As filed with the Securities and Exchange Commission on December 19, 1997
File No. 33-49570
File No. 811-6742
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 15
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 16
MONARCH FUNDS
(Exact Name of Registrant as Specified in its Charter)
Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: 207-879-1900
David I. Goldstein, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to Rule 485, paragraph (b)
_____ on [ ] pursuant to Rule 485, paragraph (b)
__X__ 60 days after filing pursuant to Rule 485, paragraph (a)(i)
_____ on [ ] pursuant to Rule 485, paragraph (a)(i)
_____ 75 days after filing pursuant to Rule 485, paragraph (a)(ii)
_____ on [ ] pursuant to Rule 485, paragraph (a)(ii)
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
EACH FUND OF THE REGISTRANT IS CURRENTLY STRUCTURED AS A MASTER-FEEDER FUND.
THIS AMENDMENT INCLUDES A MANUALLY EXECUTED SIGNATURE PAGE FOR THE MASTER FUNDS,
EACH A SERIES OF CORE TRUST (DELAWARE).
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CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(C))
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FORM N-1A LOCATION IN PROSPECTUS
ITEM NO. (CAPTION)
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary
Item 3. Condensed Financial Financial Highlights; Other Information
Information
Item 4. General Description of Registrant Prospectus Summary; Investment Objective and
Policies; Other Information
Item 5. Management of the Fund Prospectus Summary; Management of the Trust
Item 5A. Management's Discussion of Not Applicable
Fund Performance
Item 6. Capital Stock and Investment Objective and Policies;
Other Securities Dividends and Tax Matters; Other Information;
Purchases of Shares; Redemptions of Shares
Item 7. Purchase of Securities Purchases of Shares; Determination
Being Offered of Net Asset Value; Management of the Trust
Item 8. Redemption or Repurchase Redemptions of Shares
Item 9. Pending Legal Proceedings Not Applicable
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LOCATION IN STATEMENT
FORM N-1A OF ADDITIONAL INFORMATION
ITEM NO. (CAPTION)
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and History Management
Item 13. Investment Objectives and Policies Investment Policies; Investment Limitations
Item 14. Management of the Fund Management; Other Information
Item 15. Control Persons and Principal Management; Other Information
Holders of Securities
Item 16. Investment Advisory and Other Management; Other Information
Services
Item 17. Brokerage Allocation Portfolio Transactions
and Other Practices
Item 18. Capital Stock and Other Securities Determination of Net Asset Value
Item 19. Purchase, Redemption and Pricing Determination of Net Asset Value;
of Securities Being Offered Additional Purchase and Redemption Information
Item 20. Tax Status Taxation
Item 21. Underwriters Management
Item 22. Calculation of Performance Data Performance Data
Item 23. Financial Statements Financial Statements
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MONARCH FUNDS
================================================================================
UNIVERSAL SHARES
Treasury Cash Fund
Government Cash Fund
Cash Fund
PROSPECTUS
January 1, 1998
- --------------------------------------------------------------------------------
This Prospectus offers Universal Shares of Treasury Cash Fund, Government Cash
Fund and Cash Fund (each a "Fund" and collectively the "Funds"). Each Fund is a
diversified money market portfolio of Monarch Funds (the "Trust"), an open-end,
management investment company. Each Fund seeks to provide its shareholders with
high current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.
Treasury Cash Fund, Government Cash Fund and Cash Fund each seeks to achieve its
investment objective by investing all of its investable assets in Treasury Cash
Portfolio, Government Cash Portfolio and Cash Portfolio (each a "Portfolio" and
collectively the "Portfolios"), respectively. The Portfolios are separate series
of Core Trust (Delaware) ("Core Trust"), an open-end, management investment
company. See "Other Information - Fund Structure." Accordingly, each Fund's
investment experience will correspond directly with that of the Portfolio in
which it invests. Through its corresponding Portfolio:
TREASURY CASH FUND invests primarily in obligations of the U.S.
Treasury and in repurchase agreements backed by these obligations.
GOVERNMENT CASH FUND invests primarily in high-quality obligations of
the U.S. Government, its agencies and instrumentalities and in
repurchase agreements backed by these obligations.
CASH FUND invests in a broad spectrum of high-quality money market
instruments.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. Investors
should read this Prospectus and retain it for future reference. The Trust has
filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated January 1, 1998, as may be amended ("SAI"), which
contains more detailed information about the Trust and the Funds and which is
available together with other related materials for reference on the SEC's
Internet Web Site (http://www.sec.gov). The SAI, which is incorporated into the
Prospectus by reference, also is available without charge by contacting the
Trust's distributor, Forum Financial Services, Inc., at Two Portland Square,
Portland, Maine 04101.
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TABLE OF CONTENTS
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1. Prospectus Summary............................ 5. Purchases of Shares...............................
2. Financial Highlights.......................... 6. Redemptions of Shares.............................
3. Investment Objective and Policies............. 7. Distributions and Tax Matters.....................
4. Management.................................... 8. Other Information................................
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</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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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1. PROSPECTUS SUMMARY
FUND HIGHLIGHTS
This prospectus offers shares of the Universal class ("Universal Shares") of
each of the Funds. The Funds operate in accordance with the provisions of Rule
2a-7 under the Investment Company Act of 1940.
MANAGEMENT. Forum Administrative Services, LLC ("Forum") supervises the overall
management of the Funds and the Portfolios. Forum Financial Services, Inc.
("FFSI") is the distributor of the Funds' shares. Forum Investment Advisors, LLC
(the "Adviser") is the investment adviser of each Portfolio and provides
professional management of the Portfolios' investments. The Trust's transfer
agent and dividend disbursing agent is Forum Financial Corp. See "Management"
for a description of the services provided and fees charged to the Funds.
PURCHASES AND REDEMPTIONS. The minimum initial investment in Universal Shares is
$1,000,000. Universal Shares may be purchased and redeemed Monday through
Friday, between the hours of 6:00 a.m. and 3:00 p.m., Pacific time, except on
Federal holidays and other days that the Federal Reserve Bank of San Francisco
is closed ("Fund Business Days"). To be eligible to receive that days' income,
purchase orders must be received by the Transfer Agent in good order no later
than 11:00 a.m., Pacific time. Shareholders may elect to have redemptions of
over $5,000 redeemed by bank wire to a designated bank account. To be able to
receive redemption proceeds by wire on the day of the redemption, redemption
orders must be received by the transfer agent in good order no later than 11:00
a.m., Pacific time. All times may be changed without notice by Fund management
due to market activities. See "Purchases of Shares" and "Redemptions of Shares."
EXCHANGES. Shareholders may exchange Universal Shares for Universal Shares of
the other Funds. See "Redemptions of Shares - Exchange Program."
DISTRIBUTIONS. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."
INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Funds
invest only in money market instruments, all securities, including U.S.
Government Securities, involve some level of investment risk. An investment in a
Fund is not insured by the FDIC, nor is it insured or guaranteed against loss of
principal.
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Universal Shares will bear directly or
indirectly. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares. For a further description of the
various expenses incurred in the operation of the Funds and the Portfolios, see
"Management." Expenses for each Fund are based on the Funds' fiscal year ended
August 31, 1997 except that expenses for Treasury Cash Fund are estimated for
its fiscal year ending August 31, 1998.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)(1)
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Treasury Government
Cash Fund Cash Fund Cash Fund
--------- ---------- ---------
Management Fees(2) (after fee waivers) 0.09% 0.09% 0.09%
Rule 12b-1 Fees None None None
Other Expenses (after expense reimbursements) 0.16% 0.08% 0.14%
----- ----- -----
Total Operating Expenses 0.25% 0.17% 0.23%
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(1) All information includes the Fund's pro rata portion of the expenses of its
corresponding Portfolio. Absent expense reimbursements and fee waivers, the
expenses of Treasury Cash Fund, Government Cash Fund and Cash Fund would
be: Management Fees; 0.14%, 0.14% and 0.14%; Other Expenses; 0.36%, 0.12%
and 0.33%; and Total Operating Expenses, 0.50%, 0.26% and 0.47%.
(2) Includes all advisory, management and administration fees.
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EXAMPLE
You would pay directly or indirectly the following expenses on a $1,000
investment in Universal Shares, assuming a 5% annual return and redemption at
the end of each period:
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ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Treasury Cash Fund $3 $8 $14 $32
Government Cash Fund $2 $5 $10 $22
Cash Fund $2 $7 $13 $29
</TABLE>
The example is based on the expenses listed in the table above and assumes the
reinvestment of all distributions. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN
MAY BE GREATER OR LESS THAN INDICATED.
2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Universal Share of Government Cash Fund and Cash Fund for the periods indicated.
Until August 31, 1995, the Funds invested directly in portfolio securities. As
of January 1, 1998, no Universal Shares of Treasury Cash Fund were outstanding;
selected data for a single outstanding Institutional Share of that Fund is
shown. This information has been audited by KPMG Peat Marwick LLP, independent
auditors. The Funds' financial statements and the independent auditors' report
thereon are incorporated by reference into the SAI and may be obtained without
charge upon request.
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Ratios to Average
Beginning Assets Net Ratio to
Net Net --------------------- Assets at Average Net
Asset Distributions Ending End of Assets
Value Net From Net Net Asset Net Period ------
Per Investment Investment Value per Investment Total (000's Gross
Share Income Income Share Expenses Income Return Omitted) Expenses(a)
----- ------ ------ ----- -------- ------ ------ -------- -----------
TREASURY CASH FUND(C)
INSTITUTIONAL SHARES
Year Ended August 31, 1997 $ 1.00 $0.05 $(0.05) $ 1.00 0.45% 4.89% 4.98% $ 40,803 0.66%
Year Ended August 31, 1996 1.00 0.05 (0.05) 1.00 0.45% 5.01% 5.15% 79,259 0.69%
Year Ended August 31, 1995 1.00 0.05 (0.05) 1.00 0.42% 5.18% 5.28% 28,530 0.86%
Year Ended August 31, 1994 1.00 0.03 (0.03) 1.00 0.42% 3.03% 3.11% 41,194 0.74%
July 12, 1993 to Aug. 1.00 ------ ------ 1.00 0.45%(b) 2.65%(b) 2.81%(b) 39,660 1.09%(b)
31,1993
GOVERNMENT CASH FUND(C)
UNIVERSAL SHARES
Year Ended August 31, 1997 1.00 0.05 (0.05) 1.00 0.17% 5.35% 5.49% 230,410 0.26%
Year Ended August 31, 1996 1.00 0.05 (0.05) 1.00 0.19% 5.43% 5.59% 248,986 0.28%
Year Ended August 31, 1995 1.00 0.06 (0.06) 1.00 0.24% 5.46% 5.78% 182,546 0.52%
Year Ended August 31, 1994 1.00 0.04 (0.04) 1.00 0.28% 3.48% 3.64% 158,798 0.49%
Oct. 29, 1992 to Aug. 31, 1.00 0.03 (0.03) 1.00 0.21%(b) 3.19%(b) 3.23%(b) 158,516 0.52%(b)
1993
CASH FUND(C)
UNIVERSAL SHARES
Year Ended August 31, 1997 1.00 0.05 (0.05) 1.00 0.23% 5.32% 5.43% 8,453 0.47%
Year Ended August 31, 1996 1.00 0.05 (0.05) 1.00 0.27% 5.48% 5.53% 3,272 0.43%
Year Ended August 31, 1995 1.00 0.06 (0.06) 1.00 0.27% 5.59% 5.75% 26,525 0.56%
Year Ended August 31, 1994 1.00 0.04 (0.04) 1.00 0.27% 3.50% 3.69% 22,105 0.55%
Dec. 1, 1992 to Aug. 31, 1.00 0.03 (0.03) 1.00 0.25%(b) 3.29%(b) 3.36%(b) 47,854 0.62%(b)
1993
</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 in the absence of any waivers and reimbursements for the
Fund and its respective Portfolio.
(b) Annualized.
(c) As of August 31, 1997, the total net assets of each Fund (combining the
assets of each class of shares) was: Treasury Cash Fund, $70,948,273,
Government Cash Fund, $475,566,735, and Cash Fund, $246,974,489.
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3. INVESTMENT OBJECTIVE AND POLICIES
Each Fund has an investment policy that allows it to invest all of its
investable assets in its corresponding Portfolio. All other investment policies
of each Fund and its corresponding Portfolio are identical. Therefore, although
the following discusses the investment policies of the Portfolios (and the
responsibilities of Core Trust's board of trustees (the "Core Trust Board"), it
applies equally to the Funds (and the Trust's board of trustees (the "Board")).
INVESTMENT OBJECTIVE
The investment objective of each Fund is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity. Each Fund currently seeks to achieve its investment objective by
investing all of its investable assets in its corresponding Portfolio, which has
the same investment objective. There can be no assurance that any Fund or
Portfolio will achieve its investment objective.
INVESTMENT POLICIES
Each Portfolio invests only in high quality, U.S. dollar-denominated short-term
money market instruments that are determined by the Adviser, pursuant to
procedures adopted by the Core Trust Board, to be eligible for purchase and to
present minimal credit risks. High quality instruments include those that (i)
are rated (or, if unrated, are issued by an issuer with comparable outstanding
short-term debt that is rated) in the highest rating category by two nationally
recognized statistical rating organizations ("NRSROs") or, if only one NRSRO has
issued a rating, by that NRSRO or (ii) are otherwise unrated and determined by
the Adviser to be of comparable quality. A description of the rating categories
of certain NRSROs, such as Standard & Poor's Corporation and Moody's Investors
Service, Inc., is contained in the SAI.
Each Portfolio invests only in instruments that have a remaining maturity of 397
days or less (as calculated under Rule 2a-7 under the Investment Company Act of
1940 (the "1940 Act")) and maintains a dollar-weighted average portfolio
maturity of 90 days or less. Except to the limited extent permitted by Rule 2a-7
and except for U.S. Government Securities, each Portfolio will not invest more
than 5% of its total assets in the securities of any one issuer. As used in this
prospectus, "U.S. Government Securities" means obligations issued or guaranteed
as to principal and interest by the United States Government, its agencies or
instrumentalities and "Treasury Securities" means U.S. Treasury bills and notes
and other U.S. Government Securities which are guaranteed as to principal and
interest by the U.S. Treasury.
Although each Portfolio only invests in high quality money market instruments,
an investment in a Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value when
there is a change in interest rates, the issuer's actual or perceived
creditworthiness or the issuer's ability to meet its obligations.
TREASURY CASH FUND
Treasury Cash Portfolio seeks to maintain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.
GOVERNMENT CASH FUND
Government Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities and in repurchase
agreements backed by U.S. Government Securities. The U.S. Government Securities
in which the Portfolio may invest include Treasury Securities and securities
supported primarily or solely by the creditworthiness of the issuer, such as
securities of the Federal National Mortgage Association. There is no guarantee
that the U.S. Government will support securities not backed by its full faith
and credit. Accordingly, although these securities have historically involved
little risk of loss of principal if held to maturity, they may involve more risk
than securities backed by the U.S. Government's full faith and credit.
CASH FUND
Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments. The Portfolio may invest in (i)
obligations of domestic financial institutions, (ii) U.S. Government Securities
(see "Investment Objective and Policies - Government Cash Portfolio") and (iii)
corporate debt obligations of domestic issuers.
Financial institution obligations include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of banks (including savings
banks and savings associations) and their foreign branches. The Portfolio limits
its investments in bank obligations to banks which at the time of investment
have total assets in excess of one billion dollars. Certificates of deposit
represent an institution's obligation to repay funds deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations
of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-
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negotiable deposits with a banking institution that earn a specified interest
rate over a given period. Certificates of deposit and fixed time deposits, which
are payable at the stated maturity date and bear a fixed rate of interest,
generally may be withdrawn on demand by the Portfolio but may be subject to
early withdrawal penalties which could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" without registration under
the Securities Act of 1933. These "restricted securities" are restricted as to
disposition under the Federal securities laws in that any sale of these
securities may not be made absent registration under the Securities Act of 1933
or an appropriate exemption therefrom.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, may not be changed without approval of the
holders of a majority of the Fund's or Portfolio's, as applicable, outstanding
voting securities (as defined in the 1940 Act). Except as otherwise indicated in
this prospectus or in the SAI, investment policies of a Fund or a Portfolio may
be changed by the applicable board of trustees without shareholder approval.
Each Portfolio may borrow money for temporary or emergency purposes (including
the meeting of redemption requests), but not in excess of 33 1/3% of the value
of the Portfolio's total assets. Borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's total
assets. Each Portfolio is permitted to hold cash in any amount pending
investment in securities and may invest in other investment companies that
intend to comply with Rule 2a-7 and have substantially similar investment
objectives and policies. To the extent a Portfolio invests in other money funds,
it will indirectly bear the expenses of those funds. A further description of
the Funds' and the Portfolios' investment policies is contained in the SAI.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain risks not associated with direct investment in securities. The
Portfolios, however, intend to enter into repurchase agreements only with
sellers which the Adviser believes present minimal credit risks in accordance
with guidelines established by the Core Trust Board. In the event that a seller
defaulted on its repurchase obligation, however, a Portfolio might suffer a
loss.
LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including repurchase agreements
not entitling the Portfolio to payment of principal within seven days. There may
not be an active secondary market for securities held by a Portfolio. The value
of securities that have a limited market tend to fluctuate more than those that
have an active market. For this reason, a Portfolio could suffer a loss with
respect to an instrument. The Adviser monitors the liquidity of the Portfolios'
investments, but there can be no guarantee that an active secondary market will
exist.
WHEN-ISSUED SECURITIES. In order to assure itself of being able to obtain
securities at prices which the Adviser believes might not be available at a
future time, each Portfolio may purchase securities on a when-issued or delayed
delivery basis. Securities so purchased are subject to market price fluctuation
and no interest on the securities accrues to a Portfolio until delivery and
payment take place. Accordingly, the value of the securities on the delivery
date may be more or less than the purchase price. Commitments for when-issued or
delayed delivery transactions will be entered into only when a Portfolio has the
intention of actually acquiring the securities. Failure by the other party to
deliver a security purchased by a Portfolio may result in a loss or missed
opportunity to make an alternative investment.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Portfolios
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Securities
with ultimate maturities of greater than 397 days may be purchased only in
accordance with the provisions to Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features that comply with certain
requirements and certain long-term U.S. Government Securities may be purchased.
Similar to fixed rate debt instruments, variable and floating rate instruments
are subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
short-term market
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rates (these prohibited securities are often referred to as "derivative"
securities). All variable and floating rate securities purchased by a Portfolio
will have an interest rate that is adjusted based on a single short-term rate or
index, such as the Prime Rate.
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invest only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. In addition, these Portfolios limit their investments to those
permissible for Federally chartered credit unions under applicable provisions of
the Federal Credit Union Act and the applicable rules and regulations of the
National Credit Union Administration. Government Cash Portfolio limits its
investments to investments that are legally permissible for Federally chartered
savings associations without limit as to percentage and to investments that
permit Fund shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction of the Core Trust Board.
The Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Fund and the Trust. The SAI contains general
background information about the trustees and officers of the Trust and of Core
Trust.
ADMINISTRATOR AND INVESTMENT ADVISER
Forum supervises the overall management of the Trust, including overseeing the
Trust's receipt of services, advising the Trust and the Trustees on matters
concerning the Trust and its affairs, and providing the Trust with general
office facilities and certain persons to serve as officers. For these services
and facilities, Forum receives a fee at an annual rate of 0.05% of the daily net
assets of each Fund. Forum also serves as administrator of Core Trust and
provides administrative services for each Portfolio that are similar to those
provided to the Funds. For its administrative services to the Portfolios, Forum
receives a fee at an annual rate of 0.05% of the average daily net assets of
each Portfolio.
As of the date hereof Forum and its affiliates acted as administrator and
distributor of registered investment companies with assets of approximately $30
billion. FFSI, a registered broker-dealer and member of the National Association
of Securities Dealers, Inc., serves as each Fund's distributor. FFSI acts as the
agent of the Trust in connection with the offering of shares of the Funds. As of
the date of this Prospectus, Forum, FFSI, the Adviser and the Trust's transfer
agent were each directly controlled by John Y. Keffer, an officer and Trustee of
the Trust and of Core Trust. Forum, FFSI and the Adviser are located at Two
Portland Square, Portland, Maine 04101.
Subject to the general supervision of the Core Trust Board, the Adviser makes
investment decisions for each Portfolio and monitors the Portfolios'
investments. In addition to the Portfolios, the Adviser currently provides
investment advisory services to six other mutual funds, including one money
market fund. Under supervision of the Adviser, Mr. Anthony R. Fischer, Jr. acts
as each Portfolio's portfolio manager pursuant to a consulting agreement with
the Adviser.
For its services, the Adviser receives from each Portfolio an advisory fee based
upon the total average daily net assets of the three Portfolios ("Total
Portfolio Assets") that is calculated on a cumulative basis as follows: 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.
SHAREHOLDER SERVICING
Forum Financial Corp. (the "Transfer Agent"), a registered transfer agent, acts
as the Trust's transfer agent and dividend disbursing agent. The Transfer Agent
maintains an account for each shareholder of the Funds (unless such accounts are
maintained by sub-transfer agents or processing agents) and performs other
transfer agency and related functions.
The Transfer Agent is authorized to subcontract any or all of its functions to
one or more qualified sub-transfer agents or processing agents, which may be its
affiliates, who agree to comply with the terms of the Transfer Agent's agreement
with the Trust. The Transfer Agent may pay those agents for their services, but
no such payment will increase the Transfer Agent's compensation from the Trust.
For its services, the Transfer Agent is paid a transfer agent fee at an annual
rate of 0.05% of the average daily net assets of each Fund attributable to
Universal Shares plus $12,000 per year and certain account and additional class
charges and is reimbursed for certain expenses incurred on behalf of the Funds.
EXPENSES
Each Fund bears all of its expenses, which include Trust expenses attributable
to the Fund, which are allocated to the Fund, and expenses not specifically
attributable to any Fund, which are allocated among the Funds in proportion to
their average
9
<PAGE>
net assets. Each service provider may elect to waive (or continue to waive) all
or a portion of its fees and may reimburse a Fund for certain expenses. Any such
waivers or reimbursements will have the effect of increasing the Fund's
performance for the period during which the waiver or reimbursement is in
effect. No fee waivers may be recouped at a later date.
5. PURCHASES OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through the Transfer Agent, which
accepts orders for purchases only from shareholders of record and new investors.
The minimum initial investment in Universal Shares is $1,000,000. Shareholders
of record will receive from the Trust monthly statements listing all account
activity during the statement period. The Trust reserves the right in the future
to modify, limit or terminate any shareholder privilege upon appropriate notice.
Fund shares are sold on a continuous basis at their next determined net asset
value on all Fund Business Days. Fund shares are issued immediately following
the next determination of the Fund's net asset value made after an order for the
shares in proper form, accompanied by funds on deposit at a Federal Reserve Bank
("Federal Funds"), is received by the Transfer Agent. An investor's funds will
not be accepted or invested by a Fund during the period before the Fund's
receipt of Federal Funds. The Trust reserves the right to reject any
subscription for the purchase of Fund shares.
Investors may obtain the account application necessary to open an account or
obtain additional information or assistance by contacting the Trust at
800-754-8757 or writing the Trust at the following address:
Monarch Funds
P.O. Box 446
Portland, Maine 04112
Purchase orders for Universal Shares will be accepted on Fund Business Days
until 3:00 p.m., Pacific time. In order to receive distributions for the day of
investment, orders and payment must be received by the Transfer Agent as
follows:
Order Must be Received by Payment Must be Received by
------------------------- ---------------------------
11:00 a.m., Pacific time 1:00 p.m., Pacific time
If a purchase order is transmitted to the Transfer Agent after 11:00 a.m.,
Pacific time, or the wire is received after 1:00 p.m., Pacific time, the
investor will not receive a distribution on that day. On days that the New York
Stock Exchange or San Francisco Federal Reserve Bank closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which the Transfer Agent must receive
completed wire purchase orders and the cut-off times in the above table.
INITIAL PURCHASE PROCEDURES
BY BANK WIRE. To make an initial investment in a Fund using the federal wire
system for transmittal of money among banks, an investor should first telephone
the Transfer Agent at 800-754-8757 to obtain an account number. The investor
should then wire the investor's money immediately to:
Imperial Bank
ABA# 122201444
For Credit To: Forum Financial Corp.
Account #: 09075-933
Re: [Name of Fund] - Universal Shares
Account #:______________
Account Name:_________________
The investor should then promptly complete and mail the account application.
Payment in the form of a bank wire is treated as a Federal Funds payment
received at the time the wire is received.
BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to the Transfer Agent at the address listed above.
Checks are accepted at full value subject to collection.
THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks and other financial institutions ("Participating
Organizations"). Participating Organizations may charge a fee for their services
and may otherwise act as processing agents. Participating Organizations are
responsible for promptly transmitting purchase, redemption and other requests to
the Funds.
10
<PAGE>
Investors who purchase shares in this manner will be subject to the procedures
of their Participating Organization, which may include investment minimums,
cutoff times and other restrictions in addition to, or different from, those
applicable to shareholders who invest in a Fund directly. Investors purchasing
Fund shares in this manner should acquaint themselves with their Participating
Organization's procedures and should read this Prospectus in conjunction with
any materials and information provided by their Participating Organization.
Investors purchasing shares in this manner may or may not be the shareholder of
record and, subject to their Participating Organization's procedures, may have
Fund shares transferred into their name. Certain states permit shares to be
purchased and redeemed only through registered broker-dealers, including FFSI.
SUBSEQUENT INVESTMENTS
Subsequent investments in a Fund, which may be made by bank wire, by check or
through Participating Organizations. Shareholders using the wire system for
subsequent investments should first telephone the Transfer Agent at 800-754-8757
to notify it of the wire transfer.
6. REDEMPTIONS OF SHARES
GENERAL INFORMATION
Fund shares may be redeemed without charge at their next determined net asset
value on any Fund Business Day following acceptance by the Transfer Agent of the
redemption order in proper form (and any supporting documentation which the
Transfer Agent may require). There is no minimum period of investment and no
restriction on the frequency of redemptions. Redemption proceeds are paid by
check mailed to the shareholder's record address immediately following any
redemption unless the shareholder has elected wire redemption privileges. The
right of redemption may not be suspended nor the payment dates postponed except
when the New York Stock Exchange is closed (or when trading thereon is
restricted) for any reason other than its customary weekend or holiday closings
or under any emergency or other circumstance as determined by the SEC.
Redemption proceeds from the Portfolios may be made wholly or partially in
portfolio securities if the Adviser determines it to be in the best interests of
the Portfolio. Similarly, redemption proceeds from a Fund may be made wholly or
partially in portfolio securities if it is determined to be in the best
interests of the Fund.
Redemption orders for Universal Shares will be accepted on Fund Business Days
until 3:00 p.m., Pacific time. In order to receive redemption proceeds by wire,
a redemption order must be received by the Transfer Agent by 11:00 a.m., Pacific
time.
For redemption orders received after 11:00 a.m., Pacific time, the Transfer
Agent will wire proceeds the next Fund Business Day. On days that the New York
Stock Exchange or San Francisco Federal Reserve Bank closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which the Transfer Agent must receive
completed wire redemption orders.
If a shareholder elects telephone redemption or exchange privileges, as long as
the Trust employs reasonable procedures to insure that telephone orders are
genuine (which include recording certain transactions and the use of immediate
written confirmation by facsimile or otherwise), the Trust, the Transfer Agent
and FFSI are not responsible for the authenticity of telephone instructions or
losses, if any, resulting from unauthorized telephone redemption or exchange
requests. Shareholders should verify the accuracy of telephone instructions
immediately upon receipt of confirmation statements.
REDEMPTION PROCEDURES
Shareholders that wish to redeem shares by telephone or to have redemption
proceeds transmitted by bank wire must elect these options by properly
completing the appropriate sections of their account application.
Shareholders may make a redemption in any amount by sending a written request to
the Transfer Agent accompanied by any share certificates that may have been
issued to the shareholder or, for shareholders that have elected telephone
redemption privileges, by calling the Transfer Agent and providing the
shareholder's account number, the exact name in which the shareholder's shares
are registered and a shareholder identification number. During times of drastic
economic or market changes, the telephone redemption privilege may be difficult
to implement.
BANK WIRE REDEMPTION. For redemptions of more than $5,000, a shareholder that
has elected wire redemption privileges may request a Fund to transmit redemption
proceeds by Federal Funds wire to a bank account designated on the shareholder's
account application.
SIGNATURE GUARANTEES. A signature guarantee is required for written requests to
redeem shares whose value exceeds $50,000 (other than an exchange) and for any
11
<PAGE>
instruction to change the shareholder's record name, to redeem shares in an
account for which the address or registration has changed within the last 30
days, to transmit redemption proceeds to an account other than the address of
record or a preauthorized bank account or to a person other than the registered
owners or to an account with a different registration, to change the
shareholder's distribution election or the telephone redemption or other option
elected on an account. In addition, all share certificates submitted for
redemption (or exchange) must be endorsed by the shareholder with signature
guaranteed. Signature guarantees may be provided by any eligible institution
acceptable to the Transfer Agent, including a bank, a broker, a dealer, a
national securities exchange, a credit union, or a savings association that is
authorized to guarantee signatures (notarized signatures are not sufficient).
When a signature guarantee is required, the signature of each person required to
sign for the account must be guaranteed.
OTHER REDEMPTION MATTERS. Share certificates are issued only to shareholders of
record upon their written request and no certificates are issued for fractional
shares. Shares for which certificates have been issued may not be redeemed or
exchanged by telephone. Due to the cost to the Trust of maintaining smaller
accounts, the Trust reserves the right to redeem, upon not less than 60 days'
written notice, all shares in any Fund account with an aggregate net asset value
of less than $100,000, unless an investment is made to restore the minimum
value.
The Transfer Agent will deem a shareholder's account "lost" if correspondence to
the shareholder's address of record is returned for six months, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost, all distributions on the account will be reinvested in additional
Universal Shares. In addition, the amount of any outstanding (unpaid for six
months or more) checks for distributions that have been returned to the Transfer
Agent will be reinvested and the checks will be canceled.
EXCHANGE PROGRAM
Investors in Universal Shares of a Fund are entitled to exchange their shares
for Universal Shares of another Fund if that Fund's shares are eligible for sale
in the shareholder's state. Exchanges are subject to minimum investment
requirements of the Funds. There is currently no limit on the number of
exchanges a shareholder may make. The Trust reserves the right in the future to
modify, limit or terminate the exchange privilege upon appropriate notice to
shareholders.
Exchanges may be accomplished by written instructions to the Transfer Agent or,
for shareholders that have elected telephone exchange privileges, by calling the
Transfer Agent and providing the shareholder's account number, the exact name in
which the shareholder's shares are registered and the shareholder's social
security or taxpayer identification number. During times of drastic economic or
market changes, the telephone exchange privilege may be difficult to implement.
7. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Net
capital gain realized by a Fund, if any, will be distributed annually. Fund
shares become entitled to receive distributions on the day the shares are issued
as described under "Purchases of Shares General Information." Shares redeemed
are not entitled to receive distributions declared on or after the day on which
the redemption becomes effective.
Shareholders may choose either to have all distributions reinvested in
additional Fund shares or received in cash or to have distributions of net
capital gain reinvested in additional Fund shares and distributions of net
investment income paid in cash. All distributions are treated in the same manner
for Federal income tax purposes whether received in cash or reinvested in shares
of the Fund.
TAX MATTERS
TAX STATUS OF THE FUNDS. Each Fund intends to continue to qualify to be taxed as
a "regulated investment company" under the Internal Revenue Code of 1986, as
amended. Accordingly, each Fund will not be liable for Federal income taxes on
the net investment income and capital gain distributed to its shareholders.
Because the Funds intend to distribute all of their net investment income and
net capital gain each year, the Funds should also avoid Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Distributions of net capital gain, if any, realized by
a Fund are taxable to shareholders as capital gain, regardless of the length of
time the Fund shares were held by the shareholder at the time of distribution.
Different capital gain rates will apply depending on the holding period of the
securities sold by the Fund that generated the gain.
THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, distributions and
gains and losses of a
12
<PAGE>
Portfolio are deemed to be "passed through" to the respective Fund in proportion
to the Fund's holdings of the Portfolio, regardless of whether the interest,
distributions or gains have been distributed by the Portfolio or losses have
been realized by the Portfolio.
GENERAL. Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include income and capital gain distributions) paid to a
non-corporate shareholder unless that shareholder certifies in writing that the
social security or other tax identification number provided is correct and that
the shareholder is not subject to backup withholding.
Reports containing appropriate information with respect to the Federal income
tax status of distributions paid during the year by the Fund will be mailed to
shareholders shortly after the close of each calendar year.
The foregoing is only a summary of some of the Federal tax considerations
generally affecting the Funds and their shareholders. The SAI contains a further
discussion. Because other Federal, state or local tax considerations may apply,
investors are urged to consult their tax advisors.
8. OTHER INFORMATION
FUND PERFORMANCE
Universal Shares' performance may be advertised. All performance information is
based on historical results, is not intended to indicate future performance and,
unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of the period. A Fund's compounded
annualized yield assumes the reinvestment of distributions paid by the Fund,
and, therefore will be somewhat higher than the annualized yield for the same
period. Each class' performance will vary. The Funds' advertisements may also
reference ratings and rankings among similar funds by independent evaluators
such as Morningstar, Lipper Analytical Services, Inc. or IBC Financial Data,
Inc. In addition, the performance of the Funds may be compared to recognized
indices of market performance. The comparative material found in a Fund's
advertisements, sales literature, or reports to shareholders may contain
performance rankings. This material is not to be considered representative or
indicative of future performance.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 1:00 p.m.,
Pacific time, on each Fund Business Day. Net asset value per share is determined
by dividing the value of the Fund's net assets (the value of its interest in the
Portfolio and other assets less its liabilities) by the number of shares
outstanding at the time the determination is made. In order to more easily
maintain a stable net asset value per share, each Portfolio's portfolio
securities are valued at their amortized cost (acquisition cost adjusted for
amortization of premium or accretion of discount) in accordance with Rule 2a-7.
The Portfolios will only value their portfolio securities using this method if
the Core Trust Board believes that it fairly reflects the market-based net asset
value per share. The Portfolios' other assets, if any, are valued at fair value
by or under the direction of the Core Trust Board.
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end management investment
company and was organized as a business trust under the laws of the State of
Delaware on July 10, 1992. The Board has the authority to issue an unlimited
number of shares of beneficial interest of separate series with no par value per
share and to create classes of shares within each series. Except for the Funds,
no other series of shares are currently authorized.
As of December 5, 1997, there were no outstanding Universal Shares of Treasury
Cash Fund, and no shareholder beneficially owned more than 25% of the
outstanding Universal Shares of Government Cash Fund. As of that same date,
Imperial Securities Corp. and Imperial Bank of Inglewood, California owned
almost all of the outstanding Universal Shares of Cash Fund. From time to time
various shareholders may own a large percentage of Universal Shares or shares of
other classes of a Fund. These shareholders may be deemed to be controlling
persons of a class, a Fund or the Trust, and may be able to greatly affect (if
not determine) the outcome of any shareholder vote.
Shares issued by the Trust have no conversion, subscription or preemptive
rights. Voting rights are not cumulative and the shares of each series or class
of the Trust will be voted separately except when an aggregate vote is required
by law. Separate votes are taken by each class of a Fund if a matter affects
just that class. The Trust is not required to hold annual meetings of
shareholders, and it is anticipated that shareholder meetings will be held only
when specifically required by law. Shareholders have available procedures for
requiring the Trustees to call a meeting and for removing Trustees.
13
<PAGE>
FUND STRUCTURE
OTHER CLASSES OF SHARES. In addition to Universal Shares, each Fund currently
has two other classes of shares authorized, Institutional Shares and Investor
Shares. Institutional Shares are offered solely through banks, trust companies
and certain other financial institutions, and their affiliates and
correspondents, for investment of their funds or funds for which they act in a
fiduciary, agency or custodial capacity. Investor Shares are offered to the
general public and have an investment minimum of $5,000. Institutional Shares
and Investor Shares incur greater expenses than Universal Shares. Except for
certain differences, each share of each class represents an undivided,
proportionate interest in a Fund. Each share of each Fund is entitled to
participate equally in distributions and the proceeds of any liquidation of that
Fund except that, due to the differing expenses borne by the various classes,
the amount of distributions will differ among the classes.
CORE TRUST STRUCTURE. Each Fund invests all of its assets in its corresponding
Portfolio of Core Trust, a business trust organized under the laws of the State
of Delaware in September 1994 and registered under the 1940 Act as an open-end
management investment company. Accordingly, a Portfolio directly acquires its
own securities and its corresponding Fund acquires an indirect interest in those
securities. The assets of each Portfolio belong only to, and the liabilities of
the Portfolio are borne solely by, the Portfolio and no other portfolio of Core
Trust. Upon liquidation of a Portfolio, investors in the Portfolio would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.
THE PORTFOLIOS. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, the
Treasury Cash Fund and Government Cash Fund are the only investors that have
invested all of their assets in their respective Portfolios. Besides Cash Fund,
another investment company invests in Cash Portfolio. All investors in a
Portfolio will invest on the same terms and conditions as the Funds and will pay
a proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio will be entitled to vote in proportion to the relative value of
its interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. If there are other investors
in a Portfolio, there can be no assurance that any issue that receives a
majority of the votes cast by a Fund's shareholders will receive a majority of
votes cast by all investors in the Portfolio.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Portfolio
may be affected by the actions of other investors in the Portfolio. For example,
if other investors redeemed their interest in the Portfolio, the Portfolio's
remaining investors (including the Fund) might, as a result, experience higher
pro rata operating expenses. A Fund may withdraw its entire investment from a
Portfolio at any time if the Board determines that it is in the best interests
of the Fund and its shareholders to do so. The Fund might withdraw, for example,
if other investors in the Portfolio, by a vote of shareholders, changed the
investment objective or policies of the Portfolio in a manner not acceptable to
the Board or not permissible by the Fund. A withdrawal could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
by the Portfolio. That distribution could result in a less diversified portfolio
of investments for the Fund, resulting in increased risk, and could affect
adversely the liquidity of the Fund's portfolio. If the Fund decided to convert
those securities to cash, it would incur transaction costs. If the Fund withdrew
its investment from the Portfolio, the Board would consider what action might be
taken, including the management of the Fund's assets in accordance with its
investment objective and policies by the Adviser or the investment of all of the
Fund's investable assets in another pooled investment entity having
substantially the same investment objective as the Fund. Forum has only two
years of experience in managing funds that utilize its "Core and Gateway(R)"
structure.
ADDITIONAL INFORMATION. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact
FFSI at 800-754-8757. If an investor invests through a financial institution,
the investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
14
<PAGE>
MONARCH FUNDS
================================================================================
INSTITUTIONAL SHARES
Treasury Cash Fund
Government Cash Fund
Cash Fund
PROSPECTUS
January 1, 1998
- --------------------------------------------------------------------------------
This Prospectus offers Institutional Shares of Treasury Cash Fund, Government
Cash Fund and Cash Fund (each a "Fund" and collectively the "Funds"). Each Fund
is a diversified money market portfolio of Monarch Funds (the "Trust"), an
open-end, management investment company. Each Fund seeks to provide its
shareholders with high current income to the extent consistent with the
preservation of capital and the maintenance of liquidity.
Treasury Cash Fund, Government Cash Fund and Cash Fund each seeks to achieve its
investment objective by investing all of its investable assets in Treasury Cash
Portfolio, Government Cash Portfolio and Cash Portfolio (each a "Portfolio" and
collectively the "Portfolios"), respectively. The Portfolios are separate series
of Core Trust (Delaware) ("Core Trust"), an open-end, management investment
company. See "Other Information - Fund Structure." Accordingly, each Fund's
investment experience will correspond directly with that of the Portfolio in
which it invests. Through its corresponding Portfolio:
TREASURY CASH FUND invests primarily in obligations of the U.S.
Treasury and in repurchase agreements backed by these obligations.
GOVERNMENT CASH FUND invests primarily in high-quality obligations of
the U.S. Government, its agencies and instrumentalities and in
repurchase agreements backed by these obligations.
CASH FUND invests in a broad spectrum of high-quality money market
instruments.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. Investors
should read this Prospectus and retain it for future reference. The Trust has
filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated January 1, 1998, as may be amended ("SAI"), which
contains more detailed information about the Trust and the Funds and which is
available together with other related materials for reference on the SEC's
Internet Web Site (http://www.sec.gov). The SAI, which is incorporated into the
Prospectus by reference, also is available without charge by contacting the
Trust's distributor, Forum Financial Services, Inc., at Two Portland Square,
Portland, Maine 04101.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C> <C> <C>
1. Prospectus Summary............................ 5. Purchases of Shares...........................
2. Financial Highlights.......................... 6. Redemptions of Shares.........................
3. Investment Objective and Policies............. 7. Distributions and Tax Matters.................
4. Management.................................... 8. Other Information.............................
</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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
15
<PAGE>
1. PROSPECTUS SUMMARY
FUND HIGHLIGHTS
This prospectus offers shares of the Institutional class ("Institutional
Shares") of each of the Funds. The Funds operate in accordance with the
provisions of Rule 2a-7 under the Investment Company Act of 1940.
MANAGEMENT. Forum Administrative Services, LLC ("Forum") supervises the overall
management of the Funds and the Portfolios. Forum Financial Services, Inc.
("FFSI") is the distributor of the Funds' shares. Forum Investment Advisors, LLC
(the "Adviser") is the investment adviser of each Portfolio and provides
professional management of the Portfolios' investments. The Trust's transfer
agent and dividend disbursing agent is Forum Financial Corp. See "Management"
for a description of the services provided and fees charged to the Funds.
SHAREHOLDER SERVICING. The Trust has adopted a Shareholder Service Plan relating
to Institutional Shares under which FFSI is compensated for various shareholder
servicing activities. See "Management - Shareholder Servicing."
PURCHASES AND REDEMPTIONS. Institutional Shares may be purchased and redeemed
Monday through Friday, between the hours of 6:00 a.m. and 3:00 p.m., Pacific
time, except on Federal holidays and other days that the Federal Reserve Bank of
San Francisco is closed ("Fund Business Days"). To be eligible to receive that
day's income, purchase orders must be received by the Transfer Agent in good
order no later than 11:00 a.m., Pacific time. Shareholders may elect to have
redemptions of over $5,000 redeemed by bank wire to a designated bank account.
To be able to receive redemption proceeds by wire on the day of the redemption,
redemption orders must be received by the transfer agent in good order no later
than 11:00 a.m., Pacific time. All times may be changed without notice by Fund
management due to market activities. See "Purchases of Shares" and "Redemptions
of Shares."
EXCHANGES. Shareholders may exchange Institutional Shares for Institutional
Shares of the other Funds. See "Redemptions of Shares - Exchange Program."
DISTRIBUTIONS. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."
INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Funds
invest only in money market instruments, all securities, including U.S.
Government Securities, involve some level of investment risk. An investment in a
Fund is not insured by the FDIC, nor is it insured or guaranteed against loss of
principal.
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Institutional Shares will bear directly or
indirectly. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares. For a further description of the
various expenses incurred in the operation of the Funds and the Portfolios, see
"Management." Expenses for each Fund are based on the Funds' fiscal year ended
August 31, 1997.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) (1)
<TABLE>
<S> <C> <C> <C>
Treasury Government
Cash Fund Cash Fund Cash Fund
--------- --------- ---------
Management Fees (2) (after fee waivers) 0.06% 0.14% 0.14%
Rule 12b-1 Fees None None None
Other Expenses (after expense reimbursements) 0.39% 0.43% 0.43%
----- ----- -----
Total Operating Expenses 0.45% 0.57% 0.57%
</TABLE>
(1) All information includes the Fund's pro rata portion of the expenses of its
corresponding Portfolio. Absent expense reimbursements and fee waivers, the
expenses of Treasury Cash Fund, Government Cash Fund and Cash Fund would be:
Management Fees; 0.14%, 0.14% and 0.14%; Other Expenses; 0.52%, 0.43% and 0.46%;
and Total Operating Expenses; 0.66%, 0.57% and 0.60%.
(2) Includes advisory, management and administration fees.
EXAMPLE
You would pay directly or indirectly the following expenses on a $1,000
investment in Institutional Shares, assuming a 5% annual return and redemption
at the end of each period:
16
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Treasury Cash Fund $5 $14 $25 $57
Government Cash Fund $6 $18 $32 $71
Cash Fund $6 $18 $32 $71
</TABLE>
The example is based on the expenses listed in the table above and assumes the
reinvestment of all distributions. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN
MAY BE GREATER OR LESS THAN INDICATED.
2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Institutional Share of each Fund for the periods indicated. Until August 31,
1995, the Funds invested directly in portfolio securities. Prior to the offering
of Institutional Shares of Government Cash Fund and Cash Fund, those Funds had
commenced operations; selected data for a single outstanding Universal Share of
these Funds for their first year of operations also is shown. This information
has been audited by KPMG Peat Marwick LLP, independent auditors. The Funds'
financial statements and the independent auditors' report thereon are
incorporated by reference into the SAI and may be obtained without charge upon
request.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios to Average
Net Net
Assets Assets at Ratio to
Beginning Distributions Ending --------------------- End of Average Net
Net Asset Net From Net Net Asset Net Period ASSETS
Value Per Investment Investment Value per Investment Total (000's Gross
Share Income Income Share Expense Income Return Omitted) Expenses(a)
----- ------ ------ ----- ------- ------ ------ ------- -----------
TREASURY CASH FUND(C)
INSTITUTIONAL SHARES
Year Ended August 31, 1997 $ 1.00 $ 0.05 $ (0.05) $ 1.00 0.45% 4.89% 4.98% $ 40,830 0.66%
Year Ended August 31, 1996 1.00 0.05 (0.05) 1.00 0.45% 5.01% 5.15% 79,259 0.69%
Year Ended August 31, 1995 1.00 0.05 (0.05) 1.00 0.42% 5.18% 5.28% 28,530 0.86%
Year Ended August 31, 1994 1.00 0.03 (0.03) 1.00 0.42% 3.03% 3.11% 41,194 0.74%
July 12 to Aug. 31, 1993 1.00 ------ ------ 1.00 0.45%(b) 2.65%(b) 2.81%(b) 39,660 1.09%(b)
GOVERNMENT CASH FUND(C)
INSTITUTIONAL SHARES
Year Ended August 31, 1997 1.00 0.05 (0.05) 1.00 0.57% 4.95% 5.06% 245,147 0.57%
Year Ended August 31, 1996 1.00 0.05 (0.05) 1.00 0.57% 5.06% 5.18% 256,244 0.57%
Year Ended August 31, 1995 1.00 0.05 (0.05) 1.00 0.54% 5.39% 5.46% 186,620 0.66%
Year Ended August 31, 1994 1.00 0.03 (0.03) 1.00 0.56% 3.45% 3.35% 61,738 0.68%
July 15 to Aug. 31, 1993 1.00 ------ ------ 1.00 0.53%(b) 2.91%(b) 2.89%(b) 31,483 1.04%(b)
UNIVERSAL SHARES
Oct. 29, 1992 to Aug. 31, 1.00 0.03 (0.03) 1.00 0.21%(b) 3.19%(b) 3.23%(b) 158,516 0.52%(b)
1993
CASH FUND(C)
INSTITUTIONAL SHARES
Year Ended August 31, 1997 1.00 0.05 (0.05) 1.00 0.57% 4.97% 5.07% 152,041 0.60%
Year Ended August 31, 1996 1.00 0.05 (0.05) 1.00 0.57% 5.10% 5.22% 89,733 0.60%
Year Ended August 31, 1995 1.00 0.05 (0.05) 1.00 0.54% 5.33% 5.23% 73,802 0.69%
Year Ended August 31, 1994 1.00 0.03 (0.03) 1.00 0.54% 3.43% 3.40% 55,771 0.72%
July 15 to Aug. 31, 1993 1.00 ------ ------ 1.00 0.53%(b) 2.94%(b) 2.97%(b) 34,383 1.07%(b)
UNIVERSAL SHARES
Dec. 1, 1992 to Aug. 31, 1.00 0.03 (0.03) 1.00 0.25%(b) 3.29%(b) 3.36%(b) 47,854 0.62%(b)
1993
</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 in the absence of any waivers and reimbursements for the
Fund and its respective Portfolio.
(b) Annualized.
(c) As of August 31, 1997, the total net assets of each Fund (combining the
assets of each class of shares) was: Treasury Cash Fund, $70,948,273,
Government Cash Fund, $475,566,735, and Cash Fund, $246,974,489.
17
<PAGE>
3. INVESTMENT OBJECTIVE AND POLICIES
Each Fund has an investment policy that allows it to invest all of its
investable assets in its corresponding Portfolio. All other investment policies
of each Fund and its corresponding Portfolio are identical. Therefore, although
the following discusses the investment policies of the Portfolios (and the
responsibilities of Core Trust's board of trustees (the "Core Trust Board"), it
applies equally to the Funds (and the Trust's board of trustees (the "Board")).
INVESTMENT OBJECTIVE
The investment objective of each Fund is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity. Each Fund currently seeks to achieve its investment objective by
investing all of its investable assets in its corresponding Portfolio, which has
the same investment objective. There can be no assurance that any Fund or
Portfolio will achieve its investment objective.
INVESTMENT POLICIES
Each Portfolio invests only in high quality, U.S. dollar-denominated short-term
money market instruments that are determined by the Adviser, pursuant to
procedures adopted by the Core Trust Board, to be eligible for purchase and to
present minimal credit risks. High quality instruments include those that (i)
are rated (or, if unrated, are issued by an issuer with comparable outstanding
short-term debt that is rated) in the highest rating category by two nationally
recognized statistical rating organizations ("NRSROs") or, if only one NRSRO has
issued a rating, by that NRSRO or (ii) are otherwise unrated and determined by
the Adviser to be of comparable quality. A description of the rating categories
of certain NRSROs, such as Standard & Poor's Corporation and Moody's Investors
Service, Inc., is contained in the SAI.
Each Portfolio invests only in instruments that have a remaining maturity of 397
days or less (as calculated under Rule 2a-7 under the Investment Company Act of
1940 (the "1940 Act")) and maintains a dollar-weighted average portfolio
maturity of 90 days or less. Except to the limited extent permitted by Rule 2a-7
and except for U.S. Government Securities, each Portfolio will not invest more
than 5% of its total assets in the securities of any one issuer. As used in this
prospectus, "U.S. Government Securities" means obligations issued or guaranteed
as to principal and interest by the United States Government, its agencies or
instrumentalities and "Treasury Securities" means U.S. Treasury bills and notes
and other U.S. Government Securities which are guaranteed as to principal and
interest by the U.S. Treasury.
Although each Portfolio only invests in high quality money market instruments,
an investment in a Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value when
there is a change in interest rates, the issuer's actual or perceived
creditworthiness or the issuer's ability to meet its obligations.
TREASURY CASH FUND
Treasury Cash Portfolio seeks to maintain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.
GOVERNMENT CASH FUND
Government Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities and in repurchase
agreements backed by U.S. Government Securities. The U.S. Government Securities
in which the Portfolio may invest include Treasury Securities and securities
supported primarily or solely by the creditworthiness of the issuer, such as
securities of the Federal National Mortgage Association. There is no guarantee
that the U.S. Government will support securities not backed by its full faith
and credit. Accordingly, although these securities have historically involved
little risk of loss of principal if held to maturity, they may involve more risk
than securities backed by the U.S. Government's full faith and credit.
CASH FUND
Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments. The Portfolio may invest in (i)
obligations of domestic financial institutions, (ii) U.S. Government Securities
(see "Investment Objective and Policies - Government Cash Portfolio") and (iii)
corporate debt obligations of domestic issuers.
Financial institution obligations include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of banks (including savings
banks and savings associations) and their foreign branches. The Portfolio limits
its investments in bank obligations to banks which at the time of investment
have total assets in excess of one billion dollars. Certificates of deposit
represent an institution's obligation to repay funds deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations
of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-
18
<PAGE>
negotiable deposits with a banking institution that earn a specified interest
rate over a given period. Certificates of deposit and fixed time deposits, which
are payable at the stated maturity date and bear a fixed rate of interest,
generally may be withdrawn on demand by the Portfolio but may be subject to
early withdrawal penalties which could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" without registration under
the Securities Act of 1933. These "restricted securities" are restricted as to
disposition under the Federal securities laws in that any sale of these
securities may not be made absent registration under the Securities Act of 1933
or an appropriate exemption therefrom.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, may not be changed without approval of the
holders of a majority of the Fund's or Portfolio's, as applicable, outstanding
voting securities (as defined in the 1940 Act). Except as otherwise indicated in
this prospectus or in the SAI, investment policies of a Fund or a Portfolio may
be changed by the applicable board of trustees without shareholder approval.
Each Portfolio may borrow money for temporary or emergency purposes (including
the meeting of redemption requests), but not in excess of 33 1/3% of the value
of the Portfolio's total assets. Borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's total
assets. Each Portfolio is permitted to hold cash in any amount pending
investment in securities and may invest in other investment companies that
intend to comply with Rule 2a-7 and have substantially similar investment
objectives and policies. To the extent a Portfolio invests in other money funds,
it will indirectly bear the expenses of those funds. A further description of
the Funds' and the Portfolios' investment policies is contained in the SAI.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain risks not associated with direct investment in securities. The
Portfolios, however, intend to enter into repurchase agreements only with
sellers which the Adviser believes present minimal credit risks in accordance
with guidelines established by the Core Trust Board. In the event that a seller
defaulted on its repurchase obligation, however, a Portfolio might suffer a
loss.
LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including repurchase agreements
not entitling the Portfolio to payment of principal within seven days. There may
not be an active secondary market for securities held by a Portfolio. The value
of securities that have a limited market tend to fluctuate more than those that
have an active market. For this reason, a Portfolio could suffer a loss with
respect to an instrument. The Adviser monitors the liquidity of the Portfolios'
investments, but there can be no guarantee that an active secondary market will
exist.
WHEN-ISSUED SECURITIES. In order to assure itself of being able to obtain
securities at prices which the Adviser believes might not be available at a
future time, each Portfolio may purchase securities on a when-issued or delayed
delivery basis. Securities so purchased are subject to market price fluctuation
and no interest on the securities accrues to a Portfolio until delivery and
payment take place. Accordingly, the value of the securities on the delivery
date may be more or less than the purchase price. Commitments for when-issued or
delayed delivery transactions will be entered into only when a Portfolio has the
intention of actually acquiring the securities. Failure by the other party to
deliver a security purchased by a Portfolio may result in a loss or missed
opportunity to make an alternative investment.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Portfolios
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Securities
with ultimate maturities of greater than 397 days may be purchased only in
accordance with the provisions to Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features that comply with certain
requirements and certain long-term U.S. Government Securities may be purchased.
Similar to fixed rate debt instruments, variable and floating rate instruments
are subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
short-term market
19
<PAGE>
rates (these prohibited securities are often referred to as "derivative"
securities). All variable and floating rate securities purchased by a Portfolio
will have an interest rate that is adjusted based on a single short-term rate or
index, such as the Prime Rate.
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invest only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. In addition, these Portfolios limit their investments to those
permissible for Federally chartered credit unions under applicable provisions of
the Federal Credit Union Act and the applicable rules and regulations of the
National Credit Union Administration. Government Cash Portfolio limits its
investments to investments that are legally permissible for Federally chartered
savings associations without limit as to percentage and to investments that
permit Fund shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction of the Core Trust Board.
The Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Fund and the Trust. The SAI contains general
background information about the trustees and officers of the Trust and of Core
Trust.
ADMINISTRATOR AND INVESTMENT ADVISER
Forum supervises the overall management of the Trust, including overseeing the
Trust's receipt of services, advising the Trust and the Trustees on matters
concerning the Trust and its affairs, and providing the Trust with general
office facilities and certain persons to serve as officers. For these services
and facilities, Forum receives a fee at an annual rate of 0.05% of the daily net
assets of each Fund. Forum also serves as administrator of Core Trust and
provides administrative services for each Portfolio that are similar to those
provided to the Funds. For its administrative services to the Portfolios, Forum
receives a fee at an annual rate of 0.05% of the average daily net assets of
each Portfolio.
As of the date hereof Forum and its affiliates acted as administrator and
distributor of registered investment companies with assets of approximately $30
billion. FFSI, a registered broker-dealer and member of the National Association
of Securities Dealers, Inc., serves as each Fund's distributor. FFSI acts as the
agent of the Trust in connection with the offering of shares of the Funds. As of
the date of this Prospectus, Forum, FFSI, the Adviser and the Trust's transfer
agent were each directly controlled by John Y. Keffer, an officer and Trustee of
the Trust and of Core Trust. Forum, FFSI and the Adviser are located at Two
Portland Square, Portland, Maine 04101.
Subject to the general supervision of the Core Trust Board, the Adviser makes
investment decisions for each Portfolio and monitors the Portfolios'
investments. In addition to the Portfolios, the Adviser currently provides
investment advisory services to six other mutual funds, including one money
market fund. Under supervision of the Adviser, Mr. Anthony R. Fischer, Jr. acts
as each Portfolio's portfolio manager pursuant to a consulting agreement with
the Adviser.
For its services, the Adviser receives from each Portfolio an advisory fee based
upon the total average daily net assets of the three Portfolios ("Total
Portfolio Assets") that is calculated on a cumulative basis as follows: 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.
SHAREHOLDER SERVICING
TRANSFER AND DIVIDEND DISBURSING AGENT. Forum Financial Corp. (the "Transfer
Agent"), a registered transfer agent, acts as the Trust's transfer agent and
dividend disbursing agent. The Transfer Agent maintains an account for each
shareholder of the Funds (unless such accounts are maintained by sub-transfer
agents or processing agents) and performs other transfer agency and related
functions.
The Transfer Agent is authorized to subcontract any or all of its functions to
one or more qualified sub-transfer agents or processing agents, which may be its
affiliates, who agree to comply with the terms of the Transfer Agent's agreement
with the Trust. The Transfer Agent may pay those agents for their services, but
no such payment will increase the Transfer Agent's compensation from the Trust.
For its services, the Transfer Agent is paid a transfer agent fee at an annual
rate of 0.20% of the average daily net assets of each Fund attributable to
Institutional Shares plus $12,000 per year and certain account and additional
class charges and is reimbursed for certain expenses incurred on behalf of the
Funds.
SHAREHOLDER SERVICE AGENTS. The Trust has adopted a shareholder service plan
("Shareholder Service Plan") which provides that, as compensation for FFSI's
service activities with respect to the Institutional Shares, the Trust shall pay
FFSI a fee at an annual rate of 0.15% of the average daily net assets
attributable to Institutional Shares. FFSI is authorized to enter
20
<PAGE>
into shareholder servicing agreements pursuant to which a shareholder servicing
agent, on behalf of its customers, performs certain shareholder services not
otherwise provided by the Transfer Agent. As compensation for its services, the
shareholder servicing agent, which will be a Participating Organization, is paid
a fee by FFSI of up to 0.15% of the average daily net assets of Institutional
Shares owned by investors for which the shareholder service agent maintains a
servicing relationship. Certain shareholder servicing agents may be subtransfer
or processing agents.
Among the services provided by shareholder servicing agents are answering
customer inquiries regarding the manner in which purchases, exchanges and
redemptions of shares of the Trust may be effected and other matters pertaining
to the Trust's services; providing necessary personnel and facilities to
establish and maintain shareholder accounts and records; assisting shareholders
in arranging for processing purchase, exchange and redemption transactions;
arranging for the wiring of funds; guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request.
EXPENSES
Each Fund bears all of its expenses, which include Trust expenses attributable
to the Fund, which are allocated to the Fund, and expenses not specifically
attributable to any Fund, which are allocated among the Funds in proportion to
their average net assets. Each service provider may elect to waive (or continue
to waive) all or a portion of its fees and may reimburse a Fund for certain
expenses. Any such waivers or reimbursements will have the effect of increasing
the Fund's performance for the period during which the waiver or reimbursement
is in effect. No fee waivers may be recouped at a later date.
5. PURCHASES OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through the Transfer Agent, which
accepts orders for purchases only from shareholders of record and new investors.
The minimum initial investment in Institutional Shares is $500,000. Shareholders
of record will receive from the Trust monthly statements listing all account
activity during the statement period. The Trust reserves the right in the future
to modify, limit or terminate any shareholder privilege upon appropriate notice.
Fund shares are sold on a continuous basis at their next determined net asset
value on all Fund Business Days. Fund shares are issued immediately following
the next determination of the Fund's net asset value made after an order for the
shares in proper form, accompanied by funds on deposit at a Federal Reserve Bank
("Federal Funds"), is received by the Transfer Agent. An investor's funds will
not be accepted or invested by a Fund during the period before the Fund's
receipt of Federal Funds. The Trust reserves the right to reject any
subscription for the purchase of Fund shares.
Investors may obtain the account application necessary to open an account or
obtain additional information or assistance by contacting the Trust at
800-754-8757 or writing the Trust at the following address:
Monarch Funds
P.O. Box 446
Portland, Maine 04112
Purchase orders for Institutional Shares will be accepted on Fund Business Days
until 3:00 p.m., Pacific time. In order to receive distributions for the day of
investment, orders and payment must be received by the Transfer Agent as
follows:
Order Must be Received by Payment Must be Received by
------------------------- ---------------------------
11:00 a.m., Pacific time 1:00 p.m., Pacific time
If a purchase order is transmitted to the Transfer Agent after 11:00 a.m.,
Pacific time, or the wire is received after 1:00 p.m., Pacific time, the
investor will not receive a distribution on that day. On days that the New York
Stock Exchange or San Francisco Federal Reserve Bank closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which the Transfer Agent must receive
completed wire purchase orders and the cut-off times in the above table.
INITIAL PURCHASE PROCEDURES
BY BANK WIRE. To make an initial investment in a Fund using the federal wire
system for transmittal of money among banks, an investor should first telephone
the Transfer Agent at 800-754-8757 to obtain an account number. The investor
should then wire the investor's money immediately to:
21
<PAGE>
Imperial Bank
ABA# 122201444
For Credit To: Forum Financial Corp.
Account #: 09075-933
Re: [Name of Fund] - Institutional Shares
Account #:______________
Account Name:______________
The investor should then promptly complete and mail the account application.
Payment in the form of a bank wire is treated as a Federal Funds payment
received at the time the wire is received.
BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to the Transfer Agent at the address listed above.
Checks are accepted at full value subject to collection.
THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks and other financial institutions ("Participating
Organizations"). Participating Organizations may charge a fee for their services
and may otherwise act as processing agents. Participating Organizations are
responsible for promptly transmitting purchase, redemption and other requests to
the Funds.
Investors who purchase shares in this manner will be subject to the procedures
of their Participating Organization, which may include investment minimums,
cutoff times and other restrictions in addition to, or different from, those
applicable to shareholders who invest in a Fund directly. Investors purchasing
Fund shares in this manner should acquaint themselves with their Participating
Organization's procedures and should read this Prospectus in conjunction with
any materials and information provided by their Participating Organization.
Investors purchasing shares in this manner may or may not be the shareholder of
record and, subject to their Participating Organization's procedures, may have
Fund shares transferred into their name. Certain states permit shares to be
purchased and redeemed only through registered broker-dealers, including FFSI.
SUBSEQUENT INVESTMENTS
Subsequent investments in a Fund, which may be made by bank wire, by check or
through Participating Organizations. Shareholders using the wire system for
subsequent investments should first telephone the Transfer Agent at 800-754-8757
to notify it of the wire transfer.
6. REDEMPTIONS OF SHARES
GENERAL INFORMATION
Fund shares may be redeemed without charge at their next determined net asset
value on any Fund Business Day following acceptance by the Transfer Agent of the
redemption order in proper form (and any supporting documentation which the
Transfer Agent may require). There is no minimum period of investment and no
restriction on the frequency of redemptions. Redemption proceeds are paid by
check mailed to the shareholder's record address immediately following any
redemption unless the shareholder has elected wire redemption privileges. The
right of redemption may not be suspended nor the payment dates postponed except
when the New York Stock Exchange is closed (or when trading thereon is
restricted) for any reason other than its customary weekend or holiday closings
or under any emergency or other circumstance as determined by the SEC.
Redemption proceeds from the Portfolios may be made wholly or partially in
portfolio securities if the Adviser determines it to be in the best interests of
the Portfolio. Similarly, redemption proceeds from a Fund may be made wholly or
partially in portfolio securities if it is determined to be in the best
interests of the Fund.
Redemption orders for Institutional Shares will be accepted on Fund Business
Days until 3:00 p.m., Pacific time. In order to receive redemption proceeds by
wire, a redemption order must be received by the Transfer Agent by 11:00 a.m.,
Pacific time.
For redemption orders received after 11:00 a.m., Pacific time, the Transfer
Agent will wire proceeds the next Fund Business Day. On days that the New York
Stock Exchange or San Francisco Federal Reserve Bank closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which the Transfer Agent must receive
completed wire redemption orders.
If a shareholder elects telephone redemption or exchange privileges, as long as
the Trust employs reasonable procedures to insure that telephone orders are
genuine (which include recording certain transactions and the use of immediate
written confirmation by facsimile or otherwise), the Trust, the Transfer Agent
and FFSI are not responsible for the authenticity of telephone instructions or
losses, if any, resulting from unauthorized telephone redemption or exchange
requests. Shareholders should verify the accuracy of telephone instructions
immediately upon receipt of confirmation statements.
22
<PAGE>
REDEMPTION PROCEDURES
Shareholders that wish to redeem shares by telephone or to have redemption
proceeds transmitted by bank wire must elect these options by properly
completing the appropriate sections of their account application.
Shareholders may make a redemption in any amount by sending a written request to
the Transfer Agent accompanied by any share certificates that may have been
issued to the shareholder or, for shareholders that have elected telephone
redemption privileges, by calling the Transfer Agent and providing the
shareholder's account number, the exact name in which the shareholder's shares
are registered and a shareholder identification number. During times of drastic
economic or market changes, the telephone redemption privilege may be difficult
to implement.
BANK WIRE REDEMPTION. For redemptions of more than $5,000, a shareholder that
has elected wire redemption privileges may request a Fund to transmit redemption
proceeds by Federal Funds wire to a bank account designated on the shareholder's
account application.
SIGNATURE GUARANTEES. A signature guarantee is required for written requests to
redeem shares whose value exceeds $50,000 (other than an exchange) and for any
instruction to change the shareholder's record name, to redeem shares in an
account for which the address or registration has changed within the last 30
days, to transmit redemption proceeds to an account other than the address of
record or a preauthorized bank account or to a person other than the registered
owners or to an account with a different registration, to change the
shareholder's distribution election or the telephone redemption or other option
elected on an account. In addition, all share certificates submitted for
redemption (or exchange) must be endorsed by the shareholder with signature
guaranteed. Signature guarantees may be provided by any eligible institution
acceptable to the Transfer Agent, including a bank, a broker, a dealer, a
national securities exchange, a credit union, or a savings association that is
authorized to guarantee signatures (notarized signatures are not sufficient).
When a signature guarantee is required, the signature of each person required to
sign for the account must be guaranteed.
OTHER REDEMPTION MATTERS. Share certificates are issued only to shareholders of
record upon their written request and no certificates are issued for fractional
shares. Shares for which certificates have been issued may not be redeemed or
exchanged by telephone. Due to the cost to the Trust of maintaining smaller
accounts, the Trust reserves the right to redeem, upon not less than 60 days'
written notice, all shares in any Fund account with an aggregate net asset value
of less than $100,000, unless an investment is made to restore the minimum
value.
The Transfer Agent will deem a shareholder's account "lost" if correspondence to
the shareholder's address of record is returned for six months, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost, all distributions on the account will be reinvested in additional
Institutional Shares. In addition, the amount of any outstanding (unpaid for six
months or more) checks for distributions that have been returned to the Transfer
Agent will be reinvested and the checks will be canceled.
EXCHANGE PROGRAM
Investors in Institutional Shares of a Fund are entitled to exchange their
shares for Institutional Shares of another Fund if that Fund's shares are
eligible for sale in the shareholder's state. Exchanges are subject to minimum
investment requirements of the Funds. There is currently no limit on the number
of exchanges a shareholder may make. The Trust reserves the right in the future
to modify, limit or terminate the exchange privilege upon appropriate notice to
shareholders.
Exchanges may be accomplished by written instructions to the Transfer Agent or,
for shareholders that have elected telephone exchange privileges, by calling the
Transfer Agent and providing the shareholder's account number, the exact name in
which the shareholder's shares are registered and the shareholder's social
security or taxpayer identification number. During times of drastic economic or
market changes, the telephone exchange privilege may be difficult to implement.
7. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Net
capital gain realized by a Fund, if any, will be distributed annually. Fund
shares become entitled to receive distributions on the day the shares are issued
as described under "Purchases of Shares General Information." Shares redeemed
are not entitled to receive distributions declared on or after the day on which
the redemption becomes effective.
Shareholders may choose either to have all distributions reinvested in
additional Fund shares or received in cash or to have distributions of net
capital gain reinvested in additional Fund shares and distributions of net
investment income paid in cash.
23
<PAGE>
All distributions are treated in the same manner for Federal income tax purposes
whether received in cash or reinvested in shares of the Fund.
TAX MATTERS
TAX STATUS OF THE FUNDS. Each Fund intends to continue to qualify to be taxed as
a "regulated investment company" under the Internal Revenue Code of 1986, as
amended. Accordingly, each Fund will not be liable for Federal income taxes on
the net investment income and capital gain distributed to its shareholders.
Because the Funds intend to distribute all of their net investment income and
net capital gain each year, the Funds should also avoid Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Distributions of net capital gain, if any, realized by
a Fund are taxable to shareholders as capital gain, regardless of the length of
time the Fund shares were held by the shareholder at the time of distribution.
Different capital gain rates will apply depending on the holding period of the
securities sold by the Fund that generated the gain.
THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, distributions and
gains and losses of a Portfolio are deemed to be "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether the interest, distributions or gains have been distributed
by the Portfolio or losses have been realized by the Portfolio.
GENERAL. Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include income and capital gain distributions) paid to a
non-corporate shareholder unless that shareholder certifies in writing that the
social security or other tax identification number provided is correct and that
the shareholder is not subject to backup withholding.
Reports containing appropriate information with respect to the Federal income
tax status of distributions paid during the year by the Fund will be mailed to
shareholders shortly after the close of each calendar year.
The foregoing is only a summary of some of the Federal tax considerations
generally affecting the Funds and their shareholders. The SAI contains a further
discussion. Because other Federal, state or local tax considerations may apply,
investors are urged to consult their tax advisors.
8. OTHER INFORMATION
FUND PERFORMANCE
Institutional Shares' performance may be advertised. All performance information
is based on historical results, is not intended to indicate future performance
and, unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of the period. A Fund's compounded
annualized yield assumes the reinvestment of distributions paid by the Fund,
and, therefore will be somewhat higher than the annualized yield for the same
period. Each class' performance will vary. The Funds' advertisements may also
reference ratings and rankings among similar funds by independent evaluators
such as Morningstar, Lipper Analytical Services, Inc. or IBC Financial Data,
Inc. In addition, the performance of the Funds may be compared to recognized
indices of market performance. The comparative material found in a Fund's
advertisements, sales literature, or reports to shareholders may contain
performance rankings. This material is not to be considered representative or
indicative of future performance.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 1:00 p.m.,
Pacific time, on each Fund Business Day. Net asset value per share is determined
by dividing the value of the Fund's net assets (the value of its interest in the
Portfolio and other assets less its liabilities) by the number of shares
outstanding at the time the determination is made. In order to more easily
maintain a stable net asset value per share, each Portfolio's portfolio
securities are valued at their amortized cost (acquisition cost adjusted for
amortization of premium or accretion of discount) in accordance with Rule 2a-7.
The Portfolios will only value their portfolio securities using this method if
the Core Trust Board believes that it fairly reflects the market-based net asset
value per share. The Portfolios' other assets, if any, are valued at fair value
by or under the direction of the Core Trust Board.
24
<PAGE>
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end management investment
company and was organized as a business trust under the laws of the State of
Delaware on July 10, 1992. The Board has the authority to issue an unlimited
number of shares of beneficial interest of separate series with no par value per
share and to create classes of shares within each series. Except for the Funds,
no other series of shares are currently authorized.
As of December 5, 1997, Imperial Trust Company, Los Angeles, California owned of
record for the benefit of its various customers, more than 25% of the total
outstanding Institutional Shares of Treasury Cash Fund and Cash Fund and, as of
that date, may be deemed to have controlled that class. As of that same date, no
shareholder owned more than 25% of the outstanding Institutional Shares of
Government Cash Fund. From time to time various shareholders may own a large
percentage of Institutional Shares or shares of other classes of a Fund.
Accordingly, these shareholders may be able to greatly affect (if not determine)
the outcome of any shareholder vote.
Shares issued by the Trust have no conversion, subscription or preemptive
rights. Voting rights are not cumulative and the shares of each series or class
of the Trust will be voted separately except when an aggregate vote is required
by law. Separate votes are taken by each class of a Fund if a matter affects
just that class. The Trust is not required to hold annual meetings of
shareholders, and it is anticipated that shareholder meetings will be held only
when specifically required by law. Shareholders have available procedures for
requiring the Trustees to call a meeting and for removing Trustees.
FUND STRUCTURE
OTHER CLASSES OF SHARES. In addition to Institutional Shares, each Fund
currently has two other classes of shares authorized, Universal Shares and
Investor Shares. Universal Shares and Investor Shares are offered to the general
public and have investment minimums of $1,000,000 and $5,000, respectively.
Universal Shares incur less expenses and Investor Shares incur greater expenses
than Institutional Shares. Except for certain differences, each share of each
class represents an undivided, proportionate interest in a Fund. Each share of
each Fund is entitled to participate equally in distributions and the proceeds
of any liquidation of that Fund except that, due to the differing expenses borne
by the various classes, the amount of distributions will differ among the
classes.
CORE TRUST STRUCTURE. Each Fund invests all of its assets in its corresponding
Portfolio of Core Trust, a business trust organized under the laws of the State
of Delaware in September 1994 and registered under the 1940 Act as an open-end
management investment company. Accordingly, a Portfolio directly acquires its
own securities and its corresponding Fund acquires an indirect interest in those
securities. The assets of each Portfolio belong only to, and the liabilities of
the Portfolio are borne solely by, the Portfolio and no other portfolio of Core
Trust. Upon liquidation of a Portfolio, investors in the Portfolio would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.
THE PORTFOLIOS. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, the
Treasury Cash Fund and Government Cash Fund are the only investors that have
invested all of their assets in their respective Portfolios. Besides Cash Fund,
another investment company invests in Cash Portfolio. All investors in a
Portfolio will invest on the same terms and conditions as the Funds and will pay
a proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio will be entitled to vote in proportion to the relative value of
its interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. If there are other investors
in a Portfolio, there can be no assurance that any issue that receives a
majority of the votes cast by a Fund's shareholders will receive a majority of
votes cast by all investors in the Portfolio.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Portfolio
may be affected by the actions of other investors in the Portfolio. For example,
if other investors redeemed their interest in the Portfolio, the Portfolio's
remaining investors (including the Fund) might, as a result, experience higher
pro rata operating expenses. A Fund may withdraw its entire investment from a
Portfolio at any time if the Board determines that it is in the best interests
of the Fund and its shareholders to do so. The Fund might withdraw, for example,
if other investors in the Portfolio, by a vote of shareholders, changed the
investment objective or policies of the Portfolio in a manner not acceptable to
the Board or not permissible by the Fund. A withdrawal could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
by the Portfolio. That distribution could result in a less diversified portfolio
of investments for the Fund, resulting in increased risk, and could affect
adversely the liquidity of the Fund's portfolio. If the Fund decided to convert
those securities to cash, it would incur transaction costs. If the Fund withdrew
its investment from the Portfolio, the Board would consider what action might be
taken, including the management of the Fund's assets in accordance with its
investment objective and policies by the Adviser or the investment of all of the
Fund's investable assets in another pooled investment entity having
substantially
25
<PAGE>
the same investment objective as the Fund. Forum has only two years of
experience in managing funds that utilize its "Core and Gateway(R)" structure.
ADDITIONAL INFORMATION. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact
FFSI at 800-754-8757. If an investor invests through a financial institution,
the investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
26
<PAGE>
MONARCH FUNDS
================================================================================
INVESTOR SHARES
Treasury Cash Fund
Government Cash Fund
Cash Fund
PROSPECTUS
January 1, 1998
- --------------------------------------------------------------------------------
This Prospectus offers Investor Shares of Treasury Cash Fund, Government Cash
Fund and Cash Fund (each a "Fund" and collectively the "Funds"). Each Fund is a
diversified money market portfolio of Monarch Funds (the "Trust"), an open-end,
management investment company. Each Fund seeks to provide its shareholders with
high current income to the extent consistent with the preservation of capital
and the maintenance of liquidity.
Treasury Cash Fund, Government Cash Fund and Cash Fund each seeks to achieve its
investment objective by investing all of its investable assets in Treasury Cash
Portfolio, Government Cash Portfolio and Cash Portfolio (each a "Portfolio" and
collectively the "Portfolios"), respectively. The Portfolios are separate series
of Core Trust (Delaware) ("Core Trust"), an open-end, management investment
company. See "Other Information - Fund Structure." Accordingly, each Fund's
investment experience will correspond directly with that of the Portfolio in
which it invests. Through its corresponding Portfolio:
TREASURY CASH FUND invests primarily in obligations of the U.S.
Treasury and in repurchase agreements backed by these obligations.
GOVERNMENT CASH FUND invests primarily in high-quality obligations of
the U.S. Government, its agencies and instrumentalities and in
repurchase agreements backed by these obligations.
CASH FUND invests in a broad spectrum of high-quality money market
instruments.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. Investors
should read this Prospectus and retain it for future reference. The Trust has
filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated January 1, 1998, as may be amended ("SAI"), which
contains more detailed information about the Trust and the Funds and which is
available together with other related materials for reference on the SEC's
Internet Web Site (http://www.sec.gov). The SAI, which is incorporated into the
Prospectus by reference, also is available without charge by contacting the
Trust's distributor, Forum Financial Services, Inc., at Two Portland Square,
Portland, Maine 04101.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C> <C> <C>
1. Prospectus Summary............................ 5. Purchases of Shares...............................
2. Financial Highlights.......................... 6. Redemptions of Shares.............................
3. Investment Objective and Policies............. 7. Distributions and Tax Matters....................
4. Management.................................... 8. Other Information................................
</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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
27
<PAGE>
1. PROSPECTUS SUMMARY
FUND HIGHLIGHTS
This prospectus offers shares of the Investor class ("Investor Shares") of each
of the Funds. The Funds operate in accordance with the provisions of Rule 2a-7
under the Investment Company Act of 1940.
MANAGEMENT. Forum Administrative Services, LLC ("Forum") supervises the overall
management of the Funds and the Portfolios. Forum Financial Services, Inc.
("FFSI") is the distributor of the Funds' shares. Forum Investment Advisors, LLC
(the "Adviser") is the investment adviser of each Portfolio and provides
professional management of the Portfolios' investments. The Trust's transfer
agent and dividend disbursing agent is Forum Financial Corp. See "Management"
for a description of the services provided and fees charged to the Funds.
SHAREHOLDER SERVICING AND DISTRIBUTION. The Trust has adopted a Shareholder
Service Plan and a Plan of Distribution relating to Investor Shares under which
FFSI is compensated for various shareholder servicing and distribution related
activities. See "Management - Shareholder Servicing" and "- Distributor."
PURCHASES AND REDEMPTIONS. The minimum initial investment in Investor Shares is
$5,000. The minimum subsequent investment is $100. Investor Shares may be
purchased and redeemed Monday through Friday, between the hours of 6:00 a.m. and
3:00 p.m., Pacific time, except on Federal holidays and other days that the
Federal Reserve Bank of San Francisco is closed ("Fund Business Days"). To be
eligible to receive that days' income, purchase orders must be received by the
Transfer Agent in good order no later than 11:00 a.m., Pacific time.
Shareholders may elect to have redemptions of over $5,000 redeemed by bank wire
to a designated bank account. To be able to receive redemption proceeds by wire
on the day of the redemption, redemption orders must be received by the transfer
agent in good order no later than 11:00 a.m., Pacific time. All times may be
changed without notice by Fund management due to market activities. See
"Purchases of Shares" and "Redemptions of Shares."
EXCHANGES. Shareholders may exchange Investor Shares for Investor Shares of the
other Funds. See "Redemptions of Shares - Exchange Program."
DISTRIBUTIONS. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."
INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Funds
invest only in money market instruments, all securities, including U.S.
Government Securities, involve some level of investment risk. An investment in a
Fund is not insured by the FDIC, nor is it insured or guaranteed against loss of
principal.
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Investor Shares will bear directly or
indirectly. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares. For a further description of the
various expenses incurred in the operation of the Funds and the Portfolios, see
"Management." Expenses for each Fund are based on the Funds' fiscal year ended
August 31, 1997 except that expenses for Government Cash Fund are estimated for
its fiscal year ending August 31, 1998.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) (1)
<TABLE>
<S> <C> <C> <C>
Treasury Government
Cash Fund Cash Fund Cash Fund
--------- ---------- ---------
Management Fees (2) (after fee waivers) 0.06% 0.13% 0.13%
Rule 12b-1 Fees 0.25% 0.25% 0.25%
Other Expenses (after expense reimbursements) 0.52% 0.45% 0.45%
----- ----- -----
Total Operating Expenses 0.83% 0.83% 0.83%
</TABLE>
(1) All information includes the Fund's pro rata portion of the expenses of its
corresponding Portfolio. Absent expense reimbursements and fee waivers, the
expenses of Treasury Cash Fund, Government Cash Fund and Cash Fund would
be: Management Fees; 0.14%, 0.13% and 0.13%; Other Expenses; 0.58%, 0.46%
and 0.46%; and Total Operating Expenses, 0.97%, 0.85% and 0.85%.
(2) Includes all advisory, management and administration fees.
EXAMPLE
You would pay directly or indirectly the following expenses on a $1,000
investment in Investor Shares, assuming a 5% annual return and redemption at the
end of each period:
<TABLE>
<S> <C> <C> <C> <C>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Treasury Cash Fund $8 $26 $46 $103
Government Cash Fund $8 $26 $46 $103
Cash Fund $8 $26 $46 $103
</TABLE>
The example is based on the expenses listed in the table above and assumes the
reinvestment of all distributions. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN
MAY BE GREATER OR LESS THAN INDICATED.
2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Investor Share of Treasury Cash Fund and of Cash Fund; as of the date hereof,
Investor Shares of Government Cash Fund were not offered. Also shown is selected
data for a single outstanding Institutional Share of Treasury Cash Fund and
Universal Share of Government Cash Fund and Cash Fund for the periods indicated.
Those classes were the first offered for by respective Funds and, accordingly,
represent data since each Fund's inception. Until August 31, 1995, the Funds
invested directly in portfolio securities. This information has been audited by
KPMG Peat Marwick LLP, independent auditors. The Funds' financial statements
and the independent auditors' report thereon are incorporated by reference into
the SAI and may be obtained without charge upon request.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios to Average Net Net Assets
Assets at Ratio to
Beginning Distributions Ending ----------------------- End of Average Net
Net Asset Net From Net Net Asset Net Period ASSETS
Value Per Investment Investment Value per Investment Total (000's Gross
Share Income Income Share Expenses Income Return Omitted) Expenses(a)
TREASURY CASH FUND(C)
INVESTOR SHARES
Year Ended August 31, 1997 1.00 0.05 (0.05) 1.00 0.83% 4.55% 4.58% $ 30,118 0.97%
Oct. 25, 1995 to Aug. 31, 1.00 0.04 (0.04) 1.00 0.83%(b) 4.50%(b) 4.00% 3,980 1.33%(b)
1996
INSTITUTIONAL SHARES
Year Ended August 31, 1996 $ 1.00 $0.05 $(0.05) $ 1.00 0.45% 5.01% 5.15% 79,259 0.69%
Year Ended August 31, 1995 1.00 0.05 (0.05) 1.00 0.42% 5.18% 5.28% 28,530 0.86%
Year Ended August 31, 1994 1.00 0.03 (0.03) 1.00 0.42% 3.03% 3.11% 41,194 0.74%
July 12 to Aug. 31, 1993 1.00 ------ ------ 1.00 0.45%(b) 2.65%(b) 2.81%(b) 39,660 1.09%(b)
GOVERNMENT CASH FUND(C)
UNIVERSAL SHARES
Year Ended August 31, 1997 1.00 0.05 (0.05) 1.00 0.17% 5.35% 5.49% 230,410 0.26%
Year Ended August 31, 1996 1.00 0.05 (0.05) 1.00 0.19% 5.43% 5.59% 248,986 0.28%
Year Ended August 31, 1995 1.00 0.06 (0.06) 1.00 0.24% 5.46% 5.78% 182,546 0.52%
Year Ended August 31, 1994 1.00 0.04 (0.04) 1.00 0.28% 3.48% 3.64% 158,798 0.49%
Oct. 29, 1992 to Aug. 31, 1.00 0.03 (0.03) 1.00 0.21%(b) 3.19%(b) 3.23%(b) 158,516 0.52%(b)
1993
CASH FUND(C)
INVESTOR SHARES
Year Ended August 31, 1997 1.00 0.05 (0.05) 1.00 0.83% 4.72% 4.81% 76,480 0.85%
Year Ended August 31, 1996 1.00 0.05 (0.05) 1.00 0.83% 4.68% 4.95% 32,731 0.96%
June 16 to Aug. 31, 1995 1.00 0.01 (0.01) 1.00 0.84%(b) 5.32%(b) 5.14%(b) 4,665 3.76%(b)
UNIVERSAL SHARES
Year Ended August 31, 1995 1.00 0.06 (0.06) 1.00 0.27% 5.59% 5.75% 26,525 0.56%
Year Ended August 31, 1994 1.00 0.04 (0.04) 1.00 0.27% 3.50% 3.69% 22,105 0.55%
Dec. 1, 1992 to Aug. 31, 1.00 0.03 (0.03) 1.00 0.25%(b) 3.29%(b) 3.36% 47,854 0.62%(b)
1993
</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 in the absence of any waivers and reimbursements for the
Fund and its respective Portfolio.
(b) Annualized.
(c) As of August 31, 1997, the total net assets of each Fund (combining the
assets of each class of shares) was: Treasury Cash Fund, $70,948,273,
Government Cash Fund, $475,566,735, and Cash Fund, $246,974,489.
28
<PAGE>
3. INVESTMENT OBJECTIVE AND POLICIES
Each Fund has an investment policy that allows it to invest all of its
investable assets in its corresponding Portfolio. All other investment policies
of each Fund and its corresponding Portfolio are identical. Therefore, although
the following discusses the investment policies of the Portfolios (and the
responsibilities of Core Trust's board of trustees (the "Core Trust Board"), it
applies equally to the Funds (and the Trust's board of trustees (the "Board")).
INVESTMENT OBJECTIVE
The investment objective of each Fund is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity. Each Fund currently seeks to achieve its investment objective by
investing all of its investable assets in its corresponding Portfolio, which has
the same investment objective. There can be no assurance that any Fund or
Portfolio will achieve its investment objective.
INVESTMENT POLICIES
Each Portfolio invests only in high quality, U.S. dollar-denominated short-term
money market instruments that are determined by the Adviser, pursuant to
procedures adopted by the Core Trust Board, to be eligible for purchase and to
present minimal credit risks. High quality instruments include those that (i)
are rated (or, if unrated, are issued by an issuer with comparable outstanding
short-term debt that is rated) in the highest rating category by two nationally
recognized statistical rating organizations ("NRSROs") or, if only one NRSRO has
issued a rating, by that NRSRO or (ii) are otherwise unrated and determined by
the Adviser to be of comparable quality. A description of the rating categories
of certain NRSROs, such as Standard & Poor's Corporation and Moody's Investors
Service, Inc., is contained in the SAI.
Each Portfolio invests only in instruments that have a remaining maturity of 397
days or less (as calculated under Rule 2a-7 under the Investment Company Act of
1940 (the "1940 Act")) and maintains a dollar-weighted average portfolio
maturity of 90 days or less. Except to the limited extent permitted by Rule 2a-7
and except for U.S. Government Securities, each Portfolio will not invest more
than 5% of its total assets in the securities of any one issuer. As used in this
prospectus, "U.S. Government Securities" means obligations issued or guaranteed
as to principal and interest by the United States Government, its agencies or
instrumentalities and "Treasury Securities" means U.S. Treasury bills and notes
and other U.S. Government Securities which are guaranteed as to principal and
interest by the U.S. Treasury.
Although each Portfolio only invests in high quality money market instruments,
an investment in a Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value when
there is a change in interest rates, the issuer's actual or perceived
creditworthiness or the issuer's ability to meet its obligations.
TREASURY CASH FUND
Treasury Cash Portfolio seeks to maintain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.
GOVERNMENT CASH FUND
Government Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities and in repurchase
agreements backed by U.S. Government Securities. The U.S. Government Securities
in which the Portfolio may invest include Treasury Securities and securities
supported primarily or solely by the creditworthiness of the issuer, such as
securities of the Federal National Mortgage Association. There is no guarantee
that the U.S. Government will support securities not backed by its full faith
and credit. Accordingly, although these securities have historically involved
little risk of loss of principal if held to maturity, they may involve more risk
than securities backed by the U.S. Government's full faith and credit.
CASH FUND
Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments. The Portfolio may invest in (i)
obligations of domestic financial institutions, (ii) U.S. Government Securities
(see "Investment Objective and Policies - Government Cash Portfolio") and (iii)
corporate debt obligations of domestic issuers.
Financial institution obligations include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of banks (including savings
banks and savings associations) and their foreign branches. The Portfolio limits
its investments in bank obligations to banks which at the time of investment
have total assets in excess of one billion dollars. Certificates of deposit
represent an institution's obligation to repay funds deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations
of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-
29
<PAGE>
negotiable deposits with a banking institution that earn a specified interest
rate over a given period. Certificates of deposit and fixed time deposits, which
are payable at the stated maturity date and bear a fixed rate of interest,
generally may be withdrawn on demand by the Portfolio but may be subject to
early withdrawal penalties which could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" without registration under
the Securities Act of 1933. These "restricted securities" are restricted as to
disposition under the Federal securities laws in that any sale of these
securities may not be made absent registration under the Securities Act of 1933
or an appropriate exemption therefrom.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, may not be changed without approval of the
holders of a majority of the Fund's or Portfolio's, as applicable, outstanding
voting securities (as defined in the 1940 Act). Except as otherwise indicated in
this prospectus or in the SAI, investment policies of a Fund or a Portfolio may
be changed by the applicable board of trustees without shareholder approval.
Each Portfolio may borrow money for temporary or emergency purposes (including
the meeting of redemption requests), but not in excess of 33 1/3% of the value
of the Portfolio's total assets. Borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's total
assets. Each Portfolio is permitted to hold cash in any amount pending
investment in securities and may invest in other investment companies that
intend to comply with Rule 2a-7 and have substantially similar investment
objectives and policies. To the extent a Portfolio invests in other money funds,
it will indirectly bear the expenses of those funds. A further description of
the Funds' and the Portfolios' investment policies is contained in the SAI.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain risks not associated with direct investment in securities. The
Portfolios, however, intend to enter into repurchase agreements only with
sellers which the Adviser believes present minimal credit risks in accordance
with guidelines established by the Core Trust Board. In the event that a seller
defaulted on its repurchase obligation, however, a Portfolio might suffer a
loss.
LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including repurchase agreements
not entitling the Portfolio to payment of principal within seven days. There may
not be an active secondary market for securities held by a Portfolio. The value
of securities that have a limited market tend to fluctuate more than those that
have an active market. For this reason, a Portfolio could suffer a loss with
respect to an instrument. The Adviser monitors the liquidity of the Portfolios'
investments, but there can be no guarantee that an active secondary market will
exist.
WHEN-ISSUED SECURITIES. In order to assure itself of being able to obtain
securities at prices which the Adviser believes might not be available at a
future time, each Portfolio may purchase securities on a when-issued or delayed
delivery basis. Securities so purchased are subject to market price fluctuation
and no interest on the securities accrues to a Portfolio until delivery and
payment take place. Accordingly, the value of the securities on the delivery
date may be more or less than the purchase price. Commitments for when-issued or
delayed delivery transactions will be entered into only when a Portfolio has the
intention of actually acquiring the securities. Failure by the other party to
deliver a security purchased by a Portfolio may result in a loss or missed
opportunity to make an alternative investment.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Portfolios
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Securities
with ultimate maturities of greater than 397 days may be purchased only in
accordance with the provisions to Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features that comply with certain
requirements and certain long-term U.S. Government Securities may be purchased.
Similar to fixed rate debt instruments, variable and floating rate instruments
are subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
short-term market
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rates (these prohibited securities are often referred to as "derivative"
securities). All variable and floating rate securities purchased by a Portfolio
will have an interest rate that is adjusted based on a single short-term rate or
index, such as the Prime Rate.
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invest only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. In addition, these Portfolios limit their investments to those
permissible for Federally chartered credit unions under applicable provisions of
the Federal Credit Union Act and the applicable rules and regulations of the
National Credit Union Administration. Government Cash Portfolio limits its
investments to investments that are legally permissible for Federally chartered
savings associations without limit as to percentage and to investments that
permit Fund shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction of the Core Trust Board.
The Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Fund and the Trust. The SAI contains general
background information about the trustees and officers of the Trust and of Core
Trust.
ADMINISTRATOR AND INVESTMENT ADVISER
Forum supervises the overall management of the Trust, including overseeing the
Trust's receipt of services, advising the Trust and the Trustees on matters
concerning the Trust and its affairs, and providing the Trust with general
office facilities and certain persons to serve as officers. For these services
and facilities, Forum receives a fee at an annual rate of 0.05% of the daily net
assets of each Fund. Forum also serves as administrator of Core Trust and
provides administrative services for each Portfolio that are similar to those
provided to the Funds. For its administrative services to the Portfolios, Forum
receives a fee at an annual rate of 0.05% of the average daily net assets of
each Portfolio.
As of the date hereof Forum and its affiliates acted as administrator and
distributor of registered investment companies with assets of approximately $30
billion. As of the date of this Prospectus, Forum, FFSI, the Adviser and the
Trust's transfer agent were each directly controlled by John Y. Keffer, an
officer and Trustee of the Trust and of Core Trust.
Forum, FFSI and the Adviser are located at Two Portland Square, Portland, Maine
04101.
Subject to the general supervision of the Core Trust Board, the Adviser makes
investment decisions for each Portfolio and monitors the Portfolios'
investments. In addition to the Portfolios, the Adviser currently provides
investment advisory services to six other mutual funds, including one money
market fund. Under supervision of the Adviser, Mr. Anthony R. Fischer, Jr. acts
as each Portfolio's portfolio manager pursuant to a consulting agreement with
the Adviser.
For its services, the Adviser receives from each Portfolio an advisory fee based
upon the total average daily net assets of the three Portfolios ("Total
Portfolio Assets") that is calculated on a cumulative basis as follows: 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.
DISTRIBUTOR
FFSI, a registered broker-dealer and member of the National Association of
Securities Dealers, Inc., serves as each Fund's distributor. FFSI acts as the
agent of the Trust in connection with the offering of shares of the Funds. In
order to facilitate the distribution of Investor Shares, the Trust has adopted a
plan of distribution (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with
respect to each Fund's Investor Shares. Under the Plan, FFSI receives a fee at
an annual rate of 0.25% of the average daily net assets of each Fund
attributable to Investor Shares as compensation for FFSI's services as
distributor. From this amount, FFSI may make payments to various financial
institutions, including broker-dealers, banks and trust companies as
compensation for services or reimbursement of expenses in connection with the
distribution of shares or the provision of various shareholder services. If the
distribution related expenses of FFSI exceed its Rule 12b-1 fees for any Fund,
the Fund will not be obligated to pay FFSI an additional amount and if FFSI's
distribution related expenses are less than its Rule 12b-1 fees, FFSI will
realize a profit.
SHAREHOLDER SERVICING
TRANSFER AND DIVIDEND DISBURSING AGENT. Forum Financial Corp. (the "Transfer
Agent"), a registered transfer agent, acts as the Trust's transfer agent and
dividend disbursing agent. The Transfer Agent maintains an account for each
shareholder of
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the Funds (unless such accounts are maintained by sub-transfer agents or
processing agents) and performs other transfer agency and related functions.
The Transfer Agent is authorized to subcontract any or all of its functions to
one or more qualified sub-transfer agents or processing agents, which may be its
affiliates, who agree to comply with the terms of the Transfer Agent's agreement
with the Trust. The Transfer Agent may pay those agents for their services, but
no such payment will increase the Transfer Agent's compensation from the Trust.
For its services, the Transfer Agent is paid a transfer agent fee at an annual
rate of 0.20% of the average daily net assets of each Fund attributable to
Investor Shares plus $12,000 per year for each Fund and certain account and
additional class charges and is reimbursed for certain expenses incurred on
behalf of the Funds.
SHAREHOLDER SERVICE AGENTS. The Trust has adopted a shareholder service plan
("Shareholder Service Plan") which provides that, as compensation for FFSI's
service activities with respect to the Investor Shares, the Trust shall pay FFSI
a fee at an annual rate of 0.15% of the average daily net assets attributable to
Investor Shares. FFSI is authorized to enter into shareholder servicing
agreements pursuant to which a shareholder servicing agent, on behalf of its
customers, performs certain shareholder services not otherwise provided by the
Transfer Agent. As compensation for its services, the shareholder servicing
agent, which will be a Participating Organization, is paid a fee by FFSI of up
to 0.15% of the average daily net assets of Investor Shares owned by investors
for which the shareholder service agent maintains a servicing relationship.
Certain shareholder servicing agents may be subtransfer or processing agents.
Among the services provided by shareholder servicing agents are answering
customer inquiries regarding the manner in which purchases, exchanges and
redemptions of shares of the Trust may be effected and other matters pertaining
to the Trust's services; providing necessary personnel and facilities to
establish and maintain shareholder accounts and records; assisting shareholders
in arranging for processing purchase, exchange and redemption transactions;
arranging for the wiring of funds; guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request.
EXPENSES
Each Fund bears all of its expenses, which include Trust expenses attributable
to the Fund, which are allocated to the Fund, and expenses not specifically
attributable to any Fund, which are allocated among the Funds in proportion to
their average net assets. Each service provider may elect to waive (or continue
to waive) all or a portion of its fees and may reimburse a Fund for certain
expenses. Any such waivers or reimbursements will have the effect of increasing
the Fund's performance for the period during which the waiver or reimbursement
is in effect. No fee waivers may be recouped at a later date.
5. PURCHASES OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through the Transfer Agent, which
accepts orders for purchases only from shareholders of record and new investors.
The minimum initial investment in Investor Shares is $5,000. The minimum
subsequent investment is $100. Shareholders of record will receive from the
Trust monthly statements listing all account activity during the statement
period. The Trust reserves the right in the future to modify, limit or terminate
any shareholder privilege upon appropriate notice.
Fund shares are sold on a continuous basis at their next determined net asset
value on all Fund Business Days. Fund shares are issued immediately following
the next determination of the Fund's net asset value made after an order for the
shares in proper form, accompanied by funds on deposit at a Federal Reserve Bank
("Federal Funds"), is received by the Transfer Agent. An investor's funds will
not be accepted or invested by a Fund during the period before the Fund's
receipt of Federal Funds. The Trust reserves the right to reject any
subscription for the purchase of Fund shares.
Investors may obtain the account application necessary to open an account or
obtain additional information or assistance by contacting the Trust at
800-754-8757 or writing Imperial Securities Corporation at the following
address:
Imperial Securities Corporation
9920 South La Cienega Boulevard
14th Floor
Inglewood, California 90301
Purchase orders for Investor Shares will be accepted on Fund Business Days until
3:00 p.m., Pacific time. In order to receive distributions for the day of
investment, orders and payment must be received by the Transfer Agent as
follows:
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Order Must be Received by Payment Must be Received by
------------------------- ---------------------------
11:00 a.m., Pacific time 1:00 p.m., Pacific time
If a purchase order is transmitted to the Transfer Agent after 11:00 a.m.,
Pacific time, or the wire is received after 1:00 p.m., Pacific time, the
investor will not receive a distribution on that day. On days that the New York
Stock Exchange or San Francisco Federal Reserve Bank closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which the Transfer Agent must receive
completed wire purchase orders and the cut-off times in the above table.
INITIAL PURCHASE PROCEDURES
BY BANK WIRE. To make an initial investment in a Fund using the federal wire
system for transmittal of money among banks, an investor should first telephone
the Transfer Agent at 800-754-8757 to obtain an account number. The investor
should then wire the investor's money immediately to:
Imperial Bank
ABA# 122201444
For Credit To: Forum Financial Corp.
Account #: 09075-933
Re: [Name of Fund] - Investor Shares
Account #:________________
Account Name:________________
The investor should then promptly complete and mail the account application.
Payment in the form of a bank wire is treated as a Federal Funds payment
received at the time the wire is received.
BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to the Transfer Agent at the address listed above.
Checks are accepted at full value subject to collection.
THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks and other financial institutions ("Participating
Organizations"). Participating Organizations may charge a fee for their services
and may otherwise act as processing agents. Participating Organizations are
responsible for promptly transmitting purchase, redemption and other requests to
the Funds.
Investors who purchase shares in this manner will be subject to the procedures
of their Participating Organization, which may include investment minimums,
cutoff times and other restrictions in addition to, or different from, those
applicable to shareholders who invest in a Fund directly. Investors purchasing
Fund shares in this manner should acquaint themselves with their Participating
Organization's procedures and should read this Prospectus in conjunction with
any materials and information provided by their Participating Organization.
Investors purchasing shares in this manner may or may not be the shareholder of
record and, subject to their Participating Organization's procedures, may have
Fund shares transferred into their name. Certain states permit shares to be
purchased and redeemed only through registered broker-dealers, including FFSI.
SUBSEQUENT INVESTMENTS
There is a $100 minimum for subsequent investments in a Fund, which may be made
by bank wire, by check or through Participating Organizations. Shareholders
using the wire system for subsequent investments should first telephone the
Transfer Agent at 800-754-8757 to notify it of the wire transfer.
6. REDEMPTIONS OF SHARES
GENERAL INFORMATION
Fund shares may be redeemed without charge at their next determined net asset
value on any Fund Business Day following acceptance by the Transfer Agent of the
redemption order in proper form (and any supporting documentation which the
Transfer Agent may require). There is no minimum period of investment and no
restriction on the frequency of redemptions. Redemption proceeds are paid by
check mailed to the shareholder's record address immediately following any
redemption unless the shareholder has elected wire redemption privileges. The
right of redemption may not be suspended nor the payment dates postponed except
when the New York Stock Exchange is closed (or when trading thereon is
restricted) for any reason other than its customary weekend or holiday closings
or under any emergency or other circumstance as determined by the SEC.
Redemption proceeds from the Portfolios may be made wholly or partially in
portfolio securities if the Adviser determines it to be in the best interests of
the Portfolio. Similarly, redemption proceeds from a Fund may be made wholly or
partially in portfolio securities if it is determined to be in the best
interests of the Fund.
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Redemption orders for Investor Shares will be accepted on Fund Business Days
until 3:00 p.m., Pacific time. In order to receive redemption proceeds by wire,
a redemption order must be received by the Transfer Agent by 11:00 a.m., Pacific
time.
For redemption orders received after 11:00 a.m., Pacific time, the Transfer
Agent will wire proceeds the next Fund Business Day. On days that the New York
Stock Exchange or San Francisco Federal Reserve Bank closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which the Transfer Agent must receive
completed wire redemption orders.
If a shareholder elects telephone redemption or exchange privileges, as long as
the Trust employs reasonable procedures to insure that telephone orders are
genuine (which include recording certain transactions and the use of immediate
written confirmation by facsimile or otherwise), the Trust, the Transfer Agent
and FFSI are not responsible for the authenticity of telephone instructions or
losses, if any, resulting from unauthorized telephone redemption or exchange
requests. Shareholders should verify the accuracy of telephone instructions
immediately upon receipt of confirmation statements.
REDEMPTION PROCEDURES
Shareholders that wish to redeem shares by telephone or to have redemption
proceeds transmitted by bank wire must elect these options by properly
completing the appropriate sections of their account application.
Shareholders may make a redemption in any amount by sending a written request to
the Transfer Agent accompanied by any share certificates that may have been
issued to the shareholder or, for shareholders that have elected telephone
redemption privileges, by calling the Transfer Agent and providing the
shareholder's account number, the exact name in which the shareholder's shares
are registered and a shareholder identification number. During times of drastic
economic or market changes, the telephone redemption privilege may be difficult
to implement.
BANK WIRE REDEMPTION. For redemptions of more than $5,000, a shareholder that
has elected wire redemption privileges may request a Fund to transmit redemption
proceeds by Federal Funds wire to a bank account designated on the shareholder's
account application.
BY CHECK. Shareholders electing check writing privileges will be provided with
redemption drafts ("checks") drawn on the Fund's account which may be made out
in an amount of $500 or more. When a check is presented for payment, the number
of shares required to cover the amount of the check will be redeemed from the
shareholder's account. If the amount of a check is greater than the value of the
shares owned by the shareholder for which certificates have not been issued, the
check will not be honored. If the amount of the check is less than $500, the
check will be honored and shareholders will be charged a $10 fee, which will be
paid by an immediate redemption from the shareholder's account. Shareholders
will be subject to the Trust's rules and regulations governing the check writing
privilege, as amended from time to time. The check writing privilege is not
available for IRA accounts.
SIGNATURE GUARANTEES. A signature guarantee is required for written requests to
redeem shares whose value exceeds $50,000 (other than an exchange) and for any
instruction to change the shareholder's record name, to redeem shares in an
account for which the address or registration has changed within the last 30
days, to transmit redemption proceeds to an account other than the address of
record or a preauthorized bank account or to a person other than the registered
owners or to an account with a different registration, to change the
shareholder's distribution election or the telephone redemption or other option
elected on an account. In addition, all share certificates submitted for
redemption (or exchange) must be endorsed by the shareholder with signature
guaranteed. Signature guarantees may be provided by any eligible institution
acceptable to the Transfer Agent, including a bank, a broker, a dealer, a
national securities exchange, a credit union, or a savings association that is
authorized to guarantee signatures (notarized signatures are not sufficient).
When a signature guarantee is required, the signature of each person required to
sign for the account must be guaranteed.
OTHER REDEMPTION MATTERS. Share certificates are issued only to shareholders of
record upon their written request and no certificates are issued for fractional
shares. Shares for which certificates have been issued may not be redeemed or
exchanged by telephone. Due to the cost to the Trust of maintaining smaller
accounts, the Trust reserves the right to redeem, upon not less than 60 days'
written notice, all shares in any Fund account with an aggregate net asset value
of less than $5,000, unless an investment is made to restore the minimum value.
The Transfer Agent will deem a shareholder's account "lost" if correspondence to
the shareholder's address of record is returned for six months, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost, all distributions on the account will be reinvested in additional
Investor Shares. In addition, the amount of any outstanding (unpaid for six
months or more) checks for distributions that have been returned to the Transfer
Agent will be reinvested and the checks will be canceled.
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EXCHANGE PROGRAM
Investors in Investor Shares of a Fund are entitled to exchange their shares for
Investor Shares of another Fund if that Fund's shares are eligible for sale in
the shareholder's state. Exchanges are subject to minimum investment
requirements of the Funds. There is currently no limit on the number of
exchanges a shareholder may make. The Trust reserves the right in the future to
modify, limit or terminate the exchange privilege upon appropriate notice to
shareholders.
Exchanges may be accomplished by written instructions to the Transfer Agent or,
for shareholders that have elected telephone exchange privileges, by calling the
Transfer Agent and providing the shareholder's account number, the exact name in
which the shareholder's shares are registered and the shareholder's social
security or taxpayer identification number. During times of drastic economic or
market changes, the telephone exchange privilege may be difficult to implement.
BY MAIL. Exchanges may be accomplished by written instructions to the Transfer
Agent accompanied by any stock certificate that may have been issued to the
shareholder.
BY TELEPHONE. Exchanges may be accomplished by telephone (if the shareholder has
elected telephone exchange privileges) by calling the Transfer Agent and
providing the shareholder's account number, the exact name in which the
shareholder's shares are registered and the shareholder's social security or
taxpayer identification number. During times of drastic economic or market
changes, the telephone exchange privilege may be difficult to implement.
7. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Net
capital gain realized by a Fund, if any, will be distributed annually. Fund
shares become entitled to receive distributions on the day the shares are issued
as described under "Purchases of Shares General Information." Shares redeemed
are not entitled to receive distributions declared on or after the day on which
the redemption becomes effective.
Shareholders may choose either to have all distributions reinvested in
additional Fund shares or received in cash or to have distributions of net
capital gain reinvested in additional Fund shares and distributions of net
investment income paid in cash. All distributions are treated in the same manner
for Federal income tax purposes whether received in cash or reinvested in shares
of the Fund.
TAX MATTERS
TAX STATUS OF THE FUNDS. Each Fund intends to continue to qualify to be taxed as
a "regulated investment company" under the Internal Revenue Code of 1986, as
amended. Accordingly, each Fund will not be liable for Federal income taxes on
the net investment income and capital gain distributed to its shareholders.
Because the Funds intend to distribute all of their net investment income and
net capital gain each year, the Funds should also avoid Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Distributions of net capital gain, if any, realized by
a Fund are taxable to shareholders as capital gain, regardless of the length of
time the Fund shares were held by the shareholder at the time of distribution.
Different capital gain rates will apply depending on the holding period of the
securities sold by the Fund that generated the gain.
THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, distributions and
gains and losses of a Portfolio are deemed to be "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether the interest, distributions or gains have been distributed
by the Portfolio or losses have been realized by the Portfolio.
GENERAL. Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include income and capital gain distributions) paid to a
non-corporate shareholder unless that shareholder certifies in writing that the
social security or other tax identification number provided is correct and that
the shareholder is not subject to backup withholding.
Reports containing appropriate information with respect to the Federal income
tax status of distributions paid during the year by the Fund will be mailed to
shareholders shortly after the close of each calendar year.
The foregoing is only a summary of some of the Federal tax considerations
generally affecting the Funds and their shareholders. The SAI contains a further
discussion. Because other Federal, state or local tax considerations may apply,
investors are urged to consult their tax advisors.
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8. OTHER INFORMATION
FUND PERFORMANCE
Investor Shares' performance may be advertised. All performance information is
based on historical results, is not intended to indicate future performance and,
unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of the period. A Fund's compounded
annualized yield assumes the reinvestment of distributions paid by the Fund,
and, therefore will be somewhat higher than the annualized yield for the same
period. Each class' performance will vary. The Funds' advertisements may also
reference ratings and rankings among similar funds by independent evaluators
such as Morningstar, Lipper Analytical Services, Inc. or IBC Financial Data,
Inc. In addition, the performance of the Funds may be compared to recognized
indices of market performance. The comparative material found in a Fund's
advertisements, sales literature, or reports to shareholders may contain
performance rankings. This material is not to be considered representative or
indicative of future performance.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 1:00 p.m.,
Pacific time, on each Fund Business Day. Net asset value per share is determined
by dividing the value of the Fund's net assets (the value of its interest in the
Portfolio and other assets less its liabilities) by the number of shares
outstanding at the time the determination is made. In order to more easily
maintain a stable net asset value per share, each Portfolio's portfolio
securities are valued at their amortized cost (acquisition cost adjusted for
amortization of premium or accretion of discount) in accordance with Rule 2a-7.
The Portfolios will only value their portfolio securities using this method if
the Core Trust Board believes that it fairly reflects the market-based net asset
value per share. The Portfolios' other assets, if any, are valued at fair value
by or under the direction of the Core Trust Board.
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end management investment
company and was organized as a business trust under the laws of the State of
Delaware on July 10, 1992. The Board has the authority to issue an unlimited
number of shares of beneficial interest of separate series with no par value per
share and to create classes of shares within each series. Except for the Funds,
no other series of shares are currently authorized.
As of December 5, 1997, there were no outstanding Investor Shares of Government
Cash Fund, and no shareholder beneficially owned more than 25% of the
outstanding Investor Shares of the other two Funds. From time to time various
shareholders may own a large percentage of Universal Shares or shares of other
classes of a Fund. These shareholders may be deemed to be controlling persons of
a class, a Fund or the Trust, and may be able to greatly affect (if not
determine) the outcome of any shareholder vote.
Shares issued by the Trust have no conversion, subscription or preemptive
rights. Voting rights are not cumulative and the shares of each series or class
of the Trust will be voted separately except when an aggregate vote is required
by law. Separate votes are taken by each class of a Fund if a matter affects
just that class. The Trust is not required to hold annual meetings of
shareholders, and it is anticipated that shareholder meetings will be held only
when specifically required by law. Shareholders have available procedures for
requiring the Trustees to call a meeting and for removing Trustees.
FUND STRUCTURE
OTHER CLASSES OF SHARES. In addition to Investor Shares, each Fund may create
and issue shares of other classes of securities. Each Fund currently has two
other classes of shares authorized, Universal Shares and Institutional Shares.
Universal Shares are offered to the general public and have an investment
minimum of $1,000,000. Institutional Shares are offered solely through banks,
trust companies and certain other financial institutions, and their affiliates
and correspondents, for investment of their funds or funds for which they act in
a fiduciary, agency or custodial capacity. Universal Shares and Institutional
Shares incur less expenses than Investor Shares. Except for certain differences,
each share of each class represents an undivided, proportionate interest in a
Fund. Each share of each Fund is entitled to participate equally in
distributions and the proceeds of any liquidation of that Fund except that, due
to the differing expenses borne by the various classes, the amount of
distributions will differ among the classes.
CORE TRUST STRUCTURE. Each Fund invests all of its assets in its corresponding
Portfolio of Core Trust, a business trust organized under the laws of the State
of Delaware in September 1994 and registered under the 1940 Act as an open-end
management investment company. Accordingly, a Portfolio directly acquires its
own securities and its corresponding Fund
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acquires an indirect interest in those securities. The assets of each Portfolio
belong only to, and the liabilities of the Portfolio are borne solely by, the
Portfolio and no other portfolio of Core Trust. Upon liquidation of a Portfolio,
investors in the Portfolio would be entitled to share pro rata in the net assets
of the Portfolio available for distribution to investors.
THE PORTFOLIOS. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, the
Treasury Cash Fund and Government Cash Fund are the only investors that have
invested all of their assets in their respective Portfolios. Besides Cash Fund,
another investment company invests in Cash Portfolio. All investors in a
Portfolio will invest on the same terms and conditions as the Funds and will pay
a proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio will be entitled to vote in proportion to the relative value of
its interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. If there are other investors
in a Portfolio, there can be no assurance that any issue that receives a
majority of the votes cast by a Fund's shareholders will receive a majority of
votes cast by all investors in the Portfolio.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Portfolio
may be affected by the actions of other investors in the Portfolio. For example,
if other investors redeemed their interest in the Portfolio, the Portfolio's
remaining investors (including the Fund) might, as a result, experience higher
pro rata operating expenses. A Fund may withdraw its entire investment from a
Portfolio at any time if the Board determines that it is in the best interests
of the Fund and its shareholders to do so. The Fund might withdraw, for example,
if other investors in the Portfolio, by a vote of shareholders, changed the
investment objective or policies of the Portfolio in a manner not acceptable to
the Board or not permissible by the Fund. A withdrawal could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
by the Portfolio. That distribution could result in a less diversified portfolio
of investments for the Fund, resulting in increased risk, and could affect
adversely the liquidity of the Fund's portfolio. If the Fund decided to convert
those securities to cash, it would incur transaction costs. If the Fund withdrew
its investment from the Portfolio, the Board would consider what action might be
taken, including the management of the Fund's assets in accordance with its
investment objective and policies by the Adviser or the investment of all of the
Fund's investable assets in another pooled investment entity having
substantially the same investment objective as the Fund. Forum has only two
years of experience in managing funds that utilize its "Core and Gateway(R)"
structure.
ADDITIONAL INFORMATION. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact
FFSI at 800-754-8757. If an investor invests through a financial institution,
the investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
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M O N A R C H F U N D S
================================================================================
TREASURY CASH FUND
GOVERNMENT CASH FUND
CASH FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1998
Monarch Funds is a registered, open-end management investment company. This
Statement of Additional Information supplements the Prospectuses (dated January
1, 1998) offering shares of each class of Treasury Cash Fund, Government Cash
Fund and Cash Fund, each a portfolio of the Trust, and should be read only in
conjunction with the applicable Prospectus, a copy of which may be obtained
without charge by contacting the Trust at P.O. Box 446, Portland, Maine 04101.
<TABLE>
TABLE OF CONTENTS
<S> <C> <C> <C>
PAGE
1. INVESTMENT POLICIES
2. INVESTMENT LIMITATIONS
3. INVESTMENTS BY FINANCIAL INSTITUTIONS
4. PERFORMANCE DATA AND ADVERTISING
5. MANAGEMENT
6. DETERMINATION OF NET ASSET VALUE
7. PORTFOLIO TRANSACTIONS
8. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
9. TAXATION
10. OTHER INFORMATION
11. FINANCIAL STATEMENTS
APPENDIX A - DESCRIPTION OF CERTAIN SECURITIES RATINGS
APPENDIX B - PERFORMANCE DATA
APPENDIX C- MISCELLANEOUS TABLES
</TABLE>
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DEFINITIONS
As used in this Statement of Additional Information, the following terms shall
have the meanings listed:
"Administrator" means Forum Administrative Services, LLC
"Adviser" means Forum Investment Advisors, LLC.
"Board" means the Board of Trustees of the Trust.
"Core Trust" means Core Trust (Delaware).
"Core Trust Board" means the Board of Trustees of Core Trust.
"FFC" means Forum Financial Corp.
"Forum" means Forum Financial Services, Inc.
"Forum Accounting" means Forum Accounting Services, LLC
"Fund" means each of Treasury Cash Fund, Government Cash Fund and Cash
Fund.
"Fund Business Day" shall have the meaning ascribed thereto in the
Prospectuses of the Funds.
"NRSRO" means a nationally recognized statistical rating organization.
"Portfolio" means each of Treasury Cash Portfolio, Government Cash
Portfolio, Cash Portfolio.
"SAI" means this Statement of Additional Information.
"SEC" means the U.S. Securities and Exchange Commission.
"Trust" means Monarch Funds.
"U.S. Government Securities" means obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities.
"1940 Act" means the Investment Company Act of 1940, as amended.
1. INVESTMENT POLICIES
Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio of Core Trust.
Each Fund has a fundamental investment policy that allows it to invest all of
its investable assets in its corresponding Portfolio. The investment policies of
each Fund and its corresponding Portfolio are substantially identical.
Therefore, although this and the following sections discuss the investment
policies of the Portfolios (and the responsibilities of the Core Trust Board),
it applies equally to the Funds (and the Board). Information with respect to
periods prior to September 1, 1995 (for instance, investment advisory fees
paid), the date the Funds initially invested in the Portfolios, reflects
information with respect to the Funds.
Following is information pertaining to the investment policies of each
Portfolio, which supplements the investment policy information contained in the
Funds' Prospectuses.
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The Portfolios currently are prohibited from purchasing any security issued by
the Federal Home Loan Mortgage Corporation. This does not prohibit the
Portfolios from entering into repurchase agreements collateralized with
securities issued by the Federal Home Loan Mortgage Corporation.
RATINGS AS INVESTMENT CRITERIA
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P") and other NRSROs are private services that provide ratings of the credit
quality of debt obligations. A description of the higher quality ratings
assigned to debt securities by several NRSROs is included in Appendix A to this
SAI. The Portfolios use these ratings in determining whether to purchase, sell
or hold a security. It should be emphasized, however, that ratings are general
and not absolute standards of quality. Consequently, securities with the same
maturity, interest rate and rating may have different market prices. Subsequent
to its purchase by a Portfolio, an issue of securities may cease to be rated or
its rating may be reduced. The Adviser, and in certain cases the Core Trust
Board, will consider such an event in determining whether the Portfolio should
continue to hold the obligation. Credit ratings attempt to evaluate the safety
of principal and interest payments and do not evaluate the risks of fluctuations
in market value. Also, rating agencies may fail to make timely changes in credit
ratings in response to developments and events, so that an issuer's current
financial condition may be better or worse than the rating indicates.
SMALL BUSINESS ADMINISTRATION SECURITIES
Each Portfolio may purchase securities issued by the Small Business
Administration ("SBA"). SBA securities are variable rate securities that carry
the full faith and credit of the United States Government, and generally have an
interest rate that resets monthly or quarterly based on a spread to the Prime
rate. SBA securities generally have maturities at issue of up to 25 years. No
Portfolio may purchase an SBA Security if, immediately after the purchase, (i)
the Portfolio would have more than 15% of its net assets invested in SBA
securities, (ii) the total unamortized premium on SBA Securities with a premium
held by the Portfolio divided by the sum of the par amount of all SBA securities
with a premium held by the portfolio would exceed 0.25% of the Portfolios' net
assets or (iii) the total unamortized discount on SBA Securities with a discount
held by the Portfolio divided by the sum of the par amount of all SBA securities
with a discount held by the portfolio would exceed 0.25% of the Portfolios' net
assets. Premium is the amount above par for which a security is purchased and
discount is the amount below par for which a security is purchased.
MORTGAGE BACKED SECURITIES
The Portfolios may purchase adjustable rate mortgage backed or other asset
backed securities (such as SBA securities) that are U.S. Government Securities
or, in the case of Treasury Cash Portfolio, that are U.S. Treasury Securities.
These securities directly or indirectly represent a participation in, or are
secured by and payable from, adjustable rate mortgage or other loans which may
be secured by real estate or other assets. Unlike traditional debt instruments,
payments on these securities include both interest and a partial payment of
principal. Prepayments of the principal of underlying loans may shorten the
effective maturities of these securities. Some adjustable rate U.S. Government
Securities (or the underlying loans) are subject to caps or floors that limit
the maximum change in interest rate during a specified period or over the life
of the security.
Adjustable rate mortgage backed securities ("MBSs") are securities that have
interest rates that are reset at periodic intervals, usually by reference to
some interest rate index or market interest rate. Government Cash Portfolio and
Cash Portfolio will only invest in adjustable rate MBSs that are U.S. Government
Securities. MBSs represent an interest in a pool of mortgages made by lenders
such as commercial banks, savings associations, mortgage bankers and mortgage
brokers and may be issued by governmental or government-related entities or by
non-governmental entities such as commercial banks, savings associations,
mortgage bankers and other secondary market issuers.
Interests in pools of MBSs differ from other forms of debt securities which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. In contrast, MBSs
provide periodic payments which consist of interest and, in most cases,
principal. In effect, these payments are a "pass-
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through" of the periodic payments and optional prepayments made by the
individual borrowers on their mortgage loans, net of any fees paid to the issuer
or guarantor of such securities. Additional payments to holders of MBSs are
caused by prepayments resulting from the sale of the underlying property or the
refinancing or foreclosure of the underlying mortgage loans. Such prepayments
may significantly shorten the effective maturities of MBSs, and occur more often
during periods of declining interest rates.
Although the rate adjustment feature of MBSs may act as a buffer to reduce sharp
changes in the value of MBSs, these securities are still subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rate is reset only periodically, changes
in the interest rate on MBSs may lag behind changes prevailing market interest
rates. Also, some MBSs (or the underlying mortgages) are subject to caps or
floors that limit the maximum change in interest rate during a specified period
or over the life of the security.
During the periods of declining interest rates, income to the Portfolios derived
from mortgages which are not prepared will decrease as the coupon rate resets
along with the decline in interest rates in contrast to the income on fixed-rate
mortgages, which will remain constant. At times, some of the MBSs in which the
Portfolios will invest will have higher-than-market interest rates, and will
therefore be purchased at a premium above their par value. Unscheduled
prepayments, which are made at par, will cause the Portfolios to suffer a loss
equal to the unamortized premium, if any.
During periods of rising interest rates, changes in the coupon rates of the
mortgages underlying the Portfolios' investments may lag behind changes in
market interest rates. This may result in a slightly lower value until the
coupons reset to market rates. Many MBSs in the Portfolios' portfolios will have
"caps" that limit the maximum amount by which the interest rate paid by the
borrower may change at each reset date or over the life of the loan and
fluctuation in interest rates above these levels could cause these securities to
"cap out" and to behave more like fixed-rate debt securities.
The Portfolios may purchase collateralized mortgage obligations ("CMOs"), which
are collateralized by MBSs or by pools of conventional mortgages. (See
"Investment by Shareholders that are Credit Unions - Government Cash Portfolio
and Treasury Cash Portfolio.") CMOs are typically structured with a number of
classes or series that have different maturities and are generally retired in
sequence. Each class of bonds receives periodic interest payments according to
the coupon rate on the bonds. However, all monthly principal payments and any
prepayments from the collateral pool are paid first to the "Class I"
bondholders. The principal payments are such that the Class 1 bonds will be
completely repaid no later than, for example, five years after the offering
date. Thereafter, all payments of principal are allocated to the next most
senior class of bonds until that class of bonds has been fully repaid. Although
full payoff of each class of bonds is contractually required by a certain date,
any or all classes of bonds may be paid off sooner than expected because of an
acceleration in pre-payments of the obligations comprising the collateral pool.
Since the inception of the mortgage-related pass-through security in 1970, the
market for these securities has expanded considerably. The size of the primary
issuance market and active participation in the secondary market by securities
dealers and many types of investors make government and government-related
pass-through pools highly liquid.
Government or private entities may create new types of MBSs in response to
changes in the market or changes in government regulation of such securities. As
new types of these securities are developed and offered to investors, the
Adviser may, consistent with the investment objective and policies of a
Portfolio, consider making investments in such new types of securities.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY SECURITIES
Each Portfolio may purchase securities on an when-issued or delayed delivery
basis. In those cases, the purchase price and the interest rate payable on the
securities are fixed on the transaction date and delivery and payment may take
place a month or more after the date of the transaction. At the time, a
Portfolio makes the commitment to
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purchase securities on a when-issued or delayed delivery basis, the Portfolio
will record the transaction as a purchase and thereafter reflect the value each
day of such securities in determining its net asset value. If a Portfolio
chooses to dispose of the right to acquire a when-issued security prior to its
acquisition, it could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation. Failure of an issuer
to deliver the security may result in the Portfolio incurring a loss or missing
an opportunity to make an alternative investment. When a Portfolio agrees to
purchase a security on a when-issued or delayed delivery basis, its custodian
will maintain in a segregated account cash, U.S. Government Securities or other
liquid securities with a market value at all times at least equal to the amount
of the Portfolio's commitment.
ILLIQUID SECURITIES
Each Portfolio may invest up to 10% of its net assets in illiquid securities.
The term "illiquid securities" for this purchase means repurchase agreements not
entitling the holder to payment of principal within seven days and securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market.
The Core Trust Board has ultimate responsibility for determining whether
specific securities are liquid or illiquid. The Core Trust Board has delegated
the function of making day-to-day determination of liquidity to the Adviser and,
with respect to certain types of restricted securities which may be deemed to be
illiquid, has adopted guidelines to be followed by the Adviser. The Adviser
takes into account a number of factors in reaching liquidity decisions,
including but not limited to (1) the frequency of trades and quotations of the
security; (2) the number of dealers willing to purchase or sell the security and
the number of other potential buyers; (3) the willingness of dealers to
undertake to make a market in the security; (4) the nature of the marketplace
trades, including the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer; (5) whether the security is
registered; and (6) if the security is not traded in the United States, whether
it can be freely traded in a liquid foreign securities market. The Adviser
monitors the liquidity of the securities in each Portfolio's portfolio and
reports periodically to the Core Trust Board.
Certificates of deposit and fixed time deposits that carry an early withdrawal
penalty or mature in greater than seven days are treated by the Portfolio as
illiquid securities if there is no readily available market for the instrument.
REPURCHASE AGREEMENTS AND SECURITIES LOANS
In connection with entering into repurchase agreements and securities loans, the
Portfolios require continual maintenance by the Trust's custodian of the market
value of the underlying collateral in amounts equal to, or in excess of, the
repurchase price plus the transaction costs (including loss of interest) that
the Portfolios could expect repurchase obligation, a Portfolio might suffer a
loss to the extent that the proceeds from the sale of the collateral were less
than the repurchase price. In the event of a counterparty's bankruptcy, a
Portfolio might be delayed in, or prevented from, selling the collateral for the
Portfolio's benefit. The Adviser monitors the creditworthiness of its repurchase
agreement counterparties and securities borrowers under the Core Trust Board's
general supervision and pursuant to specific Core Trust Board adopted
procedures.
VARIABLE AND FLOATING RATE SECURITIES
The yield of variable and floating rate securities varies in relation to changes
in specific money market rates, such as the Prime rate. A "variable" interest
rate adjusts at predetermined intervals (for example, daily, weekly or monthly),
while a "floating" interest rate adjusts whenever a specified benchmark rate
(such as the bank prime lending rate) changes. These changes are reflected in
adjustments to the yields of the variable and floating rate securities, and
different securities may have different adjustment rates. Accordingly, as
interest rates increase or decrease, the capital appreciation or depreciation
may be less on these obligations than for fixed rates obligations. To the extent
that the Portfolios invest in long-term variable or floating rate securities,
the Adviser believes that the Portfolios may be able to take advantage of the
higher yield that is usually paid on long-term securities.
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Cash Portfolio also may purchase variable and floating rate master notes of
corporations, which are unsecured obligations redeemable upon notice that permit
investment of fluctuating amounts at varying rates of interest pursuant to
direct arrangement with the issuer of the instrument. These obligations include
master demand notes that permit investment of fluctuating amounts at varying
rates of interest pursuant to direct arrangement with the issuer of the
instrument. The issuer of these obligations often has the right, after a given
period, to prepay their outstanding principal amount of the obligations upon a
specified number of days' notice. These obligations generally are not traded,
nor generally is there an established secondary market for these obligations. To
the extent a demand note does not have a seven day or shorter demand feature and
there is no readily available market for the obligation, it is treated as an
illiquid security.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on two interest
rates or indexes, on an interest rate or index that materially lags short-term
market rates. All variable and floating rate securities purchased by the
Portfolio have an interest rate that is adjusted based on a single short-term
rate or index, such as the Prime rate.
INVESTMENT COMPANY SECURITIES
In connection with managing their cash positions, the Portfolios may invest in
the securities of other investment companies that are money market funds within
the limits proscribed by the 1940 Act. Under normal circumstances, each
Portfolio invests up to 15% of its assets in money market funds. Each Portfolio
only invests in money market funds when it has excess cash and the Adviser
believes that the investment is in the best interest of the Portfolio. In
addition to a Portfolio's expenses (including the various fees), as a
shareholder in another investment company, a Portfolio bears its pro rata
portion of the other investment company's expenses (including fees). Those
expenses are not part of the portfolio's (or Fund's) expense ratio, but rather
are reflected in the yield of the investment in the money market fund.
ZERO-COUPON SECURITIES
All zero-coupon securities in which the Portfolio invests will have a maturity
of less than 13 months.
2. INVESTMENT LIMITATIONS
The Portfolios have adopted the following fundamental investment limitations
that cannot be changed without 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. Each Portfolio may not:
(1) With respect to 75% of its assets, purchase a security other than a
U.S. Government Security if, as a result, more than 5% of the
Portfolio's total assets would be invested in the securities of a
single issuer.
(2) Purchase securities if, immediately after the purchase, more than
25% of the value of the Portfolio's total assets would be invested in
the securities of issuers having their principal business activities in
the same industry; provided, however, that there is no limit on
investments in U.S. Government Securities.
(3) Underwrite securities of other issuers, except to the extent that
the Portfolio may be considered to be acting as an underwriter in
connection with the disposition of portfolio securities.
(4) Purchase or sell real estate or any interest therein, except that
the Portfolio may invest in debt obligations secured by real estate or
interests therein or issued by companies that invest in real estate or
interests therein.
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(5) Purchase or sell physical commodities or contracts relating to
physical commodities, provided that currencies and currency-related
contracts will not be deemed to be physical commodities.
(6) Borrow money, except for temporary or emergency purposes (including
the meeting of redemption requests) and except for entering into
reverse repurchase agreements, provided that borrowings do not exceed
33 1/3% of the value of the Portfolio's total assets.
(7) Issue senior securities except as appropriate to evidence
indebtedness that the Portfolio is permitted to incur, and provided
that the Portfolio may issue shares of additional series or classes
that the Trustees may establish.
(8) Make loans except for loans of portfolio securities, through the
use of repurchase agreements, and through the purchase of debt
securities that are otherwise permitted investments.
(9) With respect to Government Cash Portfolio, purchase or hold any
security that (i) a Federally chartered savings association may not
invest in, sell, redeem, hold or otherwise deal pursuant to law or
regulation, without limit as to percentage of the association's assets
and (ii) pursuant to 12 C.F.R. Section 566.1 would cause shares of the
Portfolio not to be deemed to be short term liquid assets when owned by
Federally chartered savings associations.
The Portfolios have adopted the following nonfundamental investment limitations
that may be changed by the Core Trust Board without shareholder approval. Each
Portfolio may not:
(a) With respect to 100% of its assets, purchase a security other than
a U.S. Government Security if, as a result, more than 5% of the
Portfolio's total assets would be invested in the securities of a
single issuer, unless the investment is permitted by Rule 2a-7 under
the 1940 Act.
(b) Purchase securities for investment while any borrowing equaling 5%
or more of the Portfolio's total assets is outstanding; and if at any
time the Portfolio's borrowings exceed the Portfolio's investment
limitations due to a decline in net assets, such borrowings will be
promptly (within three days) reduced to the extent necessary to comply
with the limitations. Borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's
total assets.
(c) Purchase securities that have voting rights, except the Portfolio
may invest in securities of other investment companies to the extent
permitted by the 1940 Act.
(d) Purchase securities on margin, or make short sales of securities,
except for the use of short-term credit necessary for the clearance of
purchases and sales of portfolio securities.
(e) Invest in securities (other than fully-collateralized debt
obligations) issued by companies that have conducted continuous
operations for less than three years, including the operations of
predecessors (unless guaranteed as to principal and interest by an
issuer in whose securities the Portfolio could invest), if as a result,
more than 5% of the value of the Portfolio's total assets would be so
invested.
(f) Invest in or hold securities of any issuer other than the Portfolio
if, to the Portfolio's knowledge, those Trustees and officers of the
Trust or the Portfolio's investment adviser, individually owning
beneficially more than 1/2 of 1% of the securities of the issuer, in
the aggregate own more than 5% of the issuer's securities.
(g) Invest in oil, gas or other mineral exploration or development
programs, or leases, or in real estate limited partnerships; provided
that the Portfolio may invest in securities issued by companies engaged
in such activities.
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(h) Acquire securities or invest in repurchase agreements with respect
to any securities if, as a result, more than 10% of the Portfolio's net
assets (taken at current value) would be invested in repurchase
agreements not entitling the holder to payment of principal within
seven days and in securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily
available market.
Except as required by the 1940 Act, if a percentage restriction on investment or
utilization of assets is adhered to at the time an investment is made, a later
change in percentage resulting from a change in the market values of a
Portfolio's assets, the change in status of a security or purchases and
redemptions of shares will not be considered a violation of the limitation. For
purposes of limitation (2): (i) loan participations are considered to be issued
by both the issuing bank and the underlying corporate borrower; (ii) utility
companies are divided according to their services (for example, gas, gas
transmission, electronic and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.
Each Fund has adopted the same fundamental and nonfundamental investment
limitations. The Fund's fundamental limitations cannot be changed without the
affirmative vote of the lesser of (i) more than 50% of the outstanding shares of
the Fund or (ii) 67% of the shares of the Fund present or represented at a
shareholders meeting at which the holders of more than 50% of the outstanding
shares of the Fund are present or represented. In addition, the Funds have
adopted a fundamental policy which provides that, notwithstanding any other
investment policy or restriction (whether fundamental or not), each Fund may
invest all of its assets in the securities of a single pooled investment fund
having substantially the same investment objectives, policies and restrictions
as the Fund or Portfolio, as applicable.
3. INVESTMENTS BY FINANCIAL INSTITUTIONS
INVESTMENT BY SHAREHOLDERS THAT ARE BANKS - GOVERNMENT CASH PORTFOLIO
Government Cash Portfolio invests only in instruments which, if held directly by
a bank or bank holding company organized under the laws of the United States or
any state thereof, would be assigned to a risk-weight category of no more than
20% under the current risk based capital guidelines adopted by the Federal bank
regulators (the "Guidelines"). In the event that the Guidelines are revised, the
Portfolio's portfolio will be modified accordingly, including by disposing of
portfolio securities or other instruments that no longer qualify under the
Guidelines. In addition, the Portfolio does not intend to hold in its portfolio
any securities or instruments that would be subject to restriction as to amount
held by a National bank under Title 12, Section 24 (Seventh) of the United
States Code. If the Portfolio's portfolio includes any instruments that would be
subject to a restriction as to amount held by a National bank, investment in the
Portfolio may be limited.
The Guidelines provide that shares of an investment fund are generally assigned
to the risk-weight category applicable to the highest risk-weighted security or
instrument that the fund is permitted to hold. Accordingly, Portfolio shares
should quality for a 20% risk weighting under the Guidelines. The Guidelines
also provide that, in the case of an investment fund whose shares should qualify
for a risk weighting below 100% due to limitations on the assets which it is
permitted to hold, bank examiners may review the treatment of the shares to
ensure that they have been assigned an appropriate risk-weight. In this
connection, the Guidelines provide that, regardless of the composition of an
investment fund's assets, shares of a fund may be assigned to the 100%
risk-weight category if it is determined that the fund engages in activities
that appear to be speculative in nature or has any other characteristics that
are inconsistent with a lower risk weighting. The Adviser has no reason to
believe that such a determination would be made with respect to the Portfolio.
Their are various subjective criteria for making this determination and,
therefore, it is not possible to provide any assurance as to how Portfolio
shares will be evaluated by bank examiners.
Before acquiring Fund shares, prospective investors that are banks or bank
holding companies, particularly those that are organized under the laws of any
country other than the United States or of any state, territory or other
political subdivision of the United States, and prospective investors that are
U.S. branches and agencies of foreign
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banks or Edge Corporations, should consult all applicable laws, regulations and
policies, as well as appropriate regulatory bodies, to confirm that an
investment in Fund shares is permissible and in compliance with any applicable
investment or other limits.
Fund shares held by National banks are generally required to be revalued
periodically and reported at the lower of cost or market value. Such shares may
also be subject to special regulatory reporting, accounting and tax treatment.
In addition, a bank may be required to obtain specific approval from its board
of directors before acquiring Fund shares, and thereafter may be required to
review its investment in a Fund for the purpose of verifying compliance with
applicable Federal banking laws, regulations and policies.
National banks generally must review their holdings of shares of a Fund at least
quarterly to ensure compliance with established bank policies and legal
requirements. Upon request, the Portfolios will make available to the Funds'
investors information relating to the size and composition of their portfolio
for the purpose of providing Fund shareholders with this information.
INVESTMENT BY SHAREHOLDERS THAT ARE CREDIT UNIONS - GOVERNMENT CASH PORTFOLIO
AND TREASURY CASH PORTFOLIO
Government Cash Portfolio and Treasury Cash Portfolio limit their investments to
investments that are legally permissible for Federally chartered credit unions
under applicable provisions of the Federal Credit Union Act (including 12 U.S.C.
Section 1757(7), (8) and (15)) and the applicable rules and regulations of the
National Credit Union Administration (including 12 C.F.R. Part 703, Investment
and Deposit Activities), as such statutes and rules and regulations may be
amended. The Portfolios limit their investments to U.S. Government Securities
(including Treasury STRIPS) and repurchase agreements fully collateralized by
U.S. Government Securities. Certain U.S. Government Securities owned by
Government Cash Portfolio may be mortgage or asset backed , but, except to
reduce interest rate risk, no such security will be (i) a stripped mortgage
backed security (SMBS"), (ii) a collateralized mortgaged obligation ("CMO") or
real estate mortgage investment conduit ("REMIC") that meets any of the tests
outlined in 12 C.F.R. Section 703.5(g) or (iii) a residual interest in a CMO or
REMIC. In order to reduce interest rate risk Government Cash Portfolio may
purchase a SMBS, CMO, REMIC or residual interest in a CMO or REMIC but only in
accordance with 12 C.F.R. Section 703.5(i). Government Cash Portfolio has no
current intention to make any such investment. Each Portfolio also may invest in
reverse repurchase agreements in accordance with 12 C.F.R 703.4(e) to the extent
otherwise permitted hereunder and in the Prospectus.
INVESTMENTS BY SHAREHOLDERS THAT ARE SAVINGS ASSOCIATIONS - GOVERNMENT CASH
PORTFOLIO AND TREASURY CASH PORTFOLIO
Government Cash Portfolio limits its investments to investments that are legally
permissible for Federally chartered savings associations without limit as to
percentage under applicable provisions of the Home Owners' Loan Act (including
12 U.S.C. Section 1464) and the applicable rules and regulations of the Office
of Thrift Supervision, as such statutes and rules and regulations may be
amended. In addition, the Portfolio limits its investments to investments that
are permissible for an open-end investment company to hold and would permit
shares of the investment company to qualify as liquid assets under 12 C.F.R.
Section 566.1(g) and as short-term liquid assets under 12 C.F.R. Section
566.1(h). These policies may be amended only by approval of the Portfolio's and
Fund's shareholders, as applicable.
4. PERFORMANCE DATA AND ADVERTISING
For a listing of certain performance data as of August 31, 1997, see Appendix B.
YIELD INFORMATION
Each Fund may provide current annualized and effective annualized yield
quotations for each class based on its daily distributions. These quotations may
from time to time be used in advertisements, shareholder reports or other
47
<PAGE>
communications to shareholders. All performance information supplied by a Fund
is historical and is not intended to indicate future returns.
In performance advertising, the Funds may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC Financial Data, Inc. or CDA/Wiesenberger
or other companies which track the investment performance of investment
companies ("Fund Tracking Companies"). The Funds may also compare any of their
performance information with the performance of recognized stock, bond and other
indexes. The Funds may also refer in such materials to mutual fund performance
rankings and other data published by Fund Tracking Companies. Performance
advertising may also refer to discussion of a Fund and comparative mutual fund
data and ratings reported in independent periodicals, such as newspapers and
financial magazines.
Any current yield quotation of a class of a Fund which is used in such a manner
as to be subject to the provisions of Rule 482(d) under the Securities Act of
1933, as amended, shall consist of an annualized historical yield, carried at
least to the nearest hundredth of one percent, based on a specific
seven-calendar-day period and shall be calculated by dividing the net change
during the seven-day period in the value of an account having a balance of one
share at the beginning of the period by the value of the account at the
beginning of the period, and multiplying the quotient by 365/7. For this
purpose, the net change in account value would reflect the value of additional
shares purchased with distributions declared on the original share and
distributions declared on both the original share and any such additional
shares, but would not reflect any realized gains or losses from the sale of
securities or any unrealized appreciation or depreciation on portfolio
securities. In addition, any effective annualized yield quotation used by a Fund
shall be calculated by compounding the current yield quotation for such period
by adding 1 to the product, raising the sum to a power equal to 365/7, and
subtracting 1 from the result.
Although published yield information is useful to investors in reviewing a
class' performance, investors should be aware that each Fund's yield fluctuates
from day to day and that the class' yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Fund's shares. Also, Participating Organizations (as that term is used in
the Prospectus) may charge their customers direct fees in connection with an
investment in a Fund, which will have the effect of reducing the class' net
yield to those shareholders. The yields of a class are not fixed or guaranteed,
and an investment in the Fund is not insured or guaranteed. Accordingly, yield
information may not necessarily be used to compare shares of the Fund with
investment alternatives which, like money market instruments or bank accounts,
may provide a fixed rate of interest. Also, it may not be appropriate directly
to compare a Fund's yield information to similar information of investment
alternatives which are insured or guaranteed.
Income calculated for the purpose of determining a class' yield differs from
income as determined for other accounting purposes. Because of the different
accounting methods used, and because of the compounding assumed in yield
calculations, the yield quoted for a class may differ from the rate of
distribution the class paid over the same period or the rate of income reported
in the Fund's financial statements.
OTHER PERFORMANCE AND SALES LITERATURE MATTERS
Total returns quoted in sales literature reflect all aspects of a Fund's return,
including the effect of reinvesting capital gain distributions. Average annual
returns generally are calculated by determining the growth or decline in value
of a hypothetical historical investment in a Fund over a stated period, and then
calculating the annually compounded percentage rate that would have produced the
same result if the rate of growth or decline in value had been constant over the
period. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that the performance is not
constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Funds.
Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment, over such periods
according to the following formula:
48
<PAGE>
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of
the applicable period, of a hypothetical $1,000 payment made
at the beginning of the applicable period.
OTHER ADVERTISING MATTERS
The Funds may advertise other forms of performance. For example, average annual
and cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of investments,
and/or a series of redemptions over any time period. Total returns may be broken
down into their components of income and capital (including capital gains and
changes in share price) in order to illustrate the relationship of se factors
and their contributions to total return. Any performance information may be
presented numerically or in a table, graph or similar illustration.
A Fund may also include various information in their advertisements. Information
included in the Fund's advertisements may include, but is not limited to (i)
portfolio holdings and portfolio allocation as of certain dates, such as
portfolio diversification by instrument type, by instrument or by maturity, (ii)
descriptions of the portfolio managers of the Funds or the Portfolios and the
portfolio management staff of the Adviser or summaries of the views of the
portfolio managers with respect to the financial markets, (iii) the results of a
hypothetical investment in a Fund over a given number of years, including the
amount that the investment would be at the end of the period, (iv) the effects
of earning Federally and, if applicable, state tax-exempt income from the Fund
or investing in a tax-deferred account, such as an individual retirement account
and (v) the net asset value, net assets or number of shareholders of a Fund as
of one or more dates.
In connection with its advertisements a Fund may provide "shareholders letters"
which serve to provide shareholders or investors an introduction into the
Fund's, the Portfolio's, the Trust's, Core Trust's or any of the Trust's of Core
Trust's service provider's policies or business practices.
5. MANAGEMENT
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and Officers of the Trust and their principal occupation during the
past five years are set forth below. Each Trustee who is an "interested person"
(as defined by the 1940 Act) of the Trust is indicated by an asterisk.
Rudolph I. Estrada, Trustee (age 49)
President and Chief Executive Officer of The Summit Group, a banking and
business consulting company, since 1987. Mr. Estrada was also a Presidential
appointee to the White House Commission on Small Business in 1993. He is also
Professor (Adjunct) of Finance and Management and Director of the Small Business
Institute at California State University; Chairman, Los Angeles County Office of
Education Personnel Commission; and Director, Foothill Thrift & Loan, Augura,
California. His address is 625 Fair Oaks Avenue, South Pasadena, California
91030.
Maurice J. DeWald, Trustee (age 57)
Chief Executive Officer and Chairman, Verity Financial Group, Inc. (a financial
advisory firm) since May 1991. Prior thereto, Mr. DeWald was managing partner of
KPMG Peat Marwick LLP (an international accounting firm).
49
<PAGE>
Mr. DeWald also serves as a director of National Medical Enterprises and
Dai-Ichi Kangyo Bank of California. His address is 19200 Von Karman Avenue,
Suite 400, Irvine, California 92715.
Robert F. Franko, Trustee (age 50)
President of Imperial Financial Group, Inc. since September 1997 and Imperial
Trust Company since March 1995. From March 1995 to September 1997 Mr. Franko was
Executive Vice President and Chief Financial Officer of Imperial Bank and
Imperial Bancorp. and held various positions with other Imperial Bancorp.
subsidiaries. Prior thereto, Mr. Franko serves in various capacities with the
Springfield and Morningside Groups, including President and Chief Executive
Officer of Springfield Bank & Trust Limited, Gibraltar and Managing Director of
Springfield Securities Limited. His address is 9920 South LaCienega Blvd., 6th
Floor, Inglewood, California 90301.
John Y. Keffer,* Trustee, Chairman and President (age 55)
President, Forum Financial Group, LLC (mutual fund services company holding
company). Mr. Keffer is also a director and/or officer of various registered
investment companies for which the various Forum Financial Group of Companies
provides services. His address is Two Portland Square, Portland, Maine 04101.
Jack J. Singer, Trustee (age 53)
Senior Vice President, Imperial Bank since November 1987. Prior thereto, Mr.
Singer was Vice President of First Interstate Bank Ltd. His address is 9920
South LaCienega Boulevard, Inglewood, California 90301.
David I. Goldstein, Vice President and Secretary (age 36)
General Counsel, Forum Financial Group, LLC, with which he has been associated
since 1991. Prior thereto, Mr. Goldstein was associated with the law firm of
Kirkpatrick & Lockhart LLP. Mr. Goldstein also serves as an officer of various
registered investment companies for which the various Forum Financial Group of
Companies provides services. His address is Two Portland Square, Portland, Maine
04101.
Robert B. Campbell, Treasurer (age 35)
Director, Custody Services, Forum Financial Group, LLC, with which she has been
associated since April 1997. Prior thereto, from February 1994 to April 1996, he
was Vice President - Business Unit Head, Domestic Fund Services at State Street
Fund Services, Inc. Prior thereto, from September 1992 to January 1994, he was
Assistant Vice President - Fund Manager at State Street Bank and Trust Company.
His address is Two Portland Square, Portland, Maine 04101.
Beth P. Hanson, Assistant Secretary (age 31)
Corporate Administrator, Forum Financial Group, LLC, with which she has been
associated since 1995. Prior thereto, Ms. Hanson was an English language
instructor with the Overseas Training Center, Inc. in Osaka, Japan. Her address
is Two Portland Square, Portland, Maine 04101.
TRUSTEES AND OFFICERS OF CORE TRUST
The Trustees and officers of Core Trust and their principal occupations during
the past five years are set forth below. Each Trustee who is an "interested
person" (as defined by the 1940 Act) of Core Trust is indicated by an asterisk.
Messrs, Keffer and Goldstein, officers of Core Trust, all currently serve as
officers of the Trust. Accordingly, for background information pertaining to
these officers, see "Trustees and Officers of the Trust" above.
John Y. Keffer*, Chairman and President
50
<PAGE>
Costas Azariadis, Trustee (age 54)
Professor of Economics, University of California, Los Angeles, since July 1992.
Prior thereto, Dr. Azariadis was Professor of Economics at the University of
Pennsylvania. His address is Department of Economics, University of California,
Los Angeles, 405 Hilgard Avenue, Los Angeles, California 90024.
James C. Cheng, Trustee (age 55)
President of Technology Marketing Associates (a marketing consulting company)
since September 1991. Prior thereto, Mr. Cheng was President and Chief Executive
Officer of Network Dynamics, Incorporated (a software development company). His
address is Two Portland Square, Portland, Maine 04101.
J. Michael Parish, Trustee (age 54)
Partner at the law firm of Reid & Priest. Prior to 1995, Mr. Parish was a
partner at Winthrop Stimson Putnam & Roberts since 1989. His address is 40 West
57th Street, New York, New York 10019.
Sara M. Morris, Vice President and Treasurer (age 34)
Chief Financial Officer, Forum Financial Group, LLC, with which she has been
associated since 1994. Prior thereto, from 1991 to 1994, Ms. Clark was
Controller of Wright Express Corporation (a national credit card company) and
for six years prior thereto was employed at Deloitte & Touche LLP as an
accountant. Ms. Clark is also an officer of various registered investment
companies for which the Forum Financial Group of companies provides services.
Her address is Two Portland Square, Portland, Maine 04101.
David I. Goldstein, Vice President and Secretary
Thomas G. Sheehan, Vice President and Assistant Secretary (age 43)
Director, Relationship Management, Forum Financial Group, LLC, since October,
1993. Prior thereto, Mr. Sheehan was a Special Counsel in the Division of
Investment Management of the U.S. Securities and Exchange Commission in
Washington, D.C. His address is Two Portland Square, Portland, Maine 04101.
Renee Walker, Assistant Secretary (age 27)
Assistant Relationship Manager, Forum Financial Group, LLC, with which she has
been associated since 1994. Prior thereto, Ms. Walker was an administrator at
Longwood Partners (the manager of a hedge fund partnership) for a year. From
1991 to 1993, Ms. Walker was a sales representative assistant at PaineWebber
Incorporated (a broker-dealer). Her address is Two Portland Square, Portland,
Maine 04101.
TRUSTEE AND OFFICER COMPENSATION
Each Trustee of the Trust is paid $2,000 ($1,000 prior to April 1997) for each
Board meeting attended (whether in person or by electronic communication) and is
paid $2,000 for each Committee meeting attended on a date when a Board meeting
is not held. Trustees are also reimbursed for travel and related expenses
incurred in attending meetings of the Board. No officer of the Trust is
compensated by the Trust, but officers are reimbursed for travel and related
expenses incurred in attending meetings of the Board. Since commencement of the
Trust's operations, Messrs. Keffer, Singer and Franko have not accepted any fees
for their services as Trustees.
The following table provides the aggregate compensation paid to each Trustee for
the twelve months ended August 31, 1997. The Trust has not adopted any form of
retirement plan covering Trustees or officers.
51
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. DeWald $7,000 None None $7,000
Mr. Estrada $7,000 None None $7,000
Mr. Franko None None None None
Mr. Keffer None None None None
Mr. Singer None None None None
</TABLE>
Each Trustee of Core Trust is paid $1,000 for each meeting of the Core Trust
Board attended (whether in person or by electronic communication) plus $100 for
each active portfolio of Core Trust and is paid $1000 for each committee meeting
attended on a date when the Core Trust Board meeting is not held. As of August
31, 1997, there were fifteen active portfolios of Core Trust (including the
Portfolios). Trustees are also reimbursed for travel and related expenses
incurred in attending meetings of the Core Trust Board. No officer of Core Trust
is compensated or reimbursed for expenses by Core Trust. Since commencement of
the Trust's operations, Mr. Keffer has not accepted any fees for his services as
Trustee. Core Trust trustee expenses were less than $5,000 for the twelve months
ended August 31, 1997.
The following table provides the aggregate compensation paid to each trustee of
Core Trust for the twelve months ended August 31, 1997. Core Trust has not
adopted any form of retirement plan covering trustees or officers of Core Trust.
<TABLE>
<S> <C> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Azariadis $7,900 None None $7,900
Mr. Parish $7,900 None None $7,900
Mr. Cheng $7,900 None None $7,900
Mr. Keffer None None None None
</TABLE>
INVESTMENT ADVISER
The Funds do not have an investment adviser. In the event that the Board
determines it is in the best interest of a Fund to withdraw its investment from
its corresponding Portfolio, the Board will determine whether to invest in a
similar portfolio or to directly retain an investment adviser. Shareholder
approval of a new investment advisory agreement between the Trust and the
Adviser would not be necessary, provided that the agreement is substantially
similar to the current Investment Advisory Agreement of Core Trust with respect
to the portfolio in which the Fund invests.
The Adviser furnishes at its own expense all services, facilities and personnel
necessary in connection with managing each Portfolio's investments and effecting
portfolio transactions for each Portfolio. The Investment Advisory Agreement
between Core Trust and the Adviser will continue in effect only if its
continuance is specifically approved at least annually by the Core Trust Board
or by vote of the respective Portfolio's shareholders, and in either case, by a
majority of the Core Trust trustees who are not parties to the Investment
Advisory Agreement or interested persons of any such party at a meeting called
for the purpose of voting on the Investment Advisory Agreement.
The Investment Advisory Agreement is terminable without penalty by Core Trust
with respect to a Portfolio on 60 days' written notice when authorized either by
vote of the Portfolio's interestholders or by a vote of a majority of the Core
Trust Board, or by the Adviser on 60 days' written notice and will automatically
terminate in the event of its assignment. The Investment Advisory Agreement also
provides that, with respect to each Portfolio, the Adviser shall not be liable
for any error of judgment or mistake of law or for any act or omission in the
performance of the Adviser's duties or by reason of reckless disregard of the
Adviser's obligations and duties under the Investment Advisory Agreement.
52
<PAGE>
For the services provided by the Adviser, Core Trust pays the Adviser, with
respect to each Portfolio, a fee based upon the total average daily net assets
of the Portfolios ("Total Portfolio Assets") at an annual rate of 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. These
fees are accrued by Core Trust daily with respect to each Portfolio in the
proportion that Portfolio's average daily net assets bear to Total Portfolio
Assets and are payable monthly in arrears on the first day of each calendar
month for services performed under the agreement during the prior calendar
month. The Adviser is paid a minimum annual fee of $50,000 for its services to
the Trust with respect to the Portfolios.
The Adviser may carry out any of its obligations under the Investment Advisory
Agreement by employing, subject to the supervision of the Core Trust Board, one
or more subadvisers who are registered as investment advisers or who are exempt
from registration. The Investment Advisory Agreement provides that the Adviser
shall not be liable for any act or omission of any subadviser except with
respect to matters as to which the Adviser specifically assumes responsibility
in writing. There are currently no investment subadvisory agreements with
respect to the Portfolios.
The Adviser was established in 1987 and is indirectly wholly-owned and
controlled by John Y. Keffer. In connection with the January 2, 1998 acquisition
of Linden Asset Management, Inc., the former investment adviser of each
Portfolio, the Adviser has entered into a consulting agreement with a new
company solely owned by Anthony R. Fischer, Jr., former owner, president and
sole director of Linden, under which Mr. Fischer continues to provide portfolio
management services to the Portfolios under the supervision of the Adviser. Mr.
Fischer has over 20 years experience in managing pools of assets. He has managed
the Portfolios' (and prior to September 1995, the Funds') assets since October
1992. Prior thereto, he was as Senior Vice President and Treasurer of United
California Savings Bank, Santa Ana, California from 1984 to 1989 and,
immediately prior thereto, as a Manager for five years at PaineWebber Jackson &
Curtis, New York, New York.
Table 1 in Appendix C shows the dollar amount of investment advisory fees paid
by the Portfolios and the Funds.
MANAGER AND DISTRIBUTOR
MANAGEMENT SERVICES. The Administrator supervises the overall management of the
Trust (which includes, among other responsibilities, negotiation of contracts
and fees with, and monitoring of performance and billing of, the transfer agent
and custodian and arranging for maintenance of books and records of the Trust),
and provides the Trust with general office facilities pursuant to an
Administration Agreement with the Trust. The Administration Agreement will
remain in effect for a period of twelve months with respect to a Fund and
thereafter is automatically renewed each year for an additional term of one
year.
The Administration Agreement terminates automatically if it is assigned and may
be terminated without penalty with respect to any Fund by vote of that Fund's
shareholders or by either party on not more than 60 days' written notice. The
Administration Agreement provides that the Administrator shall not be liable for
any error of judgment or mistake of law or for any act or omission in the
administration or management of the Trust, except for willful misfeasance, bad
faith or gross negligence in the performance of the Administrator's duties or by
reason of reckless disregard of its obligations and duties under the
Administration Agreement.
At the request of the Board, the Administrator provides persons satisfactory to
the Board to serve as officers of the Trust. Similarly, at the request of the
Core Trust Board, the Administrator provides persons satisfactory to the Core
Trust Board to serve as officers of Core Trust. Those officers, as well as
certain other employees and Trustees of the Trust and Core Trust, may be
directors, officers or employees of the Administrator, the Adviser, Forum or
their affiliates.
Table 2 in Appendix C shows the dollar amount of administration fees paid by the
Funds. Prior to December 1, 1997, Forum acted as administrator of the Trust
under an agreement substantially identical to the Administration Agreement.
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<PAGE>
The Administrator provides substantially similar services to each Portfolio
pursuant to an administration agreement with Core Trust. The provisions of that
agreement are substantially similar to those of the Trust's Administration
Agreement.
Table 2 of Appendix C shows the dollar amount of administration fees paid by the
Portfolios. Prior to June 1, 1997, Forum acted as administrator of Core Trust
under an agreement substantially identical to the administration agreement
between Core Trust and the Administrator.
DISTRIBUTION SERVICES. Forum is the Trust's distributor and acts as the agent of
the Trust in connection with the offering of shares of the Funds (and each class
thereof) pursuant to a Distribution Agreement with the Trust. With respect to
each Fund, the Distribution Agreement will continue in effect for twelve months
and will continue in effect thereafter only if its continuance is specifically
approved at least annually by the Board or by vote of the shareholders entitled
to vote thereon, and in either case, by a majority of the Trustees who (i) are
not parties to the Distribution Agreement, (ii) are not interested persons of
any such party or of thrust and (iii) with respect to any class for which the
Trust has adopted a distribution plan, have no direct or indirect financial
interest in the operation of that distribution plan or in the Distribution
Agreement, at a meeting called for the purpose of voting on the Distribution
Agreement. All subscriptions for shares obtained by Forum are directed to the
Trust for acceptance and are not binding on the Trust until accepted by it.
Forum receives no compensation or reimbursement of expenses for the distribution
services provided pursuant to the Distribution Agreement except as may be paid
with respect to the Investor class pursuant to that class' distribution plan.
The Distribution Agreement provides that Forum shall not be liable for any error
of judgment or mistake of law or in any event whatsoever, except for willful
misfeasance, bad faith or gross negligence in the performance of Forum's duties
or by reason of reckless disregard of its obligations and duties under the
Distribution Agreement.
The Distribution Agreement is terminable with respect to a Fund without penalty
by the Trust on 60 days' written notice when authorized either by vote of the
Fund's shareholders or by a vote of a majority of the Board, or by Forum on 60
days' written notice, and will automatically terminate in the event of its
assignment. With respect to any class that has adopted a distribution plan, the
Distribution Agreement is also terminable upon similar notice by a majority of
the Trustees who (i) are not interested persons of the Trust and (ii) have no
direct or indirect financial interest in the operation of that distribution plan
or in the Distribution Agreement ("Qualified Trustees"). The Distribution
Agreement will automatically terminate in the event of its assignment.
Forum acts as sole placement agent for interests in the Portfolios and receives
no compensation for those services from the Portfolios.
EXPENSES
The Trust pays all of its expenses, including: interest charges, taxes,
brokerage fees and commissions; expenses of issue, repurchase and redemption of
shares; premiums of insurance for the Trust, its Trustees and officers and
fidelity bond premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's manager, investment adviser, investment
subadviser, custodian, transfer agent and fund accountant; fees of pricing,
interest, distribution, credit and other reporting services; costs of membership
in trade associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and
maintaining its existence; costs of preparing and printing the Trust's
prospectuses, statements of additional information and shareholder reports and
delivering them to existing shareholders; expenses of meetings of shareholders
and proxy solicitations therefore; costs of maintaining books and accounts and
preparing tax returns; costs of reproduction, stationery and supplies; fees and
expenses of the Trust's Trustees; compensation of the Trust's officers and
employees who are not employees of the Adviser, Forum or their respective
affiliates and costs of other personnel (who may be employees of the Adviser,
Forum or their respective affiliates) performing services for the Trust; costs
of Trustee meetings; SEC registration fees and related expenses; and state or
foreign securities laws registration fees and related expenses.
Fund expenses also include the Fund's pro rata portion of expenses of its
corresponding Portfolio.
54
<PAGE>
The estimated total operating expenses for each class of shares of each Fund for
the Trust's current fiscal year are as follows:
<TABLE>
<S> <C> <C> <C>
Treasury Government
Cash Fund Cash Fund Cash Fund
--------- --------- ---------
Universal Shares 0.25% 0.17% 0.23%
Institutional Shares 0.45% 0.57% 0.57%
Investor Shares 0.83% 0.83% 0.83%
</TABLE>
This information for the respective class is provided in the "Prospectus
Summary" section of each prospectus.
INVESTOR CLASS DISTRIBUTION PLAN
In accordance with Rule 12b-1 under the 1940 Act, with respect to the Investor
Class of each Fund, the Trust adopted a distribution plan (the "Investor Class
Plan") which provides for the payment to Forum of a Rule 12b-1 fee at the annual
rate of 0.25% of the average daily net assets of the Investor class of each Fund
as compensation for Forum's services as distributor.
The Investor Class Plan provides that all written agreements relating to that
plan must be approved by the Board, including a majority of the Qualified
Trustees. In addition, the Investor Class Plan (as well as the Distribution
Agreement) requires the Trust and Forum to prepare and submit to the Board, at
least quarterly, and the Board will review, written reports setting forth all
amounts expended under the Investor Class Plan and identifying the activities
for which those expenditures were made.
The Investor Class Plan provides that it will remain in effect for one year from
the date of its adoption and thereafter shall continue in effect provided it is
approved at least annually by the shareholders or by the Board, including a
majority of the Qualified Trustees. The Investor Class Plan further provides
that it may not be amended to increase materially the costs which may be borne
by the Trust for distribution pursuant to the Investor Class Plan without
shareholder approval and that other material amendments of the Investor Class
Plan must be approved by the Qualified Trustees. The Investor Class Plan may be
terminated at any time by the Board, by a majority of the Qualified Trustees, or
by a Fund's Investor class shareholders.
Table 3 in Appendix C shows the dollar amount of fees paid under the Investor
Class Plan with respect to each Fund.
For the years ended August 31, 1997, 1996 and 1995, all amounts paid to Forum
under the investor Class Plan were paid out to various financial intermediaries
not affiliated with Forum for their distribution services.
TRANSFER AGENT
Forum Financial Corp. acts as transfer agent, distribution disbursing agent and
fund accountant for the Trust pursuant to a Transfer Agency Agreement. The
Transfer Agency Agreement is automatically renewed each year for an additional
term of one year.
Among the responsibilities of the FFC as transfer agent for the Trust are, with
respect to shareholders of record: (1 (1) answering customer inquiries regarding
account status and history, the manner in which purchases and redemptions of
shares of the Funds may be effected and certain other matters pertaining to the
Funds; (2) assisting shareholders in initiating and changing account
designations and addresses; (3) providing necessary personnel and facilities to
establish and maintain shareholder accounts and records, assisting in processing
purchase and redemption transactions and receiving wired funds; (4) transmitting
and receiving funds in connection with customer orders to purchase or redeem
shares; (5) verifying shareholder signatures in connection with changes in the
registration of shareholder accounts; (6) furnishing periodic statements and
confirmations of purchases and redemptions; (7) arranging for the transmission
of proxy statements, annual reports, prospectuses and other
55
<PAGE>
communications from the Trust to its shareholders; (8) arranging for the
receipt, tabulation and transmission to the Trust of proxies executed by
shareholders with respect to meetings of shareholders of the Trust; and (9)
providing such other related services as the Trust or a shareholder may
reasonably request.
FFC or any sub-transfer agent or processing agent may also act and receipt
compensation for acting as custodian, investment manager, nominee, agent or
fiduciary for its customers or clients who are shareholders of the Funds with
respect to assets invested in the Funds. FFC or any sub-transfer agent or other
processing agent may elect to credit against the fees payable to it by its
clients or customers all or a portion of any fee received from the Trust or from
FFC with respect to assets of those customers or clients invested in the Funds.
FFC, Forum or sub-transfer agents or processing agents retained by the FFC may
be Participating Organizations and, in the case of sub-transfer agents or
processing agents, may also be affiliated persons of FFC or Forum.
For its transfer agency services, FFC receives an annual fee from each Fund of
0.05% of each Fund's average daily net assets attributable to Universal Shares
and 0.20% of each Fund's average daily net assets attributable to Institutional
Shares and Investor Shares. Prior to September 1, 1995, the fee was 0.25% with
respect to each class of shares. In addition, FFC receives a fee from each Fund
of $6,000 per year for each class of shares above one for which there are shares
outstanding plus an annual per shareholder account fee of $120 per Universal
Shares shareholder and $24 per Institutional Shares and Investor Shares
shareholder. Prior to September 1, 1995, the shareholder account fee was $18 per
account.
Forum Accounting acts as interestholder recordkeeper for each Portfolio. See
"Management -- Fund Accountant" below.
Table 4 in Appendix C shows the dollar amount of fees paid under the Transfer
Agent Agreement with respect to each Fund.
SHAREHOLDER SERVICE PLAN AND AGREEMENTS
The Trust has adopted a shareholder service plan ("Shareholder Service Plan")
with respect to the Institutional class and the Investor class of each Fund
which provides that Forum may obtain the services of financial institutions,
including Imperial Trust Company (the Trust's custodian), to act as shareholder
servicing agents for their customers invested in those classes.
In adopting the Shareholder Service Plan, the Trustees considered among other
things whether (i) the Shareholder Service Plan is in the best interests of the
applicable classes and their respective shareholders, (ii) the services to be
performed pursuant to the Shareholder Service Plan are required for the
operation of the applicable classes, (iii) the service organizations can provide
services at least equal, in nature and quality, to those provided by others,
including the Trust, providing similar services, and (iv) the fees for such
services are fair and reasonable in light of the usual and customary charges
made by other entities, especially non-affiliated entities, for services of the
same nature and quality.
The Shareholder Service Plan provides that all written agreements relating to
that plan must be approved by the Board, including a majority of the Qualified
Trustees. In addition, the Shareholder Service Plan (as well as the various
shareholder service agreements) requires the Trust and Forum to prepare and
submit to the Board, at least quarterly, and the Board will review written
reports setting forth all amounts expended under the plan and identifying the
activities for which those expenditures were made.
The Shareholder Service Plan provides that it will remain in effect for one year
from the date of its adoption and thereafter shall continue in effect provided
it is approved at least annually by the shareholders or by the Board, including
a majority of the Qualified Trustees. The Shareholder Service Plan further
provides material amendments of the plan must be approved by the Qualified
Trustees. The Shareholder Service Plan may be terminated at any time by the
Board or by a majority of the Qualified Trustees.
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The Trust may enter into shareholder servicing agreements with various
Shareholder Servicing Agents pursuant to which those agents, as agent for their
customers, may agree among other things to: (i) answer shareholder inquiries
regarding the manner in which purchases, exchanges and redemptions of shares of
the Trust may be effected and other matters pertaining to the Trust's services;
(ii) provide necessary personnel and facilities to establish and maintain
shareholder accounts and records; (iii) assist shareholders in arranging for
processing purchase, exchange and redemption transactions; (iv) arrange for the
wiring of funds; (v) guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
(vi) integrate periodic statements with other shareholder transactions; and
(vii) provide such other related services as the shareholder may request.
As Participating Organizations, some Shareholder Servicing Agents also may
impose certain conditions on their customers, subject to the terms of the
Trust's Prospectus, in addition to or different from those imposed by the Trust,
such as requiring a minimum initial investment or by charging their customers a
direct fee for their services. Some Shareholder Servicing Agents may also act
and receive compensation for acting as custodian, investment manager, nominee,
agent or fiduciary for its customers or clients who are shareholders of the
Funds with respect to assets invested in the Funds. These Shareholder Servicing
Agents may elect to credit against the fees payable to it by its clients or
customers all or a portion of any fee received from the Trust with respect to
assets of those customers or clients invested in the Funds.
Table 5 in Appendix C shows the dollar amount of fees paid under the Shareholder
Service Plan with respect to Institutional Shares and Investor Shares of each
Fund.
FUND ACCOUNTANT
Forum Accounting provides accounting services for the Funds and interestholder
recordkeeper and accounting services for each Portfolio.
Under its agreement with Core Trust, Forum Accounting prepares and maintains
books and records of each Portfolio on behalf of Core Trust that are required to
be maintained under the 1940 Act, calculates the net asset value per share of
each Portfolio (and each investor therein) and prepares periodic reports to
interestholders of the Portfolios and the SEC. For these services and its
services as interestholder recordkeeper of the Portfolios, wherein it accounts
for the interest of each investor in the Portfolios. Forum Accounting receives
from Core Trust with respect to each Portfolio a fee of the lesser of 0.05% of
the average daily net assets of each Portfolio or $48,000 plus, for each
investor in a Portfolio above one (excluding Forum and its affiliates), $6,000
per year. In addition, Forum Accounting is paid an additional $12,000 per year
with respect to Portfolios with more than 25% of their total assets invested in
asset backed securities, that have more than 100 security positions or that have
a monthly portfolio turnover rate of 10% or greater.
Forum Accounting is required to use its best judgment and efforts in rendering
fund accounting services and is not be liable to Core Trust for any action or
inaction in the absence of bad faith, willful misconduct or gross negligence.
Forum Accounting is not responsible or liable for any failure or delay in
performance of its fund accounting obligations arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control and Core
Trust has agreed to indemnify and hold harmless FFC, its employees, agents,
officers and directors against and from any and all claims, demands, actions,
suits, judgments, liabilities, losses, damages, costs, charges, counsel fees and
other expenses of every nature and character arising out of or in any way
related to Forum Accounting's actions taken or failures to act with respect to a
Portfolio or based, if applicable, upon information, instructions or requests
with respect to a Portfolio given or made to Forum Accounting by an officer of
the Trust duly authorized. This indemnification does not apply to Forum
Accounting's actions taken or failures to act in cases of Forum Accounting's own
bad faith, willful misconduct or gross negligence.
The Trust has retained Forum Accounting as fund accountant to each Fund under
arrangements and agreements substantially similar to the arrangements and
agreements described above with respect to the Portfolios. No fee is payable for
fund accounting services to the Funds (a fee may be charged, subject to Board
approval). Prior to investing in the Portfolios, each Fund paid fund accounting
fees directly.
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Table 6 in Appendix C shows the dollar amount of fees paid under the
Interestholder Recordkeeper and Fund Accounting Agreement with respect to each
Portfolio.
FORUM FINANCIAL GROUP
Each of the Administrator, the Adviser, Forum, FFC and Forum Accounting are
members of the Forum Financial Group of Companies. Each of these companies are
affiliated through the common control by John Y. Keffer.
6. DETERMINATION OF NET ASSET VALUE
The Trust and each Portfolio does not determine net asset value on the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas.
Pursuant to the rules of the SEC, both the Board and the Core Trust Board have
established procedures to stabilize each Fund's and each Portfolio's, as
applicable, net asset value at $1.00 per share. These procedures include a
review of the extent of any deviation of net asset value per share as a result
of fluctuating interest rates, based on available market rates, from each Fund's
and Portfolio's, as applicable, $1.00 amortized cost price per share. Should
that deviation exceed 1/2 of 1%, the Board and the Core Trust Board,
respectively, will consider whether any action should be initiated to eliminate
or reduce material dilution or other unfair results to shareholders. Such action
may include redemption of shares in kind, selling portfolio securities prior to
maturity, reducing or withholding distributions and utilizing a net asset value
per share as determined by using available market quotations.
In determining the appropriate market value of portfolio investments, the
Portfolios may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried at their face value.
Each investor in a Portfolio including the Funds, may add to or reduce its
investment in that Portfolio on each Fund Business day. The Portfolios maintain
the same business days as do the Funds. As of the close of regular trading on
any Fund Business Day, the value of a Fund's beneficial interest in a Portfolio
is determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents the Fund's share of the
aggregate beneficial interests in the Portfolio. Any additions or reductions,
which are to be effected as of the close of the Fund Business Day, are then
effected. The Fund's percentage of the aggregate beneficial interests in the
Portfolio are then recomputed as the percentage equal to the fraction (i) the
numerator of which is the value of the Fund's investment in the Portfolio as of
the close of the Fund Business Day plus or minus, as the case may be, the amount
of net additions to or reductions from the Fund's investment in the Portfolio
effected as of that time, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of the close of the Fund Business Day plus or
minus, as the case may be, the amount of net additions to or reductions from the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage determined is then applied to determine the value of the Fund's
interest in the Portfolio as of the close of the next Fund Business Day.
7. PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities for each Portfolio usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
Purchases from underwriters of portfolio securities include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
serving as market makers include the spread between the bid and asked price.
There usually are no brokerage commissions paid for any purchases. Since each
Fund's inception, no brokerage fees were paid by any Fund (during those periods
of the Funds invested directly in securities). Since each
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Portfolio's inception, no brokerage fees were paid by any Portfolio. While Core
Trust does not anticipate that the Portfolios will pay any amounts of
commission, in the event a Portfolio pays brokerage commissions or other
transaction-related compensation, the payments may be made to broker-dealers who
pay expenses of the Portfolio that it would otherwise be obligated to pay
itself. Any transaction for which a Portfolio pays transaction-related
compensation will be effected at the best price and execution available, taking
into account the amount of any payments made on behalf of the Portfolio by the
broker-dealer effecting the transaction.
Allocations of transactions to dealers and the frequency of transactions are
determined for each Portfolio by the Adviser in its best judgment and in a
manner deemed to be in the best interest of shareholders of that Portfolio
rather than by any formula. The primary consideration is prompt execution of
orders in an effective manner and at the most favorable price available to the
Portfolio.
Investment decisions for the Portfolios will be made independently from those
for any other account or investment company that is or may in the future become
managed by the Adviser, Forum Advisors or their respective affiliates. If,
however, a Portfolio and other investment companies or accounts managed by the
Adviser or Forum Advisors are contemporaneously engaged in the purchase or sale
of the same security, the transactions may be averaged as to price and allocated
equitably to each account. In some cases, this policy might adversely affect the
price paid or received by a Portfolio or the size of the position obtainable for
the Portfolio. In addition, when purchases or sales of the same security for a
Portfolio and for other investment companies managed by the Adviser or Forum
Advisors occur contemporaneously, the purchase or sale orders may be aggregated
in order to obtain any price advantages available to large denomination
purchases or sales.
8. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
For each shareholder of record of the Trust, FFC, as the shareholder's agent,
establishes an open account to which all shares purchased by the shareholder are
credited, together with any distributions that are reinvested in additional
shares.
Shares of each Fund are sold on a continuous basis by the distributor without
any sales charge. Shareholders may effect purchases or redemptions or request
any shareholder privilege in person at the offices of the Transfer Agent, which
are located at Two Portland Square, Portland, Maine 04101.
Investors who are not shareholders of record may nonetheless have the right to
vote shares depending upon their arrangement with the financial institution that
holds their shares.
Certain Participating Organizations (as defined in the Prospectus) may enter
purchase orders with payment to follow.
BANKING LAW INFORMATION
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a Participating
Organization or perform sub-transfer agent or similar services for the Trust and
its shareholders. If a bank or bank affiliate were prohibited from performing
all or a part of the foregoing services, its shareholder customers would be
permitted to remain shareholders of the Trust and alternative means for
continuing to serve them would be sought.
REDEMPTION-IN-KIND
Redemptions may be made wholly or partially in portfolio securities if the Board
determines that payment in cash would be detrimental to the best interests of
the Fund. The Trust has filed an election with the SEC pursuant to which a Fund
will only consider effecting a redemption in portfolio securities if the
particular shareholder is redeeming more than $250,000 or 1% of the Fund's net
asset value, whichever is less, during any 90-day period. Core Trust has filed a
similar election.
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PURCHASING SHARES OTHER THAN BY BANK WIRE
In addition to the situations described in the Prospectus under "Purchases and
Redemptions of Shares", the Trust may redeem shares involuntarily to reimburse a
Fund for any loss sustained by reason of the failure of a shareholder to make
full payment for shares purchased by the shareholder or to collect any charge
relating to transactions effected for the benefit of a shareholder which is
applicable to a Fund's shares as provided in the Prospectus from time to time.
For individual and Uniform Gift/Transfer to Minors Act accounts, the check or
money order used to purchase shares of a Fund must be made payable to "Monarch
Funds" or to one or more owners of the account and endorsed to Monarch Funds.
For corporation, partnership, trust, 401(k) plan and other non-individual type
accounts, any check used to purchase shares of a Fund must be made payable to
"Monarch Funds." No other payment by checks will be accepted, All purchases must
be paid in U.S. dollars; checks must be drawn on U.S. depository institutions.
Payment by traveler's checks is prohibited.
Redemption proceeds will not be paid unless any check (including a certified or
cashier's check) used for investment has been cleared by the shareholder's bank,
which may take up to 15 calendar days.
EXCHANGE PRIVILEGE
The exchange privilege permits shareholders of each class of the Funds to
exchange their shares for shares of the same class of any other Fund of the
Trust or shares of certain other portfolios of investment companies which retain
Forum or its affiliates as investment advisor or distributor and which
participate in the Trust's exchange privilege program ("Participating Fund").
Exchange transactions will be made on the basis of relative net asset value per
share at the time of the exchange transaction. Exchanges are subject to the fees
charged by, and the restrictions listed in the Prospectus for, the Participating
Fund into which a shareholder is exchanging, including minimum investment
requirements. For Federal tax purposes, exchange transactions are treated as
sales on which a purchaser will realize a capital gain or loss depending on
whether the value of the shares redeemed is more or less than his basis in such
shares at the time of the transaction.
By the use of the exchange privilege, the shareholder authorizes the Transfer
Agent to act upon the instruction of any person representing himself either to
be, or to have the authority to act on behalf of, the investor and is believed
by the Transfer Agent to be genuine. The records of the Transfer Agent of such
instructions are binding. Proceeds of an exchange transaction may be invested
only in another Participating Fund account for which the share registration is
the same as the account from which the exchange is made.
If a shareholder exchanges into a Participating Fund that imposes a sales
charge, that shareholder is required to pay the difference between the Fund's
sales charge and any sales charge the shareholder has previously paid in
connection with the shares being exchanged.
The terms of the exchange privilege are subject to change, and the privilege may
be terminated by any of the Participating Funds or the Trust. However the
privilege will not be terminated, and no material change that restricts the
availability of the privilege to shareholders will be implemented, without 60
days' notice to shareholders, to the extent required by the applicable
regulation.
CHECK WRITING
Because of the difficulty of determining in advance the exact value of a
shareholder's Fund account, a shareholder may not use a redemption draft
("check") to close a Fund account. There are currently no charges for the check
writing privilege, but a shareholder's Fund account will be charged a fee for
stopping payment of a check upon a Shareholder's request or if a check cannot be
honored because of insufficient funds or other valid reasons. All drafts are
payable through Imperial Bank, an affiliate of the Funds' custodian and the
checkwriting privilege is subject to such rules as Imperial Bank may from to
time adopt.
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9. TAXATION
Qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended, does not, of course, involve governmental supervision of
management or investment practices or policies. The information set forth in the
Prospectus and the following discussion relate solely to Federal income taxes on
distributions and other distributions by the Funds and assumes that each Fund
qualifies for treatment as a regulated investment company. Investors should
consult their own counsel for further details and for the application of
Federal, state and local tax laws to the investor's particular situation.
In order to continue to qualify for treatment as a regulated investment company
under the Internal Revenue Code, each Fund must distribute to its shareholders
for each taxable year at least 90% of its net investment income and must meet
several additional requirements. Among these requirements are the following: (1)
each Fund must derive at least 90% of its gross income each taxable year from
distributions, interest, payments with respect to securities loans, gains from
the sale or other disposition of securities and certain other income; (2)
subject to certain exceptions, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, U.S. Government Securities and other securities, with
these other securities limited, in respect of any one issuer, to an amount that
does not exceed 5% of the value of the Fund's total assets, and (3) subject to
certain exceptions, at the close of each quarter of the Fund's taxable year, not
more than 25% of the value of its total assets may be invested in securities
(other than U.S. Government Securities) of any one issuer.
Each Fund expects to derive substantially all of its gross income (exclusive of
capital gains) from sources other than dividends. Accordingly, it is expected
that none of the Funds' distributions will qualify for the dividends-received
deduction for corporations.
Distributions declared by a Fund in October, November, or December of any year
and payable to shareholders of record on a date in such a month will be deemed
to have been paid by the Fund and received by the shareholders on December 31 of
the year declared if paid by the Fund during the following January.
10. OTHER INFORMATION
CUSTODIAN
Pursuant to a Custodian Contract with Core Trust, Imperial Trust Company, 201
North Figueroa Street, Suite 610, Los Angeles, California 90012, a subsidiary of
Imperial Bank, acts as the custodian of each Portfolio's assets. The custodian's
responsibilities include safeguarding and controlling the Portfolios cash and
securities and determining income payable on and collecting interest on
Portfolio investments. Core Trust pays the custodian a fee at an annual rate of
0.025% of each Portfolio's average daily net assets.
AUDITORS
KPMG Peat Marwick LLP, independent auditors, acts as auditors for the Trust and
as auditors for the Portfolios.
THE TRUST AND ITS SHAREHOLDERS
The Trust is a business trust organized under Delaware law. Delaware law
provides that shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
securities regulators of some states, however, have indicated that they and the
courts in their state may decline to apply Delaware law on this point.
The Trust Instrument contains an express disclaimer of shareholder liability for
the debts, liabilities, obligations, and expenses of the Trust and requires that
a disclaimer be given in each contract entered into or executed by the Trust or
the Trustees. The Trust Instrument provides for indemnification out of each
series' property of any shareholder
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or former shareholder held personally liable for the obligations of the series.
The Trust Instrument also provides that each series shall, upon request, assume
the defense of any claim made against any shareholder for any act or obligation
of the series and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply, no contractual limitation of
liability was in effect and the portfolio is unable to meet its obligations.
Forum believes that, in view of the above, there is no risk of personal
liability to shareholders.
The Trust Instrument further provides that the Trustees shall not be liable to
any person other than the Trust or its shareholders; moreover, the Trustees
shall not be liable for any conduct whatsoever, provided that a Trustee is not
protected against any liability to which he would otherwise by subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The Board is required to call a meeting of shareholders for the purpose of
voting upon the removal of any trustee when so requested in writing by the
shareholders of record holding at least 10% of the Trust's outstanding shares.
Each series capital consists of shares of beneficial interest. Shares are fully
paid and nonassessable, except as set forth above with respect to Trustee and
shareholder liability. Shareholders representing 10% or more of the Trust or a
series may, as set forth in the Trust Instrument, call meetings of the Trust or
series for any purpose related to the Trust or series, as the case may be,
including, in the case of a meeting of the entire Trust, the purpose of voting
on removal of one or more Trustees.
Generally such terminations must be approved by the vote of the holders of a
majority of the outstanding shares of the Trust or the series; however, the
Trustees may, without prior shareholder approval, change the form of
organization of the Trust by merger, consolidation or incorporation. If not so
terminated or reorganized, the Trust and its series will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote, cause
the Trust to merge or consolidate into one or more trusts, partnerships or
corporations or cause the Trust to merge or consolidate into one or more trusts,
partnerships or corporations or cause the Trust to be incorporated under
Delaware law, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the Trust's registration
statement.
SHAREHOLDINGS
As of December 5, 1996, the officers and trustees of the Trust as a group owned
less than 1% of the outstanding shares of each Fund.
Table 7 to Appendix C lists the persons who owned of record 5% or more of the
outstanding shares of a class of shares of a Fund.
MASTER FEEDER ARRANGEMENT
The Board may withdraw a Fund's assets from a Portfolio if it determines that to
be in the best interests of the Fund. The inability of a Fund that withdrew its
assets from its corresponding Portfolio to find a suitable investment adviser,
in the event the Board decided not to permit the Adviser to manage the Fund's
assets could have a significant impact on shareholders of the Fund. Each
investor in a Portfolio, including the Funds, may be deemed to be liable for all
obligations of the Portfolio, but not any other portfolio of Core Trust. The
risk to an investor in the Portfolio of incurring financial loss on account of
such liability, however, would be limited to circumstances in which the
Portfolio was unable to meet its obligations.
11. FINANCIAL STATEMENTS
The Statements of Assets and Liabilities, Statements of Operations, Statements
of Changes in Net Assets, notes thereto and Financial Highlights of the Funds
for the fiscal year ended August 31, 1997 and the Independent Auditors' Report
thereon (included in the Annual Report to Shareholders), which are delivered
along with this SAI,
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are incorporated herein by reference. Also incorporated by reference into this
SAI are the Schedules of Investments, Statements of Assets and Liabilities,
Statements of Operations, Statements of Changes in Net Assets, and notes
thereto, of the Portfolios for the fiscal year ended August 31, 1997 and the
Independent Auditors' Report thereon (included in the Annual Report to
Shareholders).
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APPENDIX A - DESCRIPTION OF CERTAIN SECURITIES RATINGS
1. CORPORATE BONDS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
Bonds which are rated Aaa are judged by Moody's to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
STANDARD & POOR'S CORPORATION ("S&P")
Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.
FITCH INVESTORS SERVICE, INC. ("FITCH")
AAA Bonds are considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
A Bonds are considered to be investment grade of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
Plus and minus signs are used with a rating symbol to indicate the relative
level of credit quality within the rating category. Plus and minus signs,
however, are not used in the AAA category.
2. COMMERCIAL PAPER
MOODY'S INVESTORS SERVICE, INC.
Moody's two highest ratings for short-term debt, including commercial paper, are
Prime-1 and Prime-2; both are judged investment grade, to indicate the relative
repayment ability of rated issuers.
Issuers (or supporting institutions) rated Prime-1 have a superior ability for
repayment of senior short-term debt obligations. Prime-1 repayment ability will
often be evidenced by many of the following characteristics:
Leading market positions in well-established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
Broad margins in earnings, coverage of fixed financial charges and
high internal cash generation.
Well-established access to a range of financial markets and assured
sources of alternate liquidity.
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Issuers rated Prime-2 by Moody's have a strong ability for repayment of senior
short-term debt obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
STANDARD & POOR'S CORPORATION
S&P's two highest commercial paper ratings are A and B. Issues in this category
are delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety. An A-1 designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation. The capacity for
timely payment on issues with an A-2 designation is satisfactory. However, the
relative degree of safety is not as high as for issues designated A-1. A-3
issues have an adequate capacity for timely payment. They are, however, somewhat
more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations. Issues rated B are regarded as
having only a speculative capacity for timely payment.
FITCH INVESTORS SERVICE, INC.
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
F-1+. Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1. Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
F-2. Good Credit Quality. Issues assigned this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as for
issues assigned F-1+ or F-1 ratings.
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APPENDIX B - PERFORMANCE DATA
For the seven day period ended August 31, 1997, the annualized yields of each of
the classes of the Funds that were then operating were as follows:
<TABLE>
<S> <C> <C> <C> <C>
7 Day 30 Day
7 Day Yield Effective Yield 30 Day Yield Effective Yield
----------- --------------- ------------ ---------------
Treasury Cash Fund
Institutional Shares 4.90% 5.02% 4.99% 5.10%
Investor Shares 4.52% 4.63% 4.61% 4.71%
Government Cash Fund
Universal Shares 5.49% 5.64% 5.47% 5.61%
Institutional Shares 5.10% 5.23% 5.08% 5.20%
Cash Fund
Universal Shares 5.51% 5.56% 5.51% 5.65%
Institutional Shares 5.12% 5.25% 5.12% 5.24%
Investor Shares 4.86% 4.98% 4.86% 4.97%
</TABLE>
For the periods ended August 31, 1997, the total return of each of the classes
of the Funds were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Calendar
One Three Year to
Month Months Date
----- ------ ----
Cummulative Annualized Cummulative Annualized Cummulative Annualized One Year
----------- ---------- ----------- ---------- ----------- ---------- --------
Treasury Cash Fund
Institutional Shares 0.42 5.12 1.25 5.06 3.31 5.01 4.98
Investor Shares 0.39 4.73 1.16 4.67 3.04 4.60 4.58
Government Cash Fund
Universal Shares 0.46 5.60 1.38 5.59 3.64 5.52 5.49
Institutional Shares 0.43 5.20 1.28 5.19 3.37 5.10 5.06
Cash Fund
Universal Shares 0.46 5.65 1.39 5.65 3.63 5.50 5.43
Institutional Shares 0.43 5.24 1.28 5.20 3.37 5.10 5.07
Investor Shares 0.41 4.98 1.22 4.94 3.20 4.84 4.81
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Three Since
Years Inception
----- Five ---------
Cummulative Annualized Years Cummulative Annualized
- ----------- ---------- ----- ----------- ----------
16.23 5.14 n/a 20.29 4.56
-- -- n/a 8.77 4.64
17.82 5.62 n/a 25.42 4.79
16.54 5.23 n/a 23.68 4.48
17.66 5.57 n/a 25.07 4.82
16.60 5.25 n/a 23.56 4.55
-- -- n/a 11.24 4.93
</TABLE>
Inception dates are listed in the Funds' anual report.
66
<PAGE>
APPENDIX C- MISCELLANEOUS TABLES
TABLE 1 - INVESTMENT ADVISORY FEES
Prior to January 1, 1998, the Portfolios paid advisory fees to Linden Asset
Management, Inc., the Portfolios' investment adviser. Prior to September 1,
1995, the Funds paid advisory fees directly to Linden Asset Management, Inc.
For the fiscal year ended August 31, 1997, the fees paid under the Investment
Advisory Agreement with respect to each Portfolio were:
Treasury Cash Portfolio $19,083
Government Cash Portfolio $196,857
Cash Portfolio $72,872
For the fiscal year ended August 31, 1996, the fees paid under the Investment
Advisory Agreement with respect to each Portfolio were:
Treasury Cash Portfolio $12,930
Government Cash Portfolio $156,552
Cash Portfolio $38,083
For the fiscal year ended August 31, 1995, the fees paid under the Investment
Advisory Agreement with respect to each Fund were:
Treasury Cash Fund $9,149
Government Cash Fund $91,590
Cash Fund $37, 794
TABLE 2 - ADMINISTRATION FEES
For the fiscal year ended August 31, 1997, the fees payable by the Funds under
the Administration Agreement were:
<TABLE>
<S> <C> <C> <C>
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund $24,300 $24,300 $0
Government Cash Fund $252,810 $123,045 $129,765
Cash Fund $89,942 $2,893 $87,049
For the fiscal year ended August 31, 1996, the fees payable by the Funds under
the Administration Agreement were:
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund $19,198 $9,307 $9,891
Government Cash Fund $230,547 $104,558 $125,989
Cash Fund $56,125 $3,719 $52,406
For the fiscal year ended August 31, 1995, the fees payable by the Funds under
the Administration Agreement were:
Accrued Fee Fee Waived Fee Paid
------------ ---------- --------
Treasury Cash Fund $21,691 $10,845 $10,846
Government Cash Fund $189,955 $81,307 $108,648
Cash Fund $89,392 $44,661 $44,731
</TABLE>
67
<PAGE>
For the fiscal year ended August 31, 1997, the fees payable by the Portfolios
for administrative services were:
<TABLE>
<S> <C> <C> <C>
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Portfolio $24,287 $14,346 $9,941
Government Cash Portfolio $252,821 $0 $252,821
Cash Portfolio $92,652 $7,621 $85,031
For the fiscal year ended August 31, 1996, the fees payable by the Portfolios
for administrative services were:
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Portfolio $19,902 $17,696 $1,506
Government Cash Portfolio $230,634 $0 $230,634
Cash Portfolio $56,113 $12,698 $43,415
</TABLE>
TABLE 3 - INVESTOR CLASS DISTRIBUTION FEES
For the fiscal year ended August 31, 1997, no Investor Shares of Government Cash
Fund were outstanding and, accordingly, no fees were payable under the Investor
Class Plan with respect to Investor Shares of that Fund. For the fiscal year
ended August 31, 1997, the fees payable under the Investor Class Plan with
respect to the other Funds were as follows.
<TABLE>
<S> <C> <C> <C>
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund $28,718 $0 28,718
Government Cash Fund n/a n/a n/a
Cash Fund $142,750 $0 $142,750
For the fiscal year ended August 31, 1996, the fees payable under the Investor
Class Plan were as follows.
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund $5,089 $0 $5,089
Government Cash Fund $340 $8 $332
Cash Fund $37,340 $36 $37,304
For the fiscal year ended August 31, 1995, no Investor Shares of Treasury Cash
Fund or Government Cash Fund were outstanding and, accordingly, no fees were
payable under the Investor Class Plan with respect to Investor Shares of those
Funds. For the fiscal year ended August 31, 1995, the fees payable under the
Investor Class Plan with respect to Cash Fund were as follows.
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund n/a n/a n/a
Government Cash Fund n/a n/a n/a
Cash Fund $684 $0 $684
</TABLE>
TABLE 4 - TRANSFER AGENT FEES
For the fiscal year ended August 31, 1997, the fees payable by the Funds under
the Transfer Agency Agreement were:
<TABLE>
<S> <C> <C> <C>
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund
Institutional Shares $32,593 $22,400 $10,193
Investor Shares $84,369 $2 $84,367
Government Cash Fund
Universal Shares $145,679 $89,267 $56,412
Institutional Shares $536,252 $0 $536,252
Cash Fund
Universal Shares $11,015 $7,247 $3,768
Institutional Shares $123,240 $7 $123,233
Investor Shares $244,861 $0 $244,861
TABLE 5 - SHAREHOLDER SERVICE FEES
INSTITUTIONAL SHARES
For the fiscal year ended August 31, 1997, the fees paid to Forum under the
Shareholder Service Plan with respect to Institutional Shares were as follows.
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund $17,231 $22,277 $5,046
Government Cash Fund $389,295 $0 $389,295
Cash Fund $85,650 $29,315 $56,335
For the fiscal year ended August 31, 1996, the fees paid to Forum under the
Shareholder Service Plan with respect to Institutional Shares were as follows.
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund $54,540 $24,768 $29,772
Government Cash Fund $378,006 $0 $378,006
Cash Fund $136,336 $14,708 $121,628
For the fiscal year ended August 31, 1995, the fees paid to Forum under the
Shareholder Service Plan with respect to Institutional Shares were as follows.
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund $32,537 $18,345 $14,192
Government Cash Fund $240,423 $33,785 $206,638
Cash Fund $99,091 $15,852 $83,239
INVESTOR SHARES
For the fiscal year ended August 31, 1997, no Investor Shares of Government Cash
Fund were outstanding and, accordingly, no fees were payable under the
Shareholder Service Plan with respect to Investor Shares of that Fund. For the
fiscal year ended August 31, 1997, the fees paid to Forum under the Shareholder
Service Plan with respect to Investor Shares were as follows.
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund $55,668 $2,875 $52,793
Cash Fund $175,845 $10,704 $165,141
For the fiscal year ended August 31, 1996, the fees paid to Forum under the
Shareholder Service Plan with respect to Investor Shares were:
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund $3,053 $510 $2,543
Government Cash Fund $204 $5 $199
Cash Fund $22,404 $3,752 $18,652
For the fiscal year ended August 31, 1995, no Investor Shares of Treasury Cash
Fund or Government Cash Fund were outstanding and, accordingly, no fees were
payable under the Shareholder Service Plan with respect to Investor Shares of
those Funds. Fees paid to Forum under the Shareholder Service Plan with respect
to Investor Shares of Cash Fund were:
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund n/a n/a n/a
Government Cash Fund n/a n/a n/a
Cash Fund $342 $0 $342
TABLE 6 - FUND ACCOUNTING FEES
Prior to September 1, 1995, each Fund paid accounting fees directly. Since that
date, the Funds have incurred no fund accounting fees.
For the fiscal year ended August 31, 1997, the fees payable by the Portfolios
under the Fund Accounting and Interestholder Recordkeeping Agreement were:
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Portfolio $24,279 $0 $24,279
Government Cash Portfolio $48,000 $0 $48,000
Cash Portfolio $48,000 $0 $48,000
For the fiscal year ended August 31, 1996, the fees payable by the Portfolios
under the Fund Accounting and Interestholder Recordkeeping Agreement were:
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Portfolio $28,518 $2,259 $26,259
Government Cash Portfolio $42,000 $0 $42,000
Cash Portfolio $42,000 $2,259 $39,741
For the fiscal year ended August 31, 1995, the fees payable by the Funds under
the Transfer Agency and Fund Accounting Agreement for fund accounting services
were:
Accrued Fee Fee Waived Fee Paid
----------- ---------- --------
Treasury Cash Fund $36,000 $0 $36,000
Government Cash Fund $43,000 $0 $43,000
Cash Fund $43,250 $0 $43,250
</TABLE>
TABLE 7 - 5% SHAREHOLDERS
As of December 5, 1996, the shareholders listed below owned of record 5% or more
of the outstanding shares of each class of shares of the Trust. Shareholders
beneficially owning 25% or more of the shares of a class, of a Fund or of the
Trust as a whole may be deemed to be controlling persons. By reason of their
substantial holdings of shares, these persons may be able to require the Trust
to hold a shareholder meeting to vote on certain issues and may be able to
determine the outcome of any shareholder vote. As noted, certain of these
shareholders are known to the Trust to hold their shares of record only and have
no beneficial interest, including the right to vote, in the shares.
As a percentage of all shares of the Trust outstanding, Imperial Bancorp and its
affiliates held 5.05% of the shares.
Holders of record only are noted as such.
<TABLE>
<S> <C> <C>
Percentage
TREASURY CASH FUND Percentage of Shares of
Institutional Shares Shareholders Shares Owned Fund Owned
--------------------------------- ------------ ----------
Imperial Trust Company (recordholder), Los Angeles, CA 41.49% 20.18%
Vertical Networks, Inc., Los Angeles, CA 10.72% 5.21%
Imperial Bank, Inglewood, CA 9.24% ---
The Carolco Liquidation Trust, N. Hollywood, CA 7.16% ---
Sullivan Kelley & Associates, Inc., Pasadena, CA 6.40% ---
State of Cal. Dept. of Health Services, on behalf of
Local Initiative Health Authority, Sacramento, CA 5.91% ---
Antrim Design Systems, Inc., Scotts Valley, CA 5.37% ---
Verticom, Inc., Santa Rosa, CA 5.02% ---
Percentage
TREASURY CASH FUND Percentage of Shares of
Investor Shares Shareholders Shares Owned Fund Owned
---------------------------- ------------ ----------
Imperial Bank (record holder), Inglewood, CA 93.81% 48.20%
Percentage
GOVERNMENT CASH FUND Percentage of Shares of
Universal Shares Shareholders Shares Owned Fund Owned
----------------------------- ------------ ----------
County of Alameda, Oakland, CA 16.36% 5.20%
Imperial Bancorp. Inglewood, CA 9.99% ---
Allied Grape Growers, Fresno, CA 8.85% ---
Imperial Credit Mortgage Holdings, Santa Ana Heights, CA 8.50% ---
Visions Federal Credit Union, Endicott, NY 7.30% ---
Monterey Watsonville Federal Savings & Loan
Watsonville, CA 6.50% ---
Percentage
GOVERNMENT CASH FUND Percentage of Shares of
Institutional Shares Shareholders Shares Owned Fund Owned
--------------------------------- ------------ ----------
Imperial Trust Company (record holder), Los Angeles, CA 21.60% 18.90%
North American Asset Development Corp.,
Walnut Creek, CA 7.87% 5.4%
Fox Kids Worldwide, Inc., Los Angeles, CA 5.33% ---
Percentage
CASH FUND Percentage of Shares of
Universal Shares Shareholders Shares Owned Fund Owned
----------------------------- ------------ ----------
Imperial Securities Corp., Inglewood, CA 53.35% 1.82%
Imperial Bank, Inglewood, CA 46.65% 1.61%
Percentage
CASH FUND Percentage of Shares of
Institutional Shares Shareholders Shares Owned Fund Owned
--------------------------------- ------------ ----------
Imperial Trust Company (record holder), Los Angeles, CA 56.77% 35.05%
Tegal Corporation, Petaluma, CA 14.71% 9.08%
Percentage
CASH FUND Percentage of Shares of
Investor Shares Shareholders Shares Owned Fund Owned
---------------------------- ------------ ----------
Imperial Bank (record holder), Inglewood, CA 98.58% 34.33%
</TABLE>
68
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS.
Included in each Prospectus:
Financial Highlights.
Incorporated by Reference into the Statement of Additional Information:
The Funds' Statements of Assets and Liabilities,
Statements of Operations, Statements of Changes in Net Assets,
notes to financial statements, Financial Highlights and
Independent Auditors' Report thereon, for the year ended
August 31, 1997, and the Schedules of Investments, Statements
of Assets and Liabilities, Statements of Operations,
Statements of Changes in Net Assets, notes to financial
statements and Independent Auditors' Report thereon for
Treasury Cash Portfolio, Government Cash Portfolio, and Cash
Portfolio, series of Core Trust (Delaware), for the year ended
August 31, 1997, all of which were filed as part of the Funds'
annual report to shareholders with the Securities and Exchange
Commission on November 3, 1997, accession number
0001047469-97-002432 pursuant to Rule 30b2-1 under the
Investment Company Act of 1940, as amended.
(B) EXHIBITS.
(1) Trust Instrument (Included herewith).
(2) Bylaws (Included herewith).
(3) None.
(4) Form of Certificate for Shares (Included herewith).
(5) None.
(6) Distribution Agreement between Registrant and Forum Financial
Services, Inc. (Included herewith).
(7) None.
(8) Custodian Agreement between Registrant and Imperial Trust
Company (Included herewith).
(9) (a) Administration Agreement between Registrant and Forum
Administrative Services, LLC (Included herewith).
(b) Transfer Agency Agreement between Registrant and
Forum Financial Corp.(Included herewith).
(c) Shareholder Service Plan (Included herewith).
(d) Fund Accounting Agreement between Registrant and
Forum Accounting Services, LLC (Included herewith).
(10) Opinion of Kirkpatrick & Lockhart LLP (Included herewith).
(11) Consent of KPMG Peat Marwick LLP (Included herewith).
(12) None.
(13) Investment Representation letter (Included herewith).
(14) None.
(15) Rule 12b-1 Plan (Included herewith).
(16) Schedule for Computation of Performance (Included herewith).
(17) Not applicable.
(18) Rule 18f-3 Plan (Included herewith).
69
<PAGE>
Other Exhibits:
(A) Power of Attorney, Maurice J. DeWald, Trustee of
Registrant (Included herewith.)
(B) Previously filed but no longer applicable to
Registrant.
(C) Power of Attorney, Jack J. Singer, Trustee of
Registrant (Included herewith.)
(D) Previously filed but no longer applicable to
Registrant.
(E) Power of Attorney, John Y. Keffer, Trustee of
Registrant (Included herewith.)
(F) Powers of Attorney, John Y. Keffer, James C. Cheng,
J. Michael Parish, Trustees of Core Trust (Delaware)
(Included herewith.)
(G) Power of Attorney, Costas Azariadis, Trustee of Core
Trust (Delaware) (Included herewith.)
(H) Power of Attorney, Rudolf I. Estrada, Trustee of
Registrant (Included herewith.)
(I) Power of Attorney, Robert M. Franko, Trustee of
Registrant (Included herewith.)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Due to the ownership interest of Cash Fund, Government Cash Fund and
Treasury Cash Fund of Cash Portfolio, Government Cash Portfolio and Treasury
Cash Portfolio of Core Trust (Delaware), the Funds may be deemed to control
those portfolios.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF DECEMBER 5, 1997.
Title of Class of Shares
of Beneficial Interest Number of Holders
--------------------- -----------------
Cash Fund
Universal Class 2
Institutional Class 37
Investor Class 15
Government Cash Fund
Universal Class 37
Institutional Class 182
Investor Class 0
Treasury Cash Fund
Universal Class 0
Institutional Class 24
Investor Class 24
ITEM 27. INDEMNIFICATION.
The Registrant's response to Item 27 of Post-Effective Amendment No. 4 to
Registration Statement on Form N-1A filed on January 15, 1994 (file number
33-49570) is incorporated herein by reference.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.
The description of Forum Investment Advisors, LLC (investment adviser to each of
Treasury cash Portfolio, Government Cash Portfolio and Cash Portfolio of Core
Trust (Delaware)) under the captions "Management " and "Management - Adviser" in
the Prospectus and Statement of Additional Information, constituting certain of
Parts A and B, respectively, of this Registration Statement, are incorporated by
reference herein.
The following are the members of Forum Investment Advisors, LLC, Two Portland
Square, Portland, Maine 04101, including their business connections which are of
a substantial nature.
Forum Holdings Corp., Member.
Forum Financial Group, LLC., Member.
Both Forum Holdings Corp. and Forum Financial Group, LLC are controlled by John
Y. Keffer, Chairman and President of the Registrant. Mr. Keffer is President of
Forum Financial Group, LLC. Mr. Keffer is also a director and/or officer of
various registered investment companies for which the various Forum Financial
Group of Companies provides services.
70
<PAGE>
The following are the officers of Forum Investment Advisors, LLC, including
their business connections which are of a substantial nature. Each officer may
serve as an officer of various registered investment companies for which the
Forum Financial Group of Companies provides services.
William J. Lewis, Director.
Director of Forum Investment Advisors, LLC.
Sara M. Morris, Treasurer.
Chief Financial Officer, Forum Financial Group, LLC. Ms. Morris serves
as an officer of several other Forum affiliated companies.
David I. Goldstein, Secretary.
General Counsel, Forum Financial Group, LLC. Mr. Goldstein serves as
an officer of several other Forum affiliated companies.
Dana A. Lukens, Assistant Secretary.
Corporate Counsel, Forum Financial Group, LLC. Mr. Lukens also serves
as an officer of several other Forum affiliated companies.
Margaret J. Fenderson, Assistant Treasurer.
Corporate Accounting Manager, Forum Financial Group, LLC. Ms.
Fenderson also serves as an officer of several other Forum affiliated
companies.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Forum Financial Services, Inc., Registrant's underwriter, serves as
underwriter for the following investment companies registered under the
investment Company Act of 1940, as amended.:
<TABLE>
<S> <C> <C>
The CRM Funds BT Alex. Brown Cash Reserve Fund, Inc.
The Cutler Trust Flag Investors Telephone Income Fund, Inc.
Forum Funds Flag Investors International Fund, Inc.
The Highland Family of Funds Flag Investors Emerging Growth Fund, Inc.
Norwest Advantage Funds Total Return U.S. Treasury Fund, Inc.
Norwest Select Funds Managed Municipal Fund, Inc.
Monarch Funds Flag Investors Value Builder Fund, Inc.
Sound Shore Fund, Inc. Flag Investors Real Estate Securities Fund, Inc.
Flag Investors Equity Partners Fund, Inc.
Flag Investors Maryland Intermediate Tax-Free
Income Fund, Inc.
Flag Investors Short-Intermediate Income Fund, Inc.
The Glenmede Portfolios
The Glenmede Fund, Inc.
</TABLE>
71
<PAGE>
(b) the following directors and officers of Forum Financial Services, Inc.,
Registrant's underwriter, hold the following positions with registrant. Their
business address is Two Portland Square, Portland, Maine 04101.
<TABLE>
<S><C> <C> <C>
Name Position with Underwriter Position with Registrant
---- ------------------------- ------------------------
John Y. Keffer President Chairman and President
David I. Goldstein Secretary Vice President
Sara M. Morris Treasurer Treasurer
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF BOOKS AND RECORDS.
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained at the offices of Forum Financial Services, Inc., Two
Portland Square, Portland, Maine 04101, and Forum Financial Corp., Two Portland
Square, Portland, Maine 04101. The records required to be maintained under Rule
31a-1(b)(1) with respect to journals of receipts and deliveries of securities
and receipts and disbursements of cash are maintained at the offices of the
Registrant's custodian, as listed under "Custodian" in Part B to this
Registration Statement. The records required to be maintained under Rule
31a-1(b)(5), (6) and (9) are maintained at the offices of the Registrant's
adviser, as listed in Item 28 hereof.
ITEM 31. MANAGEMENT SERVICES.
Not Applicable.
ITEM 32. UNDERTAKINGS.
Registrant undertakes to:
(i) contain in its Trust Instrument or Bylaws provisions for assisting
shareholder communications and for the removal of trustees substantially similar
to those provided for in Section 16(c) of the Investment Company Act of 1940,
except to the extent such provisions are mandatory or prohibited under
applicable Delaware law.
72
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, Registrant has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Portland and State of Maine on the 17th day of
December, 1997.
MONARCH FUNDS
By: /s/ John Y. Keffer
-------------------
John Y. Keffer
President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registration Statement has been signed below by the following persons on the
17th day of December, 1997.
SIGNATURES TITLE
(a) Principal Executive Officer
/s/ John Y. Keffer Chairman, President
-------------------------
John Y. Keffer
(b) Principal Financial and Accounting Officer
/s/ Robert B. Campbell Treasurer
-------------------------
Robert B. Campbell
(c) A Majority of the Trustees
/s/ John Y. Keffer Trustee
-------------------------
John Y. Keffer
Rudolph I. Estrada Trustee
Maurice J. DeWald Trustee
Robert M. Franko Trustee
Jack J. Singer Trustee
By: /s/ John Y. Keffer
---------------------
John Y. Keffer
Attorney in Fact*
* Pursuant to powers of attorney filed as Exhibits A, C, H and I to the
Registrant's Registration Statement.
73
<PAGE>
SIGNATURES
On behalf of Core Trust (Delaware), being duly authorized, I have duly caused
this amendment to the Registration Statement of Monarch Funds to be signed in
the City of Portland, State of Maine on the 17th day of December, 1997.
CORE TRUST (DELAWARE)
By: /s/ John Y. Keffer
--------------------------
John Y. Keffer
President
This amendment to the Registration Statement of Core Trust (Delaware) has been
signed below by the following persons in the capacities indicated on the 17th of
December, 1997.
SIGNATURES TITLE
(a) Principal Executive Officer
/s/ John Y. Keffer Chairman and
-------------------------
John Y. Keffer President
(b) Principal Financial and
Accounting Officer
/s/ Robert B. Campbell Treasurer
-------------------------
Robert B. Campbell
(c) A Majority of the Trustees
/s/ John Y. Keffer Chairman
--------------------------
John Y. Keffer
Costas Azariadis Trustee
J. Michael Parish Trustee
James C. Cheng Trustee
By: /s/ John Y. Keffer
------------------------
John Y. Keffer*
Attorney in Fact
* Pursuant to powers of attorney filed as Exhibits F and G to this Registration
Statement.
74
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<S><C> <C> <C>
Sequential
Exhibit Page Number
- ------- ------------
(b)(1) Trust Instrument
(b)(2) Bylaws
(b)(4) Form of Certificate for Shares
(b)(6) Distribution Agreement between Registrant and Forum Financial Services, Inc.
(b)(8) Custodian Agreement between Registrant and Imperial Trust Company
(b)(9)(a) Administration Agreement between Registrant and Forum Administrative Services, LLC
(b)(9)(b) Transfer Agency Agreement between Registrant and Forum Financial Corp.
(b)(9)(c) Shareholder Service Plan
(b)(9)(d) Fund Accounting Agreement between Registrant and Forum Accounting Services, LLC
(b)(10) Opinion of Kirkpatrick & Lockhart LLP
(b)(11) Consent of KPMG Peat Marwick LLP
(b)(13) Investment Representation letter
(b)(15) Rule 12b-1 Plan
(b)(16) Schedule for Computation of Performance
(b)(18) Rule 18f-3 Plan
Other (A) Power of Attorney, Maurice J. DeWald, Trustee of Registrant
Other (C) Power of Attorney, Jack J. Singer, Trustee of Registrant
Other (E) Power of Attorney, John Y. Keffer, Trustee of Registrant
Other (F) Powers of Attorney, John Y. Keffer, James C. Cheng, J. Michael Parish, Trustees of Core Trust (Delaware)
Other (G) Power of Attorney, Costas Azariadis, Trustee of Core Trust (Delaware)
Other (H) Power of Attorney, Rudolf I. Estrada, Trustee of Registrant
Other (I) Power of Attorney, Robert M. Franko, Trustee of Registrant
</TABLE>
75
EXHIBIT (1)
MONARCH FUNDS
TRUST INSTRUMENT
DATED JULY 10, 1992
<PAGE>
MONARCH FUNDS
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
PAGE
ARTICLE I NAME AND DEFINITIONS
Section 1.01 Name 1
Section 1.02 Definitions 1
ARTICLE II BENEFICIAL INTEREST
Section 2.01 Shares of Beneficial Interest 2
Section 2.02 Issuance of Shares 2
Section 2.03 Register of Shares and Share Certificates 3
Section 2.04 Transfer of Shares 3
Section 2.05 Treasury Shares 4
Section 2.06 Establishment of Series 4
Section 2.07 Investment in the Trust 4
Section 2.08 Assets and Liabilities of Series 5
Section 2.09 No Preemptive Rights 6
Section 2.10 No Personal Liability of Shareholders 6
Section 2.11 Assent to Trust Instrument 6
ARTICLE III THE TRUSTEES
Section 3.01 Management of the Trust 6
Section 3.02 Initial Trustees 7
Section 3.03 Term of Office 7
Section 3.04 Vacancies and Appointments 8
Section 3.05 Temporary Absence 8
Section 3.06 Number of Trustees 8
Section 3.07 Effect of Ending of a Trustee's Service 8
Section 3.08 Ownership of Assets of the Trust 8
ARTICLE IV POWERS OF THE TRUSTEES
Section 4.01 Powers 9
Section 4.02 Issuance and Repurchase of Shares 12
Section 4.03 Trustees and Officers as Shareholders 12
Section 4.04 Action by the Trustees 12
Section 4.05 Chairman of the Trustees 13
Section 4.06 Principal Transactions 13
ARTICLE V EXPENSES OF THE TRUST 13
ARTICLE VI INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
Section 6.01 Investment Adviser 14
Section 6.02 Principal Underwriter 15
Section 6.03 Administrator 15
Section 6.04 Transfer Agent 15
<PAGE>
Section 6.05 Parties to Contract 15
Section 6.06 Provisions and Amendments 16
ARTICLE VII SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.01 Voting Powers 16
Section 7.02 Meetings 17
Section 7.03 Quorum and Required Vote 17
ARTICLE VIII CUSTODIAN
Section 8.01 Appointment and Duties 18
Section 8.02 Central Certificate System 18
ARTICLE IX DISTRIBUTIONS AND REDEMPTIONS
Section 9.01 Distributions 19
Section 9.02 Redemptions 19
Section 9.03 Determination of Net Asset Value 20
and Valuation of Portfolio Assets
Section 9.04 Suspension of the Right of Redemption 21
Section 9.05 Redemption of Shares in Order to 21
Qualify as Regulated Investment Company
ARTICLE X LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.01 Limitation of Liability 21
Section 10.02 Indemnification 22
Section 10.03 Shareholders 23
ARTICLE XI MISCELLANEOUS
Section 11.01 Trust Not a Partnership 24
Section 11.02 Trustee's Good Faith Action, 24
Expert Advice, No Bond or Surety
Section 11.03 Establishment of Record Dates 24
Section 11.04 Termination of Trust 25
Section 11.05 Reorganization 26
Section 11.06 Filing of Copies, References, Headings 26
Section 11.07 Applicable Law 26
Section 11.08 Amendments 27
Section 11.09 Fiscal Year 28
Section 11.10 Provisions in Conflict with Law 28
</TABLE>
<PAGE>
MONARCH FUNDS
July 10, 1992
TRUST INSTRUMENT, made by John Y. Keffer, James F. Patterson and David I.
Goldstein (the "Trustees").
WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and property
contributed to the trust hereunder shall be held and managed in trust under this
Trust Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.01 NAME. The name of the trust created hereby is "Monarch Funds."
SECTION 1.02 DEFINITIONS. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) "Bylaws" means the Bylaws of the trust as adopted by the Trustees,
as amended from time to time;
(b) "Commission" has the meaning given it in the 1940 Act. "Affiliated
Person", "Assignment," "Interested Person" and "Principal Underwriter" shall
have the respective meanings given them in the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any rules or
regulations adopted by or interpretive releases of the Commission thereunder.
"Majority Shareholder Vote" shall have the same meaning as the term "vote of a
majority of the outstanding voting securities" is given in the 1940 Act, as
modified by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted by or interpretive releases of the
Commission thereunder.
(c) "Delaware Act" refers to Chapter 38 of Title 12 of the Delaware
Code entitled "Treatment of Delaware Business Trusts," as amended from time to
time.
(d) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03 hereof;
(e) "Outstanding Shares" means those Shares shown from time to time in
the books of the Trust or its transfer agent as then issued and outstanding, but
shall not include Shares which have
<PAGE>
been redeemed or repurchased by the Trust and which are at the time held in the
treasury of the Trust;
(f) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof.
(g) "Shareholder" means a record owner of Outstanding Shares of the
Trust;
(h) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or class thereof shall be divided and may include fractions of Shares as
well as whole Shares;
(i) The "Trust" means Monarch Funds and reference to the Trust, when
applicable to one or more Series of the Trust, shall refer to any such Series;
(j) The "Trustees" means the person or persons who has or have signed
this Trust Instrument, so long as he or they shall continue in office in
accordance with the terms hereof, and all other persons who may from time to
time be duly qualified and serving as Trustees in accordance with the provisions
of Article III hereof and reference herein to a Trustee or to the Trustees shall
refer to the individual Trustees in their capacity as Trustees hereunder;
(k) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.
(l) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
ARTICLE II
BENEFICIAL INTEREST
SECTION 2.01 SHARES OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall be divided into such transferable Shares of one or more separate
and distinct Series or classes of a Series as the Trustees shall from time to
time create and establish. The number of Shares of each Series, and class
thereof, authorized hereunder is unlimited. Each Share shall have no par value.
All Shares issued hereunder, including without limitation, Shares issued in
connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and nonassessable.
<PAGE>
SECTION 2.02 ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof.
SECTION 2.03 REGISTER OF SHARES AND SHARE CERTIFICATES. A register
shall be kept at the principal office of the Trust or an office of the Trust's
transfer agent which shall contain the names and addresses of the Shareholders
of each Series, the number of Shares of that Series (or any class or classes
thereof) held by them respectively and a record of all transfers thereof. As to
Shares for which no certificate has been issued, such register shall be entitled
to receive dividends or other distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or other distribution, nor to have notice given to him as herein
or in the Bylaws provided, until he has given his address to the transfer agent
or such officer or other agent of the Trustees as shall keep the said register
for entry thereon. The Trustees, in their discretion, may authorize the issuance
of share certificates and promulgate appropriate rules and regulations as to
their use. Such certificates may be issuable for any purpose limited in the
Trustees discretion. In the event that one or more certificates are issued,
whether in the name of a shareholder or a nominee, such certificate or
certificates shall constitute evidence of ownership of Shares for all purposes,
including transfer, assignment or sale of such Shares, subject to such
limitations as the Trustees may, in their discretion, prescribe.
SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer, together with a Share certificate, if one is
outstanding, and such evidence of the genuineness of each such execution and
authorization and of such other matters as may be required by the Trustees. Upon
such delivery the transfer shall be recorded on the register of the Trust. Until
such record is
<PAGE>
made, the Shareholder of record shall be deemed to be the holder of such Shares
for all purposes hereunder and neither the Trustees nor the Trust, nor any
transfer agent or registrar nor any officer, employee or agent of the Trust
shall be affected by any notice of the proposed transfer.
SECTION 2.05 TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
SECTION 2.06 ESTABLISHMENT OF SERIES. The Trust created hereby shall
consist of one or more Series and separate and distinct records shall be
maintained by the Trust for each Series and the assets associated with any such
Series shall be held and accounted for separately from the assets of the Trust
or any other Series. The Trustees shall have full power and authority, in their
sole discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number, to classify or reclassify any issued Shares or
any Series or classes thereof into one or more Series or classes of Shares, and
to take such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series shall be effective
upon the adoption of a resolution by a majority of the Trustees setting forth
such establishment and designation and the relative rights and preferences of
the Shares of such Series. A Series may issue any number of Shares and need not
issue shares. At any time that there are no Shares outstanding of any particular
Series previously established and designated, the Trustees may by a majority
vote abolish that Series and the establishment and designation thereof.
All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust, and each class thereof, except as the context otherwise requires.
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of all distributions made with
respect to such Series. Upon redemption of his Shares, such Shareholder shall be
paid solely out of the funds and property of such Series of the Trust.
<PAGE>
SECTION 2.07 INVESTMENT IN THE TRUST. The Trustees shall accept
investments in any Series of the Trust from such persons and on such terms as
they may from time to time authorize. At the Trustees' discretion, such
investments, subject to applicable law, may be in the form of cash or securities
in which the affected Series is authorized to invest, valued as provided in
Article IX, Section 9.03 hereof. Investments in a Series shall be credited to
each Shareholder's account in the form of full Shares at the Net Asset Value per
Share next determined after the investment is received or accepted as may be
determined by the Trustees; provided, however, that the Trustees may, in their
sole discretion, (a) fix the Net Asset Value per Share of the initial capital
contribution, (b) impose a sales charge upon investments in the Trust in such
manner and at such time determined by the Trustees or (c) issue fractional
Shares.
SECTION 2.08 ASSETS AND LIABILITIES OF SERIES. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever from the
same may be, shall be held and accounted for separately from the other assets of
the Trust and of every other Series and may be referred to herein as "assets
belonging to" that Series. The assets belonging to a particular Series shall
belong to that Series for all purposes, and to no other Series, subject only to
the rights of creditors of that Series. In addition, any assets, income,
earnings, profits or funds, or payments and proceeds with respect thereto, which
are not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in such
manner as the Trustees, in their sole discretion, deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series. The assets belonging to each
particular Series shall be charged with the liabilities of that Series and all
expenses, costs, charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees between or among any one or more of the Series in
such manner as the Trustees in their sole discretion deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders of
all Series for all purposes. Without limitation of the foregoing provisions of
this Section 2.08, but subject to the right of the Trustees in
<PAGE>
their discretion to allocate general liabilities, expenses, costs, changes or
reserves as herein provided, the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
Series shall be enforceable against the assets of such Series only, and not
against the assets of the Trust generally. Notice of this contractual limitation
on inter-Series liabilities may, in the Trustee's sole discretion, be set forth
in the certificate of trust of the Trust (whether originally or by amendment) as
filed or to be filed in the Office of the Secretary of State of the State of
Delaware pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of trust, the statutory provisions of Section 3804 of the Delaware
Act relating to limitations on inter-Series liabilities (and the statutory
effect under Section 3804 of setting forth such notice in the certificate of
trust) shall become applicable to the Trust and each Series. Any person
extending credit to, contracting with or having any claim against any Series may
look only to the assets of that Series to satisfy or enforce any debt, with
respect to that Series. No Shareholder or former Shareholder of any Series shall
have a claim on or any right to any assets allocated or belonging to any other
Series.
SECTION 2.09 NO PREEMPTIVE RIGHTS. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or the Trustees, whether of the same or other
Series.
SECTION 2.10 NO PERSONAL LIABILITY OF SHAREHOLDER. Each Shareholder of
the Trust and of each Series shall not be personally liable for the debts,
liabilities, obligation and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or by or on behalf of any Series. The
Trustees shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay by
way of subscription for any Shares or otherwise. Every note, bond, contract or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or to a Series shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series and its or their
assets (but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee of the Trust).
SECTION 2.11 ASSENT TO TRUST INSTRUMENT. Every Shareholder, by virtue
of having purchased a Share shall become a Shareholder and shall be held to have
expressly assented and agreed to be bound by the terms hereof.
ARTICLE III
THE TRUSTEES
<PAGE>
SECTION 3.01 MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be elected by
the Shareholders owning of record a plurality of the Shares voting at a meeting
of Shareholders. Such a meeting shall be held on a date fixed by the Trustees.
In the event that less than a majority of the Trustees holding office have been
elected by Shareholders, the Trustees then in office will call a Shareholders'
meeting for the election of Trustees.
SECTION 3.02 INITIAL TRUSTEES. The initial Trustees shall be the
persons named herein. On a date fixed by the Trustees, the Shareholders shall
elect at least three (3) but not more than twelve (12) Trustees, as specified by
the Trustees pursuant to Section 3.06 of this Article III.
SECTION 3.03 TERM OF OFFICE. The Trustees shall hold office during the
lifetime of this Trust, an until its termination as herein provided; except (a)
that any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such
<PAGE>
removal shall become effective; (c) that any Trustee who requests in writing to
be retired or who has died, become physically or mentally incapacitated by
reason of disease or otherwise, or is otherwise unable to serve, may be retired
by written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of the Trust by a vote of Shareholders owning at least
two-thirds of the Outstanding Shares.
SECTION 3.04 VACANCIES AND APPOINTMENTS. In case of the declination to
serve, death, resignation, retirement, removal, physical or mental incapacity by
reason of disease or otherwise, or a Trustee is otherwise unable to serve, or an
increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy in
the Board of Trustees shall occur, until such vacancy is filled, the other
Trustees shall have all the powers hereunder and the certificate of the other
Trustees of such vacancy shall be conclusive. In the case of an existing
vacancy, the remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit consistent with the limitations
under the 1940 Act. Such appointment shall be evidenced by a written instrument
signed by a majority of the Trustees in office or by resolution of the Trustees,
duly adopted, which shall be recorded in the minutes of a meeting of the
Trustees, whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to this Section 3.04 shall have accepted this trust,
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder.
SECTION 3.05 TEMPORARY ABSENCE. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall less than two Trustees
personally exercise the other powers hereunder except as herein otherwise
expressly provided.
SECTION 3.06 NUMBER OF TRUSTEES. The number of Trustees shall be at
least three (3), and thereafter shall be such number as shall be fixed from time
to time by a majority of the Trustees, provided, however, that the number of
Trustees shall in no event be more than twelve (12).
<PAGE>
SECTION 3.07 EFFECT OF ENDING OF A TRUSTEE'S SERVICE. The declination
to serve, death, resignation, retirement, removal, incapacity, or inability of
the Trustees, or any one of them, shall not operate to terminate the trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
SECTION 3.08 OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust
and of each Series shall be held separate and apart for any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in all of the assets of the Trust and the
right to conduct any business shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by, or in the name of the Trust, or in the name
of any person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof, but each Shareholder shall have, except as
otherwise provided for herein, a proportionate undivided beneficial interest in
the Trust or Series. The Shares shall be personal property giving only the
rights specifically set forth in this Trust Instrument.
ARTICLE IV
POWERS OF THE TRUSTEES
SECTION 4.01 POWERS. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. The
Trustees shall not in any way be bound or limited by present or future laws or
customs in regard to trust investments, but shall have full authority and power
to make any and all investments which they, in their sole discretion, shall deem
proper to accomplish the purpose of this Trust without recourse to any court or
other authority. Subject to any applicable limitation in this Trust Instrument
or the Bylaws of the Trust, the Trustees shall have the power and authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease
any or all of the assets of the Trust:
<PAGE>
(b) To operate as and carry on the business of an investment company,
and exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other
evidence of indebtness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertatke the performance of an obligation or engagement of any other Person
and to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders; such
Bylaws shall be deemed incorporated and included in this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the Bylaws;
(h) To retain one or more transfer agents and shareholder servicing
agents, or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any investment adviser, manager, custodian,
underwriter or other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject
to the provisions of Article XI, subsection 11.04(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
<PAGE>
(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable form; or
either in the name of the Trust or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the usual
practice of Delaware business trusts or investment companies;
(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
to apportion the same between or among two or more Series, provided that any
liabilities or expenses incurred by a particular Series shall be payable solely
out of the assets belonging to that Series as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidaton or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to
Shareholders in the manner provided herein;
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or class, and to require the
redemption of the Shares of any Shareholders whose investment is less than such
minimum upon giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the powers
of the Trustees to said committees and to adopt a committee charter providing
for such responsibilities, membership (including Trustees, officers or other
agents of the Trust therein) and any other characteristics of said committees as
the
<PAGE>
Trustees may deem proper. Notwithstanding the provisions of this Article IV, and
in addition to such provisions or any other provision of this Trust Instrument
or of the Bylaws, the Trustees may by resolution appoint a committee consisting
of less than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body;
(v) To interpret the investment policies, practices or limitations of
any Series;
(w) To establish a registered office and have a registered agent in the
state of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to see the application
of any payments make or property transferred to the Trustees or upon their
order.
SECTION 4.02 ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
<PAGE>
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.
SECTION 4.03 TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares to
the same extent as if he were not a Trustee, officer or agent; and the Trustees
may issue and sell or cause to be issued and sold Shares to and buy such Shares
from any such person or any firm or company in which he is interested, subject
only to the general limitations herein contained as to the sale and purchase of
such Shares; and all subject to any restrictions which may be contained in the
Bylaws.
SECTION 4.04 ACTION BY THE TRUSTEES. The Trustees shall act by majority
vote at a meeting duly called or by unanimous written consent without a meeting
or by telephone meeting provided a quorum of Trustees participate in any such
telephone meeting, unless the 1940 Act requires that a particular action be
taken only at a meeting at which the Trustees are present in person. At any
meeting of the Trustees, a majority of the Trustees shall constitute a quorum.
Meetings of the Trustees may be called orally or in writing by the Chairman of
the Board of Trustees or by any two other Trustees. Notice of the time, date and
place of all meetings of the Trustees shall be given by the party calling the
meeting to each Trustee by telephone, facsimile or other electronic mechanism
sent to his home or business address at least twenty-four hours in advance of
the meeting or by written notice mailed to his home or business address at least
seventy-two hours in advance of the meeting. Notice need not be given to any
Trustee who attends the meeting without objecting to the lack of notice or who
executes a written waiver of notice with respect to the meeting. Any meeting
conducted by telephone shall be deemed to take place at the principal office of
the Trust, as determined by the Bylaws or by the Trustees. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate to any
one or more of their number their authority to approve particular matters or
take particular actions on behalf of the Trust. Written consents or waivers of
the Trustees may be executed in one or more counterparts. Execution of a written
consent or waiver and delivery thereof to the Trust may be accomplished by
facsimile or other similar electronic mechanism.
SECTION 4.05 CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint one
of their number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the execution
of policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) the chief executive, financial and/or
accounting officer of the Trust.
SECTION 4.06 PRINCIPAL TRANSACTIONS. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the
<PAGE>
Trust, buy any securities from or sell any securities to, or lend any assets of
the Trust to, any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such dealings
with any investment adviser, administrator, distributor or transfer agent for
the Trust or with any Interested Person of such person; and the Trust may employ
any such person, or firm or company in which such person is an Interested
Person, as broker, legal counsel, registrar, investment adviser, administrator,
distributor, transfer agent, dividend disbursing agent, custodian or in any
other capacity upon customary terms.
ARTICLE V
EXPENSES OF THE TRUST
Subject to the provisions of Article II, Section 2.08 hereof, the
Trustees shall be reimbursed from the Trust estate or the assets belonging to
the appropriate Series for their expenses and disbursements, including, without
limitation, interest charges, taxes, brokerage fees and commissions; expenses of
issue, repurchase and redemption of shares; certain insurance premiums;
applicable fees, interest charges and expenses of third parties, including the
Trust's investment advisers, managers, administrators, distributors, custodian,
transfer agent and fund accountant; fees of pricing, interest, dividend, credit
and other reporting services; costs of membership in trade associations;
telecommunications expenses; funds transmission expenses; auditing, legal and
compliance expenses; costs of forming the Trust and maintaining corporate
existence; costs of preparing and printing the Trust's prospectuses, statements
of additional information and shareholder reports and delivering them to
existing shareholders; expenses of meetings of shareholders and proxy
solicitations therefore; costs of maintaining books and accounts; costs of
reproduction, stationery and supplies; fees and expenses of the Trust's
trustees; compensation of the Trust's officers and employees and costs of other
personnel performing services for the Trust; costs of Trustee meetings;
Securities and Exchange Commission registration fees and related expenses; state
or foreign securities laws registration fees and related expenses and for such
non-recurring items as may arise, including litigation to which the Trust (or a
Trustee acting as such) is a party, and for all losses and liabilities by them
incurred in administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities the Trustees shall have a lien on the
assets belonging to the appropriate Series, or in the case of an expense
allocable to more than one Series, on the assets of each such Series, prior to
any rights or interests of the Shareholders thereto. This section shall not
preclude the Trust from directly paying any of the aforementioned fees and
expenses.
<PAGE>
ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
SECTION 6.01 INVESTMENT ADVISER. The Trustees may in their discretion,
from time to time, enter into an investment advisory contract or contracts with
respect to the Trust or any Series whereby the other party or parties to such
contract or contracts shall undertake to furnish the Trustees with such
investment advisory, statistical and research facilities and services and such
other facilities and services, if any, all upon such terms and conditions as may
be prescribed in the Bylaws or as the Trustees may in their discretion determine
(such terms and conditions not to be inconsistent with the provisions of this
Trust Instrument or of the Bylaws). Notwithstanding any other provision of this
Trust Instrument, the Trustees may authorize any investment adviser (subject to
such general or specific instructions as the Trustees may from time to time
adopt) to effect purchases, sales or exchanges of portfolio securities, other
investment instruments of the Trust, or other Trust Property on behalf of the
Trustees, or may authorize any officer, agent, or Trustee to effect such
purchases, sales or exchanges pursuant to recommendations of the investment
adviser (and all without further action by the Trustees). Any such purchases,
sales and exchanges shall be deemed to have been authorized by all of the
Trustees.
The Trustees may authorize the investment adviser to employ, from time
to time, one or more sub-advisers to perform such of the acts and services of
the investment adviser, and upon such terms and conditions, as may be agreed
upon between the investment adviser and sub-adviser (such terms and conditions
not to be inconsistent with the provisions of this Trust Instrument or of the
Bylaws). Any reference in this Trust Instrument to the investment adviser shall
be deemed to include such sub-advisers, unless the context otherwise requires.
SECTION 6.02 PRINCIPAL UNDERWRITER. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
underwriting contract or contracts providing for the sale of Shares, whereby the
Trust may either agree to sell Shares to the other party to the contract or
appoint such other party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws); and such contract may also provide for the repurchase or sale
of Shares by such other party as principal or as agent of the Trust.
SECTION 6.03 ADMINISTRATION. The Trustees may in their discretion from
time to time enter into one or more management or
<PAGE>
administrative contracts whereby the other party or parties shall undertake to
furnish the Trustees with management or administrative services. The contract or
contracts shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws).
SECTION 6.04 TRANSFER AGENT. The Trustees may in their discretion from
time to time enter into one or more transfer agency and Shareholder service
contracts whereby the other party or parties shall undertake to furnish the
Trustees with transfer agency and Shareholder services. The contract or
contracts shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws).
SECTION 6.05 PARTIES TO CONTRACT. Any contract of the character
described in Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any
contract of the character described in Article VIII hereof may be entered into
with any corporation, firm, partnership, trust or association, although one or
more of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and no such
contract shall be invalidated or rendered void or voidable by reason of the
existence of any relationship, nor shall any person holding such relationship be
disqualified from voting on or executing the same in his capacity as Shareholder
and/or Trustee, nor shall any person holding such relationship be liable merely
by reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VI or Article VIII hereof or of
the Bylaws. The same person (including a firm, corporation, partnership, trust,
or association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or pursuant to Article
VIII hereof, and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts mentioned
in this Section 6.05.
SECTION 6.06 PROVISIONS AND AMENDMENTS. Any contract entered into
pursuant to Sections 6.01 or 6.02 of this Article VI shall be consistent with
and subject to the requirements of Section 15 of the 1940 Act, if applicable, or
other applicable Act of Congress hereafter enacted with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal thereof, and no amendment to any contract
entered into pursuant to Section 6.01 of this Article VI shall be effective
unless assented to in a manner
<PAGE>
consistent with the requirements of said Section 15, as modified by any
applicable rule, regulation or order of the Commission.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.01 VOTING POWERS. The Shareholders shall have power to vote
only (a) for the election of Trustees as provided in Article III, Sections 3.01
and 3.02 hereof, (b) for the removal of Trustees as provided in Article III,
Section 3.03(d) hereof, (c) with respect to any investment advisory contract as
provided in Article VI, Sections 6.01 and 6.06 hereof, and (d) with respect to
such additional matters relating to the Trust as may be required by law, by this
Trust Instrument, or the Bylaws or any registration of the Trust with the
Commission or any State, or as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares shall
be voted separately by individual Series, except (i) when required by the 1940
Act, Shares shall be voted in the aggregate and not by individual Series; and
(ii) when the Trustees have determined that the matter affects the interests of
more than one Series, then the Shareholders of all such Series shall be entitled
to vote thereon. The Trustees may also determine that a matter affects only the
interests of one or more classes of a Series, in which case any such matter
shall be voted on by such class or classes. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the Bylaws. A proxy may
be given in writing. The Bylaws may provide that proxies may also, or may
instead, be given by any electronic or telecommunications device or in any other
manner. Notwithstanding anything else herein or in the Bylaws, in the event a
proposal by anyone other than the officers or Trustees of the Trust is submitted
to a vote of the Shareholders of one or more Series or of the Trust, or in the
event of any proxy contest or proxy solicitation or proposal in opposition to
any proposal by the officers or Trustees of the Trust, Shares may be voted only
in person or by written proxy. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required or
permitted by law, this Trust Instrument or any of the Bylaws of the Trust to be
taken by Shareholders.
SECTION 7.02 MEETINGS. The first Shareholders' meeting shall be held in
order to elect Trustees as specified in Section 3.02 of Article III hereof at
the principal office of the Trust or such other place as the Trustees may
designate. Meetings may be held within or without the State of Delaware. Special
meetings of the Shareholders of any Series may be called by the
<PAGE>
Trustees and shall be called by the Trustees upon the written request of
Shareholders owning at least one-tenth of the Outstanding Shares entitled to
vote. Whenever ten or more Shareholders meeting the qualifications set forth in
Section 16(c) of the 1940 Act, as the same may be amended from time to time,
seek the opportunity of furnishing materials to the other Shareholders with a
view to obtaining signatures on such a request for a meeting, the Trustees shall
comply with the provisions of said Section 16(c) with respect to providing such
Shareholders access to the list of the Shareholders of record of the Trust or
the mailing of such materials to such Shareholders of record, subject to any
rights provided to the Trust or any Trustees provided by said Section 16(c).
Notice shall be sent, by First Class Mail or such other means determined by the
Trustees, at least 15 days prior to any such meeting.
SECTION 7.03 QUORUM AND REQUIRED VOTE. One-third of Shares entitled to
vote in person or by proxy shall be a quorum for the transaction of business at
a Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requires that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series (or that class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument or the Bylaws, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Trust Instrument permits or requires that
the holders of any Series shall vote as a Series (or that the holders of any
class shall vote as a class), then a majority of the Shares present in person or
by proxy of that Series (or class), voted on the matter in person or by proxy
shall decide that matter insofar as that Series (or class) is concerned.
Shareholders may act by unanimous written consent. Actions taken by Series (or
class) may be consented to unanimously in writing by Shareholders of that Series
(or class).
ARTICLE VIII
CUSTODIAN
SECTION 8.01 APPOINTMENT AND DUTIES. The Trustees shall at all times
employ a bank, a company that is a member of a national securities exchange, or
a trust company, each having capital, surplus and undivided profits of at least
two million dollars ($2,000,000) as custodian with authority as its agent, but
subject to such restrictions, limitations and other requirements,
<PAGE>
if any, as may be contained in the Bylaws of the Trust: (a) to hold the
securities owned by the Trust and deliver the same upon written order or oral
order confirmed in writing; (b) to receive and receipt for any moneys due to the
Trust and deposit the same in its own banking department or elsewhere as the
Trustees may direct; and (c) to disburse such funds upon orders or vouchers.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the laws of the
United States or one of the states thereof and having capital, surplus and
undivided profits of at least two million dollars ($2,000,000) or such other
person as may be permitted by the Commission or otherwise in accordance with the
1940 Act.
SECTION 8.02 CENTRAL CERTIFICATE SYSTEM. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, as amended, or such other
person as may be permitted by the Commission, or otherwise in accordance with
the 1940 Act, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodians, sub-custodians or other agents.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
SECTION 9.01 DISTRIBUTIONS.
(a) The Trustees may from time to time declare and pay dividends or
other distributions with respect to any Series. The amount of such dividends or
distributions and the payment of them and whether they are in cash or any other
Trust Property shall be wholly in the discretion of the Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall
<PAGE>
determine, which dividends or distributions, at the election of the Trustees,
may be paid pursuant to a standing resolution or resolutions adopted only once
or with such frequency as the Trustees may determine. The Trustees may adopt and
offer to Shareholders such dividend reinvestment plans, cash dividend payout
plans or related plans as the Trustees shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary notwithstanding,
the Trustees may at any time declare and distribute a stock dividend pro rata
among the Shareholders of a particular Series, or class thereof, as of the
record date of that Series fixed as provided in Subsection 9.01(b) hereof.
SECTION 9.02 REDEMPTIONS. In case any holder of record of Shares of a
particular Series desires to dispose of his Shares or any portion thereof, he
may deposit at the office of the transfer agent or other authorized agent of
that Series a written request or such other form of request as the Trustees may
from time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 9.02; and the Shareholder so requesting shall be
entitled to require the Series to purchase, and the Series or the principal
underwriter of the Series shall purchase his said Shares, but only at the Net
Asset Value thereof (as described in Section 9.03 of this Article IX). The
Series shall make payment for any such Shares to be redeemed, as aforesaid, in
cash or property from the assets of that Series and payment for such Shares
shall be made by the Series or the principal underwriter of the Series to the
Shareholder of record within seven (7) days after the date upon which the
request is effective. Upon redemption, shares shall become Treasury shares and
may be re-issued from time to time.
SECTION 9.03 DETERMINATION OF NET ASSET VALUE AND VALUATION OF
PORTFOLIO ASSETS. The term "Net Asset Value" of any Series shall mean that
amount by which the assets of that Series exceed its liabilities, all as
determined by or under the direction of the Trustees. Such value shall be
determined separately for each Series and shall be determined on such days and
at such times as the Trustees may determine. Such determination shall be made
with respect to securities for which market quotations are readily available, at
the market value of such securities; and with respect to other securities and
assets, at the fair value as determined in good faith by the Trustees; provided,
however, that the Trustees, without Shareholder approval, may alter the method
of valuing portfolio securities insofar as permitted under the 1940 Act and the
rules, regulations and interpretations thereof promulgated or issued by the
Commission or insofar as permitted by any Order of the Commission applicable to
the Series. The Trustees may delegate any of their powers and duties under this
Section 9.03 with respect to valuation of assets and liabilities. The resulting
amount, which shall represent the total Net Asset Value of the particular
Series, shall be divided by the total
<PAGE>
number of shares of that Series outstanding at the time and the quotient so
obtained shall be the Net Asset Value per Share of that Series. At any time the
Trustees may cause the Net Asset Value per Share last determined to be
determined again in similar manner and may fix the time when such redetermined
value shall become effective. If, for any reason, the net income of any Series,
determined at any time, is a negative amount, the Trustees shall have the power
with respect to that Series (a) to offset each Shareholder's pro rata share of
such negative amount from the accrued dividend account of such Shareholder, (b)
to reduce the number of Outstanding Shares of such Series by reducing the number
of Shares in the account of each Shareholder by a pro rata portion of that
number of full and fractional Shares which represents the amount of such excess
negative net income, (c) to cause to be recorded on the books of such Series an
asset account in the amount of such negative net income (provided that the same
shall thereupon become the property of such Series with respect to such Series
and shall not be paid to any Shareholder), which account may be reduced by the
amount, of dividends declared thereafter upon the Outstanding Shares of such
Series on the day such negative net income is experienced, until such asset
account is reduced to zero; (d) to combine the methods described in clauses (a)
and (b) and (c) of this sentence; or (e) to take any other action they deem
appropriate, in order to cause (or in order to assist in causing) the Net Asset
Value per Share of such Series to remain at a constant amount per Outstanding
Share immediately after each such determination and declaration. The Trustees
shall also have the power not to declare a dividend out of net income for the
purpose of causing the Net Asset Value per Share to be increased. The Trustees
shall not be required to adopt, but may at any time adopt, discontinue or amend
the practice of maintaining the Net Asset Value per Share of the Series at a
constant Amount.
SECTION 9.04 SUSPENSION OF THE RIGHT OF REDEMPTION. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
as permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension. In the event that any Series is divided into classes, the
provisions of this Section 9.03, to the extent applicable as determined in the
discretion of the Trustees and consistent with applicable law, may be equally
applied to each such class.
SECTION 9.05 REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED
INVESTMENT COMPANY. If the Trustees shall, at any time
<PAGE>
and in good faith, be of the opinion that direct or indirect ownership of Shares
of any Series has or may become concentrated in any Person to an extent which
would disqualify any Series as a regulated investment company under the Internal
Revenue Code, then the Trustees shall have the power (but not the obligation) by
lot or other means deemed equitable by them (a) to call for redemption by any
such person of a number, or principal amount, of Shares sufficient to maintain
or bring the direct or indirect ownership of Shares into conformity with the
requirements for such qualification and (b) to refuse to transfer or issue
Shares to any person whose acquisition of Shares in question would result in
such disqualification. The redemption shall be effected at the redemption price
and in the manner provided in this Article IX.
The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the requirements of any taxing
authority.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 10.01 LIMITATION OF LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any person other than the Trust or
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission or any conduct
whatsoever in his capacity as Trustee, provided that nothing contained herein or
in the Delaware Act shall protect any Trustee against any liability to the Trust
or to Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
SECTION 10.02 INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):
(i) every person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof;
<PAGE>
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (A) by the court or other
body approving the settlement; (B) by at least a majority of those
Trustees who are neither Interested Persons of the Trust nor are
parties to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or (C) by written opinion of
independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry);
provided, however, that any Shareholder may, by appropriate legal proceedings,
challenge any such determination by the Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) of
<PAGE>
this Section 10.02 may be paid by the Trust or Series from time to time prior to
final disposition thereof upon receipt of an undertaking by or on behalf of such
Covered Person that such amount will be paid over by him to the Trust or Series
if it is ultimately determined that he is not entitled to indemnification under
this Section 10.02; provided, however, that either (i) such Covered Person shall
have provided appropriate security for such undertaking, (ii) the Trust is
insured against losses arising out of any such advance payments or (iii) either
a majority of the Trustees who are neither Interested Persons of the Trust nor
parties to the matter, or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to believe that
such Covered Person will be found entitled to indemnification under Section
10.02.
SECTION 10.03 SHAREHOLDERS. In case any Shareholder of any Series shall
be held to be personally liable solely by reason of his being or having been a
Shareholder of such Series and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising form such liability. The Trust,
on behalf of the affected Series, shall, upon request by the Shareholder, assume
the defense of any claim made against the Shareholder for any act or obligation
of the Series and satisfy any judgment thereon from the assets of the Series.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 TRUST NOT A PARTNERSHIP. It is hereby expressly declared
that a trust and not a partnership is created hereby. No Trustee hereunder shall
have any power to bind personally either the Trust officers or any Shareholder.
All persons extending credit to, contracting with or having any claim against
the Trust or the Trustees shall look only to the assets of the appropriate
Series or (if the Trustees shall have yet to have established Series) of the
Trust for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of their agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Trust Instrument
shall protect a Trustee against any liability to which the Trustee would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.
<PAGE>
SECTION 11.02 TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
X hereof and to Section 11.01 of this Article XI, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Trust Instrument, and subject to the provisions of Article X hereof and
Section 11.01 of this Article XI, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
SECTION 11.03 ESTABLISHMENT OF RECORD DATES. The Trustees may close the
Share transfer books of the Trust for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of Shares, and in
such case such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other distribution,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the Trust
after any such record date fixed as aforesaid.
SECTION 11.04 TERMINATION OF TRUST.
(a) This Trust shall continue without limitation of time but subject to
the provisions of Subsection 11.04(b).
(b) The Trustees may, subject to a Majority Shareholder Vote of each
Series affected by the matter or, if applicable, to a Majority Shareholder Vote
of the Trust, and subject to a vote of a majority of the Trustees,
(i) sell and convey all or substantially all of the assets of
the Trust or any affected Series to another trust,
<PAGE>
partnership, association or corporation, or to a separate series of
shares thereof, organized under the laws of any state which trust,
partnership, association or corporation is an open-end management
investment company as defined in the 1940 Act, or is a series thereof,
for adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or
contingent, of the Trust or any affected Series, and which may include
shares of beneficial interest, stock or other ownership interests of
such trust, partnership, association or corporation or of a series
thereof; or
(ii) at any time sell and convert into money all of the assets
of the Trust or any affected Series.
Upon making reasonable provision, in the determination of the Trustees, for the
payment of all such liabilities in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) of each Series (or class) ratably among the holders of Shares
of that Series then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in Subsection 11.05(b), the Trust or any
affected Series shall terminate and the Trustees and the Trust shall be
discharged of any and all further liabilities and duties hereunder and the
right, title and interest of all parties with respect to the Trust or Series
shall be cancelled and discharged.
Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of the
Trust's certificate of trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee.
SECTION 11.05 REORGANIZATION. Notwithstanding anything else herein, the
Trustees, in order to change the form of organization of the Trust, may, without
prior Shareholder approval, (a) cause the Trust to merge or consolidate with or
into one or more trusts, partnerships, associations or corporations so long as
the surviving or resulting entity is an open-end management investment company
under the 1940 Act, or is a series thereof, that will succeed to or assume the
Trust's registration under that Act and which is formed, organized or existing
under the laws of a state, commonwealth, possession or colony of the United
States or (b) cause the Trust to incorporate under the laws of Delaware. Any
agreement of merger or consolidation or certificate of merger may be signed by a
majority of Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
<PAGE>
Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, and notwithstanding anything to the contrary contained in this
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 11.05 may effect any amendment to the
Trust Instrument or effect the adoption of a new trust instrument of the Trust
if it is the surviving or resulting trust in the merger or consolidation.
SECTION 11.06 FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been make and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions like
"herein," "hereof' and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions like "his", "he" and "him", shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
SECTION 11.07 APPLICABLE LAW. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
<PAGE>
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust", and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
SECTION 11.08 AMENDMENTS. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to vote
(a) on any amendment which would affect their right to vote granted in Section
7.01 of Article VII hereof, (b) on any amendment to this Section 11.08, (c) on
any amendment as may be required by law or by the Trust's registration statement
filed with the Commission and (d) on any amendment submitted to them by the
Trustees. Any amendment required or permitted to be submitted to Shareholders
which, as the Trustees determine, shall affect the Shareholders of one or more
Series shall be authorized by vote of the Shareholders of each Series affected
and no vote of shareholders of a Series not affected shall be required.
Notwithstanding anything else herein, any amendment to Article X hereof shall
not limit the rights to indemnification or insurance provided therein with
respect to action or omission of Covered Persons prior to such amendment.
SECTION 11.09 FISCAL YEAR. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees
may, without Shareholder approval, change the fiscal year of the Trust.
SECTION 11.10 PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or
<PAGE>
omitted prior to such determination. If any provision of this Trust Instrument
shall be held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any matter affect such provisions in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.
IN WITNESS WHEREOF, the undersigned, being all of the initial Trustees
of the Trust, have executed this instrument as of date first written above.
/s/ John Y. Keffer
------------------------------
John Y. Keffer, as Trustee
and not individually
/s/ James F. Patterson
------------------------------
James F. Patterson, as Trustee
and not individually
/s/ David I. Goldstein
------------------------------
David I. Goldstein, as Trustee
and not individually
EXHIBIT (2)
MONARCH FUNDS
BYLAWS
DATED JULY 10, 1992
AS AMENDED MAY 12, 1995
<PAGE>
MONARCH FUNDS
BYLAWS
These Bylaws of Monarch Funds (the "Trust"), a Delaware business trust,
are subject to the Trust Instrument of the Trust dated July 10, 1992, as from
time to time amended, supplemented or restated (the "Trust Instrument").
Capitalized terms used herein which are defined in the Trust Instrument are used
as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in New York City,
New York, or such other location as the Trustees may, from time to time,
determine. The Trust may establish and maintain such other offices and places of
business as the Trustees may, from time to time, determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
SECTION 2.01 OFFICERS. The officers of the Trust shall be a President,
a Treasurer, a Secretary, and such other officers as the Trustees may from time
to time elect. The Trustees may delegate to any officer or committee the power
to appoint any subordinate officers or agents. It shall not be necessary for any
Trustee or other officer to be a holder of Shares in the Trust.
SECTION 2.02 ELECTION OF OFFICERS. The Treasurer and Secretary shall be
chosen by the Trustees. The President shall be chosen by and from the Trustees.
Two or more offices may be held by a single person except the offices of
President and Secretary. Subject to the provisions of Section 3.13 hereof, the
President, the Treasurer and the Secretary shall each hold office until their
successors are chosen and qualified and all other officers shall hold office at
the pleasure of the Trustees.
SECTION 2.03 RESIGNATIONS. Any officer of the Trust may resign,
notwithstanding Section 2.02 hereof, by filing a written resignation with the
President, the Trustees or the Secretary, which resignation shall take effect on
being so filed or at such time as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
SECTION 3.01 MANAGEMENT OF THE TRUST. The business and affairs of the
Trust shall be managed by, or under the direction of, the Trustees, and they
shall have all powers necessary and desirable to carry out their
responsibilities, so far as such powers are not inconsistent with the laws of
the State of Delaware, the Trust Instrument or with these Bylaws.
<PAGE>
SECTION 3.02 EXECUTIVE AND OTHER COMMITTEES. The Trustees may elect
from their own number an executive committee, which shall have any or all the
powers of the Trustees while the Trustees are not in session. The Trustees may
also elect from their own number other committees from time to time. The number
composing such committees and the powers conferred upon the same are to be
determined by vote of a majority of the Trustees. All members of such committees
shall hold such offices at the pleasure of the Trustees. The Trustees may
abolish any such committee at any time. Any committee to which the Trustees
delegate any of their powers or duties shall keep records of its meetings and
shall report its actions to the Trustees. The Trustees shall have power to
rescind any action of any committee, but no such rescission shall have
retroactive effect.
SECTION 3.03 COMPENSATION. Each Trustee and each committee member may
receive such compensation for his services and reimbursement for his expenses as
may be fixed from time to time by resolution of the Trustees.
SECTION 3.04 CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint from
among their number a Chairman who shall serve as such at the pleasure of the
Trustees. When present, he shall preside at all meetings of the Shareholders and
the Trustees, and he may, subject to the approval of the Trustees, appoint a
Trustee to preside at such meetings in his absence. He shall perform such other
duties as the Trustees may from time to time designate.
SECTION 3.05 PRESIDENT. The President shall be the chief executive
officer of the Trust and, subject to the direction of the Trustees, shall have
general administration of the business and policies of the Trust. Except as the
Trustees may otherwise order, the President shall have the power to grant,
issue, execute or sign such powers of attorney, proxies, agreements or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust or any Series thereof. He shall also have the power to
employ attorneys, accountants and other advisors and agents and counsel for the
Trust. The President shall perform such duties additional to all of the
foregoing as the Trustees may from time to time designate.
SECTION 3.06 TREASURER. The Treasurer shall be the principal financial
and accounting officer of the Trust. He shall deliver all funds and securities
of the Trust which may come into his hands to such company as the Trustees shall
employ as Custodian in accordance with the Trust Instrument and applicable
provisions of law. He shall make annual reports regarding the business and
condition of the Trust, which reports shall be preserved in Trust records, and
he shall furnish such other reports regarding the business and condition of the
Trust as the Trustees may from time to time require. The Treasurer shall perform
such additional duties as the Trustees may from time to time designate.
SECTION 3.07 SECRETARY. The Secretary shall record in books kept for
the purpose all votes and proceedings of the Trustees and the Shareholders at
their respective meetings. He shall have the custody of the seal of the Trust.
The Secretary shall perform such additional duties as the Trustees may from time
to time designate.
<PAGE>
SECTION 3.08 VICE PRESIDENT. Any Vice President of the Trust shall
perform such duties as the Trustees or the President may from time to time
designate. At the request or in the absence or disability of the President, the
Vice President (or, if there are two or more Vice Presidents, then the senior of
the Vice Presidents present and able to act) may perform all the duties of the
President and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
SECTION 3.09 ASSISTANT TREASURER. Any Assistant treasurer of the Trust
shall perform such duties as the Trustees or the Treasurer may from time to time
designate, and, in the absence of the Treasurer, the senior Assistant Treasurer,
present and able to act, may perform all the duties of the Treasurer.
SECTION 3.10 ASSISTANT SECRETARY. Any Assistant Secretary of the Trust
shall perform such duties as the Trustees or the Secretary may from time to time
designate, and, in the absence of the Secretary, the senior Assistant Secretary,
present and able to act, may perform all the duties of the Secretary.
SECTION 3.11 SUBORDINATE OFFICERS. The Trustees from time to time may
appoint such officers or agents as they may deem advisable, each of whom shall
have such title, hold office for such period, have such authority and perform
such duties as the Trustees may determine. The Trustees from time to time may
delegate to one or more officers or committees of Trustees the power to appoint
any such subordinate officers or agents and to prescribe their respective terms
of office, authorities and duties.
SECTION 3.12 SURETY BONDS. The Trustees may require any officer or
agent of the Trust to execute a bond (including without limitation, any bond
required by the 1940 Act and the rules and regulations of the Commission) to the
Trust in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of his duties to the Trust
including responsibility for negligence and for the accounting of any of the
Trust's property, funds or securities that may come into his hands.
SECTION 3.13 REMOVAL. Any officer may be removed from office whenever
in the judgment of the Trustees the best interest of the Trust will be served
thereby, by the vote of a majority of the Trustees given at any regular meeting
or any special meeting of the Trustees. In addition, any officer or agent
appointed in accordance with the provisions of Section 3.10 hereof may be
removed, either with or without cause, by any officer upon whom such power of
removal shall have been conferred by the Trustees.
SECTION 3.14 REMUNERATION. The salaries or other compensation, if any,
of the officers of the Trust shall be fixed from time to time by resolution of
the Trustees.
<PAGE>
ARTICLE IV
SHAREHOLDER'S MEETINGS
SECTION 4.01 SPECIAL MEETINGS. A special meeting of the shareholders
shall be called by the Secretary whenever (a) ordered by the Trustees or (b)
requested in writing by the holder or holders of at least 10% of the Outstanding
Shares entitled to vote. If the Secretary, when so ordered or requested, refuses
or neglects for more than 30 days to call such special meeting, the Trustees or
the Shareholders so requesting, may, in the name of the Secretary, call the
meeting by giving notice thereof in the manner required when notice is given by
the Secretary. If the meeting is a meeting of the Shareholders of one or more
Series or classes of Shares, but not a meeting of all Shareholders of the Trust,
then only special meetings of the Shareholders of such one or more Series or
classes shall be called and only the shareholders of such one or more Series or
classes shall be entitled to notice of and to vote at such meeting.
SECTION 4.02 NOTICES. Except as provided in Section 4.01, notices of
any meeting of the Shareholders shall be given by the Secretary by delivering or
mailing, postage prepaid, to each Shareholder entitled to vote at said meeting,
written or printed notification of such meeting at least fifteen (15) days
before the meeting, to such address as may be registered with the Trust by the
Shareholder. Notice of any Shareholder meeting need not be given to any
Shareholder if a written waiver of notice, executed before or after such
meeting, is filed with the record of such meeting, or to any Shareholder who
shall attend such meeting in person or by proxy. Notice of adjournment of a
Shareholder's meeting to another time or place need not be given, if such time
and place are announced at the meeting or reasonable notice is given to persons
present at the meeting and the adjourned meeting is held within a reasonable
time after the date set for the original meeting.
SECTION 4.03 VOTING-PROXIES. Subject to the provisions of the Trust
Instrument, shareholders entitled to vote may vote either in person or by proxy,
provided that either (a) an instrument authorizing such proxy to act is executed
by the Shareholder in writing and dated not more than eleven (11) months before
the meeting, unless the instrument specifically provides for a longer period or
(b) the Trustees adopt by resolution an electronic, telephonic, computerized or
other alternative to execution of a written instrument authorizing the proxy to
act which authorization is received not more than eleven (11) months before the
meeting. Proxies shall be delivered to the Secretary of the Trust or other
person responsible for recording the proceedings before being voted. A proxy
with respect to Shares held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy the Trust
receives a specific written notice to the contract from any one of them. Unless
otherwise specifically limited by their terms, proxies shall entitle the holder
thereof to vote at any adjournment of a meeting. A proxy purporting to be
exercised by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden or proving invalidity
shall rest on the challenger. At all meetings of the Shareholders, unless the
voting is conducted by inspectors, all questions relating to the qualifications
of voters, the validity of proxies, and the acceptance or rejection of votes
shall be decided by the Chairman of the meeting. Except as otherwise provided
herein or in the Trust Instrument, as these Bylaws or such Trust Instrument may
be amended or supplemented from time to time, all matters relating
<PAGE>
to the giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation and the
Shareholders were shareholder of a Delaware corporation.
SECTION 4.04 PLACE OF MEETING. All special meetings of the Shareholders
shall be held at the principal place of business of the Trust or at such other
place in the United States as the Trustees may designate.
SECTION 4.05 ACTION WITHOUT A MEETING. Any action to be taken by
Shareholders may be taken without a meeting if all Shareholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of meetings of Shareholders of the Trust. Such consent
shall be treated for all purposes as a vote at a meeting of the Shareholders
held at the principal place of business of the Trust.
ARTICLE V
TRUSTEES' MEETINGS
SECTION 5.01 SPECIAL MEETINGS. Special meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or any two
other Trustees.
SECTION 5.02 REGULAR MEETINGS. Regular meetings of the Trustees may be
held at such places and at such times as the Trustees may from time to time
determine; each Trustee present at such determination shall be deemed a party
calling the meeting and no call or notice will be required to such Trustee
provided that any Trustee who is absent when such determination is made shall be
given notice of the determination by the Chairman or any two other Trustees, as
provided for in Section 4.04 of the Trust Instrument.
SECTION 5.03 QUORUM. A majority of the Trustees shall constitute a
quorum for the transaction of business and an action of a majority of the quorum
shall constitute action of the Trustees.
SECTION 5.04 NOTICE. Except as otherwise provided, notice of any
special meeting of the Trustees shall be given by the party calling the meeting
to each Trustee, as provided for the Section 4.04 of the Trust Instrument. A
written notice may be mailed, postage prepaid, addressed to him at his address
as registered on the books of the Trust or, if not so registered, at his last
known address.
SECTION 5.05 PLACE OF MEETING. All special meetings of the Trustees
shall be held at the principal place of business of the Trust or such other
place as the Trustees may designate. Any meeting may adjourn to any place.
SECTION 5.06 SPECIAL ACTION. When all the Trustees shall be present at
any meeting, however called or wherever held, or shall assent to the holding of
the meeting without notice, or
<PAGE>
shall sign a written assent thereto filed with the record of such meeting, the
acts of such meeting shall be valid as if such meeting had been regularly held.
SECTION 5.07 ACTION BY CONSENT. Any action by the Trustees may be taken
without a meeting if a written consent thereto is signed by all the Trustees and
filed with the records of the Trustees' meeting. Such consent shall be treated,
for all purposes, as a vote at a meeting of the Trustees held at the principal
place of business of the Trustees.
SECTION 5.08 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.
Trustees may participate in a meeting of Trustees by conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at such meeting. Any meeting conducted by telephone shall be
deemed to take place at and from the principal office of the Trust.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.01 BENEFICIAL INTEREST. The beneficial interest in the Trust
shall at all times divided into such transferable Shares of one or more separate
and distinct Series, or classes thereof, as the Trustees shall from time to time
create and establish. The number of Shares is unlimited, and each Share of each
Series or class thereof shall be without par value and shall represent an equal
proportionate interest with each other Share in the Series, none having priority
or preference over another, except to the extent that such priorities or
preference are established with respect to one or more classes of shares
consistent with applicable law and any rule or order of the Commission.
SECTION 6.02 TRANSFER OF SHARES. The Shares of the Trust shall be
transferable, so as to affect the rights of the Trust, only by transfer recorded
on the books of the Trust, in person or by attorney.
SECTION 6.03 EQUITABLE INTEREST NOT RECOGNIZED. The Trust shall be
entitled to treat the holder of record of any Share or Shares of beneficial
interest as equitable or other claim or interest in such Share or Shares on the
part of any other person except as may be otherwise expressly provided by law.
SECTION 6.04 SHARE CERTIFICATE. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
authorize. The Trustees may issue certificates to a Shareholder of any Series or
class thereof for any purpose and the issuance of a certificate to one or more
Shareholders shall not require the issuance of certificates generally. In the
event that the Trustees authorize the issuance of Share certificates, such
certificate shall be in the form proscribed from time to time by the Trustees
and shall be signed by the President or a Vice President and by the Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary. Such signatures may be
facsimiles if the certificate is signed by a transfer or shareholder services
agent or by a registrar, other than a Trustee, officer or employee of the Trust.
In case any officer who
<PAGE>
has signed or whose facsimile signature has been placed on certificate shall
have ceased to be such officer before such certificate is issued, it may be
issued by the Trust with the same effect as if he or she were such officer at
the time of its issue.
In lieu of issuing certificates for Shares, the Trustees or the
transfer or shareholder services agent may either issue receipts therefor or may
keep accounts upon the books of the Trusts for the record holders of such
Shares, who shall in either case be deemed, for all purposes hereunder, to be
the holders of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
SECTION 6.05 LOSS OF CERTIFICATES. In the case of the alleged loss or
destruction or the mutilation of a Share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees may prescribe.
SECTION 6.06 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees
may at any time discontinue the issuance of Share certificates and may, by
written notice to each Shareholder, require the surrender of Share certificates
to the Trust for cancellation. Such surrender and cancellation shall not affect
the ownership of Shares in the Trust.
ARTICLE VII
OWNERSHIP OF ASSETS OF THE TRUST
The Trustees, acting for and on behalf of the Trust, shall be deemed to
hold legal and beneficial ownership of any income earned on securities held by
the Trust issued by any business entity formed, organized or existing under the
laws of any jurisdiction other than a state, commonwealth, possession or colony
of the United States or the laws of the United States.
ARTICLE VIII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and regulations
the accounts and books of the Trust or any of them shall be open to the
inspection of the Shareholder; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or otherwise by the Trustees or by resolution of the Shareholders.
ARTICLE IX
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any Covered
Person or employee of the Trust, including any Covered Person or employee of the
Trust who is or was serving at the request of the Trust as a Trustee, officer or
employee of a corporation, partnership,
<PAGE>
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity or arising out of his status as
such, whether or not the Trustees would have the power to indemnify him against
such liability.
The Trust may not acquire or obtain a contract for insurance that
protects or purports to protect any Trustee or officer of the Trust against any
liability to the Trust of its Shareholders to which he would otherwise be
subject by reason or willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
ARTICLE X
SEAL
The seal of the Trust shall be circular in form bearing the
inscription:
"MONARCH FUNDS -- 1992
THE STATE OF DELAWARE"
ARTICLE XI
FISCAL YEAR
The fiscal year end of the Trust shall be August 31.
EXHIBIT (4)
- --------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
NO PAR VALUE
MONARCH FUNDS
NUMBER _____________________________________________ SHARES
______ ______
ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS IS TO CERTIFY THAT SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
--------------------
CUSIP ___________
--------------------
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST NO PAR VALUE
------------_________________________________________----------
established as a separate series of Monarch Funds, a Delaware business trust
(hereinafter called the "Trust"), under a Trust Instrument made July 10, 1992,
as amended from time to time. The holder and every transferee or assignee of
this Certificate or of the Shares presented hereby or any interest therein
accepts and agrees to be bound by the provisions of such Trust Instrument and
all amendments thereto (copies of which are on file at the principal office of
the Trust) and such Bylaws of the Trust as may from time to time be adopted by
the Trustees (copies of which are on file at the principal office of the Trust),
all of which provisions are hereby incorporated by reference as fully as if set
forth herein in their entirety. Written obligations of the Trust made by the
Trustees are made by them not individually, but as such Trustees and obligations
of the Trust are not binding upon any Trustee, shareholder, officer or agent of
the Trust individually, but bind only the Trust estate. This Certificate and the
Shares represented hereby are transferable on the books of the Trust by the
registered holder hereof in person or by duly authorized attorney upon surrender
of this Certificate properly endorsed. This Certificate is not valid until
countersigned and registered by the Transfer Agent.
Witness the seal of the Trust and the signatures of its duly authorized
officers.
Dated:
By: /s/ John Y. Keffer [SEAL]
-------------------------- MONARCH FUNDS
President SEAL
1992
DELAWARE
*
/s/ David I. Golstein
--------------------------
Secretary
COUNTERSIGNED AND REGISTERED
FORUM FINANCIAL CORP.
TRANSFER AGENT
BY:
AUTHORIZED SIGNATURE
CHAIRMAN
- --------------------------------------------------------------------------------
EXHIBIT (6)
MONARCH FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 20th day of September, 1997, by and between
Monarch Funds, a Delaware business trust, with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and Forum
Financial Services, Inc., a Delaware corporation with its principal office and
place of business at Two Portland Square, Portland, Maine 04101 ("Distributor").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company and
may issue its shares of beneficial interest, no par value ("Shares") in separate
series and classes; and
WHEREAS, the Distributor is registered under the Securities Exchange
Act of 1934, as amended ("1934 Act"), as a broker-dealer and is engaged in the
business of selling shares of registered investment companies either directly to
purchasers or through other financial intermediaries;
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement being herein
referred to as a "Fund," and collectively as the "Funds") and offers shares of
various classes of each Fund as listed in Appendix A hereto (each such class
together with all other classes subsequently established by the Trust in a Fund
being herein referred to as a "Class," and collectively as the "Classes"); and
WHEREAS, the Trust desires that the Distributor offer, as principal
underwriter, the Shares of each Fund and Class thereof to the public and the
Distributor is willing to provide those services on the terms and conditions set
forth in this Agreement in order to promote the growth of the Funds and
facilitate the distribution of the Shares;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Distributor do hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints the Distributor, and the Distributor
hereby agrees, to act as distributor of the Shares for the period and on the
terms set forth in this Agreement.
(b) In connection therewith, the Trust has delivered to the Distributor
copies of (i) the Trust's Trust Instrument and Bylaws (collectively, as amended
from time to time, "Organic Documents"), (ii) the Trust's Registration Statement
and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended
("Securities Act"), or the 1940 Act ("Registration Statement"), (iii) the
current
<PAGE>
prospectuses and statements of additional information of each Fund and Class
thereof (collectively, as currently in effect and as amended or supplemented,
the "Prospectus"), (iv) each current plan of distribution or similar document
adopted by the Trust pursuant to Rule 12b-1 under the 1940 Act ("Plan") and each
current shareholder service plan or similar document adopted by the Trust
("Service Plan"); and (iv) all procedures adopted by the Trust with respect to
the Funds (e.g., repurchase agreement procedures), and shall promptly furnish
the Distributor with all amendments of or supplements to the foregoing. The
Trust shall deliver to the Distributor a certified copy of the resolution of the
Board of Trustees of the Trust (the "Board") appointing the Distributor and
authorizing the execution and delivery of this Agreement.
SECTION 2. EXCLUSIVE NATURE OF DUTIES
The Distributor shall be the exclusive representative of the Trust to
act as distributor of the Funds except that the rights given under this
Agreement to the Distributor shall not apply to: (i) Shares issued in connection
with the merger, consolidation or reorganization of any other investment company
or series or class thereof with a Fund or Class thereof; (ii) a Fund's
acquisition by purchase or otherwise of all or substantially all of the assets
or stock of any other investment company or series or class thereof; (iii) the
reinvestment in Shares by a Fund's shareholders of dividends or other
distributions; or (iv) any other offering by the Trust of securities to its
shareholders (collectively "exempt transactions").
SECTION 3. OFFERING OF SHARES
(a) The Distributor shall have the right to buy from the Trust the
Shares needed to fill unconditional orders for unsold Shares of the Funds as
shall then be effectively registered under the Securities Act placed with the
Distributor by investors or selected dealers or selected agents (each as defined
in Section 11 hereof) acting as agent for their customers or on their own
behalf. Alternatively, the Distributor may act as the Trust's agent, to offer,
and to solicit offers to subscribe to, unsold Shares of the Funds as shall then
be effectively registered under the Securities Act. The Distributor will
promptly forward all orders and subscriptions to the Trust. The price that the
Distributor shall pay for Shares purchased from the Trust shall be the net asset
value per Share, determined as set forth in Section 3(c) hereof, used in
determining the public offering price on which the orders are based. Shares
purchased by the Distributor are to be resold by the Distributor to investors at
the public offering price, as set forth in Section 3(b) hereof, or to selected
dealers or selected agents acting as agent for their customers that have entered
into agreements with the Distributor pursuant to Section 11 hereof or acting on
their own behalf. The Trust reserves the right to sell Shares directly to
investors through subscriptions received by the Trust, but no such direct sales
shall affect the sales charges due to the Distributor hereunder.
(b) The public offering price of the Shares of a Fund, i.e., the price
per Share at which the Distributor or selected dealers or selected agents may
sell Shares to the public or to those persons eligible to invest in Shares as
described in the applicable Prospectus, shall be the public offering price
determined in accordance with the then currently effective Prospectus of the
Fund or Class thereof under the Securities Act relating to such Shares. The
public offering price shall
<PAGE>
not exceed the net asset value at which the Distributor, when acting as
principal, is to purchase such Shares, plus, in the case of Shares for which an
initial sales charge is assessed, an initial charge equal to a specified
percentage or percentages of the public offering price of the Shares as set
forth in the current Prospectus relating to the Shares. In the case of Shares
for which an initial sales charge may be assessed, Shares may be sold to certain
classes of persons at reduced sales charges or without any sales charge as from
time to time set forth in the current Prospectus relating to the Shares. The
Trust will advise the Distributor of the net asset value per Share at each time
as the net asset value per Share shall have been determined by the Trust.
(c) The net asset value per Share of each Fund or Class thereof shall
be determined by the Trust, or its designated agent, in accordance with and at
the times indicated in the applicable Prospectus on each Fund business day in
accordance with the method set forth in the Prospectus and guidelines
established by the Trust's Board.
(d) The Trust reserves the right to suspend the offering of Shares of a
Fund or of any Class thereof at any time in the absolute discretion of the
Board, and upon notice of such suspension the Distributor shall cease to offer
Shares of the Funds or Classes thereof specified in the notice.
(e) The Trust, or any agent of the Trust designated in writing to the
Distributor by the Trust, shall be promptly advised by the Distributor of all
purchase orders for Shares received by the Distributor and all subscriptions for
Shares obtained by the Distributor as agent shall be directed to the Trust for
acceptance and shall not be binding until accepted by the Trust. Any order or
subscription may be rejected by the Trust; provided, however, that the Trust
will not arbitrarily or without reasonable cause refuse to accept or confirm
orders or subscriptions for the purchase of Shares. The Trust or its designated
agent will confirm orders and subscriptions upon their receipt, will make
appropriate book entries and, upon receipt by the Trust or its designated agent
of payment thereof, will issue such Shares in certificated or uncertificated
form pursuant to the instructions of the Distributor. The Distributor agrees to
cause such payment and such instructions to be delivered promptly to the Trust
or its designated agent.
SECTION 4. REPURCHASE OR REDEMPTION OF SHARES BY THE TRUST
(a) Any of the outstanding Shares of a Fund or Class thereof may be
tendered for redemption at any time, and the Trust agrees to redeem or
repurchase the Shares so tendered in accordance with its obligations as set
forth in the Organic Documents and the Prospectus relating to the Shares. The
price to be paid to redeem or repurchase the Shares of a Fund of Class thereof
shall be equal to the net asset value calculated in accordance with the
provisions of Section 3(b) hereof less, in the case of Shares for which a
deferred sales charge is assessed, a deferred sales charge equal to a specified
percentage or percentages of the net asset value of those Shares as from time to
time set forth in the Prospectus relating to those Shares or their cost,
whichever is less. Shares of a Fund or Class thereof for which a deferred sales
charge may be assessed and that have been outstanding for a specified period of
time may be redeemed without payment of a deferred sales charge as from time to
time set forth in the Prospectus relating to those Shares.
<PAGE>
(b) The Trust or its designated agent shall pay (i) the total amount of
the redemption price consisting of the redemption price less any applicable
deferred sales charge to the redeeming shareholder or its agent and (ii) except
as may be otherwise required by the Conduct Rules (the "Rules") of the National
Association of Securities Dealers Regulation, Inc. (the "NASD") and any
interpretations thereof, any applicable deferred sales charges to the
Distributor in accordance with the Distributor's instructions on or before the
fifth business day (or such other earlier business day as is customary in the
investment company industry) subsequent to the Trust or its agent having
received the notice of redemption in proper form.
(c) Redemption of Shares or payment therefor may be suspended at times
when the New York Stock Exchange is closed for any reason other than its
customary weekend or holiday closings, when trading thereon is restricted, when
an emergency exists as a result of which disposal by the Trust of securities
owned by a Fund is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of a Fund's net assets,
or during any other period when the SEC so requires or permits.
SECTION 5. DUTIES AND REPRESENTATIONS OF THE DISTRIBUTOR
(a) The Distributor shall use reasonable efforts to sell Shares of the
Funds upon the terms and conditions contained herein and in the then current
Prospectus. The Distributor shall devote reasonable time and effort to effect
sales of Shares but shall not be obligated to sell any specific number of
Shares. The services of the Distributor to the Trust hereunder are not to be
deemed exclusive, and nothing herein contained shall prevent the Distributor
from entering into like arrangements with other investment companies so long as
the performance of its obligations hereunder is not impaired thereby.
(b) In selling Shares of the Funds, the Distributor shall use its best
efforts in all material respects duly to conform with the requirements of all
federal and state laws relating to the sale of the Shares. None of the
Distributor, any selected dealer, any selected agent or any other person is
authorized by the Trust to give any information or to make any representations
other than as is contained in a Fund's Prospectus or any advertising materials
or sales literature specifically approved in writing by the Trust or its agents.
(c) The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers or selected agents, the
collection of amounts payable by investors and selected dealers or selected
agents on such sales, and the cancellation of unsettled transactions, as may be
necessary to comply with the requirements of the NASD.
(d) The Distributor represents and warrants to the Trust that:
(i) It is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware and it is duly
qualified to carry on its business in the State of Maine;
<PAGE>
(ii) It is empowered under applicable laws and by its Articles of
Incorporation to enter into and perform this Agreement;
(iii) All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
(iv) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;
(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Distributor, enforceable
against the Distributor in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and
secured parties;
(vi) It is registered under the 1934 Act with the SEC as a
broker-dealer, it is a member in good standing of the NASD, it will
abide by the rules and regulations of the NASD, and it will notify the
Trust if its membership in the NASD is terminated or suspended; and
(vii) The performance by the Distributor of its obligations hereunder
does not and will not contravene any provision of its Articles of
Incorporation.
(e) Notwithstanding anything in this Agreement, the Distributor makes
no warranty or representation as to the number of selected dealers or selected
agents with which it has entered into agreements in accordance with Section 11
hereof, as to the availability of any Shares to be sold through any selected
dealer, selected agent or other intermediary or as to any other matter not
specifically set forth herein.
SECTION 6. DUTIES AND REPRESENTATIONS OF THE TRUST
(a) The Trust shall furnish to the Distributor copies of all financial
statements and other documents to be delivered to shareholders or investors at
least two Fund business days prior to such delivery and shall furnish the
Distributor copies of all other financial statements, documents and other papers
or information which the Distributor may reasonably request for use in
connection with the distribution of Shares. The Trust shall make available to
the Distributor the number of copies of the Funds' Prospectuses as the
Distributor shall reasonably request.
(b) The Trust shall execute any and all documents, furnish to the
Distributor any and all information, otherwise use its best efforts to take all
actions that may be reasonably necessary and cooperate with the Distributor in
taking any action as may be necessary to register or qualify Shares for sale
under the securities laws of the various states of the United States and other
jurisdictions ("States") as the Distributor shall designate (subject to approval
by the Trust); provided that the Distributor shall not be required to register
as a broker-dealer or file a consent to service of process in any State and
neither the Trust nor any Fund or Class thereof shall be required to qualify as
a foreign corporation, trust or association in any State. Any registration or
<PAGE>
qualification may be withheld, terminated or withdrawn by the Trust at any time
in its discretion. The Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the Trust
in connection with such registration or qualification.
(c) The Trust represents and warrants to the Distributor that:
(i) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware;
(ii) It is empowered under applicable laws and by its Organic Documents
to enter into and perform this Agreement;
(iii) All proceedings required by the Organic Documents have been taken
to authorize it to enter into and perform its duties under this
Agreement;
(iv) It is an open-end management investment company registered with
the SEC under the 1940 Act;
(v) All Shares, when issued, shall be validly issued, fully paid and
non-assessable;
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Trust, enforceable against
the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties;
(vii) The performance by the Trust of its obligations hereunder does
not and will not contravene any provision of its Organic Documents.
(viii) The Registration statement is currently effective and will
remain effective with respect to all Shares of the Funds and Classes
thereof being offered for sale;
(ix) The Registration Statement and Prospectuses have been or will be,
as the case may be, prepared in conformity with the requirements of the
Securities Act and the rules and regulations thereunder;
(x) The Registration Statement and Prospectuses contain or will contain
all statements required to be stated therein in accordance with the
Securities Act and the rules and regulations thereunder; all statements
of fact contained or to be contained in the Registration Statement or
Prospectuses are or will be true and correct at the time indicated or
on the effective date as the case may be; and neither the Registration
Statement nor any Prospectus, when they shall become effective or be
authorized for use, will include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser
of Shares;
<PAGE>
(xi) It will from time to time file such amendment or amendments to the
Registration Statement and Prospectuses as, in the light of
then-current and then-prospective developments, shall, in the opinion
of its counsel, be necessary in order to have the Registration
Statement and Prospectuses at all times contain all material facts
required to be stated therein or necessary to make any statements
therein not misleading to a purchaser of Shares ("Required
Amendments");
(xii) It shall not file any amendment to the Registration Statement or
Prospectuses without giving the Distributor reasonable advance notice
thereof; provided, however, that nothing contained in this Agreement
shall in any way limit the Trust's right to file at any time such
amendments to the Registration Statement or Prospectuses, of whatever
character, as the Trust may deem advisable, such right being in all
respects absolute and unconditional; and
(xiii) Any amendment to the Registration Statement or Prospectuses
hereafter filed will, when it becomes effective, contain all statements
required to be stated therein in accordance with the 1940 Act and the
rules and regulations thereunder; all statements of fact contained in
the Registration Statement or Prospectuses will, when be true and
correct at the time indicated or on the effective date as the case may
be; and no such amendment, when it becomes effective, will include an
untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of the Shares.
SECTION 7. STANDARD OF CARE
The Distributor shall use its best judgment and reasonable efforts in
rendering services to the Trust under this Agreement but shall be under no duty
to take any action except as specifically set forth herein or as may be
specifically agreed to by the Distributor in writing. The Distributor shall not
be liable to the Trust or any of the Trust's shareholders for any error of
judgment or mistake of law, for any loss arising out of any investment, or for
any action or inaction of the Distributor in the absence of bad faith, willful
misfeasance or gross negligence in the performance of the Distributor's duties
or obligations under this Agreement or by reason or the Distributor's reckless
disregard of its duties and obligations under this Agreement
SECTION 8. INDEMNIFICATION
(a) The Trust will indemnify, defend and hold the Distributor, its
employees, directors and officers and any person who controls the Distributor
within the meaning of section 15 of the Securities Act or section 20 of the 1934
Act ("Distributor Indemnitees") free and harmless from and against any and all
claims, demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character (including the cost of investigating or defending such claims,
demands, actions, suits or liabilities and any reasonable counsel fees incurred
in connection therewith) which any Distributor Indemnitee may incur, under the
Securities Act, or under common law or otherwise, arising out of or based upon
any alleged untrue statement of a material fact contained in the
<PAGE>
Registration Statement or the Prospectuses or arising out of or based upon any
alleged omission to state a material fact required to be stated in any one
thereof or necessary to make the statements in any one thereof not misleading,
unless such statement or omission was made in reliance upon, and in conformity
with, information furnished to the Trust in connection with the preparation of
the Registration Statement or exhibits to the Registration Statement by or on
behalf of the Distributor ("Distributor Claims").
After receipt of the Distributor's notice of termination under Section
13(e), the Trust shall indemnify and hold each Distributor Indemnitee free and
harmless from and against any Distributor Claim; provided, that the term
Distributor Claim for purposes of this sentence shall mean any Distributor Claim
related to the matters for which the Distributor has requested amendment to the
Registration Statement and for which the Trust has not filed a Required
Amendment, regardless of with respect to such matters whether any statement in
or omission from the Registration Statement was made in reliance upon, or in
conformity with, information furnished to the Trust by or on behalf of the
Distributor.
(b) The Trust may assume the defense of any suit brought to enforce any
Distributor Claim and may retain counsel of good standing chosen by the Trust
and approved by the Distributor, which approval shall not be withheld
unreasonably. The Trust shall advise the Distributor that it will assume the
defense of the suit and retain counsel within ten (10) days of receipt of the
notice of the claim. If the Trust assumes the defense of any such suit and
retains counsel, the defendants shall bear the fees and expenses of any
additional counsel that they retain. If the Trust does not assume the defense of
any such suit, or if the Distributor does not approve of counsel chosen by the
Trust or has been advised that it may have available defenses or claims that are
not available to or conflict with those available to the Trust, the Trust will
reimburse any Distributor Indemnitee named as defendant in such suit for the
reasonable fees and expenses of any counsel that person retains. A Distributor
Indemnitee shall not settle or confess any claim without the prior written
consent of the Trust, which consent shall not be unreasonably withheld or
delayed.
(c) The Distributor will indemnify, defend and hold the Trust and its
several officers and trustees (collectively, the "Trust Indemnitees"), free and
harmless from and against any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other expenses of every nature and character (including the cost of
investigating or defending such claims, demands, actions, suits or liabilities
and any reasonable counsel fees incurred in connection therewith), but only to
the extent that such claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses
result from, arise out of or are based upon:
(i) any alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or any alleged omission of a
material fact required to be stated or necessary to make the statements
therein not misleading, if such statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Trust in connection with the preparation of the Registration Statement
or Prospectus by or on behalf of the Distributor; or
<PAGE>
(ii) any act of, or omission by, Distributor or its sales
representatives that does not conform to the standard of care set forth
in Section 7 of this Agreement ("Trust Claims").
(d) The Distributor may assume the defense of any suit brought to
enforce any Trust Claim and may retain counsel of good standing chosen by the
Distributor and approved by the Trust, which approval shall not be withheld
unreasonably. The Distributor shall advise the Trust that it will assume the
defense of the suit and retain counsel within ten (10) days of receipt of the
notice of the claim. If the Distributor assumes the defense of any such suit and
retains counsel, the defendants shall bear the fees and expenses of any
additional counsel that they retain. If the Distributor does not assume the
defense of any such suit, or if the Trust does not approve of counsel chosen by
the Distributor or has been advised that it may have available defenses or
claims that are not available to or conflict with those available to the
Distributor, the Distributor will reimburse any Trust Indemnitee named as
defendant in such suit for the reasonable fees and expenses of any counsel that
person retains. A Trust Indemnitee shall not settle or confess any claim without
the prior written consent of the Distributor, which consent shall not be
unreasonably withheld or delayed.
(e) The Trust's and the Distributor's obligations to provide
indemnification under this Section is conditioned upon the Trust or the
Distributor receiving notice of any action brought against a Distributor
Indemnitee or Trust Indemnitee, respectively, by the person against whom such
action is brought within twenty (20) days after the summons or other first legal
process is served. Such notice shall refer to the person or persons against whom
the action is brought. The failure to provide such notice shall not relieve the
party entitled to such notice of any liability that it may have to any
Distributor Indemnitee or Trust Indemnitee except to the extent that the ability
of the party entitled to such notice to defend such action has been materially
adversely affected by the failure to provide notice.
(f) The provisions of this Section and the parties' representations and
warranties in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Distributor
Indemnitee or Trust Indemnitee and shall survive the sale and redemption of any
Shares made pursuant to subscriptions obtained by the Distributor. The
indemnification provisions of this Section will inure exclusively to the benefit
of each person that may be a Distributor Indemnitee or Trust Indemnitee at any
time and their respective successors and assigns (it being intended that such
persons be deemed to be third party beneficiaries under this Agreement).
(g) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware arising
out of or in any way connected with the issuance or sale of Shares.
(h) Nothing contained herein shall require the Trust to take any action
contrary to any provision of its Organic Documents or any applicable statute or
regulation or shall require the Distributor to take any action contrary to any
provision of its Articles of Incorporation or Bylaws or any applicable statute
or regulation; provided, however, that neither the Trust nor the
<PAGE>
Distributor may amend their Organic Documents or Articles of Incorporation and
Bylaws, respectively, in any manner that would result in a violation of a
representation or warranty made in this Agreement.
(i) Nothing contained in this section shall be construed to protect the
Distributor against any liability to the Trust or its security holders to which
the Distributor would otherwise be subject by reason of its failure to satisfy
the standard of care set forth in Section 7 of this Agreement.
SECTION 9. NOTIFICATION BY THE TRUST
The Trust shall advise the Distributor immediately: (i) of any request
by the SEC for amendments to the Trust's Registration Statement or Prospectus or
for additional information; (ii) in the event of the issuance by the SEC of any
stop order suspending the effectiveness of the Trust's Registration Statement or
any Prospectus or the initiation of any proceedings for that purpose; (iii) of
the happening of any material event which makes untrue any statement made in the
Trust's then current Registration Statement or Prospectus or which requires the
making of a change in either thereof in order to make the statements therein not
misleading; and (iv) of all action of the SEC with respect to any amendments to
the Trust's Registration Statement or Prospectus which may from time to time be
filed with the SEC under the 1940 Act or the Securities Act.
SECTION 10. COMPENSATION; EXPENSES
(a) In consideration of the Distributor's services in connection with
the distribution of Shares of each Fund and Class thereof, the Distributor shall
receive: (i) any applicable sales charge assessed upon investors in connection
with the purchase of Shares; (ii) from the Trust, any applicable contingent
deferred sales charge ("CDSC") assessed upon investors in connection with the
redemption of Shares; (iii) from the Trust, the distribution service fees with
respect to the Shares of those Classes as designated in any Plan that is in
effect (the "Distribution Fee"); and (iv) from the Trust, the shareholder
service fees with respect to the Shares of those Classes as designated in any
Service Plan that is in effect (the "Shareholder Service Fee"). The Trust grants
and transfers to the Distributor a general lien and security interest in any and
all securities and other assets of a Fund now or hereafter maintained in an
account at the Fund's custodian on behalf of the Fund to secure any Distribution
Fees and Shareholder Service Fees owed the Distributor by the Trust under this
Agreement.
(b) The Trust shall cause its transfer agent (the "Transfer Agent") to
withhold, from redemption proceeds payable to holders of Shares of the Funds and
the Classes thereof, all CDSCs properly payable by the shareholders in
accordance with the terms of the applicable Prospectus and shall cause the
Transfer Agent to pay such amounts over to the Distributor as promptly as
possible after the settlement date for each redemption of Shares.
<PAGE>
(c) Except as specified in Sections 8 and 10(a), the Distributor shall
be entitled to no compensation or reimbursement of expenses for the services
provided by the Distributor pursuant to this Agreement.
(d) The Trust shall be responsible and assumes the obligation for
payment of all the expenses of the Funds, including fees and disbursements of
its counsel and auditors, in connection with the preparation and filing of the
Registration Statement and Prospectuses (including but not limited to the
expense of setting in type the Registration Statement and Prospectuses and
printing sufficient quantities for internal compliance, regulatory purposes and
for distribution to current shareholders).
(e) The Trust shall bear the cost and expenses (i) of the registration
of the Shares for sale under the Securities Act; (ii) of the registration or
qualification of the Shares for sale under the securities laws of the various
States; (iii) if necessary or advisable in connection therewith, of qualifying
the Trust, the Funds or the Classes thereof (but not the Distributor) as an
issuer or as a broker or dealer, in such States as shall be selected by the
Trust and the Distributor pursuant to Section 6(b) hereof; and (iv) payable to
each State for continuing registration or qualification therein until the Trust
decides to discontinue registration or qualification pursuant to Section 6(b)
hereof. The Distributor shall pay all expenses relating to the Distributor's
broker-dealer qualification.
SECTION 11. SELECTED DEALER AND SELECTED AGENT AGREEMENTS
The Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") and
selected agent agreements with depository institutions and other financial
intermediaries of its choice ("selected agents") for the sale of Shares and to
fix therein the portion of the sales charge, if any, that may be allocated to
the selected dealers or selected agents; provided, that the Trust shall approve
the forms of agreements with selected dealers or selected agents and shall
review the compensation set forth therein. Shares of each Fund or Class thereof
shall be resold by selected dealers or selected agents only at the public
offering price(s) set forth in the Prospectus relating to the Shares. Within the
United States, the Distributor shall offer and sell Shares of the Funds only to
such selected dealers as are members in good standing of the NASD.
<PAGE>
SECTION 12. CONFIDENTIALITY
The Distributor agrees to treat all records and other information
related to the Trust as proprietary information of the Trust and, on behalf of
itself and its employees, to keep confidential all such information, except that
the Distributor may:
(i) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(ii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(iii) release such other information as approved in writing by the
Trust, which approval shall not be unreasonably withheld;
provided, however, that the Distributor may release any information regarding
the Trust without the consent of the Trust if the Distributor reasonably
believes that it may be exposed to civil or criminal legal proceedings for
failure to comply, when requested to release any information by duly constituted
authorities or when so requested by the Trust.
SECTION 13. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each Fund on
the later of (i) the date first above written or (ii) the date on which the
Trust's Registration Statement relating to Shares of the Fund becomes effective.
Upon effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund
until terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
(i) who are not parties to this Agreement or interested persons of any such
party (other than as Trustees of the Trust) and (ii) with respect to each class
of a Fund for which there is an effective Plan, who do not have any direct or
indirect financial interest in any such Plan applicable to the class or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on such approval.
(c) This Agreement may be terminated at any time with respect to a
Fund, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund or, with respect to
each class of a Fund for which there is an effective Plan, a majority of
Trustees of the Trust who do not have any direct or indirect financial interest
in any such Plan or in any agreements related to the Plan, on 60 days' written
notice to the Distributor or (ii) by the Distributor on 60 days' written notice
to the Trust.
<PAGE>
(d) This Agreement shall automatically terminate upon its assignment
and upon the termination of the Distributor's membership in the NASD.
(e) If the Trust shall not file a Required Amendment within fifteen
days following receipt of a written request from the Distributor to do so, the
Distributor may, at its option, terminate this Agreement immediately.
(f) The obligations of Sections 5(d), 6(d), 8, 9 and 10 shall
survive any termination of this Agreement.
SECTION 14. NOTICES
Any notice required or permitted to be given hereunder by either party
to the other shall be deemed sufficiently given if personally delivered or sent
by telegram, facsimile or registered, certified or overnight mail, postage
prepaid, addressed by the party giving such notice to the other party at the
last address furnished by the other party to the party giving such notice, and
unless and until changed pursuant to the foregoing provisions hereof each such
notice shall be addressed to the Trust or the Distributor, as the case may be,
at their respective principal places of business.
SECTION 15. ACTIVITIES OF THE DISTRIBUTOR
Except to the extent necessary to perform the Distributor's obligations
hereunder, nothing herein shall be deemed to limit or restrict the Distributor's
right, or the right of any of the Distributor's employees, agents, officers or
directors who may also be a trustee, officer or employee of the Trust, or
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.
SECTION 16. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Distributor 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
Fund to which the Distributor's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the shareholders of
the Funds.
SECTION 17. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) 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.
<PAGE>
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of New York.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) 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 Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund are separate and distinct
from the assets and liabilities of each other Fund and that no Fund shall be
liable or shall be charged for any debt, obligation or liability of any other
Fund, whether arising under this Agreement or otherwise.
(i) No affiliated person, employee, agent, officer or director of the
Distributor shall be liable at law or in equity for the Distributor's
obligations under this Agreement.
(j) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof.
(k) The terms "vote of a majority of the outstanding voting
securities," "interested person," "affiliated person" and "assignment" shall
have the meanings ascribed thereto in the 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
persons, as of the day and year first above written.
MONARCH FUNDS
By:/s/ Maurice J. DeWald
-----------------------------
Maurice J. DeWald
Trustee
FORUM FINANCIAL SERVICES, INC.
By:/s/ John Y. Keffer
-----------------------------
John Y. Keffer
President
<PAGE>
MONARCH FUNDS
DISTRIBUTION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF DECEMBER 1, 1997
TREASURY CASH FUND
Universal Shares
Institutional Shares
Investor Shares
GOVERNMENT CASH FUND
Universal Shares
Institutional Shares
Investor Shares
CASH FUND
Universal Shares
Institutional Shares
Investor Shares
EXHIBIT (8)
MONARCH FUNDS
CUSTODIAN CONTRACT
Contract made the 23rd day of October, 1992, as amended this 1st day of
September, 1995, between Monarch Funds, a business trust organized under the
laws of the State of Delaware, having its principal place of business at 2
Portland Square, Portland, ME 04101, hereinafter called the Fund, and Imperial
Trust Company, a California trust company, having its principal place of
business at 201 N. Figueroa Street, Suite 610, Los Angeles, California 90012,
hereinafter called the Custodian.
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund offers shares in three series: Cash Fund, Government
Cash Fund and Treasury Cash Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with Section 12, being herein referred to as the "Portfolios");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund pursuant to the provisions of the Trust Instrument.
The Fund on behalf of the Portfolios agrees to deliver to the Custodian all
securities and cash of the Portfolios, and all payments of income, payments of
principal or capital distributions received by it with respect to all securities
owned by the Portfolios from time to time, and the cash consideration received
by it for such new or treasury shares of beneficial interest of the Fund
representing interests in the Portfolios, ("Shares") as may be issued or sold
from time to time. The Custodian shall not be responsible for any property of a
Portfolio held or received by the Portfolio and not delivered to the Custodian.
The Fund hereby authorizes the Custodian to use Imperial Bank and The
Bank of New York as subcustodians, the use of Imperial Bank being limited to
custodianship of cash. In addition, the Custodian may, at any time and from time
to time, appoint any other bank as defined in Section 2(a)(5) of the Investment
Company Act of 1940 ("1940 Act") meeting the requirements of a custodian under
Section 17(f) of the 1940 Act and the rules and regulations thereunder, to act
on behalf of one or more Portfolios as a subcustodian for the purposes of
holding cash, securities and other assets of the Portfolios and performing other
functions of the Custodian; provided that the Custodian sends written
notification to the Fund on or before the
<PAGE>
day upon which such other subcustodian is first employed. The Custodian shall be
liable for the actions or omissions of any subcustodian to the same extent as if
such action or omission were performed by the Custodian itself.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF
THE FUND HELD BY TO CUSTODIAN
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, including all
securities owned by such Portfolio, other than securities which are
maintained pursuant to Section 2.12 in a clearing agency which acts as
a securities depository or in a book-entry system authorized by the
U.S. Department of the Treasury, collectively referred to herein as
"Securities Systems."
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
securities owned by a Portfolio held by the Custodian or in a
Securities System account of the Custodian only upon receipt of Proper
Instructions from the Fund on behalf of the applicable Portfolio,
which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.11 or into the name
or nominee name of any subcustodian appointed pursuant to
Section l; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such day
upon which such other subcustodian is first employed. The
Custodian shall be liable for the actions or omissions of any
subcustodian to the same extent as if such action or omission
were performed by the Custodian itself.
<PAGE>
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
Government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
13) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund on behalf
of the applicable Portfolio, a writing signed by an officer of
the Fund and certified by the Secretary or an Assistant
Secretary, specifying the securities of the Portfolio to be
delivered, setting forth the purpose for which such delivery
is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
<PAGE>
2.3 REGISTRATION OF SECURITIES. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian, or in the name or nominee
name of any agent appointed pursuant to Section 2.11 or in the name or
nominee name of any subcustodian appointed pursuant to Section 1,
unless specifically directed by Proper Instructions to hold such
registered securities in so-called street name; provided that, in any
event, all such securities and other assets shall be held in an account
of the Custodian containing only assets of a Portfolio, or only assets
held by a Custodian as a fiduciary or custodian for customers, and
provided further, that the records of the Custodian shall indicate at
all times the Portfolio or other customer for which such securities and
other assets are held in such account and their respective interests
therein.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or other accounts in the name of Custodian, as custodian of
each Portfolio, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under the 1940 Act. Cash held hereunder shall be deemed to
be a special deposit. Funds held by the Custodian for a Portfolio may
be deposited by it to its credit as Custodian in the Banking Department
of the Custodian or in such other banks or trust companies as it may in
its discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be appointed in accordance with
and subject to the terms of Section 1 hereof.
2 5 PAYMENTS FOR SHARES. The Custodian shall receive from the distributor
for the Shares or from the Transfer Agent of the Fund and deposit into
the account of the appropriate Portfolio such payments as are received
for Shares of that Portfolio issued or sold form time to time by the
Fund. The Custodian will provide timely notification to the Fund on
behalf of each such Portfolio and the Transfer Agent of any receipt by
it of payments for Shares of such Portfolio.
2.6 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund
on behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf
of a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of
such Portfolio which are deposited into the Portfolio's account.
2.7 COLLECTION OF INCOME. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held
hereunder to which each Portfolio shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and shall credit such
income, as collected, to such Portfolio's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach
and
<PAGE>
present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on securities held hereunder. Income due each Portfolio on
securities loaned pursuant to the provisions of Section 2.2 10) shall
be the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund
in arranging for the timely delivery to the Custodian of the income to
which the Portfolio is properly entitled.
2.8 PAYMENT OF MONIES. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of securities, for the account of the
Portfolio but only (a) against the delivery of such securities
to the Custodian (or any bank, banking firm or trust company
doing business in the United States which is qualified under
the 1940 Act to act as a custodian and has been designed by
the Custodian as its agent for this purpose) registered in the
name of the Portfolio or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in proper form
for transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth
in Section 2.12 hereof; (c) in the case of repurchase
agreements entered into between the Fund on behalf of the
Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of the NASD, (i) against
delivery of the securities either in certificate form or
through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Portfolio
of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such
securities from the Portfolio or (d) for transfer to a time
deposit account of the Fund in any domestic bank; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined in Section 2.17;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
<PAGE>
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect
of securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a writing signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
2.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of securities for the account of
a Portfolio is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions
from the Fund on behalf of such Portfolio to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such securities to
the same extent as if the securities had been received by the
Custodian.
2.10 PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND. From
such funds as may be available for the purpose but subject to the
limitations of the Trust Instrument and any applicable votes of the
Board of Trustees of the Fund (the "Board")pursuant thereto, the
Custodian shall, upon receipt of instructions from the Transfer Agent,
make funds available for payment to holders of Shares who have
delivered to the Transfer Agent a request for redemption or repurchase
of their Shares. In connection with the redemption or repurchase of
Shares of a Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a
commercial bank designated by the redeeming shareholders. In connection
with the redemption or repurchase of Shares of the Fund, the Custodian
shall honor checks drawn on the Custodian by a holder of Shares, which
checks have been furnished by the Fund to the holder of Shares, when
presented to the Custodian in accordance with such procedures and
controls as are mutually agreed upon from time to time between the Fund
and the Custodian.
2.11 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this
Article 2 as the Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
2.12 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. Upon receipt of Proper
Instructions, the Custodian may deposit and/or maintain securities
owned by a Portfolio in a clearing
<PAGE>
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities Systems" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Portfolio in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall
identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon (i)
receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the Securities System of
transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio in the form of a written advice or notice and
shall furnish to the Fund on behalf of the Portfolio copies of
daily transaction sheets reflecting each days transactions in
the Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the Securities Systems
accounting system, internal accounting control and procedures
for safeguarding securities deposited in the Securities
System;
5) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of
the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election
<PAGE>
of the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim against
the Securities System or any other person which the
Custodian may have as a consequence of any such loss or
damage if and to the extent that the Portfolio has not been
made whole for any such loss or damage.
2.13 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for an on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.12 hereof, (i) for
the purposes of compliance by the Portfolio with the procedures
required by Investment Company Act Release No. 10666, or any subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (ii) for other proper corporate purposes, but only, in
the case of clause (ii), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable Portfolio, a
writing signed by an officer of the Fund and certified by the Secretary
or an Assistant Secretary, setting forth the purpose or purposes of
such segregated account and declaring such purposes to be proper
corporate purposes.
2.14 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of each Portfolio held by it and in
connection with transfers of securities.
2.15 PROXIES. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Portfolio or a nominee of the Portfolio, all proxies are to
be voted, and shall promptly deliver to the Portfolio such proxies, all
proxy soliciting materials and all notices relating to such securities.
2.16 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. The Custodian shall
transmit promptly to the Fund for each Portfolio all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer.
2.17 PROPER INSTRUCTIONS. Proper Instructions as used throughout this
Article 2 means a writing signed or initialed by one or more person or
persons as the Board shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such
action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been
given by a person authorized to give
<PAGE>
such instructions with respect to the transaction involved. The Fund
shall cause all oral instructions to be confirmed in writing. Upon
receipt of a certificate of the Secretary or an Assistant Secretary as
to the authorization by the Board, Proper Instructions may include
communications effected directly between electro-mechanical or
electronic devices provided that the Board and the Custodian are
satisfied that such procedures afford adequate safeguards for the
Portfolios' assets. For purposes of this Section, Proper Instructions
shall include instructions received by the Custodian pursuant to any
three-party agreement which requires a segregated asset account in
accordance with Section 2.13. Notwithstanding anything to the contrary
contained in the Contract, no person authorized by the Board as
described in the preceding paragraph, Trustee, officer, employee or
agent of the Fund shall have physical access to the assets of any
Portfolio held by the Custodian nor shall the Custodian deliver any
assets of a Portfolio for delivery to an account of such person;
provided, however, that nothing in this Section 2.17 shall prohibit
the Fund's independent certified public accountants from examining or
reviewing the assets of the Portfolio's held by the Custodian.
2.18 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Custodian may in its
discretion, without express authority from the Fund on behalf of each
applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board.
2.19 EVIDENCE OF AUTHORITY. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to have
been properly executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the Board as
conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination or of any action
by the Board pursuant to the Trust Instrument as described in such
vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
<PAGE>
SECTION 3. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF
ACCOUNT
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board who keep the books of account of
each Portfolio.
SECTION 4. RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the 1940 Act with
particular attention to Section 31 thereof and Rules 3la-1 and 3la-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees and agents of the Fund and employees and agents
of the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by each Portfolio
and held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.
SECTION 5. OPINION OF FUNDS INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Funds Form
N-lA, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
SECTION 6. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, including securities
deposited and/or maintained in a Securities System, relating to the services
provided by the Custodian under this Contract; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably be required by the
Fund to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
SECTION 7. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
<PAGE>
SECTION 8. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian to advance cash or securities for
any purpose for the benefit of a Portfolio or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominees own negligent
action, negligent failure to act or willful misconduct, the Custodian promptly
shall notify the Fund of the existence of any such advances, their amount and
the Portfolio to which the advance applies. Such advances shall be payable on
demand, on the first business day following the Fund's receipt of notice of such
demand.
SECTION 9. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided, that
the Fund on behalf of one or more of the Portfolios may at time by action of the
Board (i) substitute another bank or trust company for the Custodian by giving
notice as described above to the Custodian, or (ii) terminate this Contract
immediately or at such later time as the Fund may designate in the event the
Fund determines that there is a reasonable basis to conclude that the Custodian
is insolvent or that the financial condition of the Custodian is deteriorating
in any material respect.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
<PAGE>
SECTION 10. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund or of one or more of the
Portfolios shall be appointed by the Board, the Custodian shall, upon
termination, deliver to such successor custodian at the office of the Custodian
all property of the Fund then held by it hereunder and, in the case of
securities, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System. The Custodian shall take all reasonable steps to assist in
the transfer of the assets of the applicable Portfolios to the successor
custodian.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board, deliver
at the office of the Custodian and transfer such securities, funds and other
properties in accordance with such vote. In the event that no written order
designating a successor custodian or certified copy of a vote of the Board shall
have been delivered to the Custodian on or before the date when such termination
shall become effective, then the Custodian shall have the right to deliver to a
bank or trust company, which is a "bank" as defined in the 1940 Act, doing
business in New York City, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of not
less than $25,000,000, all securities, funds and other properties held by the
Custodian on behalf of each applicable Portfolio and all instruments held by the
Custodian relative thereto and all other property held by it under this Contract
on behalf of each applicable Portfolio and to transfer to an account of such
successor custodian all the securities of each such Portfolio held in any
Securities System. Thereafter, such bank or trust company shall be the successor
of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
SECTION 11. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Trust Instrument of the
Fund. No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
<PAGE>
SECTION 12. ADDITIONAL PORTFOLIOS
In the event that the Fund establishes one or more series of Shares in
addition to the Portfolios with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
SECTION 13. CALIFORNIA LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of State of California.
SECTION 14. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
SECTION 15. MISCELLANEOUS
15.1 The Custodian agrees to treat all records and other information
relative to the Fund and its prior, present or potential Shareholders
confidentially and the Custodian on behalf of itself and its employees
agrees to keep confidential all such information, except after prior
notification to and approval in writing by the Fund, which approval
shall not be unreasonably withheld. The preceding notwithstanding, in
the event legal process is served upon the Custodian requiring certain
disclosure, the Custodian may divulge such information. In such event,
the Custodian shall, if legally permissible, advise the Fund of its
receipt of such legal process.
15.2 Notwithstanding any other provision of this Contract, the parties agree
that the assets and liabilities of each Portfolio of the Fund are
separate and distinct from the assets and liabilities of each other
Portfolio and that no Portfolio shall be liable or shall be charged for
any debt, obligation or liability or any other Portfolio, whether
arising under the Contract or otherwise.
15.3 The provisions of this Section 15, Section s7, 8, 13 and 16, and
Section 2.19, and any other rights or obligations incurred or accrued
by any party hereto prior to termination of this Contract shall survive
any termination of this Contract.
SECTION 16. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND
SHAREHOLDERS OFFICERS, EMPLOYEES AND AGENT
A copy of the Trust Instrument of the Fund is on file with the
Secretary of the Fund. The parties agree that neither the Shareholders,
Trustees, officers, employees nor any agent of the
<PAGE>
Fund shall be liable hereunder and that the parties to this Contract other than
the Fund shall look solely to the Fund property for the performance of this
Contract or payment of any claim under this Contract.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
duly executed all as of the day and year first above written.
ATTEST MONARCH FUNDS
/s/ David I. Goldstein By /s/ John Y. Keffer
- ------------------------ -----------------------
David I. Goldstein John Y. Keffer
Secretary President
ATTEST IMPERIAL TRUST COMPANY
/s/ Jai Sondhi By /s/ Michael Vaughan
- ------------------------ -----------------------
Jai Sondhi Michael Vaughan
Senior Vice President President
<PAGE>
MONARCH FUNDS CUSTODIAN CONTRACT FEE ARRANGEMENT
October 23, 1992
As Amended September 1, 1995
WHEREAS, Monarch Funds, a business trust organized under the laws of
the State of Delaware, having its principal place of business at 61 Broadway,
New York, N.Y. 10006 (the "Fund") and Imperial Trust Company, a California trust
company, having its principal place of business at 201 N. Figueroa Street, Suite
610, Los Angeles, California 90012 (the "Custodian") have entered into a
Custodian Contract dated the 23rd day of October, 1992, as amended the 1st day
of September, 1995 (the "Contract"); and
WHEREAS, Section 7 of the Contract provides that the Custodian shall be
entitled to reasonable compensation for its services and expenses as Custodian,
as agreed upon from time to time between the Fund on behalf of each portfolio of
the Fund and the Custodian;
NOW THEREFORE, in consideration of the services to be provided by the
Custodian under the Contract, the Fund and the Custodian agree that the Fund
shall pay the Custodian, with respect to Cash Fund, Government Cash Fund and
Treasury Cash Fund (each a "Portfolio"), a fee of 0.025% of the average annual
daily net assets of each Portfolio. Such fees shall be accrued by the Fund daily
and payable monthly in arrears on the first day of the next month; provided,
however, that no fee shall be payable hereunder with respect to a Portfolio
during any period in which the Portfolio invests all (or substantially all) of
its investment assets in a registered, open-end management investment company,
or separate series thereof, in accordance with Section 12(d)(1)(E) under the
Act.
ATTEST MONARCH FUNDS
/s/ David I. Goldstein By /s/ John Y. Keffer
- ------------------------ -----------------------
David I. Goldstein John Y. Keffer
Secretary President
ATTEST IMPERIAL TRUST COMPANY
/s/ Jai Sondhi By /s/ Michael Vaughan
- ----------------------- -----------------------
Jai Sondhi Michael Vaughan
Senior Vice President President
EXHIBIT (9)(A)
MONARCH FUNDS
ADMINISTRATION AGREEMENT
AGREEMENT made as of the 1st day of December, 1997, by and between
Monarch Funds, a Delaware business trust, with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and Forum
Administrative Services, Limited Liability Company, a Delaware limited liability
company with its principal office and place of business at Two Portland Square,
Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers shares of various classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes"); and
WHEREAS, the Trust desires that Forum perform certain administrative
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
administrator of the Trust for the period and on the terms set forth in this
Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Trust Instrument and Bylaws (collectively, as amended from time
to time, "Organic Documents"), (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the 1940 Act (the "Registration Statement"), (iii) the Trust's current
Prospectus and Statement of Additional Information of each Fund (collectively,
as currently in effect and as amended or supplemented, the "Prospectus"), (iv)
each current plan of distribution or similar document adopted by the Trust under
Rule 12b-1 under the 1940 Act ("Plan") and each current shareholder service plan
or similar document adopted by the Trust ("Service Plan"), and (iv) all
procedures adopted by the Trust with respect to the Funds (i.e., repurchase
agreement procedures), and shall promptly furnish Forum with all amendments of
or
<PAGE>
supplements to the foregoing. The Trust shall deliver to Forum a certified copy
of the resolution of the Board of Trustees of the Trust (the "Board") appointing
Forum and authorizing the execution and delivery of this Agreement.
SECTION 2. DUTIES OF FORUM AND THE TRUST
(a) Subject to the direction and control of the Board, Forum shall
manage all aspects of the Trust's operations with respect to the Funds except
those that are the responsibility of any other service provider hired by the
Trust, all in such manner and to such extent as may be authorized by the Board.
(b) With respect to the Trust or each Fund, as applicable, Forum shall:
(i) at the Trust's expense, provide the Trust with, or arrange for the
provision of, the services of persons competent to perform such legal,
administrative and clerical functions not otherwise described in this
Section 2(b) as are necessary to provide effective operation of the
Trust;
(ii) oversee (A) the preparation and maintenance by the Trust's
custodian, transfer agent, dividend disbursing agent and fund
accountant in such form, for such periods and in such locations as may
be required by applicable United States law, of all documents and
records relating to the operation of the Trust required to be prepared
or maintained by the Trust or its agents pursuant to applicable law;
(B) the reconciliation of account information and balances among the
Trust's custodian, transfer agent, dividend disbursing agent and fund
accountant; (C) the transmission of purchase and redemption orders for
Shares; and (D) the performance of fund accounting, including the
calculation of the net asset value of the Shares;
(iii) oversee the performance of administrative and professional
services rendered to the Trust by others, including its custodian,
transfer agent and dividend disbursing agent as well as legal,
auditing, shareholder servicing and other services performed for the
Funds;
(iv) file or oversee the filing of each document required to be filed
by the Trust in either written or, if required, electronic format
(e.g., electronic data gathering analysis and retrieval system or
"EDGAR") with the SEC;
(v) assist in and oversee the preparation, filing and printing and the
periodic updating of the Registration Statement and Prospectuses;
(vi) oversee the preparation and filing of the Trust's tax returns;
(vii) oversee the preparation of financial statements and related
reports to the Trust's shareholders, the SEC and state and other
securities administrators;
<PAGE>
(viii) assist in and oversee the preparation and printing of proxy and
information statements and any other communications to shareholders;
(ix) provide the Trust with adequate general office space and
facilities and provide persons suitable to the Board to serve as
officers of the Trust;
(x) assist the investment advisers in monitoring Fund holdings for
compliance with Prospectus investment restrictions and assist in
preparation of periodic compliance reports, as applicable;
(xi) prepare, file and maintain the Trust's Organic Documents and
minutes of meetings of Trustees, Board committees and shareholders;
(xii) with the cooperation of the Trust's counsel, investment advisers,
the officers of the Trust and other relevant parties, prepare and
disseminate materials for meetings of the Board, as applicable;
(xiii) maintain the Trust's existence and good standing under
applicable state law;
(xiv) monitor sales of Shares, ensure that the Shares are properly and
duly registered with the SEC and register, or prepare applicable
filings with respect to, the Shares with the various state and other
securities commissions;
(xv) oversee the calculation of performance data for dissemination to
information services covering the investment company industry, for
sales literature of the Trust and other appropriate purposes;
(xvi) oversee the determination of the amount of and supervise the
declaration of dividends and other distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Internal Revenue Code
of 1986, as amended (the "Code"), and prepare and distribute to
appropriate parties notices announcing the declaration of dividends and
other distributions to shareholders;
(xvii) advise the Trust and the Board on matters concerning the Trust
and its affairs;
(xviii) calculate, review and account for Fund expenses and report on
Fund expenses on a periodic basis;
(xix) authorize the payment of Trust expenses and pay, from Trust
assets, all bills of the Trust;
(xx) prepare Fund budgets, pro-forma financial statements, expense and
profit/loss projections and fee waiver/expense reimbursement
projections on a periodic basis;
<PAGE>
(xxi) prepare financial statement expense information;
(xxii) assist the Trust in the selection of other service providers,
such as independent accountants, law firms and proxy solicitors; and
(xxiii) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the
Board; provided, that Forum need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
(c) Forum shall provide such other services and assistance relating to
the affairs of the Trust as the Trust may, from time to time, reasonably request
pursuant to mutually acceptable compensation agreements.
(d) Forum shall maintain records relating to its services, such as
journals, ledger accounts and other records, as are required to be maintained
under the 1940 Act and Rule 31a-1 thereunder. The books and records pertaining
to the Trust that are in possession of Forum 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 Forum's normal business hours. Upon the
reasonable request of the Trust, copies of any such books and records shall be
provided promptly by Forum to the Trust or the Trust's authorized
representatives. In the event the Trust designates a successor that assumes any
of Forum's obligations hereunder, Forum shall, at the expense and direction of
the Trust, transfer to such successor all relevant books, records and other data
established or maintained by Forum under this Agreement.
(e) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Fund to act in contravention of a Fund's Prospectus or any
provision of the 1940 Act. Except with respect to Forum's duties as set forth in
the Section 2 and except as otherwise specifically provided herein, the Trust
assumes all responsibility for ensuring that the Trust complies with all
applicable requirements of the Securities Act, the 1940 Act and any laws, rules
and regulations of governmental authorities with jurisdiction over the Trust.
All references to any law in this Agreement shall be deemed to include reference
to the applicable rules and regulations promulgated under authority of the law
and all official interpretations of such law or rules or regulations.
(f) In order for Forum to perform the services required by this Section
2, the Trust (i) shall cause all service providers to the Trust to furnish any
and all information to Forum, and assist Forum as may be required and (ii) shall
ensure that Forum has access to all records and documents maintained by the
Trust or any service provider to the Trust.
<PAGE>
SECTION 3. STANDARD OF CARE AND RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the services
described in this Agreement. Forum shall not be liable to the Trust or any of
the Trust's shareholders for any action or inaction of Forum relating to any
event whatsoever in the absence of bad faith, willful misfeasance or gross
negligence in the performance of Forum's duties or obligations under this
Agreement or by reason of Forum's reckless disregard of its duties and
obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Fund that are consistent with
the standard of care set forth in Section 3(a) or based, if applicable, on good
faith reliance upon an item described in Section 3(d) (a "Claim"). The Trust
shall not be required to indemnify any Forum Indemnitee if, prior to confessing
any Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not
give the Trust written notice of and reasonable opportunity to defend against
the claim in its own name or in the name of the Forum Indemnitee.
(c) Forum agrees to indemnify and hold harmless the Trust, its
employees, agents, trustees and officers against and from any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character arising out of Forum's actions taken or failures to act with respect
to a Fund that are not consistent with the standard of care set forth in Section
3(a). Forum shall not be required to indemnify the Trust if, prior to confessing
any Claim against the Trust, the Trust does not give Forum written notice of and
reasonable opportunity to defend against the claim in its own name or in the
name of the Trust.
(d) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the
Trust or counsel to Forum;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction. Forum shall have
no duty or obligation to make any inquiry or effort of certification of
such oral instruction;
<PAGE>
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
Forum to be genuine and to have been signed or presented by the Trust
or other proper party or parties;
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the administrative services provided by Forum
pursuant to this Agreement, the Trust shall pay Forum, with respect to each
Class of each of the Funds, the fees set forth in Appendix B hereto. These fees
shall be accrued by the Trust daily and shall be payable monthly in arrears on
the first day of each calendar month for services performed under this Agreement
during the prior calendar month. In the event that any of the legal services
identified in Appendix C hereto are provided to the Trust by personnel of the
legal department of Forum, they will be provided at no additional charge to the
Trust except those matters designated as Special Legal Services, as to which
Forum may charge, and the Trust shall pay an additional amount as reimbursement
of the cost of Forum providing such services. Reimbursement shall be payable
monthly in arrears on the first day of each calendar month for services
performed under this Agreement during the prior calendar month. Nothing in this
Agreement shall require Forum to provide any of the services listed in Appendix
C hereto, as such services may be performed by an outside vendor if appropriate
in the judgment of Forum.
If fees begin to accrue in the middle of a month or if this Agreement
terminates before the end of any month, all fees for the period from that date
to the end of that month or from the beginning of that month to the date of
termination, as the case may be, shall be prorated according to the proportion
that the period bears to the full month in which the effectiveness or
termination occurs. Upon the termination of this Agreement with respect to a
Fund, the Trust shall pay to Forum such compensation as shall be payable prior
to the effective date of termination.
(b) The Trust shall be responsible for and assumes the obligation for
payment of all of its expenses, including: (a) the fee payable under this
Agreement; (b) the fees payable to each investment adviser under an agreement
between the investment adviser and the Trust; (c) expenses of issue, repurchase
and redemption of Shares; (d) interest charges, taxes and brokerage fees and
commissions; (e) premiums of insurance for the Trust, its trustees and officers
and fidelity bond premiums; (f) fees, interest charges and expenses of third
parties, including the
<PAGE>
Trust's independent accountant, custodian, transfer agent, dividend disbursing
agent and fund accountant; (g) fees of pricing, interest, dividend, credit and
other reporting services; (h) costs of membership in trade associations; (i)
telecommunications expenses; (j) funds transmission expenses; (k) auditing,
legal and compliance expenses; (l) costs of forming the Trust and maintaining
its existence; (m) costs of preparing, filing and printing the Trust's
Prospectuses, subscription application forms and shareholder reports and other
communications and delivering them to existing shareholders, whether of record
or beneficial; (n) expenses of meetings of shareholders and proxy solicitations
therefor; (o) costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts, of calculating the net
asset value of Shares and of preparing tax returns; (p) costs of reproduction,
stationery, supplies and postage; (q) fees and expenses of the Trust's trustees;
(r) compensation of the Trust's officers and employees and costs of other
personnel (who may be employees of the investment adviser, Forum or their
respective affiliated persons) performing services for the Trust; (s) costs of
Board, Board committee, shareholder and other corporate meetings; (t) SEC
registration fees and related expenses; (u) state, territory or foreign
securities laws registration fees and related expenses; and (v) all fees and
expenses paid by the Trust in accordance with any Plan or Service Plan or
agreement related to similar manners.
(c) Should the Trust exercise its right to terminate this Agreement,
the Trust, on behalf of the applicable Fund, shall reimburse Forum for all
out-of-pocket expenses and employee time (at 150% of salary) associated with the
copying and movement of records and material to any successor person and
providing assistance to any successor person in the establishment of the
accounts and records necessary to carry out the successor's responsibilities.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund on
December 1, 1997. Upon effectiveness of this Agreement, it shall supersede all
previous agreements between the parties hereto covering the subject matter
hereof insofar as such Agreement may have been deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund
until terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. The
obligations of Sections 3 and 4 shall survive any termination of this Agreement.
(d) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other
<PAGE>
party. All terms and provisions of this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or
one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement. Forum or the Trust may elect not to make any
such series or classes subject to this Agreement.
SECTION 7. CONFIDENTIALITY
Forum agrees to treat all records and other information related to the
Trust as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
Forum may be exposed to civil or criminal contempt proceedings for failure to
release the information, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are 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
<PAGE>
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) Forum may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
(c) Without limiting the generality of the Sections 9(a) and (b), the
Trust acknowledges that certain legal services may be rendered to it by lawyers
who are employed by Forum or its affiliates and who render services to Forum and
its affiliates. A lawyer who renders such services to the Trust, and any lawyer
who supervises such lawyer, although employed generally by Forum or its
affiliates, will have a direct professional attorney/client relationship with
the Trust. Those services for which such a direct relationship will exist are
listed in Appendix C hereto. Each of Forum and the Trust hereby consents to the
simultaneous representation by such lawyers of both Forum and the Trust, and
waives any conflict of interest existing in such simultaneous representation.
Furthermore, the Trust agrees that, in the event such lawyer ceases to represent
the Trust, whether at the request of the Trust or otherwise, the lawyer may
continue thereafter to represent Forum, and the Trust expressly consents to such
continued representation.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum 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 Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
<PAGE>
SECTION 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance
with Section 6, 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.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) 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 Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy,
<PAGE>
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person," and "affiliated person" shall have the
meanings ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
persons, as of the day and year first above written.
MONARCH FUNDS
By:/s/ Maurice J. DeWald
---------------------------
Maurice J. DeWald
Trustee
FORUM ADMINISTRATIVE SERVICES,
LIMITED LIABILITY COMPANY
By: Forum Advisors, Inc., as Manager
By: /s/ John Y. Keffer
---------------------------
John Y. Keffer
President
<PAGE>
MONARCH FUNDS
ADMINISTRATION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF DECEMBER 1, 1997
TREASURY CASH FUND
Universal Shares
Institutional Shares
Investor Shares
GOVERNMENT CASH FUND
Universal Shares
Institutional Shares
Investor Shares
CASH FUND
Universal Shares
Institutional Shares
Investor Shares
<PAGE>
MONARCH FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
(I) ADMINISTRATIVE SERVICE FEES
Fee as a % of the Annual Average
Daily Net Assets of
Fund Each Class of the Fund
---- ----------------------
Treasury Cash Fund 0.05%
Government Cash Fund 0.05%
Cash Fund 0.05%
<PAGE>
MONARCH FUNDS
ADMINISTRATION AGREEMENT
APPENDIX C
LEGAL SERVICES
1. Advise the Trust on compliance with applicable U.S. laws and regulations
with respect to matters that are WITHIN the ordinary course of the Trust's
business.
2. Advise the Trust on compliance with applicable U.S. laws and regulations
with respect to matters that are OUTSIDE the ordinary course of the Trust's
business(*).
3. Liaison with the SEC.
4. Draft correspondences to SEC and respond to SEC comments.
5. Liaison with the Trust's outside counsel.
6. Provide attorney letters to the Trust's auditors.
7. Assist Trust outside counsel in the preparation of exemptive applications,
no-action letters, prospectuses, registration statements and proxy
statements and related material.
8. Prepare exemptive applications, no-action letters, prospectuses,
registration statements and proxy statements and related material, and
draft correspondences to SEC and respond to SEC comments with respect
thereto(*).
9. Prepare prospectus supplements.
10. Review and authorize Section 24 filings.
11. Prepare and/or review agendas and minutes for and respond to inquiries at
board and shareholder meetings regarding applicable U.S. laws and
regulations.
12. Prepare and/or review agreements between the Trust and any third parties.
Note: Items designated with an (*) are Special Legal Services.
EXHIBIT(9)(B)
MONARCH FUNDS
TRANSFER AGENCY AND SERVICES AGREEMENT
AGREEMENT made as of the 1st day of December, 1997, by and between
Monarch Funds, a Delaware business trust, with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and Forum
Financial Corp., a Delaware corporation with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets, and is authorized to divide those series into
separate classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 13, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers shares of various classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes"); and
WHEREAS, the Trust on behalf of the Funds desires to appoint Forum as
its transfer agent and dividend disbursing agent and Forum desires to accept
such appointment;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) APPOINTMENT. The Trust, on behalf of the Funds, hereby appoints
Forum to act as, and Forum agrees to act as, (i) transfer agent for the
authorized and issued shares of beneficial interest of the Trust representing
interests in each of the respective Funds and Classes thereof ("Shares"), (ii)
dividend disbursing agent and (iii) agent in connection with any accumulation,
open-account or similar plans provided to the registered owners of shares of any
of the Funds ("Shareholders") and set out in the currently effective
prospectuses and statements of additional information (collectively
"prospectus") of the applicable Fund, including, without limitation, any
periodic investment plan or periodic withdrawal program.
(b) DOCUMENT DELIVERY. The Trust has delivered to Forum copies of (i)
the Trust's Trust Instrument and Bylaws (collectively, as amended from time to
time, "Organic Documents"), (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the Investment Company Act of 1940, as amended ("1940
<PAGE>
Act")(the "Registration Statement"), (iii) the Trust's current Prospectus and
Statement of Additional Information of each Fund (collectively, as currently in
effect and as amended or supplemented, the "Prospectus"), (iv) each current plan
of distribution or similar document adopted by the Trust under Rule 12b-1 under
the 1940 Act ("Plan") and each current shareholder service plan or similar
document adopted by the Trust ("Service Plan"), and (v) all procedures adopted
by the Trust with respect to the Funds (i.e., repurchase agreement procedures),
and shall promptly furnish Forum with all amendments of or supplements to the
foregoing. The Trust shall deliver to Forum a certified copy of the resolution
of the Board of Trustees of the Trust (the "Board") appointing Forum and
authorizing the execution and delivery of this Agreement.
SECTION 2. DUTIES OF FORUM
(a) SERVICES. Forum agrees that in accordance with procedures
established from time to time by agreement between the Trust on behalf of each
of the Funds, as applicable, and Forum, Forum will perform the following
services:
(i) provide the services of a transfer agent, dividend disbursing agent
and, as relevant, agent in connection with accumulation, open-account
or similar plans (including without limitation any periodic investment
plan or periodic withdrawal program) that are customary for open-end
management investment companies including: (A) maintaining all
Shareholder accounts, (B) preparing Shareholder meeting lists, (C)
mailing proxies to Shareholders, (D) mailing Shareholder reports and
prospectuses to current Shareholders, (E) withholding taxes on U.S.
resident and non-resident alien accounts, (F) preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required by
federal authorities with respect to distributions for Shareholders, (G)
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, (H) preparing and
mailing activity statements for Shareholders, and (I) providing
Shareholder account information;
(ii) receive for acceptance orders for the purchase of Shares and
promptly deliver payment and appropriate documentation therefor to the
custodian of the applicable Fund (the "Custodian") or, in the case of
Fund's operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
(iii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(iv) receive for acceptance redemption requests and deliver the
appropriate documentation therefor to the Custodian or, in the case of
Fund's operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
<PAGE>
(v) as and when it receives monies paid to it by the Custodian with
respect to any redemption, pay the redemption proceeds as required by
the prospectus pursuant to which the redeemed Shares were offered and
as instructed by the redeeming Shareholders;
(vi) effect transfers of Shares upon receipt of appropriate
instructions from Shareholders;
(vii) prepare and transmit to Shareholders (or credit the appropriate
Shareholder accounts) payments for all distributions declared by the
Trust with respect to Shares;
(viii) issue share certificates and replacement share certificates for
those share certificates alleged to have been lost, stolen, or
destroyed upon receipt by Forum of indemnification satisfactory to
Forum and protecting Forum and the Trust and, at the option of Forum,
issue replacement certificates in place of mutilated share certificates
upon presentation thereof without requiring indemnification;
(ix) receive from Shareholders or debit Shareholder accounts for sales
commissions, including contingent deferred, deferred and other sales
charges, and service fees (i.e., wire redemption charges) and prepare
and transmit payments to underwriters, selected dealers and others for
commissions and service fees received;
(x) track shareholder accounts by financial intermediary source and
otherwise as requested by the Trust and provide periodic reporting to
the Trust or its administrator or other agent;
(xi) maintain records of account for and provide reports and statements
to the Trust and Shareholders as to the foregoing;
(xii) record the issuance of Shares of the Trust and maintain pursuant
to Rule 17Ad-10(e) under the Securities Exchange Act of 1934, as
amended ("1934 Act") a record of the total number of Shares of the
Trust, each Fund and each Class thereof, that are authorized, based
upon data provided to it by the Trust, and are issued and outstanding
and provide the Trust on a regular basis a report of the total number
of Shares that are authorized and the total number of Shares that are
issued and outstanding; and
(xiii) provide a system which will enable the Trust to calculate the
total number of Shares of each Fund and Class thereof sold in each
State.
(b) OTHER SERVICES. Forum shall provide the following additional
services on behalf of the Trust and such other services agreed to in writing by
the Trust and Forum:
(i) monitor and make appropriate filings with respect to the
escheatment laws of the various states and territories of the United
States; and
<PAGE>
(ii) receive and tabulate proxy votes/oversee the activities of proxy
solicitation firms and coordinate the tabulation of proxy and
shareholder meeting votes.
(c) BLUE SKY MATTERS. The Trust or its administrator or other agent (i)
shall identify to Forum in writing those transactions and assets to be treated
as exempt from reporting for each state and territory of the United States and
for each foreign jurisdiction (collectively "States") and (ii) shall monitor the
sales activity with respect to Shareholders domiciled or resident in each State.
The responsibility of Forum for the Trust's State registration status is solely
limited to the reporting of transactions to the Trust, and Forum shall have no
obligation, when recording the issuance of Shares, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole responsibility of the Trust or
its administrator or other agent.
(d) SAFEKEEPING. Forum shall establish and maintain facilities and
procedures reasonably acceptable to the Trust for the safekeeping, control,
preparation and use of share certificates, check forms, and facsimile signature
imprinting devices. Forum shall establish and maintain facilities and procedures
reasonably acceptable to the Trust for safekeeping of all records maintained by
Forum pursuant to this Agreement.
(e) COOPERATION WITH ACCOUNTANTS. Forum shall cooperate with each
Fund's independent public accountants and shall take reasonable action to make
all necessary information available to the accountants for the performance of
the accountants' duties.
(f) RESPONSIBILITY FOR COMPLIANCE WITH LAW. Except with respect to
Forum's duties as set forth in this Section 2 and except as otherwise
specifically provided herein, the Trust assumes all responsibility for ensuring
that the Trust complies with all applicable requirements of the Securities Act,
the 1940 Act and any laws, rules and regulations of governmental authorities
with jurisdiction over the Trust. All references to any law in this Agreement
shall be deemed to include reference to the applicable rules and regulations
promulgated under authority of the law and all official interpretations of such
law or rules or regulations.
SECTION 3. RECORDKEEPING
(a) PREDECESSOR RECORDS. Prior to the commencement of Forum's
responsibilities under this Agreement, if applicable, the Trust shall deliver or
cause to be delivered over to Forum (i) an accurate list of Shareholders of the
Trust, showing each Shareholder's address of record, number of Shares owned and
whether such Shares are represented by outstanding share certificates and (ii)
all Shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by Forum under this Agreement
(collectively referred to as the "Materials"). The Trust shall on behalf of each
applicable Fund or Class indemnify and hold Forum harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any error, omission, inaccuracy or
other deficiency of the Materials, or out of the failure of the Trust to provide
any portion of the Materials or to provide any information in the Trust's
possession or control reasonably needed by Forum to perform the services
described in this Agreement.
<PAGE>
(b) RECORDKEEPING. Forum shall keep records relating to the services to
be performed under this Agreement, in the form and manner as it may deem
advisable and as required by applicable law. To the extent required by Section
31 of the 1940 Act, and the rules thereunder, Forum agrees that all such records
prepared or maintained by Forum relating to the services to be performed by
Forum under this Agreement are the property of the Trust and will be preserved,
maintained and made available in accordance with Section 31 of the 1940 Act and
the rules thereunder, and will be surrendered promptly to the Trust on and in
accordance with the Trust's request. The Trust and the Trust's authorized
representatives shall have access to Forum's records relating to the services to
be performed under this Agreement at all times during Forum's normal business
hours. Upon the reasonable request of the Trust, copies of any such records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives.
(c) CONFIDENTIALITY OF RECORDS. Forum and the Trust agree that all
books, records, information, and data pertaining to the business of the other
party which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required by law.
(d) INSPECTION OF RECORDS BY OTHERS. In case of any requests or demands
for the inspection of the Shareholder records of the Trust, Forum will endeavor
to notify the Trust and to secure instructions from an authorized officer of the
Trust as to such inspection. Forum shall abide by the Trust's instructions for
granting or denying the inspection; provided, however, that Forum may grant the
inspection without instructions if Forum is advised by counsel to Forum that
failure to do so will result in liability to Forum.
SECTION 4. ISSUANCE AND TRANSFER OF SHARES
(a) ISSUANCE OF SHARES. Forum shall make original issues of Shares of
each Fund and Class thereof in accordance with the Trust's then current
prospectus only upon receipt of (i) instructions requesting the issuance, (ii) a
certified copy of a resolution of the Board authorizing the issuance, (iii)
necessary funds for the payment of any original issue tax applicable to such
Shares, and (iv) an opinion of the Trust's counsel as to the legality and
validity of the issuance, which opinion may provide that it is contingent upon
the filing by the Trust of an appropriate notice with the SEC, as required by
Section 24 of the 1940 Act or the rules thereunder. If the opinion described in
(iv) above is contingent upon a filing under Section 24 of the 1940 Act, the
Trust shall indemnify Forum for any liability arising from the failure of the
Trust to comply with that section or the rules thereunder.
(b) TRANSFER OF SHARES. Transfers of Shares of each Fund and Class
thereof shall be registered on the Shareholder records maintained by Forum. In
registering transfers of Shares, Forum may rely upon the Uniform Commercial Code
as in effect in the State of Delaware or any other statutes that, in the opinion
of Forum's counsel, protect Forum and the Trust from liability arising from (i)
not requiring complete documentation, (ii) registering a transfer without an
adverse claim inquiry, (iii) delaying registration for purposes of such inquiry
or (iv) refusing
<PAGE>
registration whenever an adverse claim requires such refusal. As Transfer Agent,
Forum will be responsible for delivery to the transferor and transferee of such
documentation as is required by the Uniform Commercial Code.
SECTION 5. SHARE CERTIFICATES
(a) CERTIFICATES. The Trust shall furnish to Forum a supply of blank
share certificates of each Fund and Class thereof and, from time to time, will
renew such supply upon Forum's request. Blank share certificates shall be signed
manually or by facsimile signatures of officers of the Trust authorized to sign
by the Organic Documents of the Trust and, if required by the Organic Documents,
shall bear the Trust's seal or a facsimile thereof. Unless otherwise directed by
the Trust, Forum may issue or register Share certificates reflecting the manual
or facsimile signature of an officer who has died, resigned or been removed by
the Trust.
(b) ENDORSEMENT; TRANSPORTATION. New Share certificates shall be issued
by Forum upon surrender of outstanding Share certificates in the form deemed by
Forum to be properly endorsed for transfer and satisfactory evidence of
compliance with all applicable laws relating to the payment or collection of
taxes. Forum shall forward Share certificates in "non-negotiable" form by
first-class or registered mail, or by whatever means Forum deems equally
reliable and expeditious. Forum shall not mail Share certificates in
"negotiable" form unless requested in writing by the Trust and fully indemnified
by the Trust to Forum's satisfaction.
(c) NON-ISSUANCE OF CERTIFICATES. In the event that the Trust informs
Forum that any Fund or Class thereof does not issue share certificates, Forum
shall not issue any such share certificates and the provisions of this Agreement
relating to share certificates shall not be applicable with respect to those
Funds or Classes thereof.
SECTION 6. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS
(a) PURCHASE ORDERS. Shares shall be issued in accordance with the
terms of a Fund's or Class' prospectus after Forum or its agent receives either:
(i) (A) an instruction directing investment in a Fund or Class, (B) a
check (other than a third party check) or a wire or other electronic
payment in the amount designated in the instruction and (C), in the
case of an initial purchase, a completed account application; or
(ii) the information required for purchases pursuant to a selected
dealer agreement, processing organization agreement, or a similar
contract with a financial intermediary.
(b) DISTRIBUTION ELIGIBILITY. Shares issued in a Fund after receipt of
a completed purchase order shall be eligible to receive distributions of the
Fund at the time specified in the prospectus pursuant to which the Shares are
offered.
<PAGE>
(c) DETERMINATION OF FEDERAL FUNDS. Shareholder payments shall be
considered Federal Funds no later than on the day indicated below unless other
times are noted in the prospectus of the applicable Class or Fund:
(i) for a wire received, at the time of the receipt of the wire;
(ii) for a check drawn on a member bank of the Federal Reserve System,
on the second Fund Business Day following receipt of the check; and
(iv) for a check drawn on an institution that is not a member of the
Federal Reserve System, at such time as Forum is credited with Federal
Funds with respect to that check.
SECTION 7. FEES AND EXPENSES
(a) FEES. For the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to pay Forum the fees set
forth in Clauses (i) and (ii) of Appendix B hereto. Fees will begin to accrue
for each Fund on the latter of the date of this Agreement or the date of
commencement of operations of the Fund. If fees begin to accrue in the middle of
a month or if this Agreement terminates before the end of any month, all fees
for the period from that date to the end of that month or from the beginning of
that month to the date of termination, as the case may be, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. Upon the termination of this Agreement with
respect to a Fund, the Trust shall pay to Forum such compensation as shall be
payable prior to the effective date of termination.
(b) EXPENSES. In connection with the services provided by Forum
pursuant to this Agreement, the Trust, on behalf of each Fund, agrees to
reimburse Forum for the expenses set forth in Appendix B hereto. In addition,
the Trust, on behalf of the applicable Fund, shall reimburse Forum for all
expenses and employee time (at 150% of salary) attributable to any review of the
Trust's accounts and records by the Trust's independent accountants or any
regulatory body outside of routine and normal periodic reviews. Should the Trust
exercise its right to terminate this Agreement, the Trust, on behalf of the
applicable Fund, shall reimburse Forum for all out-of-pocket expenses and
employee time (at 150% of salary) associated with the copying and movement of
records and material to any successor person and providing assistance to any
successor person in the establishment of the accounts and records necessary to
carry out the successor's responsibilities.
(c) PAYMENT. All fees and reimbursements are payable in arrears on a
monthly basis and the Trust, on behalf of the applicable Fund, agrees to pay all
fees and reimbursable expenses within five (5) business days following receipt`
of the respective billing notice.
SECTION 8. REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS AND WARRANTIES OF FORUM. Forum represents and
warrants to the Trust that:
<PAGE>
(i) It is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware.
(ii) It is duly qualified to carry on its business in the State of
Maine.
(iii) It is empowered under applicable laws and by its Article of
Incorporation and Bylaws to enter into this Agreement and perform its
duties under this Agreement.
(iv) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement.
(v) It has access to the necessary facilities, equipment, and personnel
to perform its duties and obligations under this Agreement.
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of Forum, enforceable against Forum
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
(vii) It is registered as a transfer agent under Section 17A of the
1934 Act.
(b) REPRESENTATIONS AND WARRANTIES OF THE TRUST. The Trust represents
and warrants to Forum that:
(i) It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
(ii) It is empowered under applicable laws and by its Organic Documents
to enter into this Agreement and perform its duties under this
Agreement.
(iii) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement.
(iv) It is an open-end management investment company registered under
the 1940 Act.
(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Trust, enforceable against
the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties.
(vi) A registration statement under the Securities Act is currently
effective and will remain effective, and appropriate State securities
law filings have been made and will continue to be made, with respect
to all Shares of the Funds and Classes of the Trust being offered for
sale.
<PAGE>
SECTION 9. PROPRIETARY INFORMATION
(a) PROPRIETARY INFORMATION OF FORUM. The Trust acknowledges that the
databases, computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals maintained by Forum on databases under the
control and ownership of Forum or a third party constitute copyrighted, trade
secret, or other proprietary information (collectively, "Proprietary
Information") of substantial value to Forum or the third party. The Trust agrees
to treat all Proprietary Information as proprietary to Forum and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided under this Agreement.
(b) PROPRIETARY INFORMATION OF THE TRUST. Forum acknowledges that the
Shareholder list and all information related to Shareholders furnished to Forum
by the Trust or by a Shareholder in connection with this Agreement
(collectively, "Customer Data") constitute proprietary information of
substantial value to the Trust. In no event shall Proprietary Information be
deemed Customer Data. Forum agrees to treat all Customer Data as proprietary to
the Trust and further agrees that it shall not divulge any Customer Data to any
person or organization except as may be provided under this Agreement or as may
be directed by the Trust.
SECTION 10. INDEMNIFICATION
(a) INDEMNIFICATION OF FORUM. Forum shall not be responsible for, and
the Trust shall on behalf of each applicable Fund or Class thereof indemnify and
hold Forum harmless from and against, any and all losses, damages, costs,
charges, reasonable counsel fees, payments, expenses and liability arising out
of or attributable to:
(i) all actions of Forum or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without gross negligence or willful misconduct;
(ii) the Trust's lack of good faith or the Trust's gross negligence or
willful misconduct;
(iii) the reliance on or use by Forum or its agents or subcontractors
of information, records, documents or services which have been
prepared, maintained or performed by the Trust or any other person or
firm on behalf of the Trust, including but not limited to any previous
transfer agent or registrar;
(iv) the reasonable reliance on, or the carrying out by Forum or its
agents or subcontractors of, any instructions or requests of the Trust
on behalf of the applicable Fund; and
(v) the offer or sale of Shares in violation of any requirement under
the Federal securities laws or regulations or the securities laws or
regulations of any State that such
<PAGE>
Shares be registered in such State or in violation of any stop order
or other determination or ruling by any federal agency or any State
with respect to the offer or sale of such Shares in such State.
(b) INDEMNIFICATION OF TRUST. Forum shall indemnify and hold the Trust
and each Fund or Class thereof harmless from and against any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributed to any action or failure or omission to
act by Forum as a result of Forum's lack of good faith, gross negligence or
willful misconduct with respect to the services performed under or in connection
with this Agreement.
(c) RELIANCE. At any time Forum may apply to any officer of the Trust
for instructions, and may consult with legal counsel to the Trust or to Forum
with respect to any matter arising in connection with the services to be
performed by Forum under this Agreement, and Forum and its agents or
subcontractors shall not be liable and shall be indemnified by the Trust on
behalf of the applicable Fund for any action taken or omitted by it in
reasonable reliance upon such instructions or upon the advice of such counsel.
Forum, its agents and subcontractors shall be protected and indemnified in
acting upon (i) any paper or document furnished by or on behalf of the Trust,
reasonably believed by Forum to be genuine and to have been signed by the proper
person or persons, (ii) any instruction, information, data, records or documents
provided Forum or its agents or subcontractors by machine readable input, telex,
CRT data entry or other similar means authorized by the Trust, and (iii) any
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to Forum in person or by telephone, vocal telegram or other
electronic means, reasonably believed by Forum to be genuine and to have been
given by the proper person or persons. Forum shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Trust. Forum, its agents and subcontractors shall also be protected and
indemnified in recognizing share certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Trust, and
the proper countersignature of any former transfer agent or former registrar or
of a co-transfer agent or co-registrar of the Trust.
(d) RELIANCE ON ELECTRONIC INSTRUCTIONS. If the Trust has the ability
to originate electronic instructions to Forum in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information, then in such event Forum shall be entitled to rely on the
validity and authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with security
procedures established by Forum from time to time.
(e) USE OF FUND/SERV AND NETWORKING. The Trust has authorized or in the
future may authorize Forum to act as a "Mutual Fund Services Member" for the
Trust or various Funds. Fund/SERV and Networking are services sponsored by the
National Securities Clearing Corporation ("NSCC") and as used herein have the
meanings as set forth in the then current edition of NSCC RULES AND PROCEDURES
published by NSCC or such other similar publication as may exist from time to
time. The Trust shall indemnify and hold Forum harmless from and against any and
all losses, damages, costs, charges, reasonable counsel fees, payments, expenses
<PAGE>
and liability arising directly or indirectly out of or attributed to any action
or failure or omission to act by NSCC.
(f) NOTIFICATION OF CLAIMS. In order that the indemnification
provisions contained in this Section shall apply, upon the assertion of a claim
for which either party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion, and
shall keep the other party advised with respect to all developments concerning
such claim. The party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense of such claim
or to defend against said claim in its own name or in the name of the other
party. The party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
SECTION 11. EFFECTIVENESS, DURATION AND TERMINATION
(a) EFFECTIVENESS. This Agreement shall become effective with respect
to each Fund or Class on December 1, 1997. Upon effectiveness of this Agreement,
it shall supersede all previous agreements between the parties hereto covering
the subject matter hereof insofar as such Agreement may have been deemed to
relate to the Funds.
(b) DURATION. This Agreement shall continue in effect with respect to a
Fund until terminated; provided, that continuance is specifically approved at
least annually (i) by the Board or by a vote of a majority of the outstanding
voting securities of the Fund and (ii) by a vote of a majority of Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such party (other than as Trustees of the Trust).
(c) TERMINATION. This Agreement may be terminated with respect to a
Fund at any time, without the payment of any penalty (i) by the Board on 60
days' written notice to Forum or (ii) by Forum on 60 days' written notice to the
Trust. Any termination shall be effective as of the date specified in the
notice. Upon notice of termination of this Agreement by either party, Forum
shall promptly transfer to the successor transfer agent the original or copies
of all books and records maintained by Forum under this Agreement including, in
the case of records maintained on computer systems, copies of such records in
machine-readable form, and shall cooperate with, and provide reasonable
assistance to, the successor transfer agent in the establishment of the books
and records necessary to carry out the successor transfer agent's
responsibilities.
(d) SURVIVAL. The obligations of Sections 7, 9 and 10 shall survive any
termination of this Agreement.
<PAGE>
SECTION 12. ADDITIONAL FUNDS AND CLASSES. In the event that the Trust
establishes one or more series of Shares or one or more classes of Shares after
the effectiveness of this Agreement, such series of Shares or classes of Shares,
as the case may be, shall become Funds and Classes under this Agreement. Forum
or the Trust may elect not to make and such series or classes subject to this
Agreement.
SECTION 13. ASSIGNMENT. Except as otherwise provided in this Agreement,
neither this Agreement nor any rights or obligations under this Agreement may be
assigned by either party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns. Forum may, without further
consent on the part of the Trust, subcontract for the performance hereof with
any entity, including affiliated persons of Forum; provided however, that Forum
shall be as fully responsible to the Trust for the acts and omissions of any
subcontractor as Forum is for its own acts and omissions.
SECTION 14. FORCE MAJEURE. Forum shall not be responsible or liable for
any failure or delay in performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control including, without limitation, acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical
breakdowns, flood or catastrophe, acts of God, insurrection, war, riots or
failure of the mails or any transportation medium, communication system or power
supply.
SECTION 15. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS,
OFFICERS, EMPLOYEES AND AGENTS. The trustees of the Trust and the shareholders
of each Fund shall not be liable for any obligations of the Trust or of the
Funds under this Agreement, and Forum 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 Fund to which Forum's rights or claims relate in settlement of
such rights or claims, and not to the trustees of the Trust or the shareholders
of the Funds.
SECTION 16. TAXES. Forum shall not be liable for any taxes, assessments
or governmental charges that may be levied or assessed on any basis whatsoever
in connection with the Trust or any Shareholder or any purchase of Shares,
excluding taxes assessed against Forum for compensation received by it under
this Agreement.
SECTION 17. MISCELLANEOUS
(a) NO CONSEQUENTIAL DAMAGES. Neither party to this Agreement shall be
liable to the other party for consequential damages under any provision of this
Agreement.
(b) AMENDMENTS. 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.
<PAGE>
(c) CHOICE OF LAW. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of
Delaware.
(d) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
(e) COUNTERPARTS. This Agreement may be executed by the parties hereto
on any number of counterparts, and all of the counterparts taken together shall
be deemed to constitute one and the same instrument.
(f) SEVERABILITY. 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
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(g) HEADINGS. Section and paragraph headings in this Agreement are
included for convenience only and are not to be used to construe or interpret
this Agreement.
(h) NOTICES. Notices, requests, instructions and communications
received by the parties at their respective principal addresses, or at such
other address as a party may have designated in writing, shall be deemed to have
been properly given.
(i) BUSINESS DAYS. Nothing contained in this Agreement is intended to
or shall require Forum, in any capacity hereunder, to perform any functions or
duties on any day other than a Fund Business Day. Functions or duties normally
scheduled to be performed on any day which is not a Fund Business Day shall be
performed on, and as of, the next Fund Business Day, unless otherwise required
by law.
(j) DISTINCTION OF FUNDS. Notwithstanding any other provision of this
Agreement, the parties agree that the assets and liabilities of each Fund of the
Trust are separate and distinct from the assets and liabilities of each other
Fund and that no Fund shall be liable or shall be charged for any debt,
obligation or liability of any other Fund, whether arising under this Agreement
or otherwise.
(k) NONLIABILITY OF AFFILIATES. No affiliated person (as that term is
defined in the 1940 Act), employee, agent, director, officer or manager of Forum
shall be liable at law or in equity for Forum's obligations under this
Agreement.
(l) REPRESENTATION OF SIGNATORIES. Each of the undersigned expressly
warrants and represents that they have full power and authority to sign this
Agreement on behalf of the party indicated and that their signature will bind
the party indicated to the terms hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
persons, as of the day and year first above written.
MONARCH FUNDS
By:/s/ Maurice J. DeWald
-----------------------
Maurice J. DeWald
Trustee
FORUM FINANCIAL CORP.
By:/s/ John Y. Keffer
-----------------------
John Y. Keffer
President
<PAGE>
MONARCH FUNDS
TRANSFER AGENCY AND SERVICE AGREEMENT
APPENDIX A
FUNDS AND CLASSES
AS OF DECEMBER 1, 1997
TREASURY CASH FUND
Universal Shares
Institutional Shares
Investor Shares
GOVERNMENT CASH FUND
Universal Shares
Institutional Shares
Investor Shares
CASH FUND
Universal Shares
Institutional Shares
Investor Shares
<PAGE>
MONARCH FUNDS
TRANSFER AGENCY AND SERVICE AGREEMENT
APPENDIX B
FEES AND EXPENSES
(I) BASE FEE:
<TABLE>
<S> <C>
Fees per Fund with $12,000 plus $6,000 per each class above one plus,
more than one Class
0.05% of the Average Annual Daily Net Assets
attributable to the Universal Class,
0.20% of the Average Annual Daily Net Assets
attributable to the Institutional Class, and
0.20% of the Average Annual Daily Net Assets
attributable to the Investor Class.
</TABLE>
The rates set forth above shall remain fixed through December 31, 1998.
On January 1, 1999, and on each successive January 1, the rates may be
adjusted automatically by Forum without action of the Trust to reflect
changes in the Consumer Price Index for the preceding calendar year, as
published by the U.S. Department of Labor, Bureau of Labor Statistics.
Forum shall notify the Trust each year of the new rates, if applicable.
(II) SHAREHOLDER ACCOUNT FEES:
$120 per Shareholder account per year for the Universal Class.
$24 per Shareholder account per year for the Institutional Class.
$24 per Shareholder account per year for the Investor Class.
Shareholder account fees are based upon the number of Shareholder
accounts as of the last Fund Business Day of the prior month.
(III) OUT-OF-POCKET AND RELATED EXPENSES
The Trust, on behalf of the applicable Fund, shall reimburse Forum for
all out-of-pocket and ancillary expenses in providing the services
described in this Agreement, including but not limited to the cost of
(or appropriate share of the cost of): (i) statement, confirmation,
envelope and stationary stock, (ii) share certificates, (iii) printing
of checks and drafts, (iv) postage, (v) telecommunications, (vi)
banking services (DDA account,
<PAGE>
wire and ACH, check and draft clearing and lock box fees and charges),
(vii) NSCC Mutual Fund Service Member fees and expenses, (viii)
outside proxy solicitors and tabulators, (ix) proxy solicitation fees
and (ix) microfilm and microfiche. In addition, any other expenses
incurred by Forum at the request or with the consent of the Trust,
will be reimbursed by the Trust on behalf of the applicable Fund.
EXHIBIT (9)(C)
MONARCH FUNDS
SHAREHOLDER SERVICE PLAN
as Amended October 15, 1995 and January 30, 1997
SECTION 1. APPOINTMENT
In consideration of the services provided by Forum Financial Services,
Inc. ("Forum") to the Trust as described herein, Monarch Funds (the "Trust")
hereby appoints Forum as agent to perform the services for the period and on the
terms set forth in this Plan. Forum accepts such appointment and agrees to
furnish the services described herein, in return for the compensation specified
in Section 3 of this Plan. Forum agrees to comply with all relevant provisions
of the Investment Company Act of 1940, as amended (the "Act"), and the
Securities Exchange Act of 1934, as amended, and applicable rules and
regulations thereunder in performing the services described herein.
SECTION 2. SERVICE ACTIVITIES
Forum shall perform, or arrange for the performance of certain
activities relating to the servicing and maintenance of shareholder accounts of
the Institutional class ("Institutional Shares") and Investor class ("Investor
Shares") of Treasury Cash Fund, Government Cash Fund, and Cash Fund (the
"Funds") ("Shareholder Servicing Activities") not otherwise provided by the
Trust's transfer agent. Shareholder Servicing Activities include (i) answering
shareholder inquiries regarding the manner in which purchases, exchanges and
redemptions of shares of the Trust may be effected and other matters pertaining
to the Trust's services; (ii) providing necessary personnel and facilities to
establish and maintain shareholder accounts and records; (iii) assisting
shareholders in arranging for processing purchase, exchange and redemption
transactions; (iv) arranging for the wiring of funds; (v) guaranteeing
shareholder signatures in connection with redemption orders and transfers and
changes in shareholder-designated accounts; (vi) integrating periodic statements
with other shareholder transactions; and (vii) providing such other related
services as the shareholder may request.
SECTION 3. COMPENSATION
As compensation for Forum's Shareholder Servicing Activities with
respect to Institutional Shares and Investor Shares of each Fund, the Trust
shall pay Forum a fee at an annual rate of 0.15% of the average daily net assets
of each Fund attributable to Institutional Shares and Investor Shares (the
"Payments"). The Payments shall be accrued daily and paid monthly or at such
other interval as the Trust's Board of Trustees ("Board") shall determine.
Institutional Shares and the Investor Shares of each Fund shall not directly or
indirectly pay any amounts, whether Payments or otherwise, that exceed any
applicable limits imposed by law or the National Association of Securities
Dealers, Inc. The Trust hereby grants and transfers to Forum a general lien and
security interest in any and all securities and other assets of a Fund now
<PAGE>
or hereafter maintained in an account at the Fund's custodian on behalf of the
Fund, limited to the amount of any liability, to secure any amounts owed Forum
by the Fund under this Plan.
SECTION 4. SERVICE AGREEMENTS
Forum is authorized to enter into shareholder service agreements
("Servicing Agreements") pursuant to which financial institutions or other
persons who service shareholder accounts ("Service Providers") would perform
Shareholder Servicing Activities, Forum may pay any or all amounts of the
Payments to the service providers for any service activity described in Section
2. Each Agreement shall contain a representation by the Service Provider that
any compensation payable to the Service Provider in connection with the
investment in Institutional Shares or Investor Shares of a Fund of the assets of
its customers (i) will be disclosed by the Service Provider to its customers if
required by law, (ii) will be authorized by its customers if customer
authorization is required, and (iii) will not result in an excessive fee to the
Service Provider.
SECTION 5. DURATION; TERMINATION AND AMENDMENT
With respect to Institutional Shares and Investor Shares of a Fund:
(a) This Plan shall remain in effect for a period of one year from the
date of its effectiveness, unless earlier terminated in accordance with this
Section, and thereafter shall continue in effect for successive annual periods,
provided that such continuance is specifically approved at least annually by the
Board and a majority of the Trustees who are not interested persons of the Trust
(the "Disinterested Trustees").
(b) This Plan may be terminated without penalty at any time (i) by a
vote of a majority of the Board and a majority of the Disinterested Trustees or
(ii) by Forum.
(c) Any amendment to this Plan shall be effective only upon the
approval of the Board and a majority of the Disinterested Trustees.
SECTION 6. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Plan, and
Forum agrees that, in asserting any rights or claims under this Plan, it shall
look only to the assets and property of the Trust or the Fund to which the
Forum's rights or claims relate in settlement of such rights or claims, and not
to the Trustees of the Trust or the shareholders of the Funds.
SECTION 7. MISCELLANEOUS
(a) No provisions of this Plan 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 securities of any Fund thereby affected.
<PAGE>
(b) If any part, term or provision of this Plan 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 Plan did
not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Plan are included for convenience only and
are not to be used to construe or interpret this Plan.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Plan shall be governed by and shall be construed in accordance
with the laws of the State of Delaware.
(f) The term "interested person" shall have the meaning ascribed
thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Plan to be
executed by their officers designated below as of the day first above written.
MONARCH FUNDS
/s/ John Y. Keffer
-----------------------------
John Y. Keffer
President
FORUM FINANCIAL SERVICES, INC.
/s/ John Y. Keffer
-----------------------------
John Y. Keffer
President
EXHIBIT (9)(D)
MONARCH FUNDS
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of the 1st day of December, 1997, by and between
Monarch Funds, a Delaware business trust, with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and Forum
Accounting Services, Limited Liability Company, a Delaware limited liability
company with its principal office and place of business at Two Portland Square,
Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers shares of various classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes"); and
WHEREAS, the Trust desires that Forum perform certain fund accounting
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
fund accountant of the Trust for the period and on the terms set forth in this
Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Trust Instrument and Bylaws (collectively, as amended from time
to time, "Organic Documents"), (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the 1940 Act (the "Registration Statement"), (iii) the Trust's current
Prospectus and Statement of Additional Information of each Fund (collectively,
as currently in effect and as amended or supplemented, the "Prospectus") and
(iv) all procedures adopted by the Trust with respect to the Funds (i.e.,
repurchase agreement procedures), and shall promptly furnish Forum with all
amendments of or supplements to the foregoing. The Trust shall deliver to Forum
a certified copy of the resolution of the Board of Trustees of the Trust (the
"Board") appointing Forum and authorizing the execution and delivery of this
Agreement.
<PAGE>
SECTION 2. DUTIES OF FORUM
(a) Forum and the Trust's administrator, Forum Administrative Services,
Limited Liability Company (the "Administrator"), may from time to time adopt
such procedures as they agree upon to implement the terms of this Section. With
respect to each Fund, Forum will perform the following services under this
Agreement:
(i) calculate the net asset value per share with the frequency
prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting principles ("GAAP"), the SEC's Regulation
S-X (or any successor regulation) and the Internal Revenue Code of
1986, as amended (or any successor laws)(the "Code");
(iii) maintain each Fund's general ledger and record all income,
expenses, capital share activity and security transactions of each
Fund;
(iv) calculate the yield, effective yield, tax equivalent yield and
total return for each Fund, and each Class thereof, as applicable, and
such other measure of performance as may be agreed upon between the
parties hereto;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports (A) a current security position
report, (B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each portfolio
security in maturity date order), and (C) a current cash position and
projection report;
(vi) prepare and record, as of each time when the net asset value of a
Fund is calculated or as otherwise directed by the Trust, either (A) a
valuation of the assets of the Fund (in accordance with the Trust's
valuation procedures) or (B) a calculation confirming that the market
value of the Fund's assets does not deviate from the amortized cost
value of those assets by more than a specified percentage;
(vii) make such adjustments over such periods as Forum deems necessary
to reflect over-accruals or under-accruals of estimated expenses or
income;
(viii) request any necessary information from the Administrator and the
Trust's transfer agent and distributor in order to prepare, and
prepare, the Trust's Form N-SAR;
(ix) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and
records maintained by Forum;
<PAGE>
(x) prepare semi-annual financial statements and oversee the production
of the semi-annual financial statements and any related report to the
Trust's shareholders prepared by the Trust or its investment advisers,
as applicable;
(xi) file the Funds' semi-annual financial statements with the SEC or
ensure that the Funds' semi-annual financial statements are filed with
the SEC;
(xii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information with respect to investment companies;
(xiii) provide the Trust or the Administrator with the data requested
by the Administrator that is required to update the Registration
Statement;
(xiv) provide the Trust or independent accountants with all information
requested with respect to the preparation of the Trust's income, excise
and other tax returns;
(xv) prepare or prepare, execute and file all Federal income and excise
tax returns and state income and other tax returns, including any
extensions or amendments, each as agreed between the Trust and Forum;
(xvi) produce quarterly compliance reports for investment advisers, as
applicable, to the Trust and the Board and provide information to the
Administrator, investment advisers to the Trust and other appropriate
persons with respect to questions of Fund compliance;
(xvii) determine the amount of distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare and
distribute to appropriate parties notices announcing the declaration of
dividends and other distributions to shareholders;
(xviii) transmit to and receive from each Fund's transfer agent
appropriate data to on a daily basis and daily reconcile Shares
outstanding and other data with the transfer agent;
(xix) periodically reconcile all appropriate data with each Fund's
custodian;
(xx) verify investment trade tickets when received from an investment
adviser and maintain individual ledgers and historical tax lots for
each security; and
(xxi) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the
Board; provided, that Forum need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
<PAGE>
(b) Forum shall prepare and maintain on behalf of the Trust the
following books and records of each Fund, and each Class thereof, as applicable,
pursuant to Rule 31a-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection (b)(1)
of the Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
and all other portfolio purchases or sales, as required by subsections
(b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any direct
or indirect interest or which the Trust has granted or guaranteed and a
record of any contractual commitments to purchase, sell, receive or
deliver any property as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule; and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to those provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
(c) The books and records maintained pursuant to Section 2(b) shall be
prepared and maintained in such form, for such periods and in such locations as
may be required by the 1940 Act. The books and records pertaining to the Trust
that are in possession of Forum 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 Forum's normal business hours. Upon the reasonable
request of the Trust or the Administrator, copies of any such books and records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives at the Trust's expense. In the event the Trust designates a
successor that shall assume any of Forum's obligations hereunder, Forum shall,
at the expense and direction of the Trust, transfer to such successor all
relevant books, records and other data established or maintained by Forum under
this Agreement.
(d) In case of any requests or demands for the inspection of the
records of the Trust maintained by Forum, Forum will endeavor to notify the
Trust and to secure instructions from an authorized officer of the Trust as to
such inspection. Forum shall abide by the Trust's instructions for granting or
denying the inspection; provided, however, that Forum may grant
<PAGE>
the inspection without instructions if Forum is advised by counsel to Forum that
failure to do so will result in liability to Forum.
SECTION 3. STANDARD OF CARE; RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the services
described in this Agreement. Forum shall not be liable to the Trust or any of
the Trust's shareholders for any action or inaction of Forum relating to any
event whatsoever in the absence of bad faith, willful misfeasance or gross
negligence in the performance of Forum's duties or obligations under this
Agreement or by reason of Forum's reckless disregard of its duties and
obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Fund that are consistent with
the standard of care set forth in Section 3(a) or based, if applicable, on good
faith reliance upon an item described in Section 3(d) (a "Claim"). The Trust
shall not be required to indemnify any Forum Indemnitee if, prior to confessing
any Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not
give the Trust written notice of and reasonable opportunity to defend against
the claim in its own name or in the name of the Forum Indemnitee.
(c) Forum agrees to indemnify and hold harmless the Trust, its
employees, agents, trustees and officers against and from any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character arising out of Forum's actions taken or failures to act with respect
to a Fund that are not consistent with the standard of care set forth in Section
3(a). Forum shall not be required to indemnify the Trust if, prior to confessing
any Claim against the Trust, the Trust does not give Forum written notice of and
reasonable opportunity to defend against the claim in its own name or in the
name of the Trust.
(d) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the
Trust or counsel to Forum;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction (Forum shall have
no duty or obligation to make any inquiry or effort of certification of
such oral instruction.);
<PAGE>
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
Forum to be genuine and to have been signed or presented by the Trust
or other proper party or parties;
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
(e) Except to the extent it has breached the provisions of this
Agreement, Forum shall not be liable for the errors of other service providers
to the Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
(f) With respect to Funds which do not value their assets in accordance
with Rule 2a-7 under the 1940 Act, notwithstanding anything to the contrary in
this Agreement, Forum shall not be liable to the Trust or any shareholder of the
Trust for (i) any loss to the Trust if an NAV Difference for which Forum would
otherwise be liable under this Agreement is less than or equal to 0.001 (1/10 of
1%) or (ii) any loss to a shareholder of the Trust if the NAV Difference for
which Forum would otherwise be liable under this Agreement is less than or equal
to 0.005 (1/2 of 1%) or if the loss in the shareholder's account with the Trust
is less than or equal to $10. Any loss for which Forum is determined to be
liable hereunder shall be reduced by the amount of gain which inures to
shareholders, whether to be collected by the Trust or not.
(g) For purposes of this Agreement, (i) the NAV Difference shall mean
the difference between the NAV at which a shareholder purchase or redemption
should have been effected ("Recalculated NAV") and the NAV at which the purchase
or redemption is effected, divided by the Recalculated NAV, (ii) NAV Differences
and any Forum liability therefrom are to be calculated each time a Fund's (or
class's) NAV is calculated, (iii) in calculating any NAV Difference for which
Forum would otherwise be liable under this Agreement for a particular NAV error,
Fund losses and gains shall be netted and (iv) in calculating any NAV Difference
for which Forum would otherwise be liable under this Agreement for a particular
NAV error that continues for a period covering more than one NAV determination,
Fund losses and gains for the period shall be netted.
<PAGE>
(h) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Fund to act in contravention of a Portfolio's Prospectus
or any provision of the 1940 Act. Except with respect to Forum's duties as set
forth in Section 2 of this Agreement and except as otherwise specifically
provided herein, the Trust assumes all responsibility for ensuring that the
Trust complies with all applicable requirements of the Securities Act, the 1940
Act and any laws, rules and regulations of governmental authorities with
jurisdiction over the Trust. All references to any law in this Agreement shall
be deemed to include reference to the applicable rules and regulations
promulgated under authority of the law and all official interpretations of such
law or rules or regulations.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Fund, the fees set
forth in Clause (i) of Appendix B hereto. In consideration of the services
provided by Forum pursuant to Clause (iii) of Appendix B hereof, the Trust shall
pay Forum, with respect to each Fund, the fees set forth in Clause (ii) of
Appendix B hereto. In consideration of services provided by Forum to perform
certain functions, the Trust shall pay Forum, with respect to each Fund the fees
set forth in Clause (iii) of Appendix B hereto. Nothing in this Agreement shall
require Forum to perform any of the services listed in Section 2(a)(xiv) and
Clause (iii) of Appendix B hereto, as such services may be performed by the
Fund's independent accountant if appropriate.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in Clauses (i) and (iii) of Appendix B
hereto shall be payable monthly in advance on the first day of each calendar
month for services to be performed during the following calendar month. The fees
payable for the services listed in Clause (ii) and for all reimbursements as
described in Section 4(b) shall be payable monthly in arrears on the first day
of each calendar month (the first day of the calendar month after the Fund
commences operations in the case of the fees listed in Clause (ii) of Appendix B
hereto) for services performed during the prior calendar month. If fees payable
for the services listed in Clause (i) begin to accrue in the middle of a month
or if this Agreement terminates before the end of any month, all fees for the
period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. Upon the termination of this Agreement with
respect to a Fund, the Trust shall pay to Forum such compensation as shall be
payable prior to the effective date of termination.
(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for the
expenses set forth in Clause (iv) of Appendix B hereto. In addition, the Trust,
on behalf of the applicable Fund, shall reimburse Forum for all expenses and
employee time (at 150% of salary) attributable to any review of the Trust's
accounts and records by the Trust's independent accountants or any regulatory
body outside of routine and normal periodic reviews. Should the Trust exercise
its
<PAGE>
right to terminate this Agreement, the Trust, on behalf of the applicable Fund,
shall reimburse Forum for all out-of-pocket expenses and employee time (at 150%
of salary) associated with the copying and movement of records and material to
any successor person and providing assistance to any successor person in the
establishment of the accounts and records necessary to carry out the successor's
responsibilities.
(d) Forum may, with respect to questions of law relating to its
services hereunder, apply to and obtain the advice and opinion of counsel to the
Trust or counsel to Forum. The costs of any such advice or opinion shall be
borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on December 1, 1997. Upon effectiveness of this Agreement, it shall
supersede all previous agreements between the parties hereto covering the
subject matter hereof insofar as such Agreement may have been deemed to relate
to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund
until terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. The
obligations of Sections 3 and 4 shall survive any termination of this Agreement.
(d) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or
one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement. Forum or the Trust may elect not to make any
such series or classes subject to this Agreement.
<PAGE>
SECTION 7. CONFIDENTIALITY
Forum agrees to treat all records and other information related to the
Trust as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
Forum may be exposed to civil or criminal contempt proceedings for failure to
release the information, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are 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) Forum may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
<PAGE>
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum 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 Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
SECTION 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance
with Section 6, 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.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) 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
<PAGE>
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person" and "affiliated person" shall have the meanings
ascribed thereto in the 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
persons, as of the day and year first above written.
MONARCH FUNDS
By:/s/ Maurice J. DeWald
-----------------------
Maurice J. DeWald
Trustee
FORUM ACCOUNTING SERVICES,
LIMITED LIABILITY COMPANY
By: Forum Advisors, Inc.,
as Manager
By:/s/ John Y. Keffer
-----------------------
John Y. Keffer
President
<PAGE>
MONARCH FUNDS
FUND ACCOUNTING AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF DECEMBER 1, 1997
TREASURY CASH FUND
Universal Shares
Institutional Shares
Investor Shares
GOVERNMENT CASH FUND
Universal Shares
Institutional Shares
Investor Shares
CASH FUND
Universal Shares
Institutional Shares
Investor Shares
<PAGE>
MONARCH FUNDS
FUND ACCOUNTING AGREEMENT
APPENDIX B
FEES AND EXPENSES
(I) BASE FEE
<TABLE>
<S> <C>
A. Standard Fee
Fee per Fund................................................................... $3,000/month
Fee for each additional Class of the Fund above one............................ $1,000/month
B. Plus additional surcharges for each of:
(i) Portfolios with asset levels exceeding $100 million................... $500/month
Portfolios with asset levels exceeding $250 million................... $1000/month
Portfolios with asset levels exceeding $500 million................... $1,500/month
Portfolios with asset levels exceeding $1,000 million................. $2,000/month
(ii) Portfolios requiring international custody............................ $1,000/month
(iii) Portfolios with more than 30 international positions ................. $1,000/month
(iv) Tax free money market Funds........................................... $1,000/month
(v) Portfolios with more than 25% of net assets invested in
asset backed securities............................................... $1,000/month
Portfolios with more than 50% of net assets invested in
asset backed securities............................................... $2,000/month
(vii) Portfolios with more than 100 security positions...................... $1,000/month
(viii) Portfolios with a monthly portfolio turnover rate of 10%
or greater............................................................ $1,000/month
C. Standard Fee per Gateway Fund (a Fund operating pursuant to Section
12(d)(1)(E) of the 1940 Act)
Standard Fee per Fund.......................................................... $1,000/month
(provided that until August 31, 1999 the fee shall be zero)
Standard Fee per Fund that invests in one or more instruments
in addition to the fund in which it invests.................................... $2,000/month
Fee for each additional Class of a Fund above one.............................. $1,000/month
(provided that until August 31, 1999 the fee shall be zero)
Additional surcharges listed above do not apply
D. Standard Fee per Gateway Fund (a Fund operating pursuant to Section
12(d)(1)(G) of the 1940 Act or in a similar structure)
Standard Fee per Fund.......................................................... $1,000/month
Fee for each additional Class of a Fund above one.............................. $1,000/month
Plus additional surcharges listed above if the Fund invests in
securities other than investment companies (calculated as if
the securities were the Fund's only assets)
</TABLE>
<PAGE>
Note 1: Surcharges are determined based upon the total assets,
security positions or other factors as of the end of the prior month
and on the portfolio turnover rate for the prior month. Portfolio
turnover rate shall have the meaning ascribed thereto in SEC Form
N-1A.
Note 2: The rates set forth above shall remain fixed through December
31, 1998. On January 1, 1999, and on each successive January 1, the
rates may be adjusted automatically by Forum without action of the
Trust to reflect changes in the Consumer Price Index for the preceding
calendar year, as published by the U.S. Department of Labor, Bureau of
Labor Statistics. Forum shall notify the Trust each year of the new
rates, if applicable.
(II) START-UP FEE
<TABLE>
<S> <C>
Fund Start-Up Fee ......................................................................$2,000
(III) OTHER SERVICES (payable in equal installments monthly)
TAX SERVICES. Preparation of Federal income and excise tax
returns and preparation, execution and filing of state income
tax returns, including any extensions or amendments
Standard Fee.................................................. $3,000/fiscal period
Fee per Gateway Fund (a Fund described
in (i)(C) or (D) above)....................................... $1,500/fiscal period
Fee per Gateway Fund (a Fund described in (i)(C) or (D) above)
that invests in more than one instrument in addition to the
fund(s) in which
it invests.................................................... $3,000/fiscal period
</TABLE>
(IV) OUT-OF-POCKET AND RELATED EXPENSES
The Trust, on behalf of the applicable Fund, shall reimburse Forum for
all out-of-pocket and ancillary expenses in providing the services
described in this Agreement, including but not limited to the cost of
(or appropriate share of the cost of): (i) pricing, paydown, corporate
action, credit and other reporting services, (ii) taxes, (iii) postage
and delivery services, (iv) telephone services, (v) electronic or
facsimile transmission services, (vi) reproduction, (vii) printing and
distributing financial statements, (xiii) microfilm and microfiche and
(ix) Trust record storage and retention fees. In addition, any other
expenses incurred by Forum at the request or with the consent of the
Trust, will be reimbursed by the Trust on behalf of the applicable
Fund.
EXHIBIT (10)
KIRKPATRICK & LOCKHART
SOUTH LOBBY , 9TH FLOOR Boston MA
1800 M STREET, N.W. Harrisburg, PA
WASHINGTON, D.C. 20036-5891 Miami, FL
------------ Pittsburgh, PA
TELEPHONE (202) 778-9000
TELEX 440209 KL DC UI
Arthur J. Brown FACSIMILE (202) 778-9100
(202)778-9046
October 22, 1992
Monarch Funds
61 Broadway
New York, New York 10006
Dear Sir / Madam:
Monarch Funds ("Trust") is an unincorporated voluntary association
organized under the laws of the State of Delaware pursuant to a Trust Instrument
dated July 10, 1992. You have requested our opinion regarding certain matters in
connection with the Trust's issuance of shares of beneficial interest ("Shares")
in two series of the Trust designated as Cash Fund and Government Cash Fund,
respectively.
We have, as counsel, participated in various business and other matters
related to the Trust. We have examined copies, either certified or otherwise
proved to be genuine, of the Trust Instrument and By-Laws of the Trust and other
documents relating to the organization and operation of the Trust, and we
generally are familiar with its business affairs. Based on the foregoing, it is
our opinion that the unlimited number of unissued Shares designated as Cash Fund
and Government Cash Fund, respectively, which are currently being registered,
may be legally and validly issued from time to time in accordance with the
Trust's Trust Instrument and By-Laws and subject to compliance with the
Securities Act of 1933, the Investment Company Act of 1940, and applicable state
laws regulating the offer and sale of securities; and when so issued, will be
legally issued, fully paid and nonassessable by the Trust.
The Trust is an entity of the type commonly known as a "business
trust." Under the laws of certain states, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust. The
Trust Instrument states that shareholders of the Trust shall not be personally
liable for obligations of the Trust. The Trust Instrument states that
shareholders of the Trust shall not be personally liable for the debts,
liabilities, obligations, and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or by or on behalf of any series of the
Trust. It also requires that notice of such limitation be given on each note,
bond, contract or other undertaking issued by or on behalf of the Trust or the
Trustees. The Trust Instrument further provides (I) for indemnification out of
the assets of the applicable series for all losses and expenses of any
shareholder held personally liable for the obligations of the trust solely by
virtue of ownership of shares of the Trust and (ii) for the Trust, upon the
request of a shareholder, to assume the defense of any claim against the
shareholder for any act or obligation of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the applicable series would be unable to meet
its obligations.
We hereby consent to the filing of this opinion in connection with the
Trust's Registration statement of Form N-1A to be filed with the Securities and
Exchange Commission.
Sincerely,
KIRKPATRICK & LOCKHART
By: /s/ Arthur Brown
------------------------
Arthur J. Brown
EXHIBIT (11)
Consent of Independent Auditors
The Board of Trustees
Monarch Funds:
We consent to the use of our reports dated October 3, 1997 for Treasury Cash
Fund, Government Cash Fund and Cash Fund, series of Monarch Funds, and for
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio, series of
Core Trust (Delaware), incorporated by reference into the Statement of
Additional Information and to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditors" in the Statement of
Additional Information.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
December 18, 1997
EXHIBIT (13)
FORUM FINANCIAL SERVICES, INC.
- --------------------------------------------------------------------------------
61 Broadway, New York, NY 10006
Telephone (212) 363-3300
Facsimile (212) 363-7878
October 19, 1992
Board of Trustees
Monarch Funds
61 Broadway
New York, New York 10006
Gentlemen:
In connection with the purchase by Forum Financial Services, Inc.
("Forum") of 50,000 shares of the Cash Fund and 50,00 shares of Government Cash
Fund, the two initial portfolios of Monarch Funds, and for the consideration of
cash of $1.00 per share, this letter will confirm that Forum is purchasing those
shares for its account for investment only and not with a view to reselling or
otherwise distributing those shares.
Sincerely,
/s/ John Y. Keffer
John Y. Keffer
President
EXHIBIT (15)
MONARCH FUNDS
INVESTOR CLASS DISTRIBUTION PLAN
July 12, 1993
This Distribution Plan (the "Plan") is adopted by Monarch Funds (the
"Trust") with respect to the Investor Class of shares of beneficial interest of
each of the Funds identified in Appendix A (individually a "Fund" and
collectively the "Funds") in accordance with the provisions of Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "Act").
SECTION 1. DISTRIBUTOR
The Trust has entered into a Distribution Agreement (the "Agreement")
with Forum Financial Services, Inc. ("Forum") whereby Forum acts as principal
underwriter of the Funds.
SECTION 2. PAYMENTS
(a) As compensation for Forum's distribution and service activities
with respect to the Investor Class of each Fund, the Trust shall pay Forum a fee
at an annual rate of 0.25% of the average daily net assets of the Investor Class
of each Fund (the "Payments"). The Payments shall be accrued daily and paid
monthly or at such other interval as the Trust's Board of Trustees ("Board")
shall determine.
(b) On behalf of the Trust, as principal underwriter of each Fund,
Forum may spend such amounts and incur such expenses as it deems appropriate or
necessary on any activities primarily intended to result in the sale of the
shares of the Investor Class of each Fund (distribution activities) or for the
servicing and maintenance of shareholder accounts of the Investor Class of each
Fund (service activities); provided, however that: (i) any agreement entered
into pursuant to Section 4 hereof shall apportion the payments made under the
agreement between distribution and service activities and (ii) the Investor
Class of each Fund shall not directly or indirectly pay any amounts, whether
Payments or otherwise, that exceed any applicable limits imposed by law or the
National Association of Securities Dealers, Inc. ("NASD").
(c) For purposes of the Plan, service activities shall mean any
activities covered by the definition of "service fee" contained in the NASD's
Rules of Fair Practice, as amended from time to time, and distribution
activities shall mean any activities in connection with Forum's performance of
its obligations under the Plan or the Agreement that are not deemed service
activities.
<PAGE>
SECTION 3. DISTRIBUTION AND SERVICE ACTIVITIES
Distribution and service activities include: (i) any sales, marketing
and other activities primarily intended to result in the sale of Investor Class
shares and (ii) responding to Investor Class shareholder inquiries regarding the
Funds' investment objectives, policies and other operational features. Expenses
for such activities include compensation to employees, and expenses, including
overhead and telephone and other communication expenses, of Forum and various
financial institutions or other persons who engage in or support the
distribution of Investor Class shares, or who respond to Investor Class
shareholder inquiries regarding the Funds' operations; the incremental costs of
printing (excluding typesetting) and distributing prospectuses, statements of
additional information, annual reports and other periodic reports for use in
connection with the offering or sale of Investor Class shares to any prospective
investors; and the costs of preparing, printing and distributing sales
literature and advertising materials used by Forum or others in connection with
the offering of Investor Class shares for sale to the public.
SECTION 4. MARKETING AND SERVICE AGREEMENTS
Pursuant to agreements the form of which shall be approved by the Board
("Agreements"), Forum may pay any or all amounts of the Payments to other
persons ("Service Providers") for any distribution or service activity. Each
Agreement shall contain a representation by the Service Provider that any
compensation payable to the Service Provider in connection with the investment
in the Investor class of a Fund of the assets of its customers: (i) will be
disclosed by the Service Provider to its customers; (ii) will be authorized by
its customers; and (iii) will not result in an excessive fee to the Service
Provider. Each Agreement shall provide that, in the event an issue pertaining to
the Plan is submitted for shareholder approval, the Service Provider will vote
any shares held for its own account in the same proportion as the vote of those
shares held for the accounts of the Service Provider's customers.
SECTION 5. REVIEW AND RECORDS
(a) Forum shall prepare and furnish to the Board, and the Board shall
review at least quarterly, written reports setting forth all amounts expended
under the Plan by the Trust and Forum and identifying the activities for which
the expenditures were made.
(b) The Trust shall preserve copies of the Plan, each agreement related
to the Plan and each report prepared and furnished pursuant to this Section in
accordance with Rule 12b-1 under the Act.
SECTION 6. EFFECTIVENESS; DURATION; AND TERMINATION
With respect to the Investor Class of a Fund:
<PAGE>
(a) The Plan shall become effective upon approval by: (i) a vote of at
least a majority of the outstanding voting securities of the Investor Class of
the Fund and (ii) the Board, including a majority of the trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to the Plan
(the "Qualified Trustees"), pursuant to a vote cast in person at a meeting
called for the purpose of voting on approval of the Plan.
(b) The Plan shall remain in effect for a period of one year from the
date of its effectiveness, unless earlier terminated in accordance with this
Section, and thereafter shall continue in effect for successive twelve-month
periods, provided that such continuance is specifically approved at least
annually by the Board and a majority of the Qualified Trustees pursuant to a
vote cast in person at a meeting called for the purpose of voting on continuance
of the Plan.
(c) The Plan may be terminated without penalty at any time by a vote
of: (i) a majority of the Qualified Trustees or (ii) a vote of a majority of the
outstanding voting securities of the Investor Class of the Fund.
SECTION 7. AMENDMENT
The Plan may be amended at any time by the Board, provided that: (i)
any material amendments to the Plan shall be effective only upon approval of the
Board and a majority of the Qualified Trustees pursuant to a vote cast in person
at a meeting called for the purpose of voting on the amendment to the Plan and
(ii) any amendment which increases materially the amount which may be spent by
the Trust pursuant to the Plan with respect to the Investor Class of a Fund
shall be effective only upon the additional approval a majority of the
outstanding voting securities of the Investor Class of that Fund.
SECTION 8. NOMINATION OF DISINTERESTED TRUSTEES
While the Plan is in effect, the trustees of the Trust who are not
interested persons of the Trust shall select and nominate any such disinterested
trustee.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under the Plan, and
the Distributor agrees that, in asserting any rights or claims under this Plan,
it shall look only to the assets and property of the Trust or the Fund to which
the Distributor's rights or claims relate in settlement of such rights or
claims, and not to the Trustees of the Trust or the shareholders of the Funds.
<PAGE>
SECTION 10. MISCELLANEOUS
(a) The terms "majority of the outstanding voting securities" and
"interested person" shall have the meanings ascribed thereto in the Act.
(b) If any provision of the Plan shall be held invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
APPENDIX A
Treasury Fund
Government Cash Fund
Cash Fund
EXHIBIT (16)
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
MONARCH GOVERNMENT CASH - UNIVERSAL
Note: All performance is for the period ended: 8/31/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R) R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period S = Maximum
initial sales charge R = Maximum redemption
charge (calculated based on _______)(i.e.,
lower of purchase amount or redemption
amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/redemption charges)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 4.84
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1036.40 1004.60 1013.80 1027.60 1054.90 1178.20 - - 1254.20
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) 5.52 5.60 5.59 5.55 5.49 5.62 - - 4.79
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 4.84
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1036.40 1004.60 1013.80 1027.60 1054.90 1178.20 - - 1254.20
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) 3.64 .46 1.38 2.76 5.49 17.82 - - 25.42
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during
the period that were entitled to receive
dividends
d = the maximum offering price per share on
the last day of the period
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
N/A N/A N/A N/A N/A
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
N/A N/A
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
N/A N/A N/A N/A
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
EXHIBIT 16
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
MONARCH GOVERNMENT CASH - INSTITUIONAL
Note: All performance is for the period ended: 8/31/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period S = Maximum
initial sales charge R = Maximum redemption
charge (calculated based on _______)(i.e.,
lower of purchase amount or redemption
amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 4.13
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1033.70 1004.30 1012.80 1025.60 1050.60 1165.40 - - 1236.80
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) 5.10 5.20 5.19 5.14 5.06 5.23 - - 4.48
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 4.13
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1033.70 1004.30 1012.80 1025.60 1050.60 1165.40 - - 1236.80
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) 3.37 .43 1.28 2.56 5.06 16.54 - - 23.68
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on
the last day of the period
<TABLE>
<S><C> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
N/A N/A N/A N/A N/A
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
N/A N/A
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
N/A N/A N/A N/A
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
EXHIBIT 16
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
MONARCH CASH- UNIVERSAL
Note: All performance is for the period ended: 8/31/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated
based on _______)(i.e., lower of purchase
amount or redemption amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 4.75
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1036.30 1004.60 1013.90 1027.60 1054.30 1176.60 - - 1250.70
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) 5.50 5.65 5.65 5.56 5.43 5.57 - - 4.82
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 4.75
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1036.30 1004.60 1013.90 1027.60 1054.30 1176.60 - - 1250.70
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) 3.63 .46 1.39 2.76 5.43 17.66 - - 25.07
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on
the last day of the period
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
N/A N/A N/A N/A N/A
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S><C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
N/A N/A
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
N/A N/A N/A N/A
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
EXHIBIT 16
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
MONARCH CASH - INSTITUTIONAL
Note: All performance is for the period ended: 8/31/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated
based on _______)(i.e., lower of purchase
amount or redemption amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 4.13
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1033.70 1004.30 1012.80 1025.60 1050.70 1166.00 - - 1235.60
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) 5.10 5.24 5.20 5.15 5.07 5.25 - - 4.55
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 4.13
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1033.70 1004.30 1012.80 1025.60 1050.70 1166.00 - - 1235.60
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) 3.37 .43 1.28 2.56 5.07 16.60 - - 23.56
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on
the last day of the period
<TABLE>
<S><C> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
N/A N/A N/A N/A N/A
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S><C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
N/A N/A
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S><C> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
N/A N/A N/A N/A
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
EXHIBIT 16
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
MONARCH CASH - INVESTOR
Note: All performance is for the period ended: 8/31/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated
based on _______)(i.e., lower of purchase
amount or redemption amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 2.21
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1032.00 1004.10 1012.20 1024.30 1048.10 - - - 1112.40
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) 4.84 4.98 4.94 4.88 4.81 - - - 4.93
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 2.21
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1032.00 1004.10 1012.20 1024.30 1048.10 - - - 1112.40
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) 3.20 .41 1.22 2.43 4.81 - - - 11.24
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on
the last day of the period
<TABLE>
<S><C> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
N/A N/A N/A N/A N/A
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S><C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
N/A N/A
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S><C> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
N/A N/A N/A N/A
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
EXHIBIT 16
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
MONARCH TREASURY - INSTITUTIONAL
Note: All performance is for the period ended: 8/31/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated
based on _______)(i.e., lower of purchase
amount or redemption amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 3.97
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1033.10 1004.20 1012.50 1025.10 1049.80 1162.30 - - 1202.90
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) 5.01 5.12 5.06 5.04 4.98 5.14 - - 4.56
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 3.97
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1033.10 1004.20 1012.50 1025.10 1049.80 1162.30 - - 1202.90
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) 3.31 .42 1.25 2.51 4.98 16.23 - - 20.29
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share
on the last day of the period
<TABLE>
<S><C> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
N/A N/A N/A N/A N/A
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S><C> <C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
N/A N/A
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S><C> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
N/A N/A N/A N/A
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
EXHIBIT 16
SCHEDULE OF SAMPLE PERFORMANCE QUOTATION CALCULATIONS
MONARCH TREASURY - INVESTOR
Note: All performance is for the period ended: 8/31/97
1. AVERAGE ANNUAL TOTAL RETURN (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: T = ({{[((ERV/P)-1)(1-S)-S](1-R)-R}+1}1/n)-1
where: T = average annual total return
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the initial
payment at the end of the period
S = Maximum initial sales charge
R = Maximum redemption charge (calculated
based on _______)(i.e., lower of purchase
amount or redemption amount)
a. AVERAGE ANNUAL TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. AVERAGE ANNUAL TOTAL RETURN (assuming no deduction of sales/purchase/
redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 1.85
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1030.40 1003.90 1011.60 1023.00 1045.80 - - - 1087.70
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
T(%) 4.60 4.73 4.67 4.62 4.58 - - - 4.64
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
2. CUMULATIVE TOTAL RETURN (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: C = {{[(T + 1)n - 1 - R]/(1 - R)} + S}/(1 - S)
where: C = cumulative total return of the
investment over the specified period
T = average annual total return (see above)
P = initial payment of $1,000
n = number of years
ERV = ending redeemable value of the
initial payment at the end of the period
a. CUMULATIVE TOTAL RETURN (assuming deduction of the maximum sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 1/12 1/4 1/2 1 3 5 10
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
S
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
R
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%)
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
b. CUMULATIVE OR AGGREGATE TOTAL RETURN (assuming no deduction of sales/
purchase/redemption charges)
<TABLE>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
CAL YR 1 MTH 3 MTH 6 MTH 1 YR 3 YR 5 YR 10 YR INCEPT
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
P($) 1000 1000 1000 1000 1000 1000 1000 1000 1000
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
N(YR) 2/3 1/12 1/4 1/2 1 3 5 10 1.85
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
ERV 1030.40 1003.90 1011.60 1023.00 1045.80 - - - 1087.70
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
C(%) 3.04 .39 1.16 2.30 4.58 - - - 8.77
- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
</TABLE>
<PAGE>
3. 30 DAY YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: Y = 2{[(a - b)/(cd) + 1]6 - 1]}
where: Y = 30 day yield
a = dividends and interest earned during the
period
b = expenses accrued for the period (net
of reimbursements)
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per
share on the last day of the period
<TABLE>
<S><C> <C> <C> <C> <C>
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
A($) B($) C D($) Y(%)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
N/A N/A N/A N/A N/A
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
4. 30 DAY TAX-EQUIVALENT YIELD (PURSUANT TO SEC STANDARDIZED FORMULA)
SEC Formula: TEY = Y/(1 - TR)
where: TEY = 30 day tax-equivalent yield
Y = 30 day yield (see above)
TR = assumed applicable tax rate
<TABLE>
<S><C> <C>
- ----------------------------------------------------------- ---------------------------------------------------------
TR(%) TEY(%)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
N/A N/A
- ----------------------------------------------------------- ---------------------------------------------------------
</TABLE>
5. 30-DAY DISTRIBUTION RATE (PURSUANT TO NON-STANDARDIZED FORMULA)
Formula: 30 Day Distribution Rate ("Rate")= (ab)/c
where: Rate = 30 day distribution rate
a = distributions in last 30 days
b = number of 30 day periods in year
c = maximum offering price per share on last
day of period
<TABLE>
<S><C> <C> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
A B C RATE(%)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
N/A N/A N/A N/A
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
EXHIBIT (18)
MONARCH FUNDS
MULTICLASS (RULE 18F-3) PLAN
May 12, 1995, As Amended January 22, 1996
This Plan is adopted by Monarch Funds (the "Trust") pursuant to Rule
18f-3 under the Investment Company Act of 1940 (the "Act") in order to document
the separate arrangements and expense allocations of each class of shares of
beneficial interest (the "Classes") of each of the investment portfolios of the
Trust (the "Funds") and the related exchange privileges.
SECTION 1. CLASS DESIGNATIONS
The types of Classes of the Funds are: "Universal Shares,"
"Institutional Shares," and "Investor Shares." Each Class has a different
arrangement for shareholder services or distribution or both, as follows:
(a) UNIVERSAL SHARES. Are offered with no sales charges or distribution
expenses. The investment minimum is $1,000,000, subject to reduction by Forum
Financial Services, Inc. ("Forum"), the Trust's manager.
(b) INSTITUTIONAL SHARES. Are offered solely through banks, trust
companies and certain other financial institutions and their affiliates and
correspondents with no sales charges or distribution expenses but subject to a
shareholder services plan. The investment minimum for all purchases through a
single financial institution is $500,000, subject to reduction by Forum, and the
investment minimum for accounts held directly by the transfer agent is $50,000.
(c) INVESTOR SHARES. Are offered with no sales charges but subject to a
shareholder services plan and a distribution plan adopted in accordance with
Rule 12b-1 under the Act. The investment minimum is $5,000.
SECTION 2. VOTING
Each Class shall have exclusive voting rights on any matter submitted
to a shareholder vote that relates solely to the Class' arrangement for
shareholder services or distribution and each Class shall have separate voting
rights with respect to any matter submitted to a shareholder vote in which the
interests of one Class differ from the interests of another Class.
SECTION 3. EXPENSES
(a) DISTRIBUTION EXPENSES. All expenses incurred under a Class's
distribution plan adopted in accordance with Rule 12b-1 under the Act shall be
allocated to that Class.
(b) SHAREHOLDER SERVICE EXPENSES. All expenses incurred under a Class's
shareholder service plan shall be allocated to that Class.
<PAGE>
(c) OTHER CLASS EXPENSES. The following expenses, which are incurred by
Classes in different amounts or reflect differences in the amount or kind of
services that different Classes receive (collectively with expenses under
Sections 3(a) and 3(b) "Class Expenses"), shall be allocated to the Class that
incurred the expenses to the extent practicable:
(i) Administration and transfer agent fees and expenses; (ii)
Litigation, legal and audit fees; (iii) State and foreign securities
registration fees; (iv) Shareholder report expenses; (v) Trustee fees
and expenses; (vi) Preparation, printing and related fees and expenses
for proxy statements and, with respect to
current shareholders, prospectuses and statements of
additional information; (vii) Expenses incurred in connection with
shareholder meetings; and (viii) Subject to approval by the Trustees,
such other fees and expenses as Forum, pursuant to Rule
18f-3, deems to be allocable to specified Classes.
(d) CLASS EXPENSE ALLOCATIONS. Class Expenses are to be borne solely by
the Class to which they relate. Item (i) of Section 3(c) in its entirety is
incurred by the Funds on a Class by Class basis and, accordingly, is wholly
allocated to specific Classes. All fees of a Fund's investment adviser AND
custodian [and manager] and all portfolio based fees of a Fund's fund accountant
are incurred by a Fund and not the individual Classes of the Fund. All other
items in Section 3(c) are allocated to a specific Class to the extent they are
attributable to the Classes in different amounts.
SECTION 4. OTHER ALLOCATIONS AND WAIVERS/REIMBURSEMENTS
(a) EXPENSES APPLICABLE TO MORE THAN ONE FUND. Expenses (other than
Class Expenses) incurred by the Trust on behalf of a Fund shall be allocated to
that Fund and expenses (other than Class Expenses) incurred by the Trust on
behalf of more than one Fund shall be allocated among the Funds that incurred
the expenses based on the net asset values of the Funds in relation to the net
asset value of all Funds to which the expense relates.
(b) OTHER ALLOCATIONS. Income, realized and unrealized capital gains
and losses and expenses other than Class Expenses related to a Fund shall be
allocated to each class of the Fund based on the net asset value of the Class
(excluding the value of subscriptions receivable) in relation to the net asset
value of the Fund.
(c) WAIVERS AND REIMBURSEMENTS. Nothing in this Plan shall be construed
as limiting the ability of any person to waive any fee paid by a Fund or Class
to that person or to reimburse any or all expenses of a Fund or Class; provided,
however, that no waiver or reimbursement shall be made such that the waiver or
reimbursement is, in effect, a DE FACTO modification of the fees provided for in
the Fund's various service agreements.
<PAGE>
SECTION 5. EXCHANGES
Shareholders of a Class may exchange their shares for shares of the
same Class of any other Fund in accordance with Section 11(a) of the Act, the
rules thereunder and the requirements of the applicable prospectuses.
SECTION 6. AMENDMENTS AND BOARD REVIEW
(a) NON-MATERIAL AMENDMENTS. Non-material amendments to this Plan may
be made at any time by Forum.
(b) MATERIAL AMENDMENTS. Material amendments to this Plan may only be
made by a majority of the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust as defined by the Act, upon
a finding that the amendment is in the best interests of the Classes affected by
the amendment and of the Fund and the Trust. Prior to any material amendment to
this Plan, the Board of Trustees (the "Board") shall request such information as
may be reasonably necessary to evaluate the Plan as proposed to be amended.
(c) BOARD REVIEW. The Board, including a majority of those trustees who
are not interested persons of the Trust as defined in the Act, shall review
periodically (i) this Plan for its continuing appropriateness and (ii) any fee
waivers and expense reimbursements to determine that the Funds are in compliance
with Section 4(c).
EXHIBIT (A)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Maurice J. DeWald constitutes and
appoints John Y. Keffer, David I. Goldstein, Arthur J. Brown and R. Darrell
Mounts and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement on Form
N-1A and any or all amendments thereto of Monarch Funds, and to file the same,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
/S/ MAURICE J. DEWALD
Maurice J. DeWald
Dated: October 16, 1992
EXHIBIT (C)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Jack J. Singer constitutes and
appoints John Y. Keffer, David I. Goldstein, Arthur J. Brown and R. Darrell
Mounts and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement on Form
N-1A and any or all amendments thereto of Monarch Funds, and to file the same,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
/S/ JACK J. SINGER
Jack J. Singer
Dated: October 16, 1992
EXHIBIT (E)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that John Y. Keffer constitutes and
appoints David I. Goldstein, Arthur J. Brown and R. Darrell Mounts and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N-1A and any
or all amendments thereto of Monarch Funds, and to file the same, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/S/ JOHN Y. KEFFER
John Y. Keffer
Dated: October 16, 1992
EXHIBIT (F)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that John Y. Keffer constitutes and
appoints David I. Goldstein, Thomas G. Sheehan, and R. Darrell Mounts and each
of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N-1A and any
or all amendments thereto of Core Trust (Delaware), and to file the same, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/S/ JOHN Y. KEFFER
John Y. Keffer
Dated: November 9, 1994
<PAGE>
CORE TRUST (DELAWARE)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that James C. Cheng constitutes and
appoints John Y. Keffer, David I. Goldstein, Thomas G. Sheehan, and R. Darrell
Mounts and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement on Form
N-1A and any or all amendments thereto of Core Trust (Delaware), and to file the
same, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
/S/ JAMES C. CHENG
James C. Cheng
Dated: November 9, 1994
<PAGE>
CORE TRUST (DELAWARE)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that J. Michael Parish constitutes and
appoints John Y. Keffer, David I. Goldstein, Thomas G. Sheehan, and R. Darrell
Mounts and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement on Form
N-1A and any or all amendments thereto of Core Trust (Delaware), and to file the
same, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
/S/ J. MICHAEL PARISH
J. Michael Parish
Dated: November 9, 1994
EXHIBIT (G)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Costas Azariadis constitutes and
appoints John Y. Keffer, David I. Goldstein, Thomas G. Sheehan, and R. Darrell
Mounts and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement on Form
N-1A and any or all amendments thereto of Core Trust (Delaware), and to file the
same, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
/S/ COSTAS AZARIADIS
Costas Azariadis
Dated: November 9, 1994
EXHIBIT (H)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Rudolph I. Estrada constitutes and
appoints David I. Goldstein, Arthur J. Brown and R. Darrell Mounts and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N-1A and any
or all amendments thereto of Monarch Funds, and to file the same, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/S/ RUDOLPH I. ESTRADA
Rudolph I Estrada
Dated: January 10, 1995
EXHIBIT (I)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Robert M. Franko constitutes and
appoints John Y. Keffer, David I. Goldstein, Arthur J. Brown and R. Darrell
Mounts and each of them, as true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Registration Statement on Form
N-1A and any or all amendments thereto of Monarch Funds, and to file the same,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
/S/ ROBERT M. FRANKO
Robert M. Franko
Dated: February 6, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MONARCH FUNDS 8/31/97 ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> CASH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 247,361,832
<INVESTMENTS-AT-VALUE> 247,361,832
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 247,361,832
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 387,343
<TOTAL-LIABILITIES> 387,343
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 246,993,985
<SHARES-COMMON-STOCK> 152,054,483
<SHARES-COMMON-PRIOR> 89,740,780
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (19,496)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 246,974,489
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,701,507
<OTHER-INCOME> 0
<EXPENSES-NET> 882,277
<NET-INVESTMENT-INCOME> 8,819,230
<REALIZED-GAINS-CURRENT> (8,648)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 8,810,582
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,826,021
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 771,736,564
<NUMBER-OF-SHARES-REDEEMED> 711,898,289
<SHARES-REINVESTED> 2,475,428
<NET-CHANGE-IN-ASSETS> 121,238,615
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (10,848)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 935,313
<AVERAGE-NET-ASSETS> 117,229,741
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MONARCH FUNDS 8/31/97 ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> CASH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 247,361,832
<INVESTMENTS-AT-VALUE> 247,361,832
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 247,361,832
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 387,343
<TOTAL-LIABILITIES> 387,343
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 246,993,985
<SHARES-COMMON-STOCK> 76,486,624
<SHARES-COMMON-PRIOR> 32,733,730
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (19,496)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 246,974,489
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,701,507
<OTHER-INCOME> 0
<EXPENSES-NET> 882,277
<NET-INVESTMENT-INCOME> 8,819,230
<REALIZED-GAINS-CURRENT> (8,648)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 8,810,582
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,697,925
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 571,922,876
<NUMBER-OF-SHARES-REDEEMED> 531,004,291
<SHARES-REINVESTED> 2,834,309
<NET-CHANGE-IN-ASSETS> 121,238,615
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (10,848)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 935,313
<AVERAGE-NET-ASSETS> 57,099,984
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MONARCH FUNDS 8/31/97 ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 024
<NAME> CASH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 247,361,832
<INVESTMENTS-AT-VALUE> 247,361,832
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 247,361,832
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 387,343
<TOTAL-LIABILITIES> 387,343
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 246,993,988
<SHARES-COMMON-STOCK> 152,054,483
<SHARES-COMMON-PRIOR> 89,740,780
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (19,499)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 246,974,489
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,701,507
<OTHER-INCOME> 0
<EXPENSES-NET> 882,277
<NET-INVESTMENT-INCOME> 8,819,230
<REALIZED-GAINS-CURRENT> (8,648)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 8,810,582
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,826,021
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 771,736,564
<NUMBER-OF-SHARES-REDEEMED> 711,898,289
<SHARES-REINVESTED> 2,475,428
<NET-CHANGE-IN-ASSETS> 121,238,615
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (10,848)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 935,313
<AVERAGE-NET-ASSETS> 117,229,741
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MONARCH
FUNDS FINANCIAL STATEMENT DATED 8/31/97 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> GOVERNMENT CASH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 476,768,745
<INVESTMENTS-AT-VALUE> 476,768,745
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 476,768,745
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,202,010
<TOTAL-LIABILITIES> 1,202,010
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 475,629,508
<SHARES-COMMON-STOCK> 245,179,214
<SHARES-COMMON-PRIOR> 256,251,428
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (62,773)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 475,566,735
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 27,216,340
<OTHER-INCOME> 0
<EXPENSES-NET> 1,204,257
<NET-INVESTMENT-INCOME> 26,012,083
<REALIZED-GAINS-CURRENT> (27,824)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 25,984,259
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,841,956
<DISTRIBUTIONS-OF-GAINS> 1,352
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,069,478,692
<NUMBER-OF-SHARES-REDEEMED> 2,088,930,438
<SHARES-REINVESTED> 8,379,532
<NET-CHANGE-IN-ASSETS> (30,056,372)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (32,358)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,419,587
<AVERAGE-NET-ASSETS> 259,529,757
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MONARCH
FUNDS FINANCIAL STATEMENT DATED 8/31/97 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> GOVERNMENT CASH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 476,768,745
<INVESTMENTS-AT-VALUE> 476,768,745
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 476,768,745
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,202,010
<TOTAL-LIABILITIES> 1,202,010
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 475,629,508
<SHARES-COMMON-STOCK> 230,450,715
<SHARES-COMMON-PRIOR> 249,010,624
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (62,773)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 475,566,735
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 27,216,340
<OTHER-INCOME> 0
<EXPENSES-NET> 1,204,257
<NET-INVESTMENT-INCOME> 26,012,083
<REALIZED-GAINS-CURRENT> (27,824)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 25,984,259
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,169,327
<DISTRIBUTIONS-OF-GAINS> 1,239
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,703,891,858
<NUMBER-OF-SHARES-REDEEMED> 4,729,611,744
<SHARES-REINVESTED> 7,159,556
<NET-CHANGE-IN-ASSETS> (30,056,372)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (32,358)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,419,587
<AVERAGE-NET-ASSETS> 246,090,251
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MONARCH FUNDS ANNUAL REPORT DATED 8/31/97 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 032
<NAME> TREASURY CASH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 71,102,520
<INVESTMENTS-AT-VALUE> 71,102,520
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,102,520
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 154,247
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 70,942,358
<SHARES-COMMON-STOCK> 40,826,735
<SHARES-COMMON-PRIOR> 79,256,691
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,915
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 70,948,273
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,525,129
<OTHER-INCOME> 0
<EXPENSES-NET> 188,874
<NET-INVESTMENT-INCOME> 2,336,255
<REALIZED-GAINS-CURRENT> 2,441
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,338,696
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,812,820
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 616,183,130
<NUMBER-OF-SHARES-REDEEMED> 654,886,646
<SHARES-REINVESTED> 273,560
<NET-CHANGE-IN-ASSETS> (12,291,881)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,474
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 270,438
<AVERAGE-NET-ASSETS> 37,112,187
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MONARCH FUNDS ANNUAL REPORT DATED 8/31/97 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 033
<NAME> TREASURY CASH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 71,102,520
<INVESTMENTS-AT-VALUE> 71,102,520
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,102,520
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 154,247
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 70,942,358
<SHARES-COMMON-STOCK> 30,115,623
<SHARES-COMMON-PRIOR> 3,979,989
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,915
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 70,948,273
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,525,129
<OTHER-INCOME> 0
<EXPENSES-NET> 188,874
<NET-INVESTMENT-INCOME> 2,336,255
<REALIZED-GAINS-CURRENT> 2,441
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,338,696
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 523,435
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 119,376,333
<NUMBER-OF-SHARES-REDEEMED> 93,774,543
<SHARES-REINVESTED> 533,844
<NET-CHANGE-IN-ASSETS> (12,291,881)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,474
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 270,438
<AVERAGE-NET-ASSETS> 11,487,366
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
