase of
25 to 50 basis points over the next year. Our investment strategy remains to
maximize yield for our funds while minimizing credit and interest rate risks. We
believe we have successfully accomplished this objective.
The management of Forum Funds and I wish to personally thank you for your
continued confidence and support. We remain committed to bringing you excellent
performance and service together with prudent management designed to maintain
your $1.00 share price. We hope that you will find the following detailed
statements of the Funds' holdings and financial condition informative. We invite
you to call us with your questions or comments at (207) 879-0001.
Sincerely,
/s/ John Y. Keffer
John Y. Keffer
Chairman
THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE. AN INVESTMENT IN THE FUNDS IS NEITHER INSURED
NOR GUARANTEED BY THE U.S. GOVERNMENT.
<PAGE>
<TABLE>
<S> <C> <C>
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1997
DAILY ASSETS DAILY ASSETS
TREASURY CASH
FUND FUND
------------------------------ -------------------------
ASSETS:
Investments in Portfolios of Core Trust (Delaware) at value (a) $ 44,321,412 $ 12,129,179
------------------------------ -------------------------
LIABILITIES:
Dividends payable 166,355 49,579
Payable to related parties (Note 3) 3,769 -
Accrued expenses and other liabilities 35,497 3,526
------------------------------ -------------------------
Total Liabilities 205,621 53,105
------------------------------ -------------------------
NET ASSETS $ 44,115,791 $ 12,076,074
============================== =========================
COMPONENTS OF NET ASSETS:
Paid in capital 44,094,527 12,076,074
Undistributed net investment income 19,454 -
Accumulated net realized gain (loss) 1,810 -
------------------------------ -------------------------
NET ASSETS $ 44,115,791 $ 12,076,074
============================== =========================
SHARES OF BENEFICIAL INTEREST: 44,094,527 12,076,074
NET ASSET VALUE PER SHARE
(OFFERING AND REDEMPTION PRICE PER SHARE): $ 1.00 $ 1.00
(a) Cost of Investments. $ 44,321,412 $ 12,129,179
</TABLE>
See Notes to Financial Statements. 2 FORUM FUNDS(R)
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C>
DAILY ASSETS DAILY ASSETS
TREASURY DAILY ASSETS CASH
FUND TREASURY FUND
FOR THE PERIOD FUND FOR THE PERIOD
APRIL 1, 1997 FOR THE YEAR OCTOBER 1, 1996
THROUGH ENDED THROUGH
AUGUST 31, 1997 MARCH 31, 1997 AUGUST 31, 1997
------------------------- ------------------------- --------------------
INVESTMENT INCOME ALLOCATED FROM
PORTFOLIOS OF CORE TRUST (DELAWARE):
Interest Income $ 952,989 $ 2,143,644 $ 415,538
Net expenses (27,195) (61,917) (11,052)
------------------------- ------------------------- --------------------
Net investment income allocated from Portfolios of
Core Trust (Delaware) (Note 2) 925,794 2,081,727 404,486
------------------------- ------------------------- --------------------
EXPENSES:
Management (Note 3) 18,123 41,232 7,453
Transfer agent (Note 3) 50,810 116,051 29,772
Accounting (Note 3) 5,000 12,000 11,000
Audit 7,500 9,500 8,500
Legal (Note 3) 8,658 26,406 4,475
Trustees 1,047 3,270 463
Registration 4,990 20,852 8,172
Reporting 4,493 33,887 8,250
Miscellaneous 6,863 7,091 1,422
------------------------- ------------------------- --------------------
Total expenses 107,484 270,289 79,507
Expenses reimbursed and fees waived (Note 4) (44,054) (125,976) (52,035)
------------------------- ------------------------- --------------------
Net expenses 63,430 144,313 27,472
------------------------- ------------------------- --------------------
NET INVESTMENT INCOME 862,364 1,937,414 377,014
------------------------- ------------------------- --------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
ALLOCATED FROM PORTFOLIOS OF
CORE TRUST (DELAWARE) 15,133 (1,082) -
------------------------- ------------------------- --------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 877,497 $ 1,936,332 $ 377,014
========================= ========================= ====================
</TABLE>
See Notes to Financial Statements. 3 FORUM FUNDS(R)
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<S> <C> <C> <C>
DAILY ASSETS
TREASURY DAILY ASSETS DAILY ASSETS
FUND TREASURY TREASURY
FOR THE PERIOD FUND FUND
APRIL 1, 1997 FOR THE YEAR FOR THE YEAR
THROUGH ENDED ENDED
AUGUST 31, 1997 MARCH 31, 1997 MARCH 31, 1996
----------------------- --------------------- ----------------------------
NET ASSETS - BEGINNING OF PERIOD $ 43,975,152 $ 43,102,929 $ 36,328,855
--------------------------------- ----------------------- --------------------- ----------------------------
OPERATIONS:
Net investment income 862,364 1,937,414 1,966,077
Net realized gain (loss) allocated from
Portfolios of Core Trust (Delaware) 15,133 (1,082) (12,241)
----------------------- --------------------- ----------------------------
Net increase (decrease) in net assets
resulting from operations 877,497 1,936,332 1,953,836
----------------------- --------------------- ----------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (862,364) (1,937,414) (1,967,071)
----------------------- --------------------- ----------------------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Sale of shares 35,543,377 93,585,220 83,226,136
Reinvestment of distributions 68,736 94,618 56,702
Redemption of shares (35,486,607) (92,806,533) (76,495,529)
----------------------- --------------------- ----------------------------
Net increase (decrease) from capital
transactions 125,506 873,305 6,787,309
----------------------- --------------------- ----------------------------
Net increase (decrease) 140,639 872,223 6,774,074
----------------------- --------------------- ----------------------------
NET ASSETS - END OF PERIOD $ 44,115,791 $ 43,975,152 $ 43,102,929
-------------------------- ======================= ===================== ============================
</TABLE>
See Notes to Financial Statements. 4 FORUM FUNDS(R)
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<S> <C> <C>
DAILY ASSETS
CASH
FUND
FOR THE PERIOD
OCTOBER 1, 1996
THROUGH
AUGUST 31, 1997
-------------------------------
NET ASSETS - BEGINNING OF PERIOD $ -
------------------------------- -------------------------------
OPERATIONS:
Net investment income 377,014
-------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (377,014)
-------------------------------
CAPITAL SHARE TRANSACTIONS
(at $1.00 per share):
Sale of shares 32,622,774
Reinvestment of distributions 12,391
Redemption of shares (20,559,091)
-------------------------------
Net increase (decrease) from capital
transactions 12,076,074
-------------------------------
Net increase (decrease) 12,076,074
-------------------------------
NET ASSETS - END OF PERIOD $ 12,076,074
-------------------------- ===============================
</TABLE>
See Notes to Financial Statements. 5 FORUM FUNDS(R)
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS
FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
DAILY ASSETS DAILY ASSETS
TREASURY CASH
FUND FUND
---------------------------------------------------------------------- ------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED
AUGUST 31, MARCH 31, AUGUST 31,
------------------------------------------------------------------ ------------------------
1997 (a) 1997 1996 1995 1994 1993 (b) 1997 (b)
Net Asset Value, Beginning of
Period $ 1.00 $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -------- -------- --------- ---------------
Investment Operations
Net Investment Income (Loss) 0.02 0.05 0.05 0.04 0.03 0.02 0.05
--------- --------- --------- -------- -------- --------- ---------------
Distributions From
Net Investment Income (0.02) (0.05) (0.05) (0.04) (0.03) (0.02) (0.05)
--------- --------- --------- -------- -------- --------- ---------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $1.00 $ 1.00 $1.00 $ 1.00 $ 1.00
========= ========= ========= ======== ======== ========= ===============
Total Return 2.01% (c) 4.80% 5.18% 4.45% 2.83% 3.13% (d) 4.70% (c)
Ratio/Supplementary Data
Net Assets at End of Period (000'S
omitted) $44,116 $43,975 $43,103 $36,329 $26,505 $4,687 $12,076
Ratios to Average Net Assets:
Expenses including
reimbursement/waiver 0.50% (d) 0.50% 0.50% 0.37% 0.33% 0.22% (d) 0.52% (d)
Expenses excluding
reimbursement/waiver (e) 0.95% (d) 0.99% 1.06% 1.10% 1.17% 2.43% (d) 1.22% (d)
Net investment income (loss) including
reimbursement/waiver 4.76% (d) 4.70% 5.01% 4.45% 2.82% 2.92% (d) 5.06% (d)
</TABLE>
(a) Effective June 19, 1997, Daily Assets Treasury Fund changed its year end
from March 31 to August 31.
(b) See Note 1 of Notes to Financial Statements for date of commencement of
operations.
(c) Not Annualized.
(d) Annualized.
(e) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio excluding any waivers and reimbursements for the Fund and
its corresponding Portfolio.
See Notes to Financial Statements. 6 FORUM FUNDS(R)
<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
Forum Funds(R) (the "Trust") is an open-end management investment company
organized as a Delaware business trust. The Trust currently has fourteen active
investment portfolios. The Trust instrument of the Trust authorizes each Fund to
issue an unlimited number of shares of beneficial interest without par value.
Included in this report are Daily Assets Treasury Fund and Daily Assets Cash
Fund (each a "Fund" and collectively "the Funds"), each of which is a
diversified fund that commenced operations on July 1, 1992 and October 1, 1996,
respectively.
Effective June 19, 1997, Daily Assets Treasury Fund changed its fiscal year end
from March 31 to August 31.
MASTER FEEDER ARRANGEMENT - Daily Assets Treasury Fund and Daily Assets Cash
Fund seek to achieve their investment objectives by investing all of their
investable assets in Treasury Portfolio and Cash Portfolio, respectively,
separate diversified portfolios of Core Trust (Delaware) ("Core Trust"), a
registered open-end management investment company. Each of the Funds has the
same investment objective and substantially similar policies as the respective
Core Trust Portfolio (each a "Portfolio" and collectively the "Portfolios"), in
which it invests. A Fund may withdraw its investments from a Portfolio at any
time if the Trust's Board of Trustees (the "Board") determines that it is in the
best interest of the Fund and its shareholders to do so. The Funds account for
their investments in a Portfolio as partnership investments. This is commonly
referred to as a master-feeder arrangement.
The performance of the Funds is directly affected by the performance of their
respective Portfolios. The financial statements of Treasury Portfolio and Cash
Portfolio, including the schedule of investments, are included elsewhere in this
report and should be read in conjunction with the Funds' financial statements.
Substantially all of Treasury Portfolio was owned by Daily Assets Treasury Fund
and the percentage of Cash Portfolio owned by Daily Assets Cash Fund was
approximately 4.7% as of August 31, 1997.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the fiscal periods. Actual results could differ from those estimates, but
are expected to be immaterial.
The following represent significant accounting policies of the Funds:
SECURITY VALUATION - Each Fund records its investment in the Portfolios at
value. Valuation of securities held in the Portfolios are discussed in the
Portfolios Notes to Financial Statements of Core Trust, which are included
elsewhere in this report.
INVESTMENT INCOME AND EXPENSES - Each Fund records daily its pro rata share of
each Portfolio's income, expenses and realized gain and loss. In addition, each
fund accrues its own expenses.
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 federal income tax regulations.
FEDERAL TAXES - Each Fund intends to qualify and continue to qualify each year
as a regulated investment company and distribute all of its taxable income. In
addition, by distributing in each calendar year substantially all of its net
investment income, capital gains and certain other amounts, if any, each Fund
will not be subject to a federal excise tax. Therefore, no federal income or
excise tax provision is required.
REALIZED GAIN AND LOSS - Security transactions are recorded on trade date.
Realized gain and loss on investments sold are recorded on the basis of
identified cost.
7 FORUM FUNDS(R)
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
AUGUST 31, 1997
- --------------------------------------------------------------------------------
NOTE 3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS
INVESTMENT ADVISER - Forum Advisors, Inc.(R) ("Forum Advisors") is the
investment adviser of Treasury Portfolio and provides professional management of
that Portfolio's investments. The investment adviser of Cash Portfolio is Linden
Asset Management, Inc. ("Linden") and provides professional management of that
Portfolio's investments. Forum Advisors and Linden each provide certain
subadvisory assistance for the Portfolios they do not directly advise. The Funds
may withdraw their investment from the Portfolio at any time if the Board
determines that it is in the best interest of the Funds and their shareholders
to do so. In the event the Funds were to make such a withdrawal, the Trust has
retained Forum Advisors and Linden to act as investment advisers to the Funds.
Neither Forum Advisors nor Linden receive any advisory fees with respect to the
Funds as long as the Funds remain completely invested in the Portfolios.
MANAGEMENT AND OTHER SERVICES - Forum Financial Corp.(R) ("FFC"), an affiliate
of Forum Advisors, serves as the Funds' transfer agent and dividend disbursing
agent, and for those services receives an annual fee of $12,000 plus 0.25% of
the average daily net assets of each Fund plus account and service charges.
Forum Accounting Services, Limited Liability Company ("FACS"), an affiliate of
FFC and Forum Advisors, provides fund accounting services to the Funds. For its
services, FAcS receives from each Fund an annual fee of $12,000 plus certain
amounts based upon the number and types of portfolio transactions within each
Fund.
Effective June 19, 1997, the manager of the Trust is Forum Administrative
Services, Limited Liability Company ("FAdS"), a registered broker-dealer and a
member of the National Association of Securities Dealers, Inc. FAdS receives a
management fee for its services to each Fund at an annual rate of 0.10% of the
average daily net assets of each Fund. In addition, certain legal expenses are
charged to the Funds by FAdS. For the periods ended August 31, 1997, the
respective amounts charged to Daily Assets Treasury Fund and Daily Assets Cash
Fund were $464 and $420. Forum Financial Services, Inc. ("FFSI") acts as the
distributor of the Funds' shares. Prior to June 19, 1997, FFSI also served as
manager of the Trust pursuant to the same terms and compensation as FAdS.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
FFC and FAdS have voluntarily undertaken to waive a portion of their fees and
assume certain expenses of the Funds so that total expenses of the Funds would
not exceed certain limitations including each Funds allocation of expenses from
its corresponding Portfolio. Prior to June 19, 1997, FFSI, as manager of the
Trust, voluntarily waived a portion of its fees. For the periods ended August
31, 1997, waived fees and reimbursement of expenses were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Expenses
Reimbursed Fees Waived
---------- -----------------------
FFSI and FAdS FFC FFSI and FAdS Total
------------- --- ------------- ------
Daily Assets Treasury Fund $ - $44,054 $ - $44,054
Daily Assets Cash Fund 26,816 17,766 7,453 52,035
</TABLE>
8 FORUM FUNDS(R)
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders
Forum Funds
We have audited the accompanying statements of assets and liabilities of Daily
Assets Treasury Fund and Daily Assets Cash Fund, series of Forum Funds (the
Funds) as of August 31, 1997, and the related statements of operations, changes
in net assets and financial highlights, for the period from April 1, 1997 to
August 31, 1997 for Daily Assets Treasury Fund and for the period from October
1, 1996 (commencement of operations) to August 31, 1997 for Daily Assets Cash
Fund. These financial statements and financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The statement
of operations for the year ended March 31, 1997, statements of changes in net
assets for each of the years in the two-year period ended March 31, 1997, and
the financial highlights for each of the years in the four-year period ended
March 31, 1997 and for the period from July 1, 1992 (commencement of operations)
to March 31, 1993 for Daily Assets Treasury Fund were audited by other auditors
whose report dated May 9, 1997 expressed an unqualified opinion on those
financial statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. 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 Daily
Assets Treasury Fund and Daily Assets Cash Fund, as of August 31, 1997, the
results of their operations, changes in their net assets and their financial
highlights for the years or periods specified in the first paragraph above, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 3, 1997
9
<PAGE>
CORE TRUST (DELAWARE)
ANNUAL REPORT
AUGUST 31, 1997
TREASURY PORTFOLIO
CASH PORTFOLIO
<PAGE>
TREASURY PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1997
<TABLE>
<S> <C> <C> <C>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
------------- -------------------------------------------------------------
U.S. GOVERNMENT SECURITIES (96.0%)
STUDENT LOAN MARKETING ASSOCIATION (A) (26.0%)
$ 7,500,000 5.46%, 12/18/97 $ 7,500,000
3,000,000 5.43%, 2/5/98 2,999,440
1,000,000 5.47%, 2/19/98 1,000,000
------------------------------
Total Student Loan Marketing Association 11,499,440
------------------------------
U.S. TREASURY BILLS (B) (70.0%)
31,000,000 5.15% TO 5.43%, 9/18/97 30,929,507
------------------------------
Total U.S. Government Securities 42,428,947
------------------------------
SHARES
-------------
SHORT-TERM HOLDINGS (4.0%)
1,784,461 Dreyfus Treasury Prime Cash 1,784,461
Management Fund Class A Shares
2,905 Merrill Lynch Treasury Fund 2,905
------------------------------
Total Short-Term Holdings 1,787,366
------------------------------
Total Investments (100.0%) $ 44,216,313
==============================
</TABLE>
(A) Certain securities are deemed to have a maturity remaining until the next
readjustment of the interest rate or the longer of the demand period or
readjustment. The interest rates shown reflect the rate in effect on August
31, 1997.
(B) Annualized yields at time of purchase.
See Notes to Financial Statements. 13 CORE TRUST (DELAWARE)
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1997
FACE SECURITY FACE SECURITY
AMOUNT DESCRIPTION VALUE AMOUNT DESCRIPTION VALUE
- ----------------- ------------------------------ --------------- ---------------- ----------------------------------- -------
U.S. GOVERNMENT SECURITIES (45.8%) CORPORATE NOTES (8.1%)
FEDERAL FARM CREDIT BANK (A) (14.6%) 6,000,000 Bank of America N.A., 5.65%
V/R, 4/16/98 6,000,000
$ 38,000,000 5.44%, 9/3/97 $ 37,994,258 5,000,000 Bear, Stearns & Co., Inc., 5.63%
--------------- V/R,1/6/98 5,000,000
5,000,000 Merrill Lynch & Co., 5.61% 4,999,885
SMALL BUSINESS ADMINISTRATION (B) (8.0%) V/R,3/4/98
359,486 Pool # 500536, 7.50%, 5/25/13 365,858 5,000,000 Merrill Lynch & Co., 5.68%
637,976 Pool # 500730, 8.38%, 2/25/04 652,365 V/R, 7/24/98 5,000,000
8,414 Pool # 500737, 7.75%, 12/25/97 8,414 -----------
46,995 Pool # 501256, 7.45%, 7/25/98 46,995 Total Corporate Notes 20,999,885
1,533,813 Pool # 501733, 6.50%, 2/25/17 1,558,776 -----------
1,592,429 Pool # 501989, 6.63%, 10/25/12 1,602,943 REPURCHASE AGREEMENTS (34.1%)
435,494 Pool # 502914, 6.50%, 3/25/15 435,969 25,000,000 Bear, Stearns & Co., Inc., 5.63%,
1,904,988 Pool # 503121, 6.38%, 9/25/15 1,904,988 9/2/97, to be repurchased at
4,678,187 Pool # 503429, 6.25%, 6/25/16 5,678,187 $25,015,639; Collateralized by
920,929 Pool # 503461, 6.25%, 6/25/21 921,495 $36,860,000 FHLMC - GNMA
4,533,406 Pool # 503553, 6.13%, 11/25/21 4,521,251 7 PO, 0%, 6/17/27 25,000,000
2,991,374 Pool # 503754, 6.13%, 5/25/22 2,991,374 28,310,000 Nomura Securities, 5.61%, 9/2/97,
------------- to be repurchased at $28,327,647;
Total Small Business Administrative 20,688,615 Collateralized by $38,440,000
------------- FNMA 281 PO, 0%, 11/1/26 28,310,000
35,000,000 Smith Barney, 5.59%, 9/2/97,
STUDENT LOAN MARKETING ASSOCIATION (B) (3.1%) to be repurchased at $35,038,043;
6,000,000 5.61%, 1/21/98 6,000,000 Collateralized by $50,000,000
2,000,000 5.60%, 2/17/98 2,000,000 FHLMC 183 IO, 7.00%, 4/1/27;
------------ $25,000,000 FHLMC 1611G,
Total Student Loan Marketing Association 8,000,000 6.19%, 5/15/21; $15,000,000
------------- FNMA 1993-172F, 6.03%,
STUDENT LOAN MARKETING ASSOCIATION 9/25/00 35,000,000
DISCOUNT NOTES (A) (20.1%) -----------
52,000,000 5.44%, 9/2/97 52,000,000
------------- Total Repurchase Agreements 88,310,000
Total U.S. Government Securities 118,682,873 -----------
------------- Total Investments (100.0%) 258,907,386
BANK NOTES (B) (3.1%) ===========
7,998,304 Bankers Trust New York Corp.,
5.66%, 7/21/98 7,998,304
------------- (A) Annualized yields at time of purchase.
COMMERCIAL PAPER (A) (8.9%)
5,000,000 American Express Credit Corp., (B) Certain securities are deemed to have a maturity
5.54%, 9/17/97 4,988,458 remaining until the next readjustment of the interest
rate or the longer of the demand period or
8,000,000 Ford Motor Credit Corp., readjustment. The interest rates shown reflect the
5.54%, 9/17/97 7,981,533 rate in effect on August 31, 1997.
10,000,000 General Electric Capital Corp.,
5.52%, 10/7/97 9,946,333 FHLMC Federal Home Loan Mortage Corporation
FNMA Federal National Mortgage Association
Total Commercial Paper 22,916,324 GNMA Government National Mortgage Association
------------- V/R Variable rate
</TABLE>
See Notes to Financial Statements. 14 CORE TRUST (DELAWARE)
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1997
<TABLE>
<S> <C> <C>
TREASURY CASH
PORTFOLIO PORTFOLIO
------------------------- ---------------------------
ASSETS:
Investments: (Note 2)
Investments at amortized cost $ 44,216,313 $ 170,597,386
Repurchase agreements at cost - 88,310,000
------------------------- ---------------------------
Total investments at value 44,216,313 258,907,386
Cash - 33,236
Interest and other receivables 110,735 579,311
Organization costs, net of amortization (Note 2) - 3,562
------------------------- ---------------------------
Total Assets 44,327,048 259,523,495
------------------------- ---------------------------
LIABILITIES:
Payable to adviser (Note 3) 1,878 8,218
Payable to other related parties (Note 3) - 24,266
Accrued expenses and other liabilities 3,758 -
------------------------- ---------------------------
Total Liabilities 5,636 32,484
------------------------- ---------------------------
NET ASSETS $ 44,321,412 $ 259,491,011
======================== ===========================
COMPONENTS OF NET ASSETS:
Investors' capital 44,321,412 259,491,011
------------------------- ---------------------------
NET ASSETS $ 44,321,412 $ 259,491,011
========================= ===========================
</TABLE>
See Notes to Financial Statements. 15 CORE TRUST (DELAWARE)
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C>
TREASURY
PORTFOLIO TREASURY CASH
FOR THE PERIOD PORTFOLIO PORTFOLIO
APRIL 1, 1997 FOR THE YEAR FOR THE YEAR
THROUGH ENDED ENDED
AUGUST 31, 1997 MARCH 31, 1997 AUGUST 31, 1997
----------------------- ----------------------- --------------------
INVESTMENT INCOME:
Interest income $ 952,989 $ 2,143,644 $ 10,383,977
----------------------- ----------------------- --------------------
EXPENSES:
Investment advisory (Note 3) 9,064 20,637 72,872
Administration (Note 3) 18,128 41,274 92,652
Custody 3,686 10,194 46,326
Accounting (Note 3) 20,000 48,000 48,000
Audit 13,000 11,300 12,541
Trustee and Officer Insurance - 803 -
Legal (Note 3) 373 1,501 4,723
Trustees 340 3,485 1,919
Miscellaneous 117 - 6,572
----------------------- ----------------------- --------------------
Total Expenses 64,708 137,194 285,605
Expenses reimbursed and fees waived (Note 4) (37,513) (75,277) (7,621)
----------------------- ----------------------- --------------------
Net expenses 27,195 61,917 277,984
----------------------- ----------------------- --------------------
NET INVESTMENT INCOME 925,794 2,081,727 10,105,993
----------------------- ----------------------- --------------------
REALIZED GAIN (LOSS) ON INVESTMENTS 15,133 (1,082) (8,648)
----------------------- ----------------------- --------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 940,927 $ 2,080,645 $ 10,097,345
======================= ======================= ====================
</TABLE>
See Notes to Financial Statements. 16 CORE TRUST (DELAWARE)
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<S> <C> <C> <C>
TREASURY TREASURY
PORTFOLIO TREASURY PORTFOLIO
FOR THE PERIOD PORTFOLIO FOR THE PERIOD
APRIL 1, 1997 FOR THE YEAR FEBRUARY 21, 1996
THROUGH ENDED THROUGH
AUGUST 31, 1997 MARCH 31, 1997 MARCH 31, 1996
----------------------- ----------------------- -------------------
NET ASSETS - BEGINNING OF PERIOD $ 44,184,285 $ 43,296,823 $ -
- --------------------------------- ----------------------- ----------------------- -------------------
OPERATIONS:
Net investment income 925,794 2,081,727 223,902
Net realized gain (loss) on investments sold 15,133 (1,082) 422
----------------------- ----------------------- -------------------
Net increase (decrease) in net assets resulting
from operations 940,927 2,080,645 224,324
----------------------- ----------------------- -------------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST:
Contributions 22,743,917 54,385,867 48,218,336
Withdrawals (23,547,717) (55,579,050) (5,145,837)
----------------------- ----------------------- -------------------
Net transactions from investors' beneficial interests (803,800) (1,193,183) 43,072,499
----------------------- ----------------------- -------------------
Net increase (decrease) 137,127 887,462 43,296,823
----------------------- ----------------------- -------------------
NET ASSETS - END OF PERIOD $ 44,321,412 $ 44,184,285 $ 43,296,823
- -------------------------- ======================= ======================= ===================
</TABLE>
See Notes to Financial Statements. 17 CORE TRUST (DELAWARE)
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<S> <C> <C>
CASH CASH
PORTFOLIO PORTFOLIO
FOR THE YEAR FOR THE YEAR
ENDED ENDED
AUGUST 31, 1997 AUGUST 31, 1996
-------------------------- -------------------------
NET ASSETS - BEGINNING OF PERIOD $ 126,282,923 $ -
- --------------------------------- -------------------------- -------------------------
OPERATIONS:
Net investment income 10,105,993 6,173,705
Net realized gain (loss) on investments sold (8,648) 6,420
-------------------------- -------------------------
Net increase (decrease) in net assets resulting
from operations 10,097,345 6,180,125
-------------------------- -------------------------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST:
Contributions 633,698,622 466,894,348
Withdrawals (510,587,879) (346,791,550)
-------------------------- -------------------------
Net transactions from investors' beneficial
interests 123,110,743 120,102,798
-------------------------- -------------------------
Net increase (decrease) 133,208,088 126,282,923
-------------------------- -------------------------
NET ASSETS - END OF PERIOD $ 259,491,011 $ 126,282,923
- -------------------------- ========================== =========================
</TABLE>
See Notes to Financial Statements. 18 CORE TRUST (DELAWARE)
<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
Core Trust (Delaware) ("Core Trust"), was organized as a Delaware business trust
on September 1, 1994. Core Trust, which is registered as an open-end management
investment company under the Investment Company Act of 1940 (the "Act"),
currently has seventeen separate investment portfolios. These financial
statements relate to Treasury Portfolio and Cash Portfolio (each a "Portfolio"
and collectively "the Portfolios"), each of which is a diversified portfolio,
that commenced operations on February 21, 1996 and September 1, 1995,
respectively. Interests in the Portfolios are sold in private placement
transactions without any sales charge to institutional clients, including
open-end management investment companies.
Effective June 19, 1997, Treasury Portfolio changed its fiscal year end from
March 31 to August 31.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Portfolios' financial statements are prepared in accordance with generally
accepted accounting principles which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets from
operations during the fiscal period. Actual results could differ from those
estimates, but any differences are expected to be immaterial.
PORTFOLIO VALUATION - Treasury Portfolio's net asset value per share is
calculated at 2:00 p.m., Eastern Time, and Cash Portfolio's net asset value per
share is calculated at 4:00 p.m., Eastern Time, on each 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 - The Portfolios may invest in repurchase agreements. Each
Portfolio, through its custodian, receives delivery of the underlying
securities, whose market value must always equal or exceed the repurchase price
plus accrued interest. The investment adviser is responsible for determining the
value of the underlying securities at all times. In the event of default, the
Portfolio may have difficulties with the disposition of such securities.
ORGANIZATIONAL COSTS - The costs incurred by Cash Portfolio with its
organization have been capitalized and are being amortized using the
straight-line method over a five year period beginning on the commencement of
the Portfolio's operations. These costs were paid by Forum Financial Corp.(R)
("FFC") and were reimbursed by the Portfolio.
FEDERAL TAXES - The Portfolios are not required to pay federal income taxes on
their net investment income and net capital gain as they are treated as a
partnership for federal income tax purposes. All interest, dividends, gain and
loss of a Portfolio are deemed to have been "passed through" to the partners in
proportion to their holdings of the Portfolio regardless of whether such
interest, dividends or gain have been distributed by the Portfolio.
REALIZED GAIN AND LOSS - Investment security transactions are recorded on trade
date. Realized gain and loss on investments sold are recorded on the basis of
identified cost.
19 CORE TRUST (DELAWARE)
<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997 (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 3. ADVISORY FEES, SERVICING FEES AND OTHER TRANSACTIONS
INVESTMENT ADVISERS - The investment adviser for Cash Portfolio is Linden Asset
Management, Inc. ("Linden") and the investment adviser for Treasury Portfolio is
Forum Advisors, Inc.(R) ("Forum Advisors"). Effective January 1, 1997, pursuant
to investment advisory agreements with respect to each Portfolio, Linden
receives from each Portfolio an advisory fee based upon the total average daily
net assets of the Portfolios ("Total Portfolio Assets") that is calculated on a
cumulative basis as follows: 0.06% for the first $200 million of Total Portfolio
Assets, 0.04% of the next $300 million of Total Portfolio Assets and 0.03% of
the remaining Total Portfolio Assets. The minimum total annual advisory fee is
$50,000. Forum Advisors receives an advisory fee at an annual rate of 0.05% of
the average daily net assets of Treasury Portfolio.
Prior to January 1, 1997, Linden received from each Portfolio an advisory fee
based upon Total Portfolio Assets that was calculated on a cumulative basis as
follows: 0.05% for the first $200 million of Total Portfolio Assets, 0.03% of
the next $300 million of Total Portfolio Assets and 0.02% of the remaining Total
Portfolio Assets.
Pursuant to investment advisory agreements with respect to each Portfolio among
Core Trust, Linden and Forum Advisors, Inc., each investment adviser also acts
as investment sub-adviser to the Portfolio that it does not manage on a daily
basis and from time to time may provide the other investment adviser with
assistance regarding its advisory responsibilities. To the extent that Linden or
Forum Advisors delegates portfolio management responsibilities to the other,
Linden or Forum Advisors pays its advisory fee to the other investment adviser.
MANAGEMENT AND OTHER SERVICES - Effective June 19, 1997, Forum Accounting
Services, Limited Liability Company ("FAcS") serves as the Portfolios' fund
accountant and is compensated for those services at an amount of $48,000 per
year for each Portfolio, subject to adjustments for the number and type of
portfolio transactions. Prior to June 19, 1997, Forum Financial Corp.(R) served
as the Portfolios' fund accountant pursuant to the same terms and compensation
as FAcS.
The administrator of Core Trust is Forum Financial Services, Inc.(R) ("FFSI"), a
registered broker-dealer and a member of the National Association of Securities
Dealers, Inc. FFSI receives an administrative fee for its services with respect
to the Treasury Portfolio at an annual rate of 0.10% of its average daily net
assets and the Cash Portfolio at an annual rate of 0.05% of its average daily
net assets. In addition, certain legal expenses are charged to Portfolios by
FFSI. For the year ended August 31, 1997, the respective amounts charged to
Treasury Portfolio and Cash Portfolio were $86 and $1,354.
FFSI also acts as Core Trust's placement agent pursuant to a separate agreement
with Core Trust.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
FFSI have voluntarily undertaken to waive a portion of its fees and assume
certain expenses of the Portfolios so that total expenses would not exceed
certain limitations. For the period ended August 31, 1997, waived fees and
reimbursement of expenses were as follows:
<TABLE>
<S> <C> <C> <C>
Expenses
Reimbursed Fees Waived
---------- -----------
FFSI FFSI Total
---- ---- ------
Treasury Portfolio $19,385 $18,128 $37,513
Cash Portfolio - 7,621 7,621
</TABLE>
20 CORE TRUST (DELAWARE)
<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997 (CONCLUDED)
- --------------------------------------------------------------------------------
NOTE 5. INCOME AND EXPENSE RATIOS
Income and expense ratios for each of the following periods:
<TABLE>
<S> <C> <C> <C> <C> <C>
TREASURY CASH
PORTFOLIO PORTFOLIO
-------------------------------------------- -----------------------------------
Period Ended Year Ended Period Ended Years Ended
August 31, March 31, March 31, August 31,
------------- --------------------------- -----------------------------------
1997 (a) 1997 1996 (b) 1997 1996
Ratios to Average Net Assets:
Expenses including
reimbursement/waiver 0.15% (c) 0.15% 0.15% (c) 0.15% 0.15%
Expenses excluding
reimbursement/waiver (d) 0.36% (c) 0.33% 0.60% (c) 0.15% 0.16%
Net investment income (loss) including
reimbursement/waiver 5.11% (c) 5.04% 4.99% (c) 5.45% 5.50%
</TABLE>
(a) Effective June 19, 1997, Treasury Portfolio changed its year end from March
31 to August 31.
(b) See Note 1 of Notes to Financial Statements for date of commencement of
operations.
(c) Annualized.
(d) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio excluding any waivers and reimbursements for the Fund and
its corresponding Portfolio.
21
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Trustees and Partners
Core Trust (Delaware)
We have audited the accompanying statements of assets and liabilities of
Treasury Portfolio and Cash Portfolio, series of Core Trust (Delaware) (the
Portfolios), including the schedules of investments, as of August 31, 1997, and
the related statements of operations for the year then ended for Cash Portfolio
and for the period from April 1, 1997 to August 31, 1997 for Treasury Portfolio,
the statements of changes in net assets for each of the years in the two-year
period then ended for Cash Portfolio and for the period from April 1, 1997 to
August 31, 1997 for Treasury Portfolio. These financial statements are the
responsibility of the Portfolios' management. Our responsibility is to express
an opinion on these financial statements based on our audits. The statements of
operations and changes in net assets for the year ended March 31, 1997, the
statement of changes in net assets for the period from February 21, 1996
(commencement of operations) to March 31, 1996 and financial highlights for the
year ended March 31, 1997 and the period from February 21, 1996 to March 31,
1996 of Treasury Portfolio were audited by other auditors whose report dated May
9, 1997 expressed an unqualified opinion on those financial statements and
financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements 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, 1997 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 referred to above present fairly, in
all material respects, the financial position of Treasury Portfolio and Cash
Portfolio as of August 31, 1997, the results of their operations for the year
then ended for Cash Portfolio and for the period from April 1, 1997 to August
31, 1997 for Treasury Portfolio, changes in their net assets for each of the
years in the two-year period then ended for Cash Portfolio and for the period
from April 1, 1997 to August 31, 1997 for Treasury Portfolio in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 3, 1997
22
<PAGE>
DISTRIBUTOR
Forum Financial Services, Inc.
TRANSFER AGENT
Forum Financial Corp.
[FORUM LOGO]
FORUM FUNDS
P.O. BOX 446
Portland, ME 04112
207-879-0001 (IN PORTLAND, ME)
800-94FORUM (ELSEWHERE)
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY
TO CURRENT SHAREHOLDERS AND TO OTHERS WHO HAVE
RECEIVED A COPY OF A FORUM FUNDS PROSPECTUS.
