[FORUM LOGO]
F O R U M
[Left half of page has pictures
of gear wheels, ledger paper and F U N D S
pencil, computer monitor and
keyboard on pedistal.]
--------------------------
ANNUAL REPORT
--------------------------
AUGUST 31, 1998
DAILY ASSETS TREASURY
OBLIGATIONS FUND
DAILY ASSETS
GOVERNMENT FUND
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
DAILY ASSETS CASH FUND
DAILY ASSETS
MUNICIPAL FUND
<PAGE>
Table of Contents
A Message to Our Shareholders......................................... 1
An Interview with the Portfolio Manager............................... 2
FINANCIAL STATEMENTS OF FORUM FUNDS
Statements of Assets and Liabilities.................................. 3
Statements of Operations.............................................. 4
Statements of Changes in Net Assets.................................. 5
Financial Highlights.................................................. 7
Notes to Financial Statements......................................... 9
Independent Auditors' Report.......................................... 13
FINANCIAL STATEMENTS OF CORE TRUST (DELAWARE)
Schedules of Investments:
Treasury Cash Portfolio........................................... 15
Government Portfolio.............................................. 16
Government Cash Portfolio......................................... 17
Cash Portfolio.................................................... 18
Municipal Cash Portfolio.......................................... 19
Notes to Schedules of Investments..................................... 21
Statements of Assets and Liabilities.................................. 22
Statements of Operations.............................................. 23
Statements of Changes in Net Assets.................................. 24
Notes to Financial Statements......................................... 26
Independent Auditors' Report......................................... 29
<PAGE>
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[FORUM LOGO]
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND
ANNUAL REPORT
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Dear Shareholder:
In the year since our last annual shareholders' report, combined net assets of
the Daily Assets Funds have grown 85% to $233 million--a tremendous performance
that was in part achieved by the addition of three new money market funds and by
significant expansion of our shareholder relationships.
On June 25, 1998, we launched the Daily Assets Municipal Fund with assets of $21
million. The Fund invests primarily in high-quality state obligations that
provide shareholders with income that is exempt from Federal income taxes. With
the addition of this Fund, we now offer five different Daily Assets money market
funds.
As we announced in the Semi-Annual Report, Daily Assets Treasury Obligations
Fund received an AAAm from Standard & Poor's, its highest money market fund
rating. In June, the Fund also received Moody's highest money market fund rating
of Aaa. In addition to gathering these exceptional dual ratings, the Fund grew
from $71 million a year ago to $115 million today.
New investment opportunities for our shareholders and consistently strong
performance--these are the goals we met in the last year. Therefore, as of the
close of the 1998 fiscal year, we are proud to report the following 7-day and
30-day simple yields for the Institutional Share classes: Daily Assets
Government Fund 5.24% and 5.25%, respectively; Daily Assets Treasury Obligations
Fund 5.44% and 5.41%, respectively; Daily Assets Government Obligations Fund
5.36% and 5.37%, respectively; Daily Assets Cash Fund 5.46% and 5.46%,
respectively; and Daily Assets Municipal Fund 3.06% and 3.06%, respectively. We
know it will in no way diminish your pleasure in these results to again be
reminded that investment returns for the Funds will fluctuate, and that past
performance is no guarantee of future results.
As shareholders, you are aware that much has been taking place within the Daily
Assets Funds as well as in the global economy. In the following interview, Core
Portfolio manager Tim Fischer offers insight into his investment strategies in a
turbulent global marketplace.
I wish to thank you on behalf of Forum Funds management for your continued
confidence. We remain strongly committed to superior performance and maintenance
of your $1.00 share price through prudent management. As always, we invite you
to call us with any questions or comments at (207) 879-0001.
Sincerely,
John Y. Keffer
Chairman
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO
PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE
MONEY BY INVESTING IN THE FUND.
FORUM FUNDS
<PAGE>
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AN INTERVIEW WITH ANTHONY R. FISCHER, JR., PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
Q. HOW HAVE THE FUNDS FARED DURING THE LAST TWELVE MONTHS?
A. Yields have been remarkably stable because the Federal Reserve Bank has not
changed the Federal Funds rate since the spring of 1997. While there was talk
that the Federal Reserve Bank might raise rates because of the strong economy
and the very low inflation rate, as well as the turbulence in Asia beginning in
August 1997, the Federal Reserve Bank chose to keep rates stable.
Q. DOES GROWTH IN THE FUNDS PUT DOWNWARD PRESSURE ON YIELDS?
A. Yes, to some extent. As the Funds grow, incoming monies have to be invested
at then current yields. Depending on current market sentiment, those yields can
be lower than a Fund's average existing yield. This, of course, puts downward
pressure on Fund yields.
Q. HAVE OVERSEAS MARKET CONDITIONS AFFECTED FUND YIELDS DURING THE YEAR?
A. Yes. Uncertainty in foreign markets has created a flight to U.S. Treasury
securities, which pushes their yields substantially lower than the Federal Funds
rate. Since we purchase U.S. Treasury bills, the result has been a partial
reduction in overall Fund yields.
Q. HAS YOUR OVERALL INVESTMENT STRATEGY CHANGED IN RESPONSE TO GLOBAL ECONOMIC
CONDITIONS?
A. In direct response to uncertainties in foreign markets, as well as to
domestic turbulence, we have, since July 1997, extended the average maturities
of Government Cash Portfolio and Cash Portfolio.
Q. WHAT IS YOUR OUTLOOK FOR THE FUNDS OVER THE NEXT YEAR? DO YOU EXPECT
INVESTORS TO SEEK A MONEY FUND SAFETY NET IN AN INCREASINGLY "UNFRIENDLY" STOCK
AND BOND ENVIRONMENT?
A. Given the turbulence surrounding other forms of investments, we expect the
Funds to grow substantially over the next 6 to 12 months. As investors seek the
type of safe haven from volatile markets that our Funds provide, we expect to be
the beneficiary of substantial growth.
THE OPINIONS EXPRESSED IN THIS INTERVIEW REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH AUGUST 31, 1998. THE MANAGER'S OPINIONS ARE SUBJECT TO CHANGE AT
ANY TIME BASED ON THE GOVERNMENT SECURITIES MARKET AND OTHER CONDITIONS. THE
COMPOSITION AND HOLDINGS OF THE PORTFOLIOS ARE SUBJECT TO CHANGE.
2 FORUM FUNDS
<PAGE>
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STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1998
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DAILY ASSETS DAILY ASSETS
TREASURY DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
OBLIGATIONS GOVERNMENT OBLIGATIONS CASH MUNICIPAL
FUND FUND FUND FUND FUND
----------------- ---------------- ----------------- ----------------- -----------------
ASSETS:
Investments in Portfolios of Core Trust
(Delaware) at value (Notes 1 & 2)$ 115,515,357 $ 45,753,642 $ 17,836,116 $ 33,778,948 $ 20,834,274
Organization costs, net of amortization 5,149 - 6,411 - -
----------------- ---------------- ----------------- ----------------- -----------------
Total assets 115,520,506 45,753,642 17,842,527 # 33,778,948 20,834,274
----------------- ---------------- ----------------- ----------------- -----------------
LIABILITIES:
Dividends payable 496,151 158,125 88,594 134,442 39,889
Payable to administrator (Note 3) - 533 - - -
Accrued expenses 4,963 15,045 1,967 3,432 1,079
----------------- ---------------- ----------------- ----------------- -----------------
Total liabilities 501,114 173,703 90,561 137,874 40,968
----------------- ---------------- ----------------- ----------------- -----------------
NET ASSETS $ 115,019,392 $ 45,579,939 $ 17,751,966 $ 33,641,074 $ 20,793,306
================= ================ ================= ================= =================
COMPONENTS OF NET ASSETS:
Paid in capital 115,016,893 45,579,762 17,752,002 33,641,117 20,793,306
Undistributed net investment income - 19,454 - - -
Accumulated net realized gain (loss) 2,499 (19,277) (36) (43) -
----------------- ---------------- ----------------- ----------------- -----------------
NET ASSETS $ 115,019,392 $ 45,579,939 $ 17,751,966 $ 33,641,074 $ 20,793,306
================= ================ ================= ================= =================
NET ASSETS BY SHARE CLASS:
Institutional Shares $ 110,561,324 $ 36,094,908 $ 15,352,070 $ 28,395,724 $ 20,773,174
Institutional Service Shares 4,447,942 9,485,031 2,389,770 5,235,224 10,019
Investor Shares 10,126 - 10,126 10,126 10,113
SHARES OF BENEFICIAL INTEREST:
Institutional Shares 110,558,887 36,094,975 15,352,100 28,395,816 20,773,174
Institutional Service Shares 4,447,880 9,484,787 2,389,776 5,235,175 10,019
Investor Shares 10,126 - 10,126 10,126 10,113
NET ASSET VALUE PER SHARE
(OFFERING AND REDEMPTION
PRICE PER SHARE) $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
</TABLE>
See Notes to Financial Statements. 3 FORUM FUNDS
<PAGE>
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STATEMENTS OF OPERATIONS
FOR THE YEAR OR PERIOD ENDED AUGUST 31, 1998 (Note 1)
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<TABLE>
<S> <C> <C> <C> <C> <C>
DAILY ASSETS DAILY ASSETS
TREASURY DAILY ASSETS GOVERNMENT DAILY ASSETS DAILY ASSETS
OBLIGATIONS GOVERNMENT OBLIGATIONS CASH MUNICIPAL
FUND FUND FUND FUND FUND
---------------- ---------------- ----------------- ----------------- ----------------
INVESTMENT INCOME ALLOCATED
FROM PORTFOLIOS OF CORE
TRUST (DELAWARE):
Interest income $ 2,755,965 $ 2,568,528 $ 463,264 $ 1,054,332 $ 126,858
Net expenses (75,314) (71,184) (9,631) (23,948) (3,647)
---------------- ---------------- ----------------- ----------------- ----------------
Net investment income allocated from
Portfolios of Core Trust (Delaware)
(Note 2) 2,680,651 2,497,344 453,633 1,030,384 123,211
---------------- ---------------- ----------------- ----------------- ----------------
EXPENSES:
Management (Note 3)
Institutional Shares 24,029 2,864 3,711 3,334 1,934
Institutional Service Shares 520 25,246 404 7,171 -
Transfer agent (Note 3)
Institutional Shares 31,381 4,874 10,816 9,362 4,150
Institutional Service Shares 6,071 68,534 6,869 27,955 842
Investor Shares 843 - 843 843 843
Shareholder services (Note 3)
Institutional Service Shares 2,600 78,274 2,018 22,439 -
Accounting (Note 3) 13,323 14,000 14,065 19,000 4,200
Legal (Note 3) 8,897 14,332 1,434 6,211 339
Audit 8,619 11,002 7,331 7,499 5,051
Trustees 4,559 4,225 1,306 2,086 997
Registration 43,561 23,333 14,770 16,973 14,144
Reporting 9,888 20,089 1,261 5,268 112
Amortization of organization costs 716 - 860 - -
Miscellaneous 3,008 18,035 394 4,398 201
---------------- ---------------- ----------------- ----------------- ----------------
Total expenses 158,015 284,808 66,082 132,539 32,813
Expenses reimbursed and
fees waived (Note 4) (130,859) (152,096) (57,217) (88,413) (31,735)
---------------- ---------------- ----------------- ----------------- ----------------
Net expenses 27,156 132,712 8,865 44,126 1,078
---------------- ---------------- ----------------- ----------------- ----------------
NET INVESTMENT INCOME 2,653,495 2,364,632 444,768 986,258 122,133
---------------- ---------------- ----------------- ----------------- ----------------
NET REALIZED GAIN (LOSS) ON
INVESTMENTS ALLOCATED
FROM PORTFOLIOS OF CORE
TRUST (DELAWARE) 2,499 (21,087) (36) (43) -
---------------- ---------------- ----------------- ----------------- ----------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 2,655,994 $ 2,343,545 $ 444,732 $ 986,215 $ 122,133
================ ================ ================= ================= ================
</TABLE>
See Notes to Financial Statements. 4 FORUM FUNDS
<PAGE>
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STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED MARCH 31, 1997, THE PERIOD ENDED AUGUST 31, 1997 AND THE YEAR
ENDED AUGUST 31, 1998
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<TABLE>
<S> <C>
DAILY ASSETS
GOVERNMENT
FUND
-----------------
NET ASSETS - March 31, 1996 $ 43,102,929
- -------------------------------------------------------------- -----------------
OPERATIONS:
Net investment income allocated from Portfolio of Core Trust (Delaware)
1,937,414 Net realized gain (loss) on investments allocated from Portfolio
of
Core Trust (Delaware) (1,082)
-----------------
Net increase in net assets resulting from operations 1,936,332
-----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income-Institutional Service Shares (1,937,414)
-----------------
CAPITAL SHARE TRANSACTIONS (at $1.00 per share):
Sale of shares-Institutional Service Shares 93,585,220
Reinvestment of distributions-Institutional Service Shares 94,618
Redemption of shares-Institutional Service Shares (92,806,533)
-----------------
Net increase from capital share transactions 873,305
-----------------
Net increase in net assets 872,223
-----------------
-----------------
NET ASSETS - March 31, 1997 43,975,152
- -------------------------------------------------------------- -----------------
OPERATIONS:
Net investment income allocated from Portfolio of Core Trust (Delaware)
862,364 Net realized gain on investments allocated from Portfolio of
Core Trust (Delaware) 15,133
-----------------
Net increase in net assets resulting from operations 877,497
-----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income-Institutional Service Shares (862,364)
-----------------
CAPITAL SHARE TRANSACTIONS (at $1.00 per share):
Sale of shares-Institutional Service Shares 35,543,377
Reinvestment of distributions-Institutional Service Shares 68,736
Redemption of shares-Institutional Service Shares (35,486,607)
-----------------
Net increase from capital share transactions 125,506
-----------------
Net increase in net assets 140,639
-----------------
NET ASSETS - August 31, 1997 (Note 1) 44,115,791
- -------------------------------------------------------------- -----------------
OPERATIONS:
Net investment income allocated from Portfolio of Core Trust (Delaware)
2,364,632 Net realized loss on investments allocated from Portfolio of
Core Trust (Delaware) (21,087)
-----------------
Net increase in net assets resulting from operations 2,343,545
-----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income-Institutional Shares (301,047)
Net investment income-Institutional Service Shares (2,063,585)
-----------------
Total distributions to shareholders (2,364,632)
-----------------
CAPITAL SHARE TRANSACTIONS (at $1.00 per share):
Sale of shares-Institutional Shares 40,977,001
Sale of shares-Institutional Service Shares 152,633,913
Reinvestment of distributions-Institutional Shares 1,072
Reinvestment of distributions-Institutional Service Shares 210,659
Redemption of shares-Institutional Shares (4,883,200)
Redemption of shares-Institutional Service Shares (187,454,210)
-----------------
Net increase from capital share transactions 1,485,235
-----------------
Net increase in net assets 1,464,148
-----------------
NET ASSETS - August 31, 1998 $ 45,579,939
- -------------------------------------------------------------- =================
</TABLE>
See Notes to Financial Statements. 5 FORUM FUNDS
<PAGE>
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STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31, 1997 AND THE PERIOD ENDED AUGUST 31, 1998
(Concluded) (Note 1)
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<TABLE>
<S> <C> <C> <C> <C>
DAILY ASSETS DAILY ASSETS
TREASURY GOVERNMENT DAILY ASSETS DAILY ASSETS
OBLIGATIONS OBLIGATIONS CASH MUNICIPAL
FUND FUND FUND FUND
---------------- ---------------- ----------------- ----------------
NET ASSETS - August 31, 1996 $ - $ - $ - $ -
- --------------------------------------------------- ---------------- ---------------- ----------------- ----------------
OPERATIONS:
Net investment income allocated from Portfolio of
Core Trust (Delaware) - - 377,014 -
---------------- ---------------- ----------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income-Institutional Service Shares - - (377,014) -
---------------- ---------------- ----------------- ----------------
CAPITAL SHARE TRANSACTIONS (at $1.00 per share):
Sale of shares-Institutional Service Shares - - 32,622,774 -
Reinvestment of distributions-Institutional Service Shares - - 12,391 -
Redemption of shares-Institutional Service Shares - - (20,559,091) -
---------------- ---------------- ----------------- ----------------
Net increase from capital share transactions - - 12,076,074 -
---------------- ---------------- ----------------- ----------------
Net increase in net assets - - 12,076,074 -
---------------- ---------------- ----------------- ----------------
NET ASSETS - August 31, 1997 - - 12,076,074 -
- --------------------------------------------------- ---------------- ---------------- ----------------- ----------------
OPERATIONS:
Net investment income allocated from Portfolio of
Core Trust (Delaware) 2,653,495 444,768 986,258 122,133
Net realized gain (loss) on investments allocated from
Portfolio of Core Trust (Delaware) 2,499 (36) (43) -
---------------- ---------------- ----------------- ----------------
Net increase in net assets resulting from operations 2,655,994 444,732 986,215 122,133
---------------- ---------------- ----------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income-Institutional Shares (2,599,828) (403,077) (363,971) (122,106)
Net investment income-Institutional Service Shares (53,641) (41,665) (622,260) (14)
Net investment income-Investor Shares (26) (26) (27) (13)
---------------- ---------------- ----------------- ----------------
Total distributions to shareholders (2,653,495) (444,768) (986,258) (122,133)
---------------- ---------------- ----------------- ----------------
CAPITAL SHARE TRANSACTIONS (at $1.00 per share):
Sale of shares-Institutional Shares 236,954,772 30,385,904 56,561,878 29,216,681
Sale of shares-Institutional Service Shares 8,052,682 14,873,215 46,338,416 10,005
Sale of shares-Investor Shares 10,100 10,100 10,100 10,100
Reinvestment of distributions-Institutional Shares - - - 34,192
Reinvestment of distributions-Institutional Service Shares 223 9,382 32,247 14
Reinvestment of distributions-Investor Shares 26 26 26 13
Redemption of shares-Institutional Shares (126,395,885) (15,033,804) (28,166,064) (8,477,699)
Redemption of shares-Institutional Service Shares (3,605,025) (12,492,821) (53,211,560) -
Redemption of shares-Investor Shares - - - -
---------------- ---------------- ----------------- ----------------
Net increase from capital share transactions 115,016,893 17,752,002 21,565,043 20,793,306
---------------- ---------------- ----------------- ----------------
Net increase in net assets 115,019,392 17,751,966 21,565,000 20,793,306
---------------- ---------------- ----------------- ----------------
NET ASSETS - August 31, 1998 $ 115,019,392 $ 17,751,966 $ 33,641,074 $ 20,793,306
- --------------------------------------------------- ================ ================ ================= ================
</TABLE>
See Notes to Financial Statements. 6 FORUM FUNDS
<PAGE>
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FINANCIAL HIGHLIGHTS
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Following is selected data for a share of each class of each Fund outstanding
during the years or periods indicated.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE RATIO TO
BEGINNING DISTRIBUTIONS ENDING NET ASSETS AVERAGE
NET ASSET NET FROM NET NET ASSET ------------------- NET ASSETS AT NET ASSETS
VALUE PER INVESTMENT INVESTMENT VALUE PER NET END OF PERIOD ------------
SHARE INCOME INCOME SHARE NET INVESTMENT TOTAL (000'S OMITTED) GROSS
----- ------ ------ ----- EXPENSE INCOME RETURN --------------- EXPENSES(A)
------- ------ ------ -----------
DAILY ASSETS TREASURY
OBLIGATIONS FUND
Institutional Shares
Period Ended August 31, 1998 (b) $ 1.00 0.03 (0.03) $ 1.00 0.20% (c) 5.41% (c) 3.34% $ 110,561 0.47% (c)
Institutional Service Shares
Period Ended August 31, 1998 (b) $ 1.00 0.02 (0.02) $ 1.00 0.45% (c) 5.16% (c) 2.19% $ 4,448 1.53% (c)
Investor Shares
Period Ended August 31, 1998 (b) $ 1.00 0.02 (0.02) $ 1.00 0.78% (c) 5.06% (c) 0.89% $ 10 727.11% (c)
DAILY ASSETS
GOVERNMENT FUND
Institutional Shares
Period Ended August 31, 1998 (b) $ 1.00 0.01 (0.01) $ 1.00 0.20% (c) 5.26% (c) 0.89% $ 36,095 0.69% (c)
Institutional Service Shares
Year Ended August 31, 1998 $ 1.00 0.05 (0.05) $ 1.00 0.46% 4.93% 5.04% $ 9,485 0.91%
Period Ended August 31, 1997 (d) 1.00 0.02 (0.02) 1.00 0.50% (c) 4.76% (c) 2.01% 44,116 0.95% (c)
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70% 4.80% 43,975 0.99%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01% 5.18% 43,103 1.06%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45% 4.45% 36,329 1.10%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82% 2.83% 26,505 1.17%
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
Institutional Sharess
Period Ended August 31, 1998 (b) $ 1.00 0.03 (0.03) $ 1.00 0.20% (c) 5.43% (c) 3.24% $15,352 0.74% (c)
Institutional Service Shares
Period Ended August 31, 1998 (b) $ 1.00 0.02 (0.02) $ 1.00 0.45% (c) 5.16% (c) 2.22% $ 2,390 2.13% (c)
Investor Shares
Period Ended August 31, 1998 (b) $ 1.00 0.02 (0.02) $ 1.00 0.78% (c) 5.06% (c) 0.90% $ 10 766.21% (c)
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding any fee waivers and expense reimbursements for the Fund and
its corresponding Portfolio.
(b) See Note 1 of Notes to Financial Statements for date of commencement of
operations.
(c) Annualized.
(d) Effective June 19, 1997, the Fund changed its year end from March 31 to
August 31.
See Notes to Financial Statements. 7 FORUM FUNDS
<PAGE>
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FINANCIAL HIGHLIGHTS (Concluded)
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Following is selected data for a share of each class of each Fund outstanding
during the years or periods indicated.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE
NET ASSETS RATIO TO
--------------------- AVERAGE
BEGINNING DISTRIBUTIONS ENDING NET ASSET
NET ASSET NET FROM NET NET ASSETS NET NET ASSETS AT ---------
VALUE PER INVESTMENT INVESTMENT VALUE PER NET INVESTMENT TOTAL END OF PERIOD GROSS
SHARE INCOME INCOME SHARE EXPENSES INCOME RETURN (000'S OMITTED) EXPENSES (A)
----- ------ ------ ----- -------- ------ ------ --------------- ------------
DAILY ASSETS CASH FUND
Institutional Shares
Period Ended August 31, 1998 (b) $ 1.00 0.03 (0.03) $ 1.00 0.20% (c) 5.46% (c) 2.70% $ 28,396 0.68% (c)
Institutional Service Shares
Year Ended August 31, 1998 $ 1.00 0.05 (0.05) $ 1.00 0.46% 5.22% 5.34% $ 5,235 0.90%
Period Ended August 31, 1997 1.00 0.05 (0.05) 1.00 0.52% (c) 5.06% (c) 4.70% 12,076 1.22% (c)
Investor Shares
Period Ended August 31, 1998 (b) $ 1.00 0.02 (0.02) $ 1.00 0.78% (c) 5.25% (c) 5.91% $ 10 709.02% (c)
DAILY ASSETS
MUNICIPAL FUND
Institutional Shares
Period Ended August 31, 1998 (b) $ 1.00 0.01 (0.01) $ 1.00 0.12% (c) 3.16% (c) 0.59% $ 20,773 1.26% (c)
Institutional Service Shares
Period Ended August 31, 1998 (b) $ 1.00 - - $ 1.00 0.59% (c) 2.76% (c) 0.20% $ 10 721.84% (c)
Investor Shares
Period Ended August 31, 1998 (b) $ 1.00 0.01 (0.01) $ 1.00 0.78% (c) 2.53% (c) 0.06% $ 10 749.20% (c)
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding any fee waivers and expense reimbursements for the Fund and
its corresponding Portfolio.
(b) See Note 1 of Notes to Financial Statements for date of commencement of
operations.
(c) Annualized.
See Notes to Financial Statements. 8 FORUM FUNDS
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF ORGANIZATION
Forum Funds (the "Trust") is a Delaware business trust that is registered as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "Act"). The Trust currently has twenty-three active investment
portfolios. These financial statements relate to Daily Assets Treasury
Obligations Fund, Daily Assets Government Fund, Daily Assets Government
Obligations Fund, Daily Assets Cash Fund and Daily Assets Municipal Fund (each a
"Fund" and collectively "the Funds"), each of which is diversified. The Funds
are authorized under the Trust's Trust Instrument to issue an unlimited number
of shares of beneficial interest without par value. Each Fund currently is
authorized to issue three classes of shares: Institutional Shares, Institutional
Service Shares, and Investor Shares. The Trust commenced the offering of each
class of shares as follows and no other class of shares currently is
outstanding.
<TABLE>
<S> <C>
Daily Assets Treasury Obligations Fund (Institutional Shares) January 22, 1998
Daily Assets Treasury Obligations Fund (Institutional Service Shares) April 1, 1998
Daily Assets Treasury Obligations Fund (Investor Shares) August 6, 1998
Daily Assets Government Fund (Institutional Shares) July 1, 1998
Daily Assets Government Fund (Institutional Service Shares) July 1, 1992
Daily Assets Government Obligations Fund (Institutional Shares) January 30, 1998
Daily Assets Government Obligations Fund (Institutional Service Shares) March 30, 1998
Daily Assets Government Obligations Fund (Investor Shares) August 6, 1998
Daily Assets Cash Fund (Institutional Shares) March 13, 1998
Daily Assets Cash Fund (Institutional Service Shares) October 1, 1996
Daily Assets Cash Fund (Investor Shares) August 6, 1998
Daily Assets Municipal Fund (Institutional Shares) June 25, 1998
Daily Assets Municipal Fund (Institutional Service Shares) August 6, 1998
Daily Assets Municipal Fund (Investor Shares) August 6, 1998
</TABLE>
Effective May 25, 1998, Daily Assets Government Fund changed its name to Daily
Assets Government Obligations Fund. As of the same date, Daily Assets Treasury
Fund changed its investment objective and was renamed Daily Assets Government
Fund.
MASTER-FEEDER ARRANGEMENT - Each Fund currently seeks to achieve its investment
objective by investing all of its investable assets in a separate portfolio of
Core Trust (Delaware) ("Core Trust"), a registered open-end, management
investment company, that has the same investment objective and substantially
similar policies as the Fund. Accordingly, each portfolio of Core Trust (each a
"Portfolio", and collectively the "Portfolios") directly acquires securities and
a Fund investing in a Portfolio acquires an indirect interest in those
securities. The Funds account for their investment in a Portfolio as partnership
investments. This is commonly referred to as a master-feeder arrangement.
The financial statements of the Portfolios are included elsewhere in this
report. As of August 31, 1998, Daily Assets Government Fund owned 97.8% of the
interests of Government Portfolio; the percentage of Treasury Cash Portfolio
owned by Daily Assets Treasury Obligations Fund was 43.6%; the percentage of
Government Cash Portfolio owned by Daily Assets Government Obligations Fund was
2.5%; the percentage of Cash Portfolio owned by Daily Assets Cash Fund was 5.6%;
and Daily Assets Municipal Fund owned substantially all the interests of
Municipal Cash Portfolio.
9 FORUM FUNDS
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998 (Continued)
- --------------------------------------------------------------------------------
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 period. Actual results could differ from those estimates. The
following represent significant accounting policies of the Funds:
SECURITY VALUATION - Each Fund determines its net asset value per share as of
4:00 p.m., Eastern time, on each Fund business day. Each Fund records its
investment in its Portfolio at value. Valuation of securities held in the
Portfolios is discussed in the Notes to Financial Statements of Core Trust
(Delaware), 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.
ORGANIZATION COSTS - The costs incurred by the Daily Assets Treasury Obligations
Fund and Daily Assets Government Obligations Fund in connection with their
organization and registration of shares have been capitalized and are being
amortized using the straight-line method over a five year period beginning with
the commencement of the Funds' operations.
CLASS SPECIFIC EXPENSES - Each share of each class of a Fund represents an
undivided, proportionate interest in the Fund. The Funds' class specific
expenses include administration fees, shareholder servicing fees, transfer agent
fees and certain other expenses as determined by the Trust's Board of Trustees
(the "Board"). Institutional Shares and Investor Shares incur shareholder
servicing fees and Investor Shares incur distribution fees. In addition, there
are differences between the classes of shares with respect to the minimum
investment required.
FEDERAL TAXES - Each Fund intends to qualify or 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 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.
As of August 31, 1998, Daily Assets Government Fund had a capital loss
carryover, in the amount of $17,394, available to offset future capital gains.
This carryover is due to expire in the year 2006.
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.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER - The investment adviser of each Portfolio is Forum
Investment Advisors, LLC ("Forum Advisors"). Prior to January 2, 1998, Linden
Asset Management, Inc. ("Linden") served as investment adviser to Treasury Cash
Portfolio, Government Cash Portfolio and Cash Portfolio. On January 2, 1998,
Forum Advisors, Inc. acquired Linden and reorganized into a new company, Forum
Advisors. A Fund may withdraw its investment from its Portfolio at any time if
the Board determines that it is in the best interest of the Fund and its
shareholders to do so.
10 FORUM FUNDS
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998 (Continued)
- --------------------------------------------------------------------------------
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES (concluded)
ADMINISTRATOR - The administrator of the Funds is Forum Administrative Services,
LLC ("FAdS"). For its administrative services and facilities, FAdS receives from
each Fund a fee at an annual rate of 0.05% of the average daily net assets of
the Fund. In addition, certain legal expenses are charged to the Funds by FAdS.
For the fiscal year ended August 31, 1998, the amounts charged to Daily Assets
Government Fund, Daily Assets Treasury Obligations Fund, Daily Assets Government
Obligations Fund and Daily Assets Cash Fund were $909, $234, $46, and $255,
respectively.
TRANSFER AGENT - The transfer agent and dividend disbursing agent for the Funds
is Forum Shareholder Services, LLC ("FSS"). FSS is paid a transfer agent fee at
an annual rate of 0.05%, 0.10% and 0.25% of the average daily net assets
attributable to the Institutional Shares, Institutional Service Shares and
Investor Shares of each Fund, respectively. In addition, FSS is paid $12,000 per
Fund and certain account charges.
SHAREHOLDER SERVICE AGENT - The Trust has adopted a shareholder servicing plan
with respect to Institutional Service Shares and Investor Shares under which the
Trust pays FAdS a shareholder servicing fee at an annual rate of 0.25% of the
average daily net assets attributable to the Institutional Services Shares and
Investor Shares of each Fund. FAdS may pay any or all amounts of these payments
to various institutions that provide shareholder servicing to their customers
who hold Institutional Service Shares or Investor Shares.
DISTRIBUTOR - FFSI, a registered broker-dealer and a member of the National
Association of Securities Dealers, Inc, acts as each Fund's distributor. The
Trust has adopted a Distribution Plan pursuant to Rule 12b-1 under the Act with
respect to Investor Shares under which the Trust pays FFSI a distribution fee at
an annual rate of 0.15% of the average daily net assets of Investor Shares of
each Fund. FFSI may pay any or all amounts of these payments to various
institutions that provide distribution or shareholder services for Investor
Shares. The plan obligates the Funds to pay FFSI as compensation for FFSI's
services and not as reimbursement for certain expenses incurred.
OTHER SERVICE PROVIDERS - Forum Accounting Services, LLC ("FAcS") provides fund
accounting services to the Funds. For its services, FAcS receives from each Fund
an annual fee of $12,000.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
FAdS, FSS and FAcS have voluntarily waived a portion of their fees, and FAdS has
assumed certain expenses of the Funds. For the fiscal year ended August 31,
1998, fees waived and expenses reimbursed were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Administration Transfer Shareholder Accounting Reimbursed
Fee Agent Fee Service Fee Fee Expenses Total
-------------- ----------- ----------- ---------- ---------- -----
Daily Assets Treasury Obligations Fund
Institutional Service Shares $ 520 $ 6,069 $ 2,600 $ 310 $ 1,480 $ 10,979
Institutional Shares 24,029 31,036 - 13,013 48,068 116,146
Investor Shares - 843 - - 2,891 3,734
Daily Assets Government Fund
Institutional Service Shares - 53,276 78,274 624 - 132,174
Institutional Shares 2,864 4,853 - 3,376 8,829 19,922
Daily Assets Government Obligations Fund
Institutional Service Share 404 6,866 2,018 1,162 3,088 13,538
Institutional Shares 3,711 10,762 - 12,902 12,369 39,744
Investor Shares - 843 - - 3,092 3,935
</TABLE>
11 FORUM FUNDS
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998 (Concluded)
- --------------------------------------------------------------------------------
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES (concluded)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Administration Transfer Shareholder Accounting Reimbursed
Fee Agent Fee Service Fee Fee Expenses Total
-------------- --------- ----------- ---------- ----------- -----
Daily Assets Cash Fund
Institutional Service Shares 7,171 15,294 22,439 6,199 1,321 52,424
Institutional Shares 3,334 9,311 - 6,800 12,903 32,348
Investor Shares - 843 - - 2,798 3,641
Daily Assets Municipal Fund
Institutional Service Shares - 842 - - 2,812 3,654
Institutional Shares 1,934 4,126 - 4,198 13,980 24,238
Investor Shares - 843 - - 3,000 3,843
</TABLE>
NOTE 5. SPECIAL MEETING OF SHAREHOLDERS (Unaudited)
The following matter was submitted to a vote of shareholders of Daily Assets
Cash Fund at a special meeting of shareholders held December 12, 1997 to
authorize the Trust, on behalf of that Fund, to vote at a meeting of the
interestholders of Core Trust (Delaware) to approve a new Investment Advisory
Agreement between Core Trust (Delaware) and Forum Advisors with respect to Cash
Portfolio. Votes were cast as follows: 9,395,473 For; 0 Against; 15,629
Abstained.
NOTE 6. FEDERAL INCOME TAX STATUS OF DIVIDENDS (Unaudited)
100% of the dividends distributed by the Daily Assets Municipal Fund for the
year ended August 31, 1998, are exempt from federal income tax, other than
alternative minimum tax.
12 FORUM FUNDS
<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 Obligations Fund, Daily Assets Government Fund (formerly Daily
Assets Treasury Fund), Daily Assets Government Obligations Fund (formerly Daily
Assets Government Fund), Daily Assets Cash Fund and Daily Assets Municipal Fund,
five series of Forum Funds (the Funds), as of August 31, 1998, and the related
statements of operations for the year then ended for Daily Assets Government
Fund and Daily Assets Cash Fund, the period from January 22, 1998 (commencement
of operations) to August 31, 1998 for Daily Assets Treasury Obligations Fund,
the period from January 30, 1998 (commencement of operations) to August 31, 1998
for Daily Assets Government Obligations Fund, and the period from June 25, 1998
(commencement of operations) to August 31, 1998 for Municipal Cash Fund, and the
statements of changes in net assets for the year then ended and the period from
April 1, 1997 to August 31, 1997 for Daily Assets Government Fund, the period
from January 22, 1998 to August 31, 1998 for Daily Assets Treasury Obligations
Fund, the period from January 30, 1998 to August 31, 1998 for Daily Assets
Government Obligations Fund, the year then ended and the period from October 1,
1996 to August 31, 1997 for Daily Assets Cash Fund and the period from June 25,
1998 to August 31, 1998 for Daily Assets Municipal Fund and the financial
highlights for the year then ended and the period from April 1, 1997 to August
31, 1997 for Daily Assets Government Fund, the period from January 22, 1998 to
August 31, 1998 for Daily Assets Treasury Obligations Fund, the period from
January 30, 1998 to August 31, 1998 for Daily Assets Government Obligations
Fund, the year then ended and the period from October 1, 1996 to August 31, 1997
for Daily Assets Cash Fund and the period from June 25, 1998 to August 31, 1998
for Daily Assets Municipal 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 changes in net assets for the year ended
March 31, 1997 and the financial highlights for each of the years in the
four-year period ended March 31, 1997 for Daily Assets Government Fund, were
audited by other auditors whose report dated May 9, 1997 expressed an
unqualified opinion on that financial statement and those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free from 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 Obligations Fund, Daily Assets Government Fund, Daily Assets
Government Obligations Fund, Daily Assets Cash Fund and Daily Assets Municipal
Fund of Forum Funds as of August 31, 1998, the results of their operations,
changes in their net assets and financial highlights for the periods indicated
above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 6, 1998
13 FORUM FUNDS
<PAGE>
TREASURY CASH PORTFOLIO
GOVERNMENT PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
MUNICIPAL CASH PORTFOLIO
ANNUAL REPORT
AUGUST 31, 1998
<PAGE>
- --------------------------------------------------------------------------------
TREASURY CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- -------------- ------------------------------- -------------
U.S. TREASURY BILLS (A) (69.6%)
$ 20,000,000 5.04%, 10/22/98 $ 19,857,342
15,000,000 5.09%, 12/24/98 14,758,462
150,000,000 5.43%, 9/15/98 149,683,250
-------------
Total U.S Treasury Bills 184,299,054
-------------
REPURCHASE AGREEMENTS (30.4%)
40,570,000 Bank of America, 5.78%, 9/1/98,
to be repurchased at $40,576,514;
Collateralized by $40,200,000 U.S.
Treasury Notes, 6.25%, 3/31/99 40,570,000
40,000,000 Donaldson, Lufkin & Jenrette
Securities Corp., 5.80%, 9/1/98
to be repurchased at $40,006,444;
Collateralized by $49,737,000 U.S.
Treasury Strips I/O, 4.87%,
11/15/09; $36,950,000 U.S. Treasury
Strips, I/O 5.37%, 2/15/17
40,000,000
-------------
Total Repurchase Agreements 80,570,000
-------------
Total Investments (B) (100.0%) $264,869,054
=============
(A) Annualized yields at time of purchase.
(B) Tax cost of investments is $264,869,054.
See Notes to Financial Statements and
Notes to Schedules of Investments. 15 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
GOVERNMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- -------------- ------------------------------- ------------
U.S. GOVERNMENT SECURITIES (96.8%)
FEDERAL HOME LOAN BANK-
DISCOUNT NOTES (A) (30.1%)
$ 1,000,000 5.48%, 9/2/98 $ 999,851
3,500,000 5.49%, 9/8/98 3,496,325
2,000,000 5.48%, 9/10/98 1,997,310
7,500,000 5.49%, 10/1/98 7,466,376
------------
Total Federal Home Loan Bank-Discount Notes 13,959,862
------------
FEDERAL FARM CREDIT BUREAU-
DISCOUNT NOTES (A) (32.2%)
2,500,000 5.51%, 9/16/98 2,494,365
9,000,000 5.51%, 9/18/98 8,977,008
3,500,000 5.50%, 9/21/98 3,489,500
------------
------------
Total Federal Farm Credit Bureau-Discount Notes 14,960,873
------------
STUDENT LOAN MARKETING ASSOCIATION (B) (34.5%)
16,000,000 5.45%, 10/15/98 16,000,000
------------
Total U.S. Government Securities 44,920,735
------------
OTHER HOLDINGS (3.2%)
1,507,597 Federated U.S. Treasury Cash
Reserve, 5.11% 1,507,597
------------
Total Investments (C) (100.0%) $ 46,428,332
============
(A) Annualized yields at time of purchase.
(B) Certain securities are deemed to have a maturity remaining until the next
readjustment of the interest rate, the demand period or a combination of
the longer of the demand period or readjustment. The interest rates shown
reflect the rate in effect on August 31, 1998.
(C) Tax cost of investments is $46,428,348.
See Notes to Financial Statements and
Notes to Schedules of Investments. 16 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
GOVERNMENT CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FACE SECURITY FACE SECURITY
AMOUNT DESCRIPTION VALUE AMOUNT DESCRIPTION
- -------------- ------------------------------- ------------- ------------- -------------------------------
U.S. GOVERNMENT SECURITIES (83.3%) SMALL BUSINESS ADMINISTRATION (CONCLUDED)
FEDERAL FARM CREDIT BANK (B) (2.5%) $ 1,739,665 Pool #503472, 6.25%, 8/25/21
$18,000,000 5.30%, 4/1/99 $ 18,000,000 1,067,337 Pool #503553, 6.13%, 11/25/21
-------------
5,037,804 Pool #503671, 6.13%, 3/25/22
FEDERAL HOME LOAN BANK- 1,873,064 POOL #503754, 6.13%, 5/25/22
DISCOUNT NOTES (A) (14.4%) 1,194,471 Pool #503780, 6.13%, 3/25/22
35,000,000 5.40%, 11/4/98 34,664,000 5,153,881 Pool #503882, 6.00%, 9/25/22
20,000,000 5.33%, 2/1/99 19,546,950 4,359,648 Pool #503892, 6.13%, 7/25/22
20,000,000 5.32%, 2/3/99 19,542,321 5,794,480 Pool #503909, 6.00%, 10/25/22
30,000,000 5.33%, 2/12/99 29,272,250 2,973,358 Pool #504015, 6.00%, 1/25/23
-------------
-------------
Total Federal Home Loan Bank-Discount Notes 103,025,521 5,254,135 Pool #504062, 6.00%, 2/25/23
-------------
5,327,203 Pool #504074, 6.00%, 2/25/23
FEDERAL NATIONAL MORTGAGE ASSOCIATION- 3,538,056 POOL #504203, 6.13%, 7/25/13
DISCOUNT NOTES (A) (50.9%) Total Small Business Administration
50,000,000 5.42%, 9/10/98 49,932,250
35,318,000 5.41%, 10/1/98 35,158,775 STUDENT LOAN MARKETING ASSOCIATION (0.7%)
35,000,000 5.58%, 10/16/98 34,763,750 5,000,000 5.26%, 1/13/99
50,000,000 5.44%, 10/20/98 49,629,777
50,000,000 5.36%, 11/23/98 49,382,111 Total U.S. Government Securities
28,058,000 5.36%, 1/4/99 27,535,810
50,000,000 5.35%, 2/8/99 48,811,112 REPURCHASE AGREEMENTS (16.7%)
40,000,000 5.54%, 2/22/99 38,971,467 59,500,000 Bankers Trust Co., 5.80%, 9/1/98,
30,000,000 5.55%, 2/22/99 29,227,875 to be repurchased at $59,509,586;
-------------
Total Federal National Mortgage Association- Collateralized by $52,102,000 U.S.
Discount Notes 363,412,927 Treasury Bonds, 6.50%, 11/15/26
-------------
60,000,000 Bear, Stearns & Co., Inc., 5.78%,
FEDERAL NATIONAL MORTGAGE ASSOCIATION (3.5%) 9/1/98, to be repurchased at
25,000,000 5.45%, 3/16/99 25,000,000 $60,009,633; Collateralized by
-------------
$19,380,000 U.S. Treasury Notes,
SMALL BUSINESS ADMINISTRATION (B) (11.3%) 6.13%, 12/31/01; $25,300,000 U.S.
308,114 Pool #500545, 8.38%, 3/25/03 308,114 Treasury Bonds, 10.63%, 8/15/15
315,984 Pool #500746, 7.75%, 11/25/01 315,984
916,751 Pool #501077, 7.00%, 11/25/14 923,821 Total Repurchase Agreements
2,465,304 Pool #501308, 7.00%, 10/25/15 2,518,496
2,811,122 Pool #501543, 6.88%, 7/25/16 2,822,268 Total Investments (C) (100.0%)
424,567 Pool #501628, 8.38%, 9/25/04 424,567
1,187,786 Pool #501690, 6.63%, 12/25/16 1,197,107 (A) Annualized yields at time of purchase.
1,927,861 Pool #501898, 6.75%, 7/25/17 1,936,198 (B) Certain securities are deemed to have a maturity remaining
5,581,658 Pool #502150, 6.50%, 2/25/18 5,664,269 until the next readjustment of the interest rate, the demand
305,607 Pool #502161, 6.50%, 2/25/18 306,264 period or a combination of the longer of the demand period or
2,752,875 Pool #502208, 6.50%, 2/25/18 2,797,075 readjustment. The interest rates shown reflect the rate in
1,620,060 Pool #502306, 6.50%, 2/25/18 1,644,270 effect on August 31, 1998.
1,977,575 Pool #502613, 6.50%, 4/25/19 1,977,575 (C) Tax cost of investments is $714,527,744.
1,092,686 Pool #503058, 6.38%, 7/25/15 1,092,686
1,706,555 Pool #503082, 6.38%, 8/25/20 1,706,555
1,580,958 Pool #503120, 6.38%, 11/25/20 1,580,958
461,643 Pool #503121, 6.38%, 8/25/15 461,643
2,696,003 Pool #503232, 6.13%, 12/25/15 2,696,003
950,552 Pool #503278, 6.13%, 2/25/21 950,518
2,900,520 Pool #503431, 6.25%, 7/25/21 2,902,187
3,035,608 Pool #503461, 6.25%, 9/25/21 3,037,480
</TABLE>
See Notes to Financial Statements
and Notes to Schedules of Investment. 17 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
FACE SECURITY FACE SECURITY
AMOUNT DESCRIPTION VALUE AMOUNT DESCRIPTION VALUE
- -------------- ------------------------------- ------------ ------------ ------------------------------- --------------
U.S. GOVERNMENT SECURITIES (8.7%) COMMERCIAL PAPER (CONCLUDED)
FEDERAL HOME LOAN BANK- $ 10,000,000 International Lease Finance Corp.,
DISCOUNT NOTES (A) (3.2%) 5.56%, 10/14/98 $ 9,934,545
$ 20,000,000 5.32%, 2/3/99 $ 19,542,321 15,000,000 Merrill Lynch & Co., Inc.,
------------ 5.51%, 10/9/98 14,912,758
10,000,000 Merrill Lynch & Co., Inc., 5.50%,
SMALL BUSINESS ADMINISTRATION (B) (5.5%) 10/30/98 9,909,862
267,344 Pool #500536, 7.50%, 5/25/13 271,172 14,000,000 Monsanto Co., 5.49%, 10/8/98 13,921,005
510,939 Pool #500730, 8.38%, 2/25/04 518,751 11,000,000 Monsanto Co., 5.48%, 12/8/98 10,835,905
1,039,579 Pool #501733, 6.50%, 2/25/17 1,059,150 5,000,000 Monsanto Co., 5.47%, 1/28/99 4,886,802
1,075,499 Pool #501989, 6.63%, 10/25/12 1,081,013 25,000,000 Prudential Funding Corp., 5.47%,
289,483 Pool #502914, 6.50%, 3/25/15 289,765 1/21/99 24,460,597
1,846,572 Pool #503121, 6.38%, 9/25/15 1,846,572 25,000,000 Salomon Smith Barney Holdings,
4,645,734 Pool #503429, 6.25%, 6/25/16 4,645,734 5.51%, 10/15/98 24,831,638
758,902 Pool #503461, 6.25%, 9/25/21 759,377 28,000,000 Transamerica Financial Corp., 5.47%,
3,932,381 Pool #503553, 6.13%, 11/25/21 3,921,933 12/15/98 27,553,283
2,809,596 Pool #503754, 6.13%, 5/25/22 2,809,596 2,000,000 Transamerica Financial Corp., 5.47%,
4,925,248 Pool #503882, 6.00%, 9/25/22 4,919,307 1/26/99 1,955,330
--------------
--------------
5,454,681 Pool #503912, 6.00%, 10/25/22 5,451,390 Total Commercial Paper 335,991,351
--------------
5,680,350 Pool #504015, 6.00%, 1/25/23 5,678,613
------------
------------
Total Small Business Administration 33,252,373 CORPORATE NOTES (B) (4.1%)
------------
15,000,000 Bear, Stearns & Co., Inc., 5.64% V/R,
Total U.S. Government Securities 52,794,694 1/6/99 15,000,000
------------
10,000,000 Bear, Stearns & Co., Inc., 5.63% V/R,
BANKERS ACCEPTANCES (A) (2.9%) 4/6/99 10,000,000
--------------
--------------
11,000,000 Bank of America, 5.53%, 2/16/99 10,723,828 Total Corporate Notes 25,000,000
--------------
7,000,000 Bank of America, 5.53%, 2/17/99 6,823,207
------------
------------
Total Bankers Acceptances 17,547,035 REPURCHASE AGREEMENTS (28.2%)
------------
85,650,000 Bankers Trust New York Corp.,
CERTIFICATES OF DEPOSITS (B) (0.7%) 5.80%, 9/1/98, to be repurchased at
4,000,000 Bankers Trust New York Co., $85,663,799; Collateralized by U.S.
5.64%, 9/11/98 3,999,988 Treasury Bonds, 11.75%, 11/15/14;
------------ $75,000,000 U.S. Treasury Bonds,
6.50%, 11/15/26 85,650,000
COMMERCIAL PAPER (A) (55.4%)
25,000,000 American Express Credit Corp., 85,000,000 Bear, Stearns & Co., Inc., 5.78%, 9/1/98,
5.48%, 9/16/98 24,942,917 to be repurchased at $85,013,647;
25,000,000 Associates Corp. of North America, Collateralized by $6,035,000 U.S.
5.48%, 9/16/98 24,942,917 Treasury Notes, 6.13%, 12/31/01;
25,000,000 CIT Group Holdings, Inc., 5.49%, $50,000,000 U.S. Treasury Bonds,
9/30/98 24,889,438 10.63%, 8/15/15 85,000,000
--------------
25,000,000 Caterpillar Financial Services Corp.,
5.57%, 2/22/99 24,345,085 Total Repurchase Agreements 170,650,000
--------------
28,000,000 Ford Motor Credit Co., 5.47%,
2/8/99 27,319,290 Total Investments (C) (100.0%) $605,983,068
7,000,000 General Electric Capital Corp., 5.50%, ==============
9/14/98 6,986,097
20,000,000 General Electric Capital Corp., 5.47%, (A) Annualized yields at time of purchase.
1/20/99 19,571,518 (B) Certain securities are deemed to have a maturity remaining
25,000,000 General Motors Acceptance Corp., until the next readjustment of the interest rate, the demand
5.50%, 10/5/98 24,870,139 period or a combination of the longer of the demand period or
15,000,000 International Lease Finance Corp., readjustment. The interest rates shown reflect the rate in
5.49%, 10/5/98 14,922,225 effect on August 31, 1998.
(C) Tax cost of investments is $605,984,702.
</TABLE>
See Notes to Financial Statements and
Notes to Schedules of Investments. 18 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
MUNICIPAL CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
FACE SECURITY FACE SECURITY
AMOUNT DESCRIPTION VALUE AMOUNT DESCRIPTION VALUE
- -------------- ------------------------------- ------------ ------------- ------------------------------ -------------
MUNICIPAL SECURITIES (98.0%) (A) MUNICIPAL SECURITIES (CONTINUED)
ALABAMA (4.8%) NEVADA (4.8%)
$ 1,000,000 Columbia, AL, IDA, Alabama $ 1,000,000 Clark County, NV, Airport RV, MBIA
Power Company, PCR RV insured, 3.15% V/R, 7/1/12 $ 1,000,000
-------------
Series D, 3.30% V/R, 10/1/22 $ 1,000,000
------------
NEW JERSEY (14.7%)
ARIZONA (4.8%) 1,000,000 New Jersey EDA, Water Facilities RV,
1,000,000 Arizona Health Facilities Authority Elizabethtown Water Co. Project,
RV, Pooled Loan Programs, Series B, AMBAC insured, 3.05%
FGIC insured, 3.30% V/R, 10/1/15 1,000,000 V/R, 6/1/27 1,000,000
------------
1,000,000 New Jersey State Highway Authority
CALIFORNIA (4.8%) Garden State Parkway, GO, Series
1,000,000 Los Angeles, CA, Tax & Revenue Parkway, 7.25%, 1/1/16 1,031,782
Anticipation Notes, 4,00%, 6/30/99 1,003,826 1,000,000 New Jersey State Turnpike Authority,
------------
Turnpike RV, Series D, FGIC
CONNECTICUT (4.8%) insured, 2.90% V/R, 1/1/18 1,000,000
-------------
1,000,000 Connecticut Health & Education 3,031,782
-------------
Facilities Authority, Yale University,
Series T, 3.20% V/R, 7/1/29 1,000,000 NEW YORK (9.6%)
------------
1,000,000 Long Island Power Authority, NY,
FLORIDA (9.6%) Electric System RV, Series 6, 3.30%
1,000,000 Alachua County, FL, Health Facilities V/R, 5/1/33 1,000,000
Authority, Health Facilities RV, 1,000,000 New York, NY, IDA RV, Field Hotel
Shands Teaching Hospital, Series Association, JFK Project, 2.90%
B, 3.22% V/R, 12/1/26 1,000,000 V/R, 12/1/15 1,000,000
-------------
1,000,000 Tampa, FL, Occupational License 2,000,000
-------------
Tax RV, Series A, FGIC-SPI
insured, 3.22%, 10/1/18 1,000,000 NORTH CAROLINA (8.8%)
------------
2,000,000 1,000,000 Charlotte, NC, Airport RV, Series A,
------------
MBIA insured, 3.25% V/R, 7/1/17 1,000,000
GEORGIA (4.8%) 800,000 Winston-Salem, NC, Water & Sewer
1,000,000 Burke County, GA, Development Systems RV, 3.20% V/R, 6/1/14 800,000
-------------
Authority, Pollution Control RV, 1,800,000
-------------
Ogelthorpe Power Corporation,
3.15% V/R, 1/1/16 1,000,000 PENNSYLVANIA (4.8%)
------------
1,000,000 Pennsylvania State HEHFA, Health
ILLINOIS (4.8%) Services RV, University of
1,000,000 Illinois HFA RV, Advocate Health Pennsylvania, 3.40% V/R, 1/1/24 1,000,000
-------------
Care, 3.25% V/R, 8/15/22 1,000,000
------------
Texas (7.3%)
KENTUCKY (4.8%) 500,000 State of Texas, HEFA RV, Higher
1,000,000 Kentucky EDA, Hospital Facilities Education Authority, 3.30% V/R,
RV, Health Alliance Project, Series 12/1/27 500,000
C, MBIA insured, 3.30% V/R, 1/1/22 1,000,000 1,000,000 State of Texas, GO Bonds, Veterans
------------
Housing Assistance Fund, Series
I, 3.15% V/R, 12/1/16 1,000,000
-------------
1,500,000
-------------
</TABLE>
See Notes to Financial Statements and
Notes to Schedules of Investments. 19 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
MUNICIPAL CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998 (Concluded)
- --------------------------------------------------------------------------------
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- -------------- ------------------------------- ------------
MUNICIPAL SECURITIES (CONCLUDED)
WASHINGTON (4.8%)
1,000,000 Washington State, GO Bonds, Series
VR 96B, 3.40% V/R, 6/1/20 1,000,000
------------
Total Municipal Securities 20,335,608
------------
OTHER HOLDINGS (2.0%)
404,000 Federated Municipal Obligations
Fund - Institutional Shares, 3.40%404,000
------------
Total Investments (B) (100.0%) $ 20,739,608
============
(A) Certain securities are deemed to have a maturity remaining until the next
readjustment of the interest rate, the demand period or a combination of
the longer of the demand period or readjustment. The interest rates shown
reflect the rate in effect on August 31, 1998.
(B) Tax cost of investments is $20,739,608.
See Notes to Financial Statements and
Notes to Schedules of Investments. 20 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO SCHEDULES OF INVESTMENTS
- --------------------------------------------------------------------------------
AMBAC American Municipal Bond Assurance Corporation
EDA Economic Development Authority
FFCB Federal Farm Credit Bureau
FGIC Financial Guaranty Insurance Company
FGIC-SPI Financial Guaranty Insurance Company-Securities Purchase, Inc.
FHLB Federal Home Loan Bank
GO General Obligation
HEFA Higher Education Facilities Authority
HEHFA Higher Education & Health Facilities Authority
HFA Housing Finance Authority
IDA Industrial Development Authority
MBIA Municipal Bond Insurance Association
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
RV Revenue Bonds
SLMA Student Loan Marketing Association
V/R Variable Rate
See Notes to Financial Statements. 21 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
TREASURY GOVERNMENT MUNICIPAL
CASH GOVERNMENT CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ----------------- ---------------- ---------------- -----------------
ASSETS:
Investments: (Note 2)
Securities $ 184,299,054 $ 46,428,332 $ 595,026,188 $ 435,333,068 $ 20,739,608
Repurchase agreements at cost 80,570,000 - 119,500,000 170,650,000 -
---------------- ----------------- ---------------- ---------------- -----------------
Total investments at value 264,869,054 46,428,332 714,526,188 605,983,068 20,739,608
Cash 18,156 - 12,272 17,591 1,659
Interest and other receivables 12,958 340,000 2,688,859 1,413,946 95,284
Organization costs, net of
amortization (Note 2) 479 - 8,779 2,374 -
---------------- ----------------- ---------------- ---------------- -----------------
Total assets 264,900,647 46,768,332 717,236,098 607,416,979 20,836,551
---------------- ----------------- ---------------- ---------------- -----------------
LIABILITIES:
Payable to adviser (Note 3) 7,678 1,844 24,524 18,592 881
Payable to administrator (Note 3) 30,255 - 34,722 26,323 -
Accrued expenses and other liabilities 17,767 3,502 52,495 31,220 1,196
---------------- ----------------- ---------------- ---------------- -----------------
Total liabilities 55,700 5,346 111,741 76,135 2,077
---------------- ----------------- ---------------- ---------------- -----------------
NET ASSETS $ 264,844,947 $ 46,762,986 $ 717,124,357 $ 607,340,844 $ 20,834,474
================ ================= ================ ================ =================
COMPONENTS OF NET ASSETS:
Interestholders capital 264,844,947 46,762,986 717,124,357 607,340,844 20,834,474
---------------- ----------------- ---------------- ---------------- -----------------
NET ASSETS $ 264,844,947 $ 46,762,986 $ 717,124,357 $ 607,340,844 $ 20,834,474
================ ================= ================ ================ =================
</TABLE>
See Notes to Financial Statements. 22 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR OR PERIOD ENDED AUGUST 31, 1998 (Note 1)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
TREASURY GOVERNMENT MUNICIPAL
CASH GOVERNMENT CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ---------------- ----------------- ---------------- ---------------
INVESTMENT INCOME:
Interest income $ 8,226,210 $ 2,577,969 $ 35,902,478 $ 24,178,266 $ 126,858
----------------- ---------------- ----------------- ---------------- ---------------
EXPENSES:
Investment advisory (Note 3) 55,735 23,813 238,860 158,716 1,937
Administration (Note 3) 74,964 28,796 317,754 212,800 1,937
Custody 37,482 14,176 158,877 106,400 969
Accounting (Note 3) 48,000 48,000 48,000 48,000 8,800
Legal (Note 3) 3,826 2,943 4,848 4,551 5
Audit 9,522 15,000 22,255 17,758 9,500
Trustees 565 1,290 2,723 1,615 318
Rating fees 22,000 - - - -
Amortization of organization costs 239 - 4,390 1,187 -
Miscellaneous 2,259 4,169 6,661 5,331 23
----------------- ---------------- ----------------- ---------------- ---------------
Total expenses 254,592 138,187 804,368 556,358 23,489
Expenses reimbursed and fees
waived (Note 4) (29,678) (66,742) - - (19,842)
----------------- ---------------- ----------------- ---------------- ---------------
Net expenses 224,914 71,445 804,368 556,358 3,647
----------------- ---------------- ----------------- ---------------- ---------------
NET INVESTMENT INCOME 8,001,296 2,506,524 35,098,110 23,621,908 123,211
----------------- ---------------- ----------------- ---------------- ---------------
NET REALIZED GAIN (LOSS) ON
INVESTMENTS 9,432 (21,088) (43,555) 853 -
----------------- ---------------- ----------------- ---------------- ---------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 8,010,728 $ 2,485,436 $ 35,054,555 $ 23,622,761 $ 123,211
================= ================ ================= ================ ===============
</TABLE>
See Notes to Financial Statements. 23 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED MARCH 31, 1997, THE PERIOD ENDED AUGUST 31, 1997 AND THE YEAR
ENDED AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GOVERNMENT
PORTFOLIO
-----------------
NET ASSETS - March 31, 1996 $ 43,296,823
- -------------------------------------------------------------- -----------------
OPERATIONS:
Net investment income 2,081,727
Net realized loss on investments sold (1,082)
-----------------
Net increase in net assets resulting from operations 2,080,645
-----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 54,385,867
Withdrawals (55,579,050)
-----------------
Net transactions in investors' beneficial interests (1,193,183)
-----------------
Net increase in net assets 887,462
-----------------
NET ASSETS - March 31, 1997 $ 44,184,285
- -------------------------------------------------------------- -----------------
OPERATIONS:
Net investment income 925,794
Net realized gain on investments sold 15,133
-----------------
Net increase in net assets resulting from operations 940,927
-----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 22,743,917
Withdrawals (23,547,717)
-----------------
Net transactions in investors' beneficial interests (803,800)
-----------------
Net increase in net assets 137,127
-----------------
NET ASSETS - August 31, 1997 (Note 1) $ 44,321,412
- -------------------------------------------------------------- -----------------
OPERATIONS:
Net investment income 2,506,524
Net realized loss on investments sold (21,088)
-----------------
Net increase in net assets resulting from operations 2,485,436
-----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 145,773,098
Withdrawals (145,816,960)
-----------------
Net transactions in investors' beneficial interests (43,862)
-----------------
Net increase in net assets 2,441,574
-----------------
NET ASSETS - August 31, 1998 $ 46,762,986
- -------------------------------------------------------------- =================
</TABLE>
See Notes to Financial Statements. 24 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 1997 AND 1998 (Concluded) (Note 1)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
TREASURY GOVERNMENT MUNICIPAL
CASH CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ---------------- ----------------- -----------------
NET ASSETS - August 31, 1996 $ 83,471,666 $ 508,099,794 $ 126,282,923 $ -
- ----------------------------------------------------- ----------------- ---------------- ----------------- -----------------
OPERATIONS:
Net investment income 2,525,129 27,216,340 10,105,993 -
Net realized gain (loss) on investments sold 2,441 (27,824) (8,648) -
----------------- ---------------- ----------------- -----------------
Net increase in net assets resulting from operations 2,527,570 27,188,516 10,097,345 -
----------------- ---------------- ----------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 292,088,302 1,552,918,166 633,698,622 -
Withdrawals (306,985,018) (1,611,437,731) (510,587,879) -
----------------- ---------------- ----------------- -----------------
Net transactions in investors' beneficial interests (14,896,716) (58,519,565) 123,110,743 -
----------------- ---------------- ----------------- -----------------
Net increase (decrease) in net assets (12,369,146) (31,331,049) 133,208,088 -
----------------- ---------------- ----------------- -----------------
NET ASSETS - August 31, 1997 $ 71,102,520 $ 476,768,745 $ 259,491,011 $ -
- ----------------------------------------------------- ----------------- ---------------- ----------------- -----------------
OPERATIONS:
Net investment income 8,001,296 35,098,110 23,621,908 123,211
Net realized gain (loss) on investments sold 9,432 (43,555) 853 -
----------------- ---------------- ----------------- -----------------
Net increase in net assets resulting from operations 8,010,728 35,054,555 23,622,761 123,211
----------------- ---------------- ----------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 630,794,381 1,930,394,761 1,309,647,918 22,849,987
Withdrawals (445,062,682) (1,725,093,704) (985,420,846) (2,138,724)
----------------- ---------------- ----------------- -----------------
Net transactions in investors' beneficial interests 185,731,699 205,301,057 324,227,072 20,711,263
----------------- ---------------- ----------------- -----------------
Net increase in net assets 193,742,427 240,355,612 347,849,833 20,834,474
----------------- ---------------- ----------------- -----------------
NET ASSETS - August 31, 1998 $ 264,844,947 $ 717,124,357 $ 607,340,844 $ 20,834,474
- ----------------------------------------------------- ================= ================ ================= =================
</TABLE>
See Notes to Financial Statements. 25 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF 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, as amended (the
"Act"), currently has twenty-one separate investment portfolios. These financial
statements relate to Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio (each a "Portfolio"
and collectively the "Portfolios"), each of which is diversified. Government
Portfolio commenced operations on February 21, 1996, Municipal Cash Portfolio
commenced operations on June 25, 1998 and the other Portfolios commenced
operations on September 1, 1995. Interests in the Portfolios are sold in private
placement transactions without any sales charge to institutional clients,
including open-end management investment companies. On May 25, 1998, Treasury
Portfolio was renamed Government Portfolio.
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 period. Actual results could differ from those estimates. The
following represent significant accounting policies of the Portfolios:
SECURITY VALUATION - Core Trust determines the net asset value per share of each
Portfolio as of 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
collateral, whose market value must always equal or exceed the repurchase price.
The investment adviser is responsible for determining the value of the
underlying collateral. In the event of default, a Portfolio may have
difficulties with the disposition of such securities held as collateral.
ORGANIZATIONAL COSTS - The costs incurred by Treasury Cash Portfolio, Government
Cash Portfolio and Cash Portfolio with their organization have been capitalized
and are being amortized using the straight-line method over a five year period
beginning on the commencement of each Portfolio's operations.
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
partnerships 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 interest in the Portfolio regardless of whether such
interest, dividends or gain have been distributed by the Portfolio.
SECURITIES TRANSACTIONS, INTEREST INCOME AND REALIZED GAIN AND LOSS - Investment
securities transactions are recorded on a trade date basis, interest income is
accrued as earned and realized gain and loss on investments sold are recorded on
the basis of identified cost. The cost basis of investments for federal income
tax purposes at August 31, 1998 is the same as for financial reporting purposes.
26 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
AUGUST 31, 1998
- --------------------------------------------------------------------------------
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER - The investment adviser of each Portfolio is Forum
Investment Advisors, LLC ("Forum Advisors"). Prior to January 2, 1998, Linden
Asset Management ("Linden") served as investment adviser to Treasury Cash
Portfolio, Government Cash Portfolio and Cash Portfolio. On January 2, 1998,
Forum Advisors, Inc. acquired Linden and reorganized as Fourm Advisors.
Forum Advisors receives an advisory fee from Treasury Cash Portfolio, Government
Cash Portfolio and Cash Portfolio based upon the total average daily net assets
of those Portfolios ("Total Portfolio Assets") that is calculated on a
cumulative basis at the following annual rates: 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. Forum Advisors
receives an advisory fee from Government Portfolio and Municipal Cash Portfolio
at an annual rate of 0.05% of the average daily net assets of each Portfolio.
ADMINISTRATOR - The administrator of each Portfolio is Forum Administrative
Services, LLC ("FAdS"). For its administrative services and facilities, FAdS
receives from each Portfolio an administration fee at an annual rate of 0.05% of
the average daily net assets of each Portfolio. In addition, certain legal
expenses are charged to the Portfolios by FAdS. For the year ended August 31,
1998, the respective amounts charged to, Treasury Cash Portfolio, Government
Portfolio, Government Cash Portfolio and Cash Portfolio were $48, $369, $319 and
$162.
PLACEMENT AGENT - Forum Financial Services, Inc. ("FFSI"), a registered
broker-dealer and a member of the National Association of Securities Dealers,
Inc., acts as each Portfolio's placement agent.
OTHER SERVICE PROVIDERS - Forum Accounting Services, LLC ("FAcS") serves as the
Portfolios' fund accountant and interestholder recordkeeper. For these services,
FAcS receives a fee from each Portfolio of $48,000 per year, plus additional
amounts depending on the number and type of portfolio transactions and number of
interest holders.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
FAdS and FAcS have voluntarily waived a portion of their fees and have assumed
certain expenses of the Portfolios. For the year ended August 31, 1998, fees
waived and expenses reimbursed were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Administration Accounting Expense
Fee Fee Reimbursed Total
-------------- ---------- ---------- -----
Treasury Cash Portfolio $ 29,678 $ - $ - $29,678
Government Portfolio 28,796 37,946 - 66,742
Municipal Cash Portfolio 1,937 8,800 9,105 19,842
</TABLE>
27 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Concluded)
AUGUST 31, 1998
- --------------------------------------------------------------------------------
NOTE 5. INCOME AND EXPENSE RATIOS
Income and expense ratios are presented below. During certain periods, various
fees were waived and expenses reimbursed. The ratio of Gross Expenses to Average
Net Assets reflects the expense ratio excluding waivers and reimbursements, if
any. All ratios for a period of less than a year are annualized.
<TABLE>
<S> <C> <C> <C>
Ratios to Average Net Assets
----------------------------
Net
Investment Gross
Expenses Income Expenses
-------- ------ --------
Treasury Cash Portfolio
Year Ended August 31, 1998....................................................... 0.15% 5.34% 0.17%
Year Ended August 31, 1997....................................................... 0.15% 5.20% 0.18%
Year Ended August 31, 1996....................................................... 0.15% 5.30% 0.20%
Government Portfolio
Year Ended August 31, 1998....................................................... 0.15% 5.26% 0.29%
Period Ended August 31, 1997 (annualized)........................................ 0.15% 5.11% 0.36%
Year Ended March 31, 1997........................................................ 0.15% 5.04% 0.33%
Period Ended March 31, 1996.(annualized) ....................................... 0.15% 4.99% 0.60%
Government Cash Portfolio
Year Ended August 31, 1998....................................................... 0.13% 5.52% 0.13%
Year Ended August 31, 1997....................................................... 0.14% 5.38% 0.14%
Year Ended August 31, 1996....................................................... 0.14% 5.49% 0.14%
Cash Portfolio
Year Ended August 31, 1998....................................................... 0.13% 5.55% 0.13%
Year Ended August 31, 1997....................................................... 0.15% 5.45% 0.15%
Year Ended August 31, 1996....................................................... 0.15% 5.50% 0.16%
Municipal Cash Portfolio
Period Ended August 31, 1998 (annualized)........................................ 0.09% 3.18% 0.61%
</TABLE>
NOTE 6. SPECIAL MEETING OF INTERESTHOLDERS (Unaudited)
The following matter was submitted to a vote of interestholders of each of
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio at a
special meeting held December 12, 1997 and then continued on December 18, 1997:
to approve a new Investment Advisory Agreement between Core Trust and Forum
Advisors. Interests in each of the portfolios were voted as follows: Treasury
Cash Portfolio - 99.63% For; 0.37% Against; Government Cash Portfolio - 99.00%
For; 1.00% Against; Cash Portfolio - 96.45% For; 3.55% Against.
28 CORE TRUST (DELAWARE)
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Trustees and Interestholders
Core Trust (Delaware)
We have audited the accompanying statements of assets and liabilities of
Treasury Cash Portfolio, Government Portfolio (formerly Treasury Portfolio),
Government Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio, five
series of Core Trust (Delaware) (the Portfolios), including the schedules of
investments, as of August 31, 1998, and the related statements of operations for
the year then ended for Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio, and Cash Portfolio, and for the period from June 25,
1998 (commencement of operations) to August 31, 1998 for Municipal Cash
Portfolio, and the statements of changes in net assets for each of the years in
the two-year period then ended for Treasury Cash Portfolio, Government Cash
Portfolio, Cash Portfolio, the year then ended and the period from April 1, 1997
to August 31, 1997 for Government Portfolio, and the period from June 25, 1998
to August 31, 1998 for Municipal Cash 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
statement of changes in net assets for the year ended March 31, 1997 and the
income and expense ratios for the periods indicated in Note 5 ending prior to
April 1, 1997 for Government Portfolio, were audited by other auditors whose
report dated May 9, 1997 expressed an unqualified opinion on that financial
statement and those income and expense ratios.
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, 1998 by correspondence with
the 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 referred to above present fairly, in
all material respects, the financial position of Treasury Cash Portfolio,
Government Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal
Cash Portfolio of Core Trust as of August 31, 1998, the results of their
operations and changes in their net assets for the periods indicated above, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 6, 1998
29 CORE TRUST (DELAWARE)
<PAGE>
DISTRIBUTOR
Forum Financial Services, Inc.
TRANSFER AGENT
Forum Shareholder Services, LLC
[FORUM LOGO]
FORUM FUNDS
P.O. Box 446
Portland, ME 04112
207-879-0001 (IN PORTLAND, ME)
800-94-FORUM (ELSEWHERE)
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY
TO CURRENT SHAREHOLDERS AND TO OTHERS WHO HAVE
RECEIVED A COPY OF THE FORUM FUNDS PROSPECTUS.
