<PAGE>
(File Nos. 33-49570 and 811-6742)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(3)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MONARCH FUNDS
(Name of Registrant as Specified in its Charter)
BOARD OF TRUSTEES OF REGISTRANT
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
-------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------
4) Proposed maximum aggregate value of transaction:
-------------------------
5) Total fee paid:
-------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------
2) Form, Schedule or Registration Statement No.:
-------------------------
3) Filing Party:
-------------------------
4) Date Filed:
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MONARCH FUNDS
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TREASURY CASH FUND
GOVERNMENT CASH FUND
CASH FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 27, 1996
- --------------------------------------------------------------------------------
Dear Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of Treasury Cash
Fund, Government Cash Fund and Cash Fund (each a "Fund" and collectively the
"Funds"), the three series of Monarch Funds (the "Trust"), will be held at the
offices of Forum Financial Services, Inc., the Trust's manager and distributor,
at Two Portland Square, Portland, Maine 04101, on Friday, December 27, 1996 at
10:00 a.m. Eastern time, for the following purpose:
1. To authorize the Trust, on behalf of the Funds, to vote at a meeting
of the interestholders of Core Trust (Delaware) to approve an
amendment to the Investment Advisory Agreement between Core Trust
(Delaware) and Linden Asset Management, Inc. to increase the
investment advisory fee with respect to Treasury Cash Portfolio,
Government Cash Portfolio and Cash Portfolio; and
2. To transact such other business as may properly come before the
meeting.
The Proposal is discussed more fully in the attached Proxy Statement.
You are entitled to vote at the meeting and any adjournment thereof if you owned
shares of any of the Funds at the close of business on November 22, 1996. If
you do not expect to attend the meeting, please complete, date, sign and return
the enclosed proxy card(s) in the enclosed postage paid envelope.
By order of the Board of Trustees,
David I. Goldstein
Secretary
Portland, Maine
November 27, 1996
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YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE. IN
ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU TO
INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD(S), DATE AND SIGN
IT, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
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<PAGE>
MONARCH FUNDS
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TREASURY CASH FUND
GOVERNMENT CASH FUND
CASH FUND
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 27, 1996
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INTRODUCTORY MATTERS
This is a proxy statement for Monarch Funds (the "Trust"), a registered open-end
management investment company that currently has three series of shares
outstanding: Treasury Cash Fund, Government Cash Fund and Cash Fund (each a
"Fund" and collectively the "Funds"). This proxy statement is being furnished
to the shareholders of the Funds in connection with the Board of Trustees' (the
"Board") solicitation of proxies to be used at a special meeting of shareholders
of the Funds to be held on December 27, 1996 or any adjournment or adjournments
thereof (the "Meeting"). This proxy statement will first be mailed to
shareholders on or about November 27, 1996.
The record date to determine shareholders eligible to vote at the meeting is
November 22, 1996. Shareholders of the Funds on the record date (hereafter
"Shareholders") will be entitled to one vote for each share held on that date.
One third of the shares of a Fund outstanding on the record date, represented in
person or by proxy, must be present to form a quorum for the transaction of
business at the Meeting for that Fund. In the event that a quorum for a Fund is
present at the meeting but sufficient votes to approve the proposal for that
Fund are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of those shares of
the Fund represented at the Meeting in person or by proxy. If a quorum is
present, the persons named as proxies will vote those proxies that they are
entitled to vote for any such proposal FOR such adjournment and will vote those
proxies required to be voted against any such proposal against such adjournment.
A shareholder vote may be taken on any proposal in this proxy statement prior to
adjournment if sufficient votes have been received and it is otherwise
appropriate.
The persons named as proxies on the enclosed proxy card(s) will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed. If you give no voting instructions, your shares
will be voted in favor of the proposal described in this proxy statement. The
proxy card may be revoked by giving another proxy, by letter or telegram
revoking your proxy received by the Trust prior to the meeting, or by appearing
and voting at the meeting.
Abstentions and broker non-votes will be counted as shares present for
determining whether a quorum is present but will not be counted for or against
any adjournment. Accordingly, abstentions and broker non-votes effectively will
be a vote against adjournment. Abstentions and broker non-votes will also not
be counted as votes cast for the purpose of determining whether sufficient votes
have been received to approve a proposal. Broker non-votes are shares held by a
broker or nominee as to which instructions have not been received from the
beneficial owners or persons entitled to vote and the broker or nominee does not
have discretionary voting power.
The solicitation of proxies, the cost of which will be borne by the Trust, will
be made primarily by mail but also may include telephone or oral communications
by regular employees of Forum Financial Services, Inc., the Trust's manager and
distributor, or its affiliates. These persons will not receive any compensation
from the Trust for their solicitation efforts. The Trust will furnish to each
person to whom the Proxy Statement is delivered, a copy of the Trust's latest
annual report to shareholders upon request without charge. Requests may be
directed by phone to
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shareholder services at 1 (800) 754-8757 or in writing, in care of the Trust, at
Two Portland Square, Portland, Maine 04101.
MASTER-FEEDER ARRANGEMENTS
Under a structure commonly referred to as "master-feeder," each of Treasury Cash
Fund, Government Cash Fund and Cash Fund invests all of its investable assets in
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio (each a
"Portfolio" and collectively the "Portfolios"), respectively. These three
portfolios are separate series of Core Trust (Delaware) ("Core Trust"), itself a
registered open-end management investment company. Each Portfolio directly
acquires securities and its corresponding Fund (as well as other investors in
the Portfolio) acquires an indirect interest in those securities. Under this
structure, investment advisory services are rendered to the Portfolios and not
the Funds, but shareholders of the Funds are afforded the same rights to vote on
the investment advisory agreement of the Portfolios as they would have if the
Funds invested directly in portfolio securities.
The Board is proposing for shareholder approval an amendment to the investment
advisory agreement (the "Advisory Agreement") between Core Trust and Linden
Asset Management, Inc. ("Linden") with respect to each Portfolio. The amendment
would increase the advisory fee payable to Linden by each Portfolio.
Under the master-feeder structure, on behalf of each Fund as an interestholder
in the applicable Portfolio, at the meeting of interestholders of the Portfolio
the Board will vote the Fund's interest in the same proportion as Shareholders
cast their votes at the Meeting. For example, as of the record date, Cash Fund
owned 97% of the outstanding interests in Cash Portfolio (Daily Assets Cash
Fund, a separate series of Forum Funds, a registered open-end management
investment company, owns the other 3% of Cash Portfolio). If, at the Meeting,
60% of the votes cast by Cash Fund Shareholders are for Proposal 1, the Board
will vote 60% of Cash Fund's interest in Cash Portfolio for the investment
advisory agreement amendment. As of the record date, Treasury Cash Fund and
Government Cash Fund owned substantially all of the outstanding interests of
Treasury Cash Portfolio and Government Cash Portfolio, respectively.
PROPOSAL 1 - APPROVAL OF AN AMENDMENT TO THE INVESTMENT
ADVISORY AGREEMENT
If this Proposal is approved, as described below, the Portfolios investment
advisory fees will be increased to 0.06% of the first $200 million of total
average daily net assets of the three Portfolios ("Total Portfolio Assets"),
0.04% of the next $300 million of Total Portfolio Assets, and 0.03% of the
remaining Total Portfolio Assets. Currently, the Portfolios incur investment
advisory fees of 0.05% of 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.
In order for a Portfolio's investment advisory fee to be increased, a "majority
of the interests in the Portfolio" must approve the increase. For this purpose
a "majority of the interests in the Portfolio" requires the affirmative vote of
the lesser of (i) more than 50% of the outstanding interests of the Portfolio or
(ii) 67% of the interests of the Portfolio present or represented at an
interestholders meeting at which the holders of more than 50% of the outstanding
interests of the Portfolio are present or represented. The Portfolios and, to
the best of the Trust's knowledge, all other investment company interestholders
in the Portfolios, will have a shareholders meeting on or about the same date as
the Meeting.
CURRENT TERMS OF THE ADVISORY AGREEMENT
Under the Advisory Agreement, Linden, subject to the control of the Board of
Trustees of Core Trust (the "Core Board"), manages the Portfolios' investments.
In this regard, it is the responsibility of Linden to continuously provide the
Portfolios with investment management, including investment research, advice and
supervision, to determine which securities shall be purchased or sold by the
Portfolios, and to make purchases and sales of securities on behalf of the
Portfolios. The Portfolios are currently the only advisory accounts of Linden.
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The Advisory Agreement between Core Trust and Linden with respect to the
Portfolios, was initially approved by the Core Board on August 30, 1995 and is
dated September 1, 1995. The Advisory Agreement with respect to the Portfolios
continue in effect for successive twelve-month periods with respect to the
Portfolio; provided that the continuance is specifically approved at least
annually (i) by the Core Board or by vote of a majority of the outstanding
voting interests of the Portfolio, and in either case, (ii) by a majority of
Core Trust's trustees who are not parties to the Advisory Agreement or
interested persons of any such party (other than as trustees of Core Trust). If
the continuation of an Advisory Agreement is not approved as to a Portfolio,
Linden may continue to render services described in the Advisory Agreement to
the other Portfolios. Continuance of the Advisory Agreement in their present
form was most recently approved by the Core Board at a meeting held on September
27, 1996. Initial interestholders of the Portfolios approved the Advisory
Agreement on August 30, 1995. The Advisory Agreement is terminable without
penalty (i) by the Core Board or by a vote of a majority of the outstanding
voting securities of the Portfolio on 60 days' written notice to Linden or (ii)
by Linden on 60 days' written notice to Core Trust. The Advisory Agreement will
automatically terminate in the event of its assignment.
On September 1, 1995 each Fund converted to a master-feeder structure by
contributing all of its assets to its respective Portfolio. Linden provided
investment advisory services to each Fund prior to that date.
PROPOSED AMENDMENTS
For its investment advisory services, Linden currently receives from each
Portfolio an advisory fee based upon Total Portfolio Assets that is calculated
on a cumulative basis as follows: 0.05% of 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. Under the proposed amendment to
the Advisory Agreement, the advisory fee rate for each Portfolio would be 0.06%
of 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. All advisory fees are paid to Linden monthly. The advisory fees paid
to Linden for the Portfolio's fiscal year ended August 31, 1996, and the
advisory fees that would have been paid to Linden for the same period had the
proposed Advisory Agreement amendments been in place during the year are:
Treasury Cash Portfolio; $12,930 and $16,770; Government Cash Portfolio;
$156,552 and $202,679; and Cash Portfolio; $38,083 and $49,306. This represents
an increase of 29% over the actual advisory fees paid during the year. The
proposed amendments would change Section 7 of the Investment Advisory Agreement
attached hereto as Exhibit A.
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<PAGE>
COMPARATIVE FEE TABLE (UNIVERSAL SHARES)
The following table shows, for the Funds' fiscal year ended August 31, 1996, the
operating expenses of the Funds (Universal Shares) and the pro forma operating
expenses of the Funds assuming the proposed amendments to the Advisory Agreement
had been in effect throughout the year. Because the Funds' management
voluntarily capped each Fund's expense ratio at the amount set forth on the
"Total Operating Expenses" line, the increase in advisory fees would have had no
effect on the Funds' total operating expenses. The purpose of the table and
example that follows is to assist investors in understanding the various costs
and expenses of investing in Universal Shares of the Funds (as of the date
hereof, no Universal Shares of Treasury Cash Fund were outstanding).
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)(1)
Government
Cash Fund Cash Fund
--------- ---------
Actual Pro Forma Actual Pro Forma
------ --------- ------ ---------
Management Fees(2) (after fee waivers) 0.09% 0.09% 0.07% 0.08%
Other Expenses (after reimbursements) 0.10% 0.10% 0.20% 0.19%
----- ----- ----- -----
Total Operating Expenses 0.19% 0.19% 0.27% 0.27%
(1) All information is net of applicable waivers and reimbursements and
includes the Fund's pro rata portion of the expenses of its corresponding
Portfolio. Absent expense reimbursements and fee waivers, the actual and
pro forma expenses of (i) GOVERNMENT CASH FUND would be: Management Fees;
0.13% (actual) and 0.14% (pro forma); Other Expenses; 0.14% (actual) and
0.14% (pro forma); and Total Operating Expenses, 0.27% (actual) and 0.28%
(pro forma); and (ii) CASH FUND would be: Management Fees; 0.13% (actual)
and 0.14% (pro forma); Other Expenses; 0.29% (actual) and 0.29% (pro
forma); and Total Operating Expenses, 0.42% (actual) and 0.43% (pro forma).
(2) Includes all advisory, management and administration fees.
EXAMPLE
The following illustrates the expenses an investor would pay on a $1,000
investment in Universal Shares under the existing and proposed fees and the
expenses stated above, assuming a 5% annual return, reinvestment of all
distributions and redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Actual and Pro Forma
Government Cash Fund $2 $6 $11 $24
Cash Fund $3 $9 $15 $34
THE EXAMPLE SHOULD NOT BE CONSIDERED A PRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
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<PAGE>
COMPARATIVE FEE TABLE (INSTITUTIONAL SHARES)
The following table shows, for the Funds' fiscal year ended August 31, 1996, the
operating expenses of the Funds (Institutional Shares) and the pro forma
operating expenses of the Funds assuming the proposed amendments to the Advisory
Agreement had been in effect throughout the year. Because the Funds' management
voluntarily capped each Fund's expense ratio at the amount set forth on the
"Total Operating Expenses" line, the increase in advisory fees would have had no
effect on the Funds' total operating expenses. The purpose of the table and
example that follows is to assist investors in understanding the various costs
and expenses of investing in Institutional Shares of the Funds.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
<CAPTION>
Treasury Government
Cash Fund Cash Fund Cash Fund
--------- --------- ---------
Actual Pro Forma Actual Pro Forma Actual Pro Forma
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Management Fees(2) (after fee waivers) 0.07% 0.08% 0.13% 0.14% 0.12% 0.13%
Other Expenses (after reimbursements) 0.38% 0.37% 0.44% 0.43% 0.45% 0.44%
----- ----- ----- ----- ----- -----
Total Operating Expenses 0.45% 0.45% 0.57% 0.57% 0.57% 0.57%
</TABLE>
(1) All information is net of applicable waivers and reimbursements and
includes the Fund's pro rata portion of the expenses of its corresponding
Portfolio. Absent expense reimbursements and fee waivers, the actual and
pro forma expenses of (i) TREASURY CASH FUND would be: Management Fees;
0.13% (actual) and 0.14% (pro forma); Other Expenses; 0.56% (actual) and
0.56% (pro forma); and Total Operating Expenses, 0.69% (actual) and 0.70%
(pro forma); (ii) GOVERNMENT CASH FUND would be: Management Fees; 0.13%
(actual) and 0.14% (pro forma); Other Expenses; 0.44% (actual) and 0.44%
(pro forma); and Total Operating Expenses, 0.57% (actual) and 0.58% (pro
forma); and (i) CASH FUND would be: Management Fees; 0.13% (actual) and
0.14% (pro forma); Other Expenses; 0.46% (actual) and 0.46% (pro forma);
and Total Operating Expenses, 0.59% (actual) and 0.60% (pro forma).
(2) Includes all advisory, management and administration fees.
EXAMPLE
The following illustrates the expenses an investor would pay on a $1,000
investment in Institutional Shares under the existing and proposed fees and the
expenses stated above, assuming a 5% annual return, reinvestment of all
distributions and redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Actual and Pro Forma
Treasury Cash Fund $5 $14 $25 $57
Government Cash Fund $6 $18 $32 $71
Cash Fund $6 $18 $32 $71
THE EXAMPLE SHOULD NOT BE CONSIDERED A PRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
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<PAGE>
COMPARATIVE FEE TABLE (INVESTOR SHARES)
The following table shows, for the Funds' fiscal year ended August 31, 1996, the
operating expenses of the Funds (Investor Shares) and the pro forma operating
expenses of the Funds assuming the proposed amendments to the Advisory Agreement
had been in effect throughout the year. Because the Funds' management
voluntarily capped each Fund's expense ratio at the amount set forth on the
"Total Operating Expenses" line, the increase in advisory fees would have had no
effect on the Funds' total operating expenses. The purpose of the table and
example that follows is to assist investors in understanding the various costs
and expenses of investing in Investor Shares of the Funds (as of the date
hereof, no Investor Shares of Government Cash Fund were outstanding).
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
<CAPTION>
Treasury
Cash Fund Cash Fund
--------- ---------
Actual Pro Forma Actual Pro Forma
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Management Fees(2) (after fee waivers) 0.04% 0.05% 0.12% 0.13%
Rule 12b-1 Fees None None None None
Other Expenses (after reimbursements) 0.79% 0.78% 0.71% 0.70%
----- ----- ----- -----
Total Operating Expenses 0.83% 0.83% 0.83% 0.83%
</TABLE>
(1) All information is net of applicable waivers and reimbursements and
includes the Fund's pro rata portion of the expenses of its corresponding
Portfolio. Absent expense reimbursements and fee waivers, the actual and
pro forma expenses of (i) TREASURY CASH FUND would be: Management Fees;
0.13% (actual) and 0.14% (pro forma); Other Expenses; 1.19% (actual) and
1.19% (pro forma); and Total Operating Expenses, 1.32% (actual) and 1.33%
(pro forma); and (ii) CASH FUND would be: Management Fees; 0.13% (actual)
and 0.14% (pro forma); Other Expenses; 0.82% (actual) and 0.82% (pro
forma); and Total Operating Expenses, 0.95% (actual) and 0.96% (pro forma).
(2) Includes all advisory, management and administration fees.
EXAMPLE
The following illustrates the expenses an investor would pay on a $1,000
investment in Investor Shares under the existing and proposed fees and the
expenses stated above, assuming a 5% annual return, reinvestment of all
distributions and redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Actual and Pro Forma
Treasury Cash Fund $8 $26 $46 $103
Cash Fund $8 $26 $46 $103
THE EXAMPLE SHOULD NOT BE CONSIDERED A PRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
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<PAGE>
FACTORS CONSIDERED BY THE BOARDS OF TRUSTEES
At a meeting held on September 27, 1996, the Core Board considered various
matters in determining the reasonableness and fairness of the proposed increase
in the advisory fee payable by Core Trust. At a meeting held November 21, 1996,
the Board reviewed the same information in determining to submit this proposal
to Shareholders.
In reaching their decisions, the Core Board and the Board examined and weighed
certain factors, including (i) the nature and quality of the services rendered
and the results achieved by Linden in its management of the Portfolios
(including investment performance comparisons with other mutual funds and
certain indices); (ii) the payments received by Linden related to the
Portfolios; (iii) the organizational capabilities and financial condition of
Linden; (iv) an analysis of the proposed fee rate changes; and (v) information
concerning the Portfolios' expense ratios on both an existing and pro forma
basis (see "Comparative Fee Table" above).
Certain of the factors addressed by the Core Board and the Board in reaching
their determination are discussed in more detail below.
- - PORTFOLIO PERFORMANCE. The Core Board and the Board considered the
performance of the Portfolios as compared to the performance of securities
indices and performance of other funds having comparable investment
objectives and policies. The Boards took into account the strong
historical gross investment results of the Portfolios and, prior to their
conversion to a master-feeder structure, the Funds.
- - ACTUAL AND PRO FORMA ADVISORY FEES AND EXPENSES. The Core Board considered
the effect of the proposed advisory fee increase on the Portfolios' fee
rates and annual expense ratios (which include the advisory fee and all
other operating expenses incurred by the Portfolios).
- - COMPARISONS WITH OTHER FUNDS. The Core Board and the Board considered the
advisory fees paid by other funds with similar investment objectives. The
Boards also compared the proposed operating expense ratio of the Portfolios
with the ratios of those other investment companies.
- - The Core Board and the Board considered the expenses incurred by Linden in
managing the Portfolios and the current and anticipated profitability of
Linden of the Advisory Agreement.
After full consideration of the matter, the Core Board and the Board
recommended that the Advisory Agreement be amended and that those amendments be
submitted to all interestholders of the Portfolios, including the Funds.
If approved by the interestholders of the Portfolios, the Advisory Agreement as
proposed to be amended will become effective as of January 1, 1997, and the
amended Advisory Agreement will continue in effect from year to year thereafter
if approved in the same manner as the Advisory Agreement in present form. If
the amendment is not approved by interestholders, the Advisory Agreement will
continue in effect in its present form.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL ONE
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<PAGE>
OTHER BUSINESS
Management knows of no other business to be presented at the Meeting. If any
additional matters should be properly presented, it is intended that the
enclosed proxy will be voted on such matters in accordance with the judgment of
the persons designated in the proxy.
ADDITIONAL INFORMATION
ADVISERS, PRINCIPAL UNDERWRITER AND MANAGER
Linden serves as the investment adviser to each of the Portfolios and Forum
Advisors, Inc. ("Forum Advisors") provides certain investment advisory services
to each Portfolio at the request of Linden. Linden is wholly owned by Anthony
Fischer, its president and sole director. Linden's and Mr. Fischer's principal
business address is 812 North Linden Drive, Beverly Hills, California 90210.
The principal business address of Forum Advisors and its affiliate, Forum
Financial Services, Inc., as well as the Trust, is Two Portland Square,
Portland, Maine 04101. Forum Financial Services, Inc. serves as the principal
underwriter of each Fund, as the manager of the Trust and administrator of the
Portfolios. For a further description of the services provided by and
compensation paid to any of these persons, shareholders should refer to the
Funds' prospectuses.
John Y. Keffer, Chairman and President of the Trust, and David I. Goldstein,
Vice President and Secretary of the Trust, and are the only executive officers
of the Trust. Mr. Goldstein is a Managing Director and Counsel of Forum
Financial Services, Inc. Mr. Keffer is the president and director of Forum
Financial Services, Inc., Forum Financial Corp., the Trust's transfer agent, and
Forum Advisors. Messrs. Keffer and Goldstein also serve other investment
companies, including Core Trust, in capacities similar to those they hold with
the Trust. Their address is Two Portland Square, Portland, Maine 04101.
CERTAIN INFORMATION CONCERNING SHARE OWNERSHIP
As of the record date, there were 791,098,721 shares of the Trust outstanding as
follows: Treasury Cash Fund, 27,874,751 shares; Government Cash Fund,
613,268,644 shares; and Cash Fund, 149,955,326 shares. Also as of the record
date, the Trust believed the following persons beneficially owned five percent
or more of the total outstanding shares of each Fund or the Trust. Management
is not aware of any other person who owns of record or beneficially five percent
or more of the shares of the Trust.
<TABLE>
<CAPTION>
Number of Percent of
Shares Fund Shares
------ -----------
<S> <C> <C>
TREASURY CASH FUND
Sullivan Kelley & Associates, Inc., Pasadena, CA 5,645,000 20.25%
GOVERNMENT CASH FUND
Imperial Bank, Inglewood, CA 134,610,740 21.95%
Imperial Credit Mortgage Holdings, Santa Ana Heights, CA 50,090,553 8.17%
Imperial Credit Industries, Inc., Santa Ana Heights, CA 36,921,661 6.02%
CASH FUND
Imperial Bank, Inglewood, CA 47,445,607 31.64%
Tegal Corporation, Petaluma, CA 27,792,410 18.53%
</TABLE>
As of the record date, Imperial Trust Company owned of record for the benefit of
various persons 14,786,900, 54,040,000 and 60,009,100 shares of Treasury Cash
Fund, Government Cash Fund and Cash Fund, respectively (53.05%, 8.11% and
40.01%, respectively). As of the record date, the Trustees and officers of the
Trust, in the
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<PAGE>
aggregate, owned less than one percent of the shares of the Trust. As of the
record date, the following Trustees owned shares of the Trust: Robert M.
Franko, 46,718 shares; and Jack J. Singer, 71,842 shares. Also as of the record
date, no officer of the Trust owned any Trust shares.
SUBMISSION OF SHAREHOLDER PROPOSALS
Following the Meeting, it is anticipated that neither the Trust nor any of the
Funds will hold any shareholder meetings except as required by Federal or
Delaware state law. Shareholders wishing to submit proposals, including
proposals to nominate persons for election as trustees, for inclusion in a proxy
statement for a subsequent shareholder meeting should send proposals to the
Secretary of the Trust, David I. Goldstein, in care of Forum Financial Services,
Inc.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES
Banks, broker-dealers and voting trustees and their nominees should advise the
Vice President and Secretary of the Trust, David I. Goldstein, in care of Forum
Financial Services, Inc., whether, with respect to shares of record held by
them, other persons are beneficial owners of shares for which proxies are being
solicited and if so, the number of copies of the Proxy Statement needed in order
to supply copies to the beneficial owners of the shares.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY
November 27, 1996 By order of the Board of Trustees,
David I. Goldstein
Secretary
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EXHIBIT A
CORE TRUST (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 1st day of September, 1995 and amended this ___ day of
_____, 199__, between Core Trust (Delaware) (the "Trust"), a business trust
organized under the laws of the State of Delaware with its principal place of
business at Two Portland Square, Portland, Maine 04101, and Linden Asset
Management, Inc. (the "Adviser"), a corporation organized under the laws of
State of California with its principal place of business at 812 North Linden
Drive, Beverly Hills, California 90210.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "Act") as an open-end management investment company and is
authorized to issue interests (as defined in the Trust's Trust Instrument) in
separate series; and
WHEREAS, the Trust desires that Linden perform investment advisory services
for Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio (each
a "Portfolio," and collectively the "Portfolios"), and Linden is willing to
provide those services on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument and Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the Act, as may be
supplemented from time to time, all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board").
The Trust is currently authorized to issue eight series of interests and the
Board is authorized to issue interests in any number of additional series. The
Trust has delivered to Linden copies of the Trust's Trust Instrument and
Registration Statement and will from time to time furnish Linden with any
amendments thereof.
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs Linden, subject to the direction and supervision
of the Board, to manage the investment and reinvestment of the assets in each
Portfolio and, without limiting the generality of the foregoing, to provide
other services specified in Section 3 hereof.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in each Portfolio. To carry out
such decisions, Linden is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, at the risk of and in the name of the Trust, to
place orders and issue instructions with respect to those transactions of the
Portfolios. In all purchases, sales and other transactions in securities for
the Portfolios, Linden is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in each Portfolio since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Portfolios and
Linden, and on its own initiative, will furnish the Board from time to time with
such information as Linden may believe appropriate for this purpose, whether
concerning the individual companies whose securities are included in
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the Portfolios' holdings, the industries in which they engage, or the economic,
social or political conditions prevailing in each country in which the
Portfolios' maintain investments. The Adviser will also furnish the Board with
such statistical and analytical information with respect to securities in the
Portfolios as Linden may believe appropriate or as the Board reasonably may
request.
(c) In making purchases and sales of securities for the Portfolios, Linden
will follow and comply with the policies set from time to time by the Board as
well as the limitations imposed by the Trust's Trust Instrument and Registration
Statement under the Act, the limitations in the Act and in the Internal Revenue
Code of 1986, as amended, in respect of regulated investment companies and the
investment objectives, policies and restrictions of the Portfolios.
(d) The Adviser will from time to time employ or associate with such
persons as Linden believes to be particularly qualified to assist in the
execution of Linden's duties hereunder, the cost of performance of such duties
to be borne and paid by Linden. No obligation may be incurred on the Trust's
behalf in any such respect.
(e) The Adviser shall either monitor the performance of brokers, dealers
and other persons who introduce or execute purchases, sales and other
transactions of securities and other investment assets of the Portfolios or
select an introducing broker who shall, as part of its transaction charges,
monitor such performance. Such persons may be affiliated with Linden, any
investment subadviser or other affiliates of the Trust to the extent permitted
by the Act.
(f) The Adviser shall maintain records relating to portfolio transactions
and the placing and allocation of brokerage orders as are required to be
maintained by the Trust under the Act. The Adviser shall prepare and maintain,
or cause to be prepared and maintained, in such form, for such periods and in
such locations as may be required by applicable law, all documents and records
relating to the services provided by Linden pursuant to this Agreement required
to be prepared and maintained by the Trust pursuant to the rules and regulations
of any national, state, or local government entity with jurisdiction over the
Trust, including the Commission and the Internal Revenue Service. The books and
records pertaining to the Trust which are in possession of Linden shall be the
property of the Trust. The Trust, or the Trust's authorized representatives,
shall have access to such books and records at all times during Linden's normal
business hours. Upon the reasonable request of the Trust, copies of any such
books and records shall be provided promptly by Linden to the Trust or the
Trust's authorized representatives.
SECTION 4. SUBADVISERS
The Adviser may carry out any of its obligations under this Agreement by
employing, subject to the Board's supervision, one or more persons who are
registered as investment advisers pursuant to the Investment Advisers Act of
1940, as amended, (the "Advisers Act") or who are exempt from registration
thereunder ("SubAdvisers"). Each SubAdviser's employment will be evidenced by a
separate written agreement approved by the Trustees of the Trust and the
interestholders of the applicable Portfolios. The Adviser shall not be liable
for any act or omission of any SubAdviser except with respect to matters as to
which Linden specifically assumes responsibility in writing.
SECTION 5. EXPENSES
The Trust hereby confirms that the Trust shall be responsible and shall
assume the obligation for payment of all the Trust's expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the Trust's custodian and
transfer agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of the Trust's formation and maintaining its existence; costs of
preparing the Trust's registration statement, account application forms and
interestholder reports and delivering them to existing and prospective
interestholders; costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts and of calculating the net
asset value of interests in the Trust; costs of reproduction, stationery and
supplies; compensation of the Trust's trustees, officers and employees and the
costs of other personnel performing services for the Trust; costs of Trust
meetings; registration fees and related expenses for registration with the
Commission and the securities regulatory authorities of other countries in
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which the Trust's interests are sold; state securities law registration fees and
related expenses; and fees and out-of-pocket expenses payable to Forum Financial
Services, Inc. under any placement agent, management or similar agreement.
SECTION 6. STANDARD OF CARE
(a) The Adviser shall give the Trust the benefit of its best judgment and
efforts in rendering its services to the Trust and shall not be liable for error
of judgment or mistake of law, for any loss arising out of any investment, or in
any event whatsoever, provided that nothing herein shall be deemed to protect,
or purport to protect, Linden against any liability to the Trust or to the
security holders of the Trust to which it would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder, or by reason of reckless disregard of its obligations and
duties hereunder. No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or Linden, from liability in violation of
Sections 17(h), 17(i) or 36(b) of the Act.
(b) The Adviser shall not be held responsible for any loss incurred by
reason of any act or omission of any dealer, broker or custodian; provided that
such loss in not the result of Linden's willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or the result of Linden's
reckless disregard of its obligations and duties hereunder.
(c) This Section shall survive the termination of this Agreement and shall
be binding upon the Trust's and Linden's successors and personal
representatives.
SECTION 7. COMPENSATION
For the services provided by Linden pursuant to this Agreement, the Trust
shall pay Linden, with respect to each of the Portfolios, a fee based upon the
total average daily net assets of the Portfolios ("Total Portfolio Assets").
The Trust shall pay Linden a total fee of 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. Such fees shall be
accrued by the Trust daily with respect to each Portfolio in the proportion that
Portfolio's average daily net assets bear to Total Portfolio Assets and shall be
payable monthly in arrears on the first day of each calendar month. Upon the
termination of this Agreement, the Trust shall pay to Linden such compensation
as shall be payable prior to the effective date of such termination. The
Adviser shall be paid a minimum annual fee of $50,000 for its services to the
Trust with respect to the Portfolios. To the extent Linden has delegated its
responsibilities with respect to a Portfolio to a SubAdviser, Linden shall pay
the advisory fee to that SubAdviser.
SECTION 8. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Portfolio
immediately upon approval by a majority of the outstanding voting interests of
that Portfolio.
(b) This Agreement shall remain in effect with respect to a Portfolio for
a period of two years from the date of its effectiveness and shall continue in
effect for successive twelve-month periods (computed from each anniversary date
of the approval) with respect to the Portfolio; provided that such continuance
is specifically approved at least annually (i) by the Board or by the vote of a
majority of the outstanding voting interests of the Portfolio, and, in either
case, (ii) by a majority of the Trust's trustees who are not parties to this
Agreement or interested persons of any such party (other than as trustees of the
Trust); provided further, however, that if this Agreement or the continuation of
this Agreement is not approved as to a Portfolio, Linden may continue to render
to that Portfolio the services described herein in the manner and to the extent
permitted by the Act and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Portfolio on 60
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days' written notice to Linden or (ii) by Linden on 60 days' written notice to
the Trust. This agreement shall terminate upon assignment.
SECTION 9. ACTIVITIES OF THE ADVISER
(a) Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict Linden's right, or the right
of any of Linden's officers, directors or employees who may also be a trustee,
officer or employee of the Trust, or persons otherwise affiliated persons of the
Trust to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.
(b) The Adviser represents that it is currently registered, and will
during the entire period this Agreement is in effect be registered, as an
investment adviser under Lindens Act.
SECTION 10. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of each Portfolio shall
not be liable for any obligations of the Trust or of the Portfolios under this
Agreement, and Linden agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Portfolio to which Linden's rights or claims relate in settlement of such rights
or claims, and not to the Trustees of the Trust or the interestholders of the
Portfolios.
SECTION 11. NOTICE
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given, if to the Trust, at:
Two Portland Square
Portland, Maine 04101
Attention: Secretary
and if to Linden at:
812 North Linden Drive
Beverly Hills, California 90210
Attention: President
SECTION 12. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting interests of the Portfolios thereby affected. No amendment
to this Agreement or the termination of this Agreement with respect to a
Portfolio shall effect this Agreement as it pertains to any other Portfolio.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Advisory
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(c) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
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(d) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Delaware.
(f) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
CORE TRUST (DELAWARE)
-----------------------
John Y. Keffer
President
LINDEN ASSET MANAGEMENT, INC.
-----------------------
Anthony R. Fischer, Jr.
President
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MONARCH FUNDS
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TREASURY CASH FUND
GOVERNMENT CASH FUND
CASH FUND
PROXY
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 27, 1996
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints David I.
Goldstein and Richard C. Butt (or, if only one shall act, that one) proxies with
the power of substitution to vote all of the shares of Treasury Cash Fund,
Government Cash Fund and Cash Fund (the "Funds"), each a series of Monarch Funds
(the "Trust"), registered in the name of the undersigned at the Special Meeting
of Shareholders of the Funds to be held at the offices of Forum Financial
Services, Inc., the Trust's manager and distributor, at Two Portland Square,
Portland, Maine 04101, on Friday, December 27, 1996 at 10:00 a.m. Eastern time,
and at any adjournment or adjournments thereof.
PROPOSAL 1:
To consider and act upon a proposal to authorize the Trust, on behalf
of the Funds, to vote at a meeting of the interestholders of Core
Trust (Delaware) to approve an amendment to the Investment Advisory
Agreement between Core Trust (Delaware) and Linden Asset Management,
Inc. to increase the investment advisory fee with respect to Treasury
Cash Portfolio, Government Cash Portfolio and Cash Portfolio.
For / / Against / / Abstain / /
Receipt is acknowledged of the Proxy Statement for the Special Meeting of
Shareholders to be held on December 27, 1996. (NOTE: Checking the box labeled
ABSTAIN will result in the shares covered by the Proxy being treated as if they
were voted AGAINST the proposal.)
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Authorized Signature Date
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Printed Name (and Title if Applicable)
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Authorized Signature (Joint Investor) Date
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Printed Name (and Title if Applicable)
