<PAGE>
M O N A R C H F U N D S
- --------------------------------------
- --------------------------------------
Treasury Cash Fund
Government Cash Fund
Cash Fund
ANNUAL REPORT
August 31, 1997
- --------------------------------------------------------------------------------
Dear Shareholders:
The management of Monarch Funds and I are pleased to present our 1997 annual
report to shareholders for the year ended August 31, 1997. We ended the year
with combined assets of nearly $800 million--a new high. We are also pleased to
announce that Government Cash Fund, our oldest Fund and our performance leader,
will mark its 5th anniversary at the end of October. For the twelve months ended
August 31, 1997, Government Cash Fund/Universal Shares had the second highest
total return out of 161 funds in the Government-Only Institutions-Only category
tracked by IBC Financial Data, Inc.'s MONEY FUND REPORT AVERAGES-TM-. However,
past performance is no guarantee of future results.
Over the past six months, Investor Shares assets in Treasury Cash Fund and Cash
Fund have almost doubled to more than $100 million. Monarch Funds began offering
Investor Shares in late 1995 with lower investment minimums and checkwriting
privileges to provide an investment option to a broader range of investors. Of
course, we continue to offer Universal and Institutional Shares which are
designed and customized for the needs of the business community.
The management of Monarch Funds and I wish to thank you for your continued
confidence and support as we begin our 6th year. We remain committed to bringing
you excellent performance and service on top of prudent management designed to
maintain your $1.00 share price. We hope that you will find the following
detailed statements of the Funds' holdings and financial condition informative.
We invite you to call us with your questions or comments at (800) 754-8757.
Sincerely,
[SIGNATURE]
John Y. Keffer
Chairman
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS OF MONARCH FUNDS
- ---------------------------------------------------------
<S> <C>
Portfolio Manager's Report.................... 2
Independent Auditors' Report.................. 3
Statements of Assets and Liabilities.......... 4
Statements of Operations...................... 5
Statements of Changes in Net Assets........... 6
Financial Highlights.......................... 7
Notes to Financial Statements................. 8
FINANCIAL STATEMENTS OF CORE TRUST (DELAWARE)
- ---------------------------------------------------------
Independent Auditors' Report.................. 12
Schedules of Investments...................... 13
Statements of Assets and Liabilities.......... 16
Statements of Operations...................... 17
Statements of Changes in Net Assets........... 18
Notes to Financial Statements................. 19
Supplementary Information..................... 21
</TABLE>
- --------------------------------------------------------------------------------
THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY TO CURRENT SHAREHOLDERS AND TO
OTHERS WHO HAVE RECEIVED A COPY OF A MONARCH FUNDS PROSPECTUS.
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
AN INTERVIEW WITH ANTHONY R. FISCHER, JR.--PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
Mr. Fischer, President of Linden Asset Management, Inc., has been portfolio
manager of the Funds since their inception.
Q. How have general economic conditions affected Fund yields during the last
twelve months?
A. The economy has grown rapidly over the past year, but with a low rate of
inflation. This has allowed the Federal Reserve to maintain a steady interest
rate policy which, in turn, has allowed our Funds to deliver high, stable
yields.
Q. Has the reduction in the federal deficit had any impact on the Funds?
A. The U.S. Treasury recently reduced the size of its Treasury Bill auctions,
and this has put downward pressure on their yields. Since we buy U.S. Treasury
Bills for Treasury Cash Portfolio, this has had a negative impact on that Fund's
performance. It has also created downward pressure on general short-term
interest rates for other government securities.
Q. What does the average maturity of a Portfolio indicate? How have the average
maturities of the Portfolios changed over the year?
A. A Portfolio's average maturity reflects its portfolio manager's view on the
future direction of interest rates. A portfolio manager is likely to extend
average maturities if he predicts stable or lower interest rates. Conversely, a
portfolio manager will shorten average maturities if he thinks that interest
rates will go higher. We have kept the average maturities of the Portfolios
relatively short in anticipation that the Federal Reserve will raise rates one
or two more times in this economic cycle.
Q. Describe your overall investment strategy.
A. I look to maximize the yield for our Funds while minimizing both credit and
interest rate risks.
Q. How would you rate the credit quality of Cash Portfolio?
A. Cash Portfolio holds a high percentage of government agency paper as well as
the highest rated commercial paper issuers. As a matter of policy, we purchase
only the highest rated issuers.
Q. What is your outlook for the Funds?
A. Assuming that the economy continues its strong growth, it is likely that the
Federal Reserve will increase the Federal Funds Rate by 25 to 50 basis points
over the next year. We are keeping the average maturities of the Portfolios
short to take advantage of these increases. We also believe that extending
maturities now produces limited, if any, short-term benefit. On a different
note, we have noticed that there has been a greater acceptance of the Funds by
both new and existing customers, and we look for a 30% increase in the size of
the Funds over the next year.
The opinions expressed in this interview reflect those of the portfolio manager
only through August 31, 1997. The manger's opinions are subject to change at any
time based on the money market securities market and other conditions. The
composition and holdings of the Portfolios are subject to change.
2
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders
Monarch Funds
We have audited the accompanying statements of assets and liabilities of
Treasury Cash Fund, Government Cash Fund, and Cash Fund, series of Monarch Funds
(the Funds), as of August 31, 1997, and the related statements of operations for
the year then ended, statements of changes in net assets for each of the years
in the two-year period then ended and financial highlights for each of the years
in the four-year period ended August 31, 1997, and the period ended August 31,
1993. 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.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Treasury Cash Fund, Government Cash Fund, and Cash Fund, as of August 31, 1997,
the results of their operations for the year then ended, changes in their net
assets for each of the years in the two-year period then ended and financial
highlights for each of the years in the four-year period ended August 31, 1997,
and the period ended August 31, 1993, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 3, 1997
3
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
------------- --------------- --------------
<S> <C> <C> <C>
ASSETS:
Investment in Portfolios of Core Trust (Delaware) at value
(a).......................................................... $ 71,102,520 $ 476,768,745 $ 247,361,832
------------- --------------- --------------
LIABILITIES:
Dividends payable.............................................. 123,596 1,023,923 274,728
Payable to related parties (Note 3)............................ -- 10,466 9,192
Accrued expenses............................................... 30,651 167,621 103,423
------------- --------------- --------------
Total Liabilities................................................ 154,247 1,202,010 387,343
------------- --------------- --------------
NET ASSETS....................................................... $ 70,948,273 $ 475,566,735 $ 246,974,489
------------- --------------- --------------
------------- --------------- --------------
COMPONENTS OF NET ASSETS:
Paid in capital................................................ $ 70,942,359 $ 475,629,509 $ 246,993,988
Undistributed (distribution in excess of)
net investment income........................................ 3,473 (34,793) --
Accumulated net realized gain (loss)........................... 2,441 (27,981) (19,499)
------------- --------------- --------------
NET ASSETS....................................................... $ 70,948,273 $ 475,566,735 $ 246,974,489
------------- --------------- --------------
------------- --------------- --------------
NET ASSETS BY CLASS OF SHARES:
Universal Shares............................................... $ -- $ 230,410,016 $ 18,452,878
Institutional Shares........................................... 40,830,514 245,156,719 152,041,478
Investor Shares................................................ 30,117,759 -- 76,480,133
------------- --------------- --------------
NET ASSETS....................................................... $ 70,948,273 $ 475,566,735 $ 246,974,489
------------- --------------- --------------
------------- --------------- --------------
SHARES OF BENEFICIAL INTEREST:
Universal Shares............................................... -- 230,450,715 18,452,878
Institutional Shares........................................... 40,826,735 245,179,214 152,054,483
Investor Shares................................................ 30,115,623 -- 76,486,624
NET ASSET VALUE PER SHARE (OFFERING AND REDEMPTION PRICE PER
SHARE)......................................................... $ 1.00 $ 1.00 $ 1.00
(a) Cost of Investments.......................................... $ 71,102,520 $ 476,768,745 $ 247,361,832
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
------------ --------------- ------------
<S> <C> <C> <C>
NET INVESTMENT INCOME ALLOCATED FROM PORTFOLIOS OF CORE TRUST
(DELAWARE)
Interest income.................................................... $ 2,597,996 $ 27,916,906 $ 9,968,439
Net expenses....................................................... (72,867) (700,566) (266,932)
------------ --------------- ------------
Net investment income allocated from Portfolios of Core Trust
(Delaware).......................................................... 2,525,129 27,216,340 9,701,507
------------ --------------- ------------
EXPENSES:
Management (Note 3)................................................ 24,300 252,810 89,942
Transfer agent (Note 3)
Universal Shares................................................. -- 145,679 11,015
Institutional Shares............................................. 32,593 536,252 123,240
Investor Shares.................................................. 84,369 -- 244,861
Shareholder services (Note 3)
Institutional Shares............................................. 17,231 389,295 85,650
Investor Shares.................................................. 55,668 -- 175,845
Legal (Note 3)..................................................... 980 12,698 4,337
Audit.............................................................. 1,890 8,455 4,699
Trustees........................................................... 1,008 11,530 3,963
Distribution--Investor Shares (Note 3)............................. 28,718 -- 142,750
Registration....................................................... 20,893 27,932 38,624
Reporting.......................................................... 1,054 17,965 6,504
Miscellaneous...................................................... 1,734 16,971 3,883
------------ --------------- ------------
Total expenses....................................................... 270,438 1,419,587 935,313
Expenses reimbursed and fees waived (Note 4)......................... (81,564) (215,330) (53,036)
------------ --------------- ------------
Net expenses......................................................... 188,874 1,204,257 882,277
------------ --------------- ------------
NET INVESTMENT INCOME................................................ 2,336,255 26,012,083 8,819,230
------------ --------------- ------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM PORTFOLIOS OF
CORE TRUST (DELAWARE)............................................... 2,441 (27,824) (8,648)
------------ --------------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. $ 2,338,696 $ 25,984,259 $ 8,810,582
------------ --------------- ------------
------------ --------------- ------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 1996 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
------------- --------------- -------------
<S> <C> <C> <C>
NET ASSETS--August 31, 1995........................................... $ 28,530,314 $ 369,166,371 $ 104,992,082
------------- --------------- -------------
OPERATIONS:
Net investment income............................................... 1,914,180 24,095,466 5,685,345
Net realized gain (loss) on investments allocated from Portfolios of
Core Trust (Delaware)............................................. 3,474 11,721 6,420
------------- --------------- -------------
Net increase (decrease) in net assets resulting from operations... 1,917,654 24,107,187 5,691,765
------------- --------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Universal Shares............................. -- (11,339,957) (352,288)
Net investment income--Institutional Shares......................... (1,822,829) (12,749,225) (4,633,913)
Net investment income--Investor Shares.............................. (91,351) (6,284) (699,144)
Net realized gain on investments--Institutional Shares.............. (6,930) -- --
Net realized gain on investments--Investor Shares................... (332) -- --
------------- --------------- -------------
Total distributions to shareholders............................... (1,921,442) (24,095,466) (5,685,345)
------------- --------------- -------------
CAPITAL SHARES TRANSACTIONS (at $1.00 per share):
Sale of shares--Universal Shares.................................... -- 3,821,065,840 475,099,981
Sale of shares--Institutional Shares................................ 740,875,976 2,249,757,121 489,479,393
Sale of shares--Investor Shares..................................... 22,912,928 500,001 219,952,023
Reinvestment of distributions--Universal Shares..................... -- 5,401,509 284,455
Reinvestment of distributions--Institutional Shares................. 285,067 8,492,380 2,092,801
Reinvestment of distributions--Investor Shares...................... 68,620 4,978 574,912
Redemption of shares--Universal Shares.............................. -- (3,760,033,346) (498,649,996)
Redemption of shares--Institutional Shares.......................... (690,427,404) (2,188,631,902) (475,637,963)
Redemption of shares--Investor Shares............................... (19,001,559) (111,566) (192,458,234)
------------- --------------- -------------
Net increase (decrease) from capital transactions................. 54,713,628 136,445,015 20,737,372
------------- --------------- -------------
Net increase (decrease)........................................... 54,709,840 136,456,736 20,743,792
------------- --------------- -------------
NET ASSETS--August 31, 1996........................................... 83,240,154 505,623,107 125,735,874
------------- --------------- -------------
OPERATIONS:
Net investment income............................................... 2,336,255 26,012,083 8,819,230
Net realized gain (loss) on investments allocated from Portfolios of
Core Trust (Delaware)............................................. 2,441 (27,824) (8,648)
------------- --------------- -------------
Net increase (decrease) in net assets resulting from operations... 2,338,696 25,984,259 8,810,582
------------- --------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Universal Shares............................. -- (13,169,327) (295,284)
Net investment income--Institutional Shares......................... (1,812,820) (12,841,956) (5,826,021)
Net investment income--Investor Shares.............................. (523,435) (800) (2,697,925)
Net realized gain on investments--Universal Shares.................. -- (1,239) --
Net realized gain on investments--Institutional Shares.............. -- (1,352) --
Net realized gain on investments--Investor Shares................... -- -- --
------------- --------------- -------------
Total distributions to shareholders............................... (2,336,255) (26,014,674) (8,819,230)
------------- --------------- -------------
CAPITAL SHARES TRANSACTIONS (at $1.00 per share):
Sale of shares--Universal Shares -- 4,703,891,858 793,431,000
Sale of shares--Institutional Shares................................ 616,183,130 2,069,478,692 771,736,564
Sale of shares--Investor Shares..................................... 119,376,333 -- 571,922,876
Reinvestment of distributions--Universal Shares..................... -- 7,159,556 311,720
Reinvestment of distributions--Institutional Shares................. 273,560 8,379,532 2,475,428
Reinvestment of distributions--Investor Shares...................... 533,844 1,725 2,834,309
Redemption of shares--Universal Shares.............................. -- (4,729,611,744) (778,562,054)
Redemption of shares--Institutional Shares.......................... (654,886,646) (2,088,930,438) (711,898,289)
Redemption of shares--Investor Shares............................... (93,774,543) (395,138) (531,004,291)
------------- --------------- -------------
Net increase (decrease) from capital transactions................. (12,294,322) (30,025,957) 121,247,263
------------- --------------- -------------
Net increase (decrease)........................................... (12,291,881) (30,056,372) 121,238,615
------------- --------------- -------------
NET ASSETS--August 31, 1997........................................... $ 70,948,273 $ 475,566,735 $ 246,974,489
------------- --------------- -------------
------------- --------------- -------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Following is selected data for a share of each class of each Fund outstanding
during the periods indicated.
<TABLE>
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
BEGINNING DISTRIBUTIONS ------------------------
NET ASSET NET FROM NET ENDING NET NET
VALUE PER INVESTMENT INVESTMENT ASSET VALUE INVESTMENT
SHARE INCOME INCOME PER SHARE EXPENSES INCOME
--------- ---------- ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
TREASURY CASH FUND
Institutional Shares
Year Ended August 31, 1997.......... $ 1.00 $ 0.05 ($ 0.05) $ 1.00 0.45% 4.89%
Year Ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.45% 5.01%
Year Ended August 31, 1995.......... 1.00 0.05 (0.05) 1.00 0.42% 5.18%
Year Ended August 31, 1994.......... 1.00 0.03 (0.03) 1.00 0.42% 3.03%
Period Ended August 31, 1993 (c).... 1.00 -- -- 1.00 0.45%(b) 2.65%(b)
Investor Shares
Year Ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.83% 4.55%
Period Ended August 31, 1996 (c).... 1.00 0.04 (0.04) 1.00 0.83%(b) 4.50%(b)
GOVERNMENT CASH FUND
Universal Shares
Year Ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.17% 5.35%
Year Ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.19% 5.43%
Year Ended August 31, 1995.......... 1.00 0.06 (0.06) 1.00 0.24% 5.46%
Year Ended August 31, 1994.......... 1.00 0.04 (0.04) 1.00 0.28% 3.48%
Period Ended August 31, 1993 (c).... 1.00 0.03 (0.03) 1.00 0.21%(b) 3.19%(b)
Institutional Shares
Year Ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.57% 4.95%
Year Ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.57% 5.06%
Year Ended August 31, 1995.......... 1.00 0.05 (0.05) 1.00 0.54% 5.39%
Year Ended August 31, 1994.......... 1.00 0.03 (0.03) 1.00 0.56% 3.45%
Period Ended August 31, 1993 (c).... 1.00 -- -- 1.00 0.53%(b) 2.91%(b)
CASH FUND
Universal Shares
Year Ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.23% 5.32%
Year Ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.27% 5.48%
Year Ended August 31, 1995.......... 1.00 0.06 (0.06) 1.00 0.27% 5.59%
Year Ended August 31, 1994.......... 1.00 0.04 (0.04) 1.00 0.27% 3.50%
Period Ended August 31, 1993 (c).... 1.00 0.03 (0.03) 1.00 0.25%(b) 3.29%(b)
Institutional Shares
Year Ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.57% 4.97%
Year Ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.57% 5.10%
Year Ended August 31, 1995.......... 1.00 0.05 (0.05) 1.00 0.54% 5.33%
Year Ended August 31, 1994.......... 1.00 0.03 (0.03) 1.00 0.54% 3.43%
Period Ended August 31, 1993 (c).... 1.00 -- -- 1.00 0.53%(b) 2.94%(b)
Investor Shares
Year Ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.83% 4.72%
Year Ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.83% 4.68%
Period Ended August 31, 1995 (c).... 1.00 0.01 (0.01) 1.00 0.84%(b) 5.32%(b)
<CAPTION>
RATIO TO
NET ASSETS AVERAGE NET
AT END OF ASSETS
PERIOD -----------
TOTAL (000'S GROSS
RETURN OMITTED) EXPENSES(A)
---------- ---------- -----------
<S> <C> <C> <C>
TREASURY CASH FUND
Institutional Shares
Year Ended August 31, 1997.......... 4.98% $ 40,830 0.66%
Year Ended August 31, 1996.......... 5.15% 79,259 0.69%
Year Ended August 31, 1995.......... 5.28% 28,530 0.86%
Year Ended August 31, 1994.......... 3.11% 41,194 0.74%
Period Ended August 31, 1993 (c).... 2.81%(b) 39,660 1.09%(b)
Investor Shares
Year Ended August 31, 1997.......... 4.58% 30,118 0.97%
Period Ended August 31, 1996 (c).... 4.00% 3,980 1.33%(b)
GOVERNMENT CASH FUND
Universal Shares
Year Ended August 31, 1997.......... 5.49% 230,410 0.26%
Year Ended August 31, 1996.......... 5.59% 248,986 0.28%
Year Ended August 31, 1995.......... 5.78% 182,546 0.52%
Year Ended August 31, 1994.......... 3.64% 158,798 0.49%
Period Ended August 31, 1993 (c).... 3.23%(b) 158,516 0.52%(b)
Institutional Shares
Year Ended August 31, 1997.......... 5.06% 245,157 0.57%
Year Ended August 31, 1996.......... 5.18% 256,244 0.57%
Year Ended August 31, 1995.......... 5.46% 186,620 0.66%
Year Ended August 31, 1994.......... 3.35% 61,738 0.68%
Period Ended August 31, 1993 (c).... 2.89%(b) 31,483 1.04%(b)
CASH FUND
Universal Shares
Year Ended August 31, 1997.......... 5.43% 18,453 0.47%
Year Ended August 31, 1996.......... 5.53% 3,272 0.43%
Year Ended August 31, 1995.......... 5.75% 26,525 0.56%
Year Ended August 31, 1994.......... 3.69% 22,105 0.55%
Period Ended August 31, 1993 (c).... 3.36%(b) 47,854 0.62%(b)
Institutional Shares
Year Ended August 31, 1997.......... 5.07% 152,041 0.60%
Year Ended August 31, 1996.......... 5.22% 89,733 0.60%
Year Ended August 31, 1995.......... 5.23% 73,802 0.69%
Year Ended August 31, 1994.......... 3.40% 55,771 0.72%
Period Ended August 31, 1993 (c).... 2.97%(b) 34,383 1.07%(b)
Investor Shares
Year Ended August 31, 1997.......... 4.81% 76,480 0.85%
Year Ended August 31, 1996.......... 4.95% 32,731 0.96%
Period Ended August 31, 1995 (c).... 5.14%(b) 4,665 3.76%(b)
</TABLE>
(a) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects the
expense ratio excluding any waivers and reimbursements for the Fund and its
corresponding Portfolio.
(b) Annualized.
(c) See Note 1 for the date each share class commenced operations.
See Notes to Financial Statements.
7
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF ORGANIZATION
Monarch Funds (the "Trust") was formed as a Delaware business trust on July 10,
1992. The Trust, which is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "Act"), currently has
three diversified investment portfolios, Treasury Cash Fund, Government Cash
Fund and Cash Fund (each a "Fund" and collectively the "Funds"). The Funds are
authorized under the Trust's Trust Instrument to issue an unlimited number of
shares of beneficial interest without par value. Each Fund currently is
authorized to issue three classes of shares, Universal Shares, Institutional
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>
Treasury Cash Fund (Institutional Shares) July 12, 1993
Treasury Cash Fund (Investor Shares) October 25, 1995
Government Cash Fund (Universal Shares) October 29, 1992
Government Cash Fund (Institutional Shares) July 15, 1993
Cash Fund (Universal Shares) December 1, 1992
Cash Fund (Institutional Shares) July 15, 1993
Cash Fund (Investor Shares) June 16, 1995
</TABLE>
The Trust previously offered Investor Shares of Government Cash Fund. As of
September 17, 1996, there were no Government Cash Fund Investor Shares
outstanding.
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") which has the same investment objective and
substantially similar policies as the Fund. Core Trust also is registered as an
open-end, management investment company and the portfolios in which the Funds
invest, Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio
(the "Portfolios"), are all diversified. 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. Except for Cash Fund, the Funds own
substantially all of the interests in their respective Portfolio. The percentage
of Cash Portfolio owned by Cash Fund at August 31, 1997, was approximately
95.3%.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Funds' financial statements are prepared in accordance with generally
accepted accounting principles which requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets 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 1:00
p.m., Pacific time, on each Fund business day. Each Fund records its investment
in the Portfolios at value. Valuation of securities held in the Portfolios is
discussed in the Notes to the Financial Statements of Core Trust which are
included elsewhere in this report.
INVESTMENT INCOME AND EXPENSES-Each Fund records daily its prorata share of its
Portfolio's income, expenses and realized gain and loss. In addition, the Fund
accrues its own expenses.
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 shareholder service fees, transfer agent fees,
8
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
AUGUST 31, 1997
- --------------------------------------------------------------------------------
distribution fees and certain other expenses as determined by the Trust's Board
of Trustees (the "Board"). Institutional Shares and Investor Shares incur
shareholder service fees and Investor Shares incur distribution fees. In
addition, there are differences between the classes of shares with respect to
the minimum investment required and voting rights.
FEDERAL TAXES-Each Fund intends to qualify and continue to qualify each year as
a regulated investment company and distribute all of its taxable income. In
addition, by distributing in each calendar year substantially all of its net
investment income, capital gains and certain other amounts, if any, each Fund
will not be subject to a federal excise tax. Therefore, no federal income or
excise tax provision is required.
As of August 31, 1997, certain of the Funds had capital loss carryovers
available to offset future capital gains as follows:
<TABLE>
<S> <C>
Cash Fund (Expires 2003).................... $ 10,851
Cash Fund (Expires 2005).................... 8,527
Government Cash Fund (Expires 2005)......... 27,824
</TABLE>
DISTRIBUTIONS TO SHAREHOLDERS-Distributions to shareholders of net investment
income, if any, 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 ADVISERS-The investment adviser to each Portfolio is Linden Asset
Management, Inc. (the "Adviser"). Pursuant to investment advisory agreements
with respect to each Portfolio among Core Trust, the Adviser and Forum Advisors,
Inc.-Registered Trademark- ("Forum Advisors"), the Adviser may delegate
responsibility for portfolio management to Forum Advisors. A Fund may withdraw
its investment from a Portfolio at any time if the Board determines that it is
in the best interest of the Fund and its shareholders to do so.
MANAGER-The manager of the Trust is Forum Financial Services,
Inc.-Registered Trademark- ("Forum"), a registered broker-dealer and a member of
the National Association of Securities Dealers, Inc. For its management services
and facilities, Forum receives from each Fund a management 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 Forum. For the year ended August 31, 1997,
the respective amounts charged to Treasury Cash Fund, Government Cash Fund and
Cash Fund were $323, $3,662 and $1,268.
TRANSFER AGENT AND SHAREHOLDER SERVICE AGENTS-The transfer agent and dividend
disbursing agent for the Funds is Forum Financial Corp.-Registered Trademark-
(the "Transfer Agent"). The Transfer Agent is paid a transfer agent fee at an
annual rate of 0.20% of the average daily net assets of Institutional Shares and
Investor Shares of the Funds and 0.05% of the average daily net assets of
Universal Shares of each Fund, plus certain account and additional class
charges.
The Trust has adopted a shareholder service plan with respect to Institutional
Shares and Investor Shares under which the Trust pays Forum a shareholder
servicing fee at an annual rate of 0.15% of the average daily net assets of
Institutional Shares and Investor Shares of each Fund. Forum may pay any or all
amounts of these payments to various institutions which provide shareholder
servicing to their customers who hold Institutional Shares or Investor Shares.
DISTRIBUTOR-Forum acts as each Fund's distributor pursuant to a separate
distribution agreement with the Trust. The Trust has adopted a plan of
distribution pursuant to Rule 12b-1 under the Act with respect to Investor
Shares under which the Trust pays Forum a distribution fee at an annual rate of
0.25% of the average daily net assets of Investor Shares of each Fund. Forum may
pay any or all amounts of these
9
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
AUGUST 31, 1997
- --------------------------------------------------------------------------------
payments to various institutions which provide distribution or shareholder
services for Investor Shares. The Plan obligates the Funds to pay Forum as
compensation for Forum's distributions and shareholder services and not as
reimbursement for certain expenses incurred.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
Forum and the Transfer Agent have voluntarily waived a portion of their fees,
and Forum has assumed certain expenses of the Funds. For the year ended August
31, 1997, fees waived and expenses reimbursed were as follows:
<TABLE>
<CAPTION>
MANAGEMENT TRANSFER SHAREHOLDER REIMBURSED
FEE AGENT FEE SERVICE FEE EXPENSES TOTAL
------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Treasury Cash Fund
Institutional Shares $ 18,556 $ 22,400 $ 22,277 $ 5,317 $ 68,550
Investor Shares 5,744 2 2,875 4,393 13,014
Government Cash Fund
Universal Shares 123,045 89,267 -- 3,018 215,330
Institutional Shares -- -- -- -- --
Cash Fund
Universal Shares 2,777 7,247 -- 2,870 12,894
Institutional Shares 116 7 29,315 -- 29,438
Investor Shares -- -- 10,704 -- 10,704
</TABLE>
- --------------------------
SUPPLEMENTARY INFORMATION
DISTRIBUTIONS (UNAUDITED)
During the fiscal year ended August 31, 1997, Government Cash Fund distributed
$2,591 in long term capital gain to shareholders.
SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
The following matter was submitted to a vote of shareholders of each Fund at a
special meeting of shareholders held December 27, 1996: 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. Votes were cast as follows: Treasury Cash
Fund--12,693,830 For; 546,054 Against; 0 Abstained; Government Cash
Fund--195,861,387 For; 40,639,951 Against; 41,946,637 Abstained; and Cash
Fund--57,837,208 For; 45,980,925 Against; 142,400 Abstained.
10
<PAGE>
CORE TRUST (DELAWARE)
ANNUAL REPORT
AUGUST 31, 1997
Treasury Cash Portfolio
Government Cash Portfolio
Cash Portfolio
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Interestholders
Core Trust (Delaware)
We have audited the accompanying statements of assets and liabilities of
Treasury Cash Portfolio, Government Cash Portfolio, and Cash Portfolio, series
of Core Trust (Delaware) (the Portfolios), including the schedules of
investments, as of August 31, 1997, and the related statements of operations for
the year then ended and the statements of changes in net assets for each of the
years in the two-year period then ended. 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.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of August 31, 1997 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Treasury Cash Portfolio,
Government Cash Portfolio, and Cash Portfolio as of August 31, 1997, the results
of their operations for the year then ended and the changes in their net assets
for each of the years in the two-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 3, 1997
12
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
TREASURY CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ------------ ------------------------------ -----------
<C> <S> <C>
U.S. TREASURY BILLS (A) (73.0%)
$15,000,000 4.97%, 9/4/97................. $14,995,858
22,000,000 5.18%, 9/18/97................ 21,948,876
15,000,000 5.04%, 9/25/97................ 14,951,700
-----------
Total U.S. Treasury Bills 51,896,434
-----------
REPURCHASE AGREEMENTS (27.0%)
10,000,000 Nomura Securities, 5.53%,
9/2/97, to be repurchased at
$10,006,144; Collateralized
by $10,000,000 U.S. Treasury
Note, 5.88%, 10/31/98....... 10,000,000
9,200,000 Smith Barney, 5.50%, 9/2/97,
to be repurchased at
$9,205,622; Collateralized
by $9,210,000 U.S. Treasury
Bond, 6.75%, 8/15/25........ 9,200,000
-----------
Total Repurchase Agreements 19,200,000
-----------
Total Investments (100.0%) $71,096,434
-----------
-----------
</TABLE>
(A) Annualized yields at time of purchase.
See Notes to Financial Statements.
13
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
GOVERNMENT CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ------------ ------------------------------ ------------
<C> <S> <C>
U.S. GOVERNMENT SECURITIES (64.2%)
FEDERAL FARM CREDIT BANK (B)(3.8%)
$18,000,000 5.51%, 4/1/99................. $ 18,000,000
FEDERAL HOME LOAN BANK (A) (3.2%)
15,000,000 5.42%, 9/12/97................ 14,977,416
FEDERAL NATIONAL MORTGAGE ASSOCIATION (A)(25.0%)
38,590,000 5.45%, 9/12/97................ 38,531,633
67,000,000 5.45%, 9/15/97................ 66,868,153
13,565,000 5.45%, 9/29/97................ 13,509,604
------------
Total Federal National Mortgage Association 118,909,390
------------
SMALL BUSINESS ADMINISTRATION (B)(12.7%)
396,208 Pool# 500545, 8.38%,
3/25/03..................... 398,567
400,744 Pool# 500746, 7.75%,
11/25/01.................... 400,744
1,316,936 Pool# 501077, 7.00%,
11/25/14.................... 1,329,259
2,537,728 Pool# 501308, 7.00%,
10/25/15.................... 2,596,521
3,474,044 Pool# 501543, 6.88%,
7/25/16..................... 3,489,518
476,870 Pool# 501628, 8.38%,
9/25/04..................... 476,870
1,496,499 Pool# 501690, 6.63%,
12/25/16.................... 1,508,193
1,977,024 Pool# 501898, 6.75%,
7/25/17..................... 1,986,144
7,425,344 Pool# 502150, 6.50%,
2/25/18..................... 7,545,123
720,884 Pool# 502161, 6.50%,
2/25/18..................... 727,425
4,234,179 Pool# 502208, 6.50%,
2/25/18..................... 4,304,032
2,285,160 Pool# 502306, 6.50%,
2/25/18..................... 2,322,533
3,240,455 Pool# 502613, 6.50%,
4/25/19..................... 3,240,455
1,228,725 Pool# 503058, 6.38%,
7/25/15..................... 1,228,725
1,796,427 Pool# 503082, 6.38%,
8/25/20..................... 1,796,427
2,422,208 Pool# 503120, 6.38%,
11/25/20.................... 2,422,208
476,247 Pool# 503121, 6.38%,
8/25/15..................... 476,247
3,020,638 Pool# 503232, 6.13%,
12/25/15.................... 3,020,638
1,239,839 Pool# 503278, 6.13%,
2/25/21..................... 1,239,814
2,956,148 Pool# 503431, 6.25%,
7/25/21..................... 2,957,922
3,683,718 Pool# 503461, 6.25%,
9/25/21..................... 3,685,951
3,482,960 Pool# 503472, 6.25%,
8/25/21..................... 3,485,060
1,230,514 Pool# 503553, 6.13%,
11/25/21.................... 1,227,449
5,131,030 Pool# 503671, 6.13%,
3/25/22..................... 5,131,030
1,994,249 Pool# 503754, 6.13%,
5/25/22..................... 1,994,249
1,216,575 Pool# 503780, 6.13%,
3/25/22..................... 1,218,090
------------
Total Small Business Administration 60,209,194
------------
STUDENT LOAN MARKETING ASSOCIATION (B)(4.8%)
8,000,000 5.41%, 8/20/98................ 8,000,000
10,000,000 5.41%, 11/10/98............... 10,000,000
5,000,000 5.43%, 1/13/99................ 5,000,000
------------
Total Student Loan Marketing Association 23,000,000
------------
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ------------ ------------------------------ ------------
<C> <S> <C>
STUDENT LOAN MARKETING ASSOCIATION--DISCOUNT NOTES
(A)(14.7%)
$70,000,000 5.44%, 9/2/97................. $ 70,000,000
------------
Total U.S. Government Securities 305,096,000
------------
REPURCHASE AGREEMENTS (35.8%)
45,000,000 Bear, Stearns & Co., Inc.,
5.63%, 9/2/97, to be
repurchased at $45,028,150;
Collateralized by
$66,130,386 FHLMC--GNMA 7
PO, 0%, 6/17/27............. 45,000,000
15,000,000 Nomura Securities, 5.58%,
9/2/97, to be repurchased at
$15,009,300; Collateralized
by $37,095,000 FNMA 251 PO,
0%, 11/1/23................. 15,000,000
45,150,000 Nomura Securities, 5.61%,
9/2/97, to be repurchased at
$45,178,144; Collateralized
by $61,305,000 FNMA 281 PO,
0%, 11/1/26................. 45,150,000
65,000,000 Smith Barney, 5.59%, 9/2/97,
to be repurchased at
$65,070,651; Collateralized
by $50,000,000 FHLMC 184 PO,
0%, 5/1/27; $8,700,000 FHLMC
1695 AC, 6.09%, 1/15/24;
$27,500,000 FNMA 1992-197 A,
6.50%, 7/25/18.............. 65,000,000
------------
Total Repurchase Agreements 170,150,000
------------
Total Investments (100.0%) $475,246,000
------------
------------
</TABLE>
(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 or the longer of the demand period or
readjustment. The interest rates shown reflect the rate in effect on August
31, 1997.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GNMA--Government National Mortgage Association
See Notes to Financial Statements.
14
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ------------ ------------------------------ ------------
<C> <S> <C>
U.S. GOVERNMENT SECURITIES (45.8%)
FEDERAL FARM CREDIT BANK (A) (14.6%)
$38,000,000 5.44%, 9/3/97................. $ 37,994,258
------------
SMALL BUSINESS ADMINISTRATION (B) (8.0%)
359,486 Pool# 500536, 7.50%,
5/25/13..................... 365,858
637,976 Pool# 500730, 8.38%,
2/25/04..................... 652,365
8,414 Pool# 500737, 7.75%,
12/25/97.................... 8,414
46,995 Pool# 501256, 7.45%,
7/25/98..................... 46,995
1,533,813 Pool# 501733, 6.50%,
2/25/17..................... 1,558,776
1,592,429 Pool# 501989, 6.63%,
10/25/12.................... 1,602,943
435,494 Pool# 502914, 6.50%,
3/25/15..................... 435,969
1,904,988 Pool# 503121, 6.38%,
9/25/15..................... 1,904,988
5,678,187 Pool# 503429, 6.25%,
6/25/16..................... 5,678,187
920,929 Pool# 503461, 6.25%,
9/25/21..................... 921,495
4,533,406 Pool# 503553, 6.13%,
11/25/21.................... 4,521,251
2,991,374 Pool# 503754, 6.13%,
5/25/22..................... 2,991,374
------------
Total Small Business Administration 20,688,615
------------
STUDENT LOAN MARKETING ASSOCIATION (B)(3.1%)
6,000,000 5.61%, 1/21/98................ 6,000,000
2,000,000 5.60%, 2/17/98................ 2,000,000
------------
Student Loan Marketing Association 8,000,000
STUDENT LOAN MARKETING ASSOCIATION DISCOUNT NOTES(A)(20.1%)
52,000,000 5.44%, 9/2/97................. 52,000,000
------------
Total U.S. Government Securities 118,682,873
------------
BANK NOTES (B)(3.1%)
7,998,304 Bankers Trust New York Corp.,
5.66%, 7/21/98.............. 7,998,304
------------
COMMERCIAL PAPER (A)(8.9%)
5,000,000 American Express Credit Corp.,
5.54%, 9/17/97.............. 4,988,458
8,000,000 Ford Motor Credit Corp.,
5.54%, 9/17/97.............. 7,981,533
10,000,000 General Electric Capital
Corp., 5.52%, 10/7/97....... 9,946,333
------------
Total Commercial Paper 22,916,324
------------
CORPORATE NOTES (8.1%)
6,000,000 Bank of America N.A., 5.65%
V/R, 4/16/98................ 6,000,000
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ------------ ------------------------------ ------------
<C> <S> <C>
CORPORATE NOTES, CONTINUED:
$ 5,000,000 Bear, Stearns & Co., Inc.,
5.63% V/R, 1/6/98........... $ 5,000,000
5,000,000 Merrill Lynch & Co., Inc.,
5.61% V/R, 3/4/98........... 4,999,885
5,000,000 Merrill Lynch & Co., Inc.,
5.68% V/R, 7/24/98.......... 5,000,000
------------
Total Corporate Notes 20,999,885
------------
REPURCHASE AGREEMENTS (34.1%)
25,000,000 Bear, Stearns & Co., Inc.,
5.63%, 9/2/97, to be
repurchased at $25,015,639;
Collateralized by
$36,860,000 FHLMC - GNMA
7 PO, 0%, 6/17/27........... 25,000,000
28,310,000 Nomura Securities, 5.61%,
9/2/97, to be repurchased at
$28,327,647; Collateralized
by $38,440,000 FNMA 281 PO,
0%, 11/1/26................. 28,310,000
35,000,000 Smith Barney, 5.59%, 9/2/97,
to be repurchased at
$35,038,043; Collateralized
by $50,000,000 FHLMC 183 IO,
7.00%, 4/1/27; $25,000,000
FHLMC 1611 G, 6.19%,
5/15/21; $15,000,000 FNMA
1993-172 F, 6.03%,
9/25/00..................... 35,000,000
------------
Total Repurchase Agreements 88,310,000
------------
Total Investments (100.0%) $258,907,386
------------
------------
</TABLE>
(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 or the longer of the demand period or
readjustment. The interest rates shown reflect the rate in effect on August
31, 1997.
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
GNMA--Government National Mortgage Association
V/R --Variable Rate
See Notes to Financial Statements.
15
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
------------- --------------- --------------
<S> <C> <C> <C>
ASSETS:
Investments: (Note 2)
Investments at amortized cost................................ $ 51,896,434 $ 305,096,000 $ 170,597,386
Repurchase agreements at cost................................ 19,200,000 170,150,000 88,310,000
------------- --------------- --------------
Total investments at value................................. 71,096,434 475,246,000 258,907,386
Cash........................................................... 17,471 34,002 33,236
Interest and other receivables................................. 1,459 1,572,436 579,311
Organization costs, net of amortization (Note 2)............... 718 13,169 3,562
------------- --------------- --------------
Total Assets..................................................... 71,116,082 476,865,607 259,523,495
------------- --------------- --------------
LIABILITIES:
Payable to adviser (Note 3).................................... 2,401 16,970 8,218
Payable to other related parties (Note 3)...................... 4,490 30,672 6,996
Accrued expenses............................................... 6,671 49,220 17,270
------------- --------------- --------------
Total Liabilities................................................ 13,562 96,862 32,484
------------- --------------- --------------
NET ASSETS....................................................... $ 71,102,520 $ 476,768,745 $ 259,491,011
------------- --------------- --------------
------------- --------------- --------------
COMPONENTS OF NET ASSETS:
Investors' capital............................................. $ 71,102,520 $ 476,768,745 $ 259,491,011
------------- --------------- --------------
NET ASSETS....................................................... $ 71,102,520 $ 476,768,745 $ 259,491,011
------------- --------------- --------------
------------- --------------- --------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income.................................................. $2,597,996 $ 27,916,906 $ 10,383,977
------------ --------------- -------------
EXPENSES:
Investment advisory (Note 3)..................................... 19,083 196,857 72,872
Administration (Note 3).......................................... 24,287 252,821 92,652
Custody.......................................................... 12,143 126,410 46,326
Accounting (Note 3).............................................. 24,279 48,000 48,000
Legal (Note 3)................................................... 1,217 13,307 4,723
Audit............................................................ 3,664 25,895 12,541
Trustees......................................................... 754 4,888 1,919
Miscellaneous.................................................... 1,786 32,388 6,572
------------ --------------- -------------
Total expenses..................................................... 87,213 700,566 285,605
Fees waived (Note 4)............................................... (14,346) -- (7,621)
------------ --------------- -------------
Net expenses....................................................... 72,867 700,566 277,984
------------ --------------- -------------
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
------------ --------------- -------------
------------ --------------- -------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 1996 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ----------------- ---------------
<S> <C> <C> <C>
NET ASSETS--September 1, 1995............................... $ -- $ -- $ --
--------------- ----------------- ---------------
OPERATIONS:
Net investment income..................................... 2,035,977 25,307,996 6,173,705
Net realized gain (loss) on investments sold.............. 3,474 11,721 6,420
--------------- ----------------- ---------------
Net increase (decrease) in net assets resulting from
operations............................................ 2,039,451 25,319,717 6,180,125
--------------- ----------------- ---------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions............................................. 338,723,762 1,854,582,628 466,894,348
Withdrawals............................................... (257,291,547) (1,371,802,551) (346,791,550)
--------------- ----------------- ---------------
Net transactions in investors' beneficial interests..... 81,432,215 482,780,077 120,102,798
--------------- ----------------- ---------------
Net increase (decrease)................................. 83,471,666 508,099,794 126,282,923
--------------- ----------------- ---------------
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 (decrease) 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)................................. (12,369,146) (31,331,049) 133,208,088
--------------- ----------------- ---------------
NET ASSETS--August 31, 1997................................. $ 71,102,520 $ 476,768,745 $ 259,491,011
--------------- ----------------- ---------------
--------------- ----------------- ---------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF ORGANIZATION
Core Trust (Delaware) ("Core Trust") was formed as a Delaware business trust on
September 1, 1994. Core Trust, which is registered as an open-end, management
investment company under the Investment Company Act of 1940 (the "Act"),
currently has seventeen separate investment portfolios. These financial
statements relate to Treasury Cash Portfolio, Government Cash Portfolio and Cash
Portfolio (each a "Portfolio" and collectively the "Portfolios"), each of which
is diversified. The 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.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Portfolios' financial statements are prepared in accordance with generally
accepted accounting principles which requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets from
operations during the fiscal period. Actual results could differ from those
estimates.
The following represent significant accounting policies of the Portfolios:
PORTFOLIO VALUATION-Core Trust determines the net asset value per share of each
Portfolio as of 1:00 p.m., Pacific time, on each Portfolio business day
utilizing the amortized cost method pursuant to Rule 2a-7 under the Act. Under
this method, all investments purchased at a discount or premium are valued by
accreting or amortizing, respectively, the difference between the original
purchase price and the maturity value of the investment over the period to the
investment's maturity.
REPURCHASE AGREEMENTS-The Portfolios may invest in repurchase agreements. Each
Portfolio, through its custodian, receives delivery of the underlying
securities, whose market value must always equal or exceed the repurchase price
plus accrued interest. The investment adviser is responsible for determining the
value of the underlying securities at all times. In the event of default, the
Portfolio may have difficulties with the disposition of such securities.
ORGANIZATIONAL COSTS-The costs incurred by each Portfolio in connection with its
organization have been capitalized and are being amortized using the
straight-line method over a five year period beginning on the commencement of
each Portfolio's operations. These costs were paid by Forum Financial Corp. and
were reimbursed by the Portfolios.
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 holdings of the Portfolio regardless of whether such
interest, dividends or gain has been distributed by the Portfolio.
SECURITIES TRANSACTIONS, INTEREST INCOME AND REALIZED GAIN AND LOSS-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, 1997 is the same as for financial accounting purposes.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISERS-The investment adviser to each Portfolio is Linden Asset
Management, Inc. (the "Adviser"). Effective January 1, 1997, pursuant to
investment advisory agreements with respect to each Portfolio, the Adviser
receives from each Portfolio an advisory fee based upon the total average daily
net
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<PAGE>
CORE TRUST (DELAWARE)
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NOTES TO FINANCIAL STATEMENTS (concluded)
AUGUST 31, 1997
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assets of the Portfolios ("Total Portfolio Assets") that is calculated on a
cumulative basis as follows: 0.06% for the first $200 million of Total Portfolio
Assets, 0.04% of the next $300 million of Total Portfolio Assets and 0.03% of
the remaining Total Portfolio Assets. The minimum total annual advisory fee is
$50,000.
Prior to January 1, 1997, the Adviser received from each Portfolio an advisory
fee based upon Total Portfolio Assets that was calculated on a cumulative basis
as follows: 0.05% for the first $200 million of Total Portfolio Assets, 0.03% of
the next $300 million of Total Portfolio Assets and 0.02% of the remaining Total
Portfolio Assets.
Pursuant to investment advisory agreements with respect to each Portfolio among
Core Trust, the Adviser and Forum Advisors, Inc.-Registered Trademark- ("Forum
Advisors"), the Adviser may delegate responsibility for portfolio management to
Forum Advisors. To the extent the Adviser has so delegated its responsibilities,
the Adviser pays its advisory fee to Forum Advisors.
ADMINISTRATOR-The administrator of each Portfolio is Forum Financial Services,
Inc.-Registered Trademark- ("Forum"), a registered broker-dealer and a member of
the National Association of Securities Dealers, Inc. For its administrative
services and facilities, Forum receives from each Portfolio an administration
fee at an annual rate of 0.05% of the average daily net assets of the Portfolio.
In addition, certain legal expenses are charged to the Funds by Forum. For the
year ended August 31, 1997, the respective amounts charged to Treasury Cash
Portfolio, Government Cash Portfolio and Cash Portfolio were $380, $3,953 and
$1,354.
OTHER SERVICE PROVIDERS-The interestholder record keeper and fund accountant of
the Portfolios is Forum Accounting Services, Limited Liability Company ("FAS").
FAS is paid an annual accounting fee of the lesser of 0.05% of the average daily
net assets of the Portfolio on an annualized basis or $48,000, plus certain
additional charges for each interestholder in the Portfolio.
PLACEMENT AGENT-Forum acts as Core Trust's placement agent pursuant to a
separate agreement with Core Trust and receives no compensation for these
services.
NOTE 4. WAIVER OF FEES
Forum has voluntarily waived a portion of its fees. For the year ended August
31, 1997, Forum waived administration fees for Treasury Cash Portfolio and Cash
Portfolio in the amount of $14,346 and $7,621, respectively.
NOTE 5. INCOME AND EXPENSE RATIOS
Portfolio income and expense ratios for the years ended August 31, 1996 and 1997
are presented below. During the period, various fees were waived. The ratio of
Gross Expenses to Average Net Assets reflects the expense ratio excluding any
waivers.
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
-------------------------------------
NET
INVESTMENT GROSS
EXPENSES INCOME EXPENSES
----------- ----------- -----------
<S> <C> <C> <C>
Treasury Cash Portfolio
Year Ended August 31, 1997.................................................... 0.15% 5.20% 0.18%
Year Ended August 31, 1996.................................................... 0.15% 5.30% 0.20%
Government Cash Portfolio
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, 1997.................................................... 0.15% 5.45% 0.15%
Year Ended August 31, 1996.................................................... 0.15% 5.50% 0.16%
</TABLE>
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<PAGE>
CORE TRUST (DELAWARE)
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SUPPLEMENTARY INFORMATION
AUGUST 31, 1997
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SPECIAL MEETING OF INTERESTHOLDERS (unaudited)
The following matter was submitted to a vote of interestholders of each
Portfolio at a special meeting held December 27, 1996: 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
the Portfolios. Interests in each of the Portfolios were voted as follows:
Treasury Cash Portfolio--95.88% For; 4.12% Against; 0% Abstained; Government
Cash Portfolio--70.34% For; 29.66% Against; 0% Abstained; and Cash
Portfolio--58.63% For; 41.37% Against; 0% Abstained.
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