<PAGE>
M O N A R C H F U N D S
- --------------------------------------
- --------------------------------------
Treasury Cash Fund
Government Cash Fund
Cash Fund
ANNUAL REPORT
August 31, 1998
- --------------------------------------------------------------------------------
Dear Shareholders:
In the year since our last annual report, combined assets of the Monarch Funds
have grown to over $1.4 billion. Added to the good news of this record growth is
the truly impressive five year performance of Monarch's Government Cash Fund,
our oldest Fund. For the five years ended September 30, 1998, Universal Shares
of the Fund were ranked #1 for total return out of 98 funds in the
Government-Only Institutions-Only category tracked by IBC Financial Data, Inc.'s
Money Fund Report Averages-TM-(1). We know it will in no way diminish your
pleasure in these results to again be reminded that investment returns for the
Funds will fluctuate, and that past performance is no guarantee of future
results.
The year ended August 31, 1998 was also a successful one for our Treasury Cash
Fund and Cash Fund: Investor Shares assets in both funds have increased from
nearly $90 million to almost $240 million since our semi-annual report to you
earlier this year. As you know, we began offering Investor Shares in late 1995.
This share class offers lower investment minimums as well as checkwriting
privileges, features designed to appeal to a broader range of investors. Our
Universal and Institutional Shares, which are designed and customized to meet
the needs of the business community, also continue to attract new investors.
The management of Monarch Funds and I wish to thank you for your continued
confidence and support as we near the end of our 6th year of operations. We
remain strongly committed to superior performance and maintenance of your $1.00
share price through prudent portfolio management. After you review the following
detailed statements of the Funds' holdings and financial condition, please feel
free to call us with any questions or comments at (800) 754-8757.
Sincerely,
/s/ John Y. Keffer
John Y. Keffer
Chairman
(1) For the twelve months ended September 30, 1998, the Fund was ranked #4 for
total return out of 192 funds in the same category.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS OF MONARCH FUNDS
- ---------------------------------------------------------
<S> <C>
Portfolio Manager's Report.................... 2
Independent Auditors' Report.................. 3
Statements of Assets and Liabilities.......... 4
Statements of Operations...................... 5
Statements of Changes in Net Assets........... 6
Financial Highlights.......................... 7
Notes to Financial Statements................. 8
FINANCIAL STATEMENTS OF THE PORTFOLIOS
- ---------------------------------------------------------
Independent Auditors' Report.................. 13
Schedules of Investments...................... 14
Statements of Assets and Liabilities.......... 17
Statements of Operations...................... 18
Statements of Changes in Net Assets........... 19
Notes to Financial Statements................. 20
</TABLE>
- --------------------------------------------------------------------------------
ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. AN INVESTMENT IN
THE FUNDS IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT ENDORSED OR GUARANTEED BY
ANY BANK OR ANY AFFILIATE OF A BANK. THIS REPORT IS AUTHORIZED FOR DISTRIBUTION
ONLY TO CURRENT SHAREHOLDERS AND TO OTHERS WHO HAVE RECEIVED A COPY OF A MONARCH
FUNDS PROSPECTUS.
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
AN INTERVIEW WITH ANTHONY R. FISCHER, JR., PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
Mr. Fischer has been portfolio manager of the Funds since their inception.
Q. How have the Funds fared during the last twelve months?
A. Yields have been remarkably stable because the Federal Reserve Bank has not
changed the Federal Funds rate since the spring of 1997. While there was talk
that the Federal Reserve Bank might raise rates because of the strong economy
and the very low inflation rate, as well as the turbulence in Asia beginning in
August 1997, the Federal Reserve Bank chose to keep rates stable.
Q. Does growth in the Funds put downward pressure on yields?
A. Yes, to some extent. As the Funds grow, incoming monies have to be invested
at then current yields. Depending on current market sentiment, those yields can
be lower than a Fund's average existing yield. This, of course, puts downward
pressure on Fund yields.
Q. Have overseas market conditions affected Fund yields during the year?
A. Yes. Uncertainty in foreign markets has created a flight to U.S. Treasury
securities, which pushes their yields substantially lower than the Federal Funds
rate. Since we purchase U.S. Treasury bills, the result has been a partial
reduction in overall Fund yields.
Q. Has your overall investment strategy changed in response to global economic
conditions?
A. In direct response to uncertainties in foreign markets, as well as to
domestic turbulence, we have, since July 1997, extended the average maturities
of Government Cash Portfolio and Cash Portfolio.
Q. What is your outlook for the Funds over the next year? Do you expect
investors to seek a money fund safety net in an increasingly "unfriendly" stock
and bond environment?
A. Given the turbulence surrounding other forms of investments, we expect the
Funds to grow substantially over the next 6 to 12 months. As investors seek the
type of safe haven from volatile markets that our Funds provide, we expect to be
the beneficiary of substantial growth.
THE OPINIONS EXPRESSED IN THIS INTERVIEW REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH AUGUST 31, 1998. THE MANAGER'S OPINIONS ARE SUBJECT TO CHANGE AT
ANY TIME BASED ON THE GOVERNMENT SECURITIES MARKET AND OTHER CONDITIONS. THE
COMPOSITION AND HOLDINGS OF THE PORTFOLIOS ARE SUBJECT TO CHANGE.
2
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders
Monarch Funds
We have audited the accompanying statements of assets and liabilities of
Treasury Cash Fund, Government Cash Fund, and Cash Fund, each a series of
Monarch Funds (the Funds), as of August 31, 1998, and the related statements of
operations for the year then ended, statements of changes in net assets for each
of the years in the two-year period then ended and financial highlights for each
of the years or periods in the five-year period ended August 31, 1998. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Treasury Cash Fund, Government Cash Fund, and Cash Fund, as of August 31, 1998,
the results of their operations for the year then ended, changes in their net
assets for each of the years in the two-year period then ended and financial
highlights for each of the years or periods in the five-year period then ended,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 6, 1998
3
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
-------------- --------------- --------------
<S> <C> <C> <C>
ASSETS:
Investment in Portfolios of Core Trust (Delaware) at value
(Notes 1 & 2)............................................... $ 149,329,590 $ 699,288,136 $ 573,561,896
-------------- --------------- --------------
LIABILITIES:
Dividends payable............................................. 158,715 1,619,134 528,682
Payable to administrator (Note 3)............................. 3,462 28,509 20,823
Accrued expenses.............................................. 88,146 378,620 367,471
-------------- --------------- --------------
Total liabilities............................................... 250,323 2,026,263 916,976
-------------- --------------- --------------
NET ASSETS...................................................... $ 149,079,267 $ 697,261,873 $ 572,644,920
-------------- --------------- --------------
-------------- --------------- --------------
COMPONENTS OF NET ASSETS:
Paid in capital............................................... $ 149,066,419 $ 697,368,322 $ 572,663,523
Undistributed (distributions in excess of) net investment
income...................................................... -- (34,950) --
Accumulated net realized gain (loss).......................... 12,848 (71,499) (18,603)
-------------- --------------- --------------
NET ASSETS...................................................... $ 149,079,267 $ 697,261,873 $ 572,644,920
-------------- --------------- --------------
-------------- --------------- --------------
NET ASSETS BY CLASS OF SHARES:
Universal Shares.............................................. $ -- $ 253,644,219 $ 91,670,593
Institutional Shares.......................................... 91,122,142 443,617,654 299,220,153
Investor Shares............................................... 57,957,125 -- 181,754,174
-------------- --------------- --------------
NET ASSETS...................................................... $ 149,079,267 $ 697,261,873 $ 572,644,920
-------------- --------------- --------------
-------------- --------------- --------------
SHARES OF BENEFICIAL INTEREST:
Universal Shares.............................................. -- 253,705,528 91,670,975
Institutional Shares.......................................... 91,115,366 443,662,637 299,232,745
Investor Shares............................................... 57,951,053 -- 181,759,799
NET ASSET VALUE PER SHARE (OFFERING AND REDEMPTION PRICE PER
SHARE)........................................................ $ 1.00 $ 1.00 $ 1.00
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
------------ --------------- -------------
<S> <C> <C> <C>
NET INVESTMENT INCOME ALLOCATED FROM PORTFOLIOS OF CORE TRUST
(DELAWARE)
Interest income.................................................. $ 5,470,244 $ 35,439,213 $ 23,123,934
Net expenses..................................................... (149,600) (794,737) (532,410)
------------ --------------- -------------
Net investment income allocated from Portfolios of Core Trust
(Delaware) (Note 2)............................................... 5,320,644 34,644,476 22,591,524
------------ --------------- -------------
EXPENSES:
Administration (Note 3)
Universal Shares............................................... -- 113,364 25,795
Institutional Shares........................................... 27,327 199,480 107,670
Investor Shares................................................ 22,928 -- 70,012
Transfer agent (Note 3)
Universal Shares............................................... -- 144,599 34,429
Institutional Shares........................................... 119,247 815,003 441,229
Investor Shares................................................ 101,975 -- 289,208
Shareholder services (Note 3)
Institutional Shares........................................... 99,026 726,580 396,602
Investor Shares................................................ 83,999 -- 256,286
Distribution--Investor Shares (Note 3)........................... 114,707 -- 350,059
Legal (Note 3)................................................... 2,877 13,091 11,044
Audit............................................................ 4,008 8,770 7,404
Trustees......................................................... 2,447 15,888 8,994
Miscellaneous.................................................... 35,432 79,077 125,202
------------ --------------- -------------
Total expenses..................................................... 613,973 2,115,852 2,123,934
Fees waived (Note 4)............................................. (140,487) (217,680) (179,156)
------------ --------------- -------------
Net expenses....................................................... 473,486 1,898,172 1,944,778
------------ --------------- -------------
NET INVESTMENT INCOME.............................................. 4,847,158 32,746,304 20,646,746
------------ --------------- -------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM PORTFOLIOS
OF CORE TRUST (DELAWARE).......................................... 6,934 (43,518) 896
------------ --------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $ 4,854,092 $ 32,702,786 $ 20,647,642
------------ --------------- -------------
------------ --------------- -------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 1997 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
------------- ---------------- ----------------
<S> <C> <C> <C>
NET ASSETS--AUGUST 31, 1996........................................... $ 83,240,154 $ 505,623,107 $ 125,735,874
- ---------------------------- ------------- ---------------- ----------------
OPERATIONS:
Net investment income allocated from Portfolios of Core Trust
(Delaware)........................................................ 2,336,255 26,012,083 8,819,230
Net realized gain (loss) on investments allocated from Portfolios of
Core Trust (Delaware)............................................. 2,441 (27,824) (8,648)
------------- ---------------- ----------------
Net increase in net assets resulting from operations.............. 2,338,696 25,984,259 8,810,582
------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Universal Shares............................. -- (13,169,327) (295,284)
Net investment income--Institutional Shares......................... (1,812,820) (12,841,956) (5,826,021)
Net investment income--Investor Shares.............................. (523,435) (800) (2,697,925)
Net realized gain on investments--Universal Shares.................. -- (1,239) --
Net realized gain on investments--Institutional Shares.............. -- (1,352) --
------------- ---------------- ----------------
Total distributions to shareholders............................... (2,336,255) (26,014,674) (8,819,230)
------------- ---------------- ----------------
CAPITAL SHARES TRANSACTIONS (at $1.00 per share):
Sale of shares--Universal Shares.................................... -- 4,703,891,858 793,431,000
Sale of shares--Institutional Shares................................ 616,183,130 2,069,478,692 771,736,564
Sale of shares--Investor Shares..................................... 119,376,333 -- 571,922,876
Reinvestment of distributions--Universal Shares..................... -- 7,159,556 311,720
Reinvestment of distributions--Institutional Shares................. 273,560 8,379,532 2,475,428
Reinvestment of distributions--Investor Shares...................... 533,844 1,725 2,834,309
Redemption of shares--Universal Shares.............................. -- (4,729,611,744) (778,562,054)
Redemption of shares--Institutional Shares.......................... (654,886,646) (2,088,930,438) (711,898,289)
Redemption of shares--Investor Shares............................... (93,774,543) (395,138) (531,004,291)
------------- ---------------- ----------------
Net increase (decrease) from capital transactions................. (12,294,322) (30,025,957) 121,247,263
------------- ---------------- ----------------
Net increase (decrease) in net assets............................. (12,291,881) (30,056,372) 121,238,615
------------- ---------------- ----------------
NET ASSETS--AUGUST 31, 1997........................................... 70,948,273 475,566,735 246,974,489
- ---------------------------- ------------- ---------------- ----------------
OPERATIONS:
Net investment income allocated from Portfolios of Core Trust
(Delaware)........................................................ 4,847,158 32,746,304 20,646,746
Net realized gain (loss) on investments allocated from Portfolios of
Core Trust (Delaware)............................................. 6,934 (43,518) 896
------------- ---------------- ----------------
Net increase in net assets resulting from operations.............. 4,854,092 32,702,786 20,647,642
------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Universal Shares............................. -- (12,434,504) (2,829,163)
Net investment income--Institutional Shares......................... (2,730,320) (20,311,800) (11,009,468)
Net investment income--Investor Shares.............................. (2,116,838) -- (6,808,115)
------------- ---------------- ----------------
Total distributions to shareholders............................... (4,847,158) (32,746,304) (20,646,746)
------------- ---------------- ----------------
CAPITAL SHARES TRANSACTIONS (at $1.00 per share):
Sale of shares--Universal Shares.................................... -- 5,089,256,401 1,364,748,919
Sale of shares--Institutional Shares................................ 792,223,786 2,912,199,423 774,989,103
Sale of shares--Investor Shares..................................... 337,141,622 -- 1,421,668,593
Reinvestment of distributions--Universal Shares..................... -- 6,626,988 2,264,797
Reinvestment of distributions--Institutional Shares................. 899,824 10,058,549 5,703,260
Reinvestment of distributions--Investor Shares...................... 2,094,927 -- 6,808,022
Redemption of shares--Universal Shares.............................. -- (5,072,628,157) (1,293,795,619)
Redemption of shares--Institutional Shares.......................... (742,834,980) (2,723,774,548) (633,514,099)
Redemption of shares--Investor Shares............................... (311,401,119) -- (1,323,203,441)
------------- ---------------- ----------------
Net increase from capital transactions............................ 78,124,060 221,738,656 325,669,535
------------- ---------------- ----------------
Net increase in net assets........................................ 78,130,994 221,695,138 325,670,431
------------- ---------------- ----------------
NET ASSETS--AUGUST 31, 1998........................................... $ 149,079,267 $ 697,261,873 $ 572,644,920
- ---------------------------- ------------- ---------------- ----------------
------------- ---------------- ----------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Following is selected data for a share of each class of each Fund outstanding
during the past five years. See Note 1 for the date each share class commenced
operations.
<TABLE>
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
BEGINNING DISTRIBUTIONS ------------------------
NET ASSET NET FROM NET ENDING NET NET
VALUE PER INVESTMENT INVESTMENT ASSET VALUE INVESTMENT
SHARE INCOME INCOME PER SHARE EXPENSES INCOME
--------- ---------- ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
TREASURY CASH FUND
Institutional Shares
Year ended August 31, 1998.......... $ 1.00 $ 0.05 $ (0.05) $ 1.00 0.45% 5.00%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.45% 4.89%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.45% 5.01%
Year ended August 31, 1995.......... 1.00 0.05 (0.05) 1.00 0.42% 5.18%
Year ended August 31, 1994.......... 1.00 0.03 (0.03) 1.00 0.42% 3.03%
Investor Shares
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.82% 4.62%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.83% 4.55%
Period ended August 31, 1996........ 1.00 0.04 (0.04) 1.00 0.83%(b) 4.50%(b)
GOVERNMENT CASH FUND
Universal Shares
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.18% 5.48%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.17% 5.35%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.19% 5.43%
Year ended August 31, 1995.......... 1.00 0.06 (0.06) 1.00 0.24% 5.46%
Year ended August 31, 1994.......... 1.00 0.04 (0.04) 1.00 0.28% 3.48%
Institutional Shares
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.57% 5.09%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.57% 4.95%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.57% 5.06%
Year ended August 31, 1995.......... 1.00 0.05 (0.05) 1.00 0.54% 5.39%
Year ended August 31, 1994.......... 1.00 0.03 (0.03) 1.00 0.56% 3.45%
CASH FUND
Universal Shares
Year ended August 31, 1998.......... 1.00 0.06 (0.06) 1.00 0.18% 5.48%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.23% 5.32%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.27% 5.48%
Year ended August 31, 1995.......... 1.00 0.06 (0.06) 1.00 0.27% 5.59%
Year ended August 31, 1994.......... 1.00 0.04 (0.04) 1.00 0.27% 3.50%
Institutional Shares
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.57% 5.11%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.57% 4.97%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.57% 5.10%
Year ended August 31, 1995.......... 1.00 0.05 (0.05) 1.00 0.54% 5.33%
Year ended August 31, 1994.......... 1.00 0.03 (0.03) 1.00 0.54% 3.43%
Investor Shares
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.83% 4.86%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.83% 4.72%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.83% 4.68%
Period ended August 31, 1995........ 1.00 0.01 (0.01) 1.00 0.84%(b) 5.32%(b)
<CAPTION>
RATIO TO
NET ASSETS AVERAGE NET
AT END OF ASSETS
PERIOD -----------
TOTAL (000'S GROSS
RETURN OMITTED) EXPENSES(a)
---------- ---------- -----------
<S> <C> <C> <C>
TREASURY CASH FUND
Institutional Shares
Year ended August 31, 1998.......... 5.11% $ 91,122 0.67%
Year ended August 31, 1997.......... 4.98% 40,830 0.66%
Year ended August 31, 1996.......... 5.15% 79,259 0.69%
Year ended August 31, 1995.......... 5.28% 28,530 0.86%
Year ended August 31, 1994.......... 3.11% 41,194 0.74%
Investor Shares
Year ended August 31, 1998.......... 4.72% 57,957 0.91%
Year ended August 31, 1997.......... 4.58% 30,118 0.97%
Period ended August 31, 1996........ 4.00% 3,980 1.33%(b)
GOVERNMENT CASH FUND
Universal Shares
Year ended August 31, 1998.......... 5.63% 253,644 0.26%
Year ended August 31, 1997.......... 5.49% 230,410 0.26%
Year ended August 31, 1996.......... 5.59% 248,986 0.28%
Year ended August 31, 1995.......... 5.78% 182,546 0.52%
Year ended August 31, 1994.......... 3.64% 158,798 0.49%
Institutional Shares
Year ended August 31, 1998.......... 5.22% 443,618 0.58%
Year ended August 31, 1997.......... 5.06% 245,157 0.57%
Year ended August 31, 1996.......... 5.18% 256,244 0.57%
Year ended August 31, 1995.......... 5.46% 186,620 0.66%
Year ended August 31, 1994.......... 3.35% 61,738 0.68%
CASH FUND
Universal Shares
Year ended August 31, 1998.......... 5.65% 91,671 0.29%
Year ended August 31, 1997.......... 5.43% 18,453 0.47%
Year ended August 31, 1996.......... 5.53% 3,272 0.43%
Year ended August 31, 1995.......... 5.75% 26,525 0.56%
Year ended August 31, 1994.......... 3.69% 22,105 0.55%
Institutional Shares
Year ended August 31, 1998.......... 5.24% 299,220 0.61%
Year ended August 31, 1997.......... 5.07% 152,041 0.60%
Year ended August 31, 1996.......... 5.22% 89,733 0.60%
Year ended August 31, 1995.......... 5.23% 73,802 0.69%
Year ended August 31, 1994.......... 3.40% 55,771 0.72%
Investor Shares
Year ended August 31, 1998.......... 4.97% 181,754 0.86%
Year ended August 31, 1997.......... 4.81% 76,480 0.85%
Year ended August 31, 1996.......... 4.95% 32,731 0.96%
Period ended August 31, 1995........ 5.14%(b) 4,665 3.76%(b)
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding any fee waivers and expense reimbursements for the Fund and
its corresponding Portfolio.
(b) Annualized.
See Notes to Financial Statements.
7
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF ORGANIZATION
Monarch Funds (the "Trust") was organized as a Delaware business trust on July
10, 1992. The Trust, which is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "Act"), currently has
three diversified investment portfolios, Treasury Cash Fund, Government Cash
Fund and Cash Fund (each a "Fund" and collectively the "Funds"). The Funds are
authorized under the Trust's Trust Instrument to issue an unlimited number of
shares of beneficial interest without par value. Each Fund currently is
authorized to issue three classes of shares, Universal Shares, Institutional
Shares and Investor Shares. The Trust commenced the offering of each class of
shares as follows and no other class of shares currently is outstanding.
<TABLE>
<S> <C>
Treasury Cash Fund (Institutional Shares) July 12, 1993
Treasury Cash Fund (Investor Shares) October 25, 1995
Government Cash Fund (Universal Shares) October 29, 1992
Government Cash Fund (Institutional Shares) July 15, 1993
Cash Fund (Universal Shares) December 1, 1992
Cash Fund (Institutional Shares) July 15, 1993
Cash Fund (Investor Shares) June 16, 1995
</TABLE>
MASTER FEEDER ARRANGEMENT-Each Fund currently seeks to achieve its investment
objective by investing all of its investable assets in a separate portfolio
(each a "Portfolio" and collectively the "Portfolios") of Core Trust (Delaware)
("Core Trust"), a registered open-end, management investment company that has
the same investment objective and substantially similar policies as the Fund.
Accordingly, each Portfolio directly acquires securities, and a Fund investing
in the Portfolio acquires an indirect interest in those securities. The Funds
account for their investments in the Portfolios as partnership investments. This
is commonly referred to as a master-feeder arrangement. The financial statements
of the Portfolios are included elsewhere in this report. As of August 31, 1998
the percentage of Treasury Cash Portfolio owned by Treasury Cash Fund was 56.4%;
the percentage of Government Cash Portfolio owned by Government Cash Fund was
97.5%; and the percentage of Cash Portfolio owned by Cash Fund was 94.4%.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the fiscal period. Actual results could differ from those estimates. The
following represent significant accounting policies of the Funds:
SECURITY VALUATION-Each Fund determines its net asset value per share as of 1:00
p.m., Pacific time, on each business day. Each Fund records its investment in
its Portfolio at value. Valuation of securities held in the Portfolios is
discussed in the Notes to Financial Statements of Core Trust, included in this
report.
INVESTMENT INCOME AND EXPENSES-Each Fund records daily its prorata share of its
Portfolio's income, expenses and realized gain and loss. In addition, the Fund
accrues its own expenses.
CLASS SPECIFIC EXPENSES-Each share of each class of a Fund represents an
undivided, proportionate interest in the Fund. The Funds' class specific
expenses include administration fees, shareholder servicing fees, transfer agent
fees and certain other expenses as determined by the Trust's Board of Trustees
(the "Board").
8
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
AUGUST 31, 1998
- --------------------------------------------------------------------------------
Institutional Shares and Investor Shares incur shareholder servicing fees and
Investor Shares incur distribution fees. In addition, there are differences
between the classes of shares with respect to the minimum investment required.
FEDERAL TAXES-Each Fund intends to continue to qualify each year as a regulated
investment company and distribute all of its net investment income. In addition,
by distributing in each calendar year substantially all of its net investment
income, capital gain and certain other amounts, each Fund will not be subject to
a federal excise tax. Therefore, no federal income or excise tax provision is
required.
As of August 31, 1998, certain of the Funds had capital loss carryovers
available to offset future capital gains as follows: Cash Fund - $6,209 expiring
in 2004 and $10,851 expiring in 2005; Government Cash Fund - $27,824 expiring in
2005 and $41,999 expiring in 2006.
DISTRIBUTIONS TO SHAREHOLDERS-Distributions to shareholders of net investment
income are declared daily and paid monthly. Net capital gain, if any, is
distributed to shareholders at least annually. Distributions are based on
amounts calculated in accordance with applicable income tax regulations.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER-The investment adviser of each Portfolio is Forum Investment
Advisors, LLC ("Forum Advisors"). Prior to January 2, 1998 Linden Asset
Management, Inc. ("Linden") served as investment adviser of the Portfolios. On
January 2, 1998, Forum Advisors, Inc. acquired Linden and reorganized as Forum
Advisors. Each Fund may withdraw its investment from its respective Portfolio at
any time if the Board determines that it is in the best interest of the Fund and
its shareholders to do so.
ADMINISTRATOR-The administrator of each Fund is Forum Administrative Services,
LLC. ("FAdS"). For its administrative services and facilities, FAdS receives
from each Fund an administration fee at an annual rate of 0.05% of the average
daily net assets of the Fund. In addition, certain legal expenses are charged to
the Funds by FAdS. For the year ended August 31, 1998, the amounts charged to
Treasury Cash Fund, Government Cash Fund and Cash Fund were $101, $649 and $356,
respectively. A previous management agreement in effect with Forum Financial
Services, Inc. ("FFSI") during the period was identical in all material terms
including fees to the current agreement with FAdS.
TRANSFER AGENT-The transfer agent and dividend disbursing agent for the Funds is
Forum Shareholder Services, LLC ("FSS"). FSS is paid a transfer agent fee at an
annual rate of 0.20% of the average daily net assets of Institutional Shares and
Investor Shares of each Fund and 0.05% of the average daily net assets of
Universal Shares of each Fund, plus certain account and additional class
charges.
SHAREHOLDER SERVICE AGENT-The Trust has adopted a shareholder servicing plan
with respect to Institutional Shares and Investor Shares under which the Trust
pays FAdS a shareholder servicing fee at an annual rate of 0.20% of the average
daily net assets of Institutional Shares and Investor Shares of each Fund. FAdS
may pay any or all amounts of these payments to various institutions that
provide shareholder servicing to their customers who hold Institutional Shares
or Investor Shares.
DISTRIBUTOR-FFSI, a registered broker-dealer and a member of the National
Association of Securities Dealers, Inc., acts as each Fund's distributor. The
Trust has adopted a plan of distribution pursuant to Rule 12b-1 under the Act
with respect to Investor Shares under which the Trust pays FFSI a distribution
fee at an annual rate of 0.25% of the average daily net assets of Investor
Shares of each Fund. FFSI may pay any or all amounts of these payments to
various institutions that provide distribution or shareholder services for
Investor Shares. The Plan obligates the Funds to pay FFSI as compensation for
FFSI's services and not as reimbursement for certain expenses incurred.
9
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
AUGUST 31, 1998
- --------------------------------------------------------------------------------
NOTE 4. WAIVER OF FEES
FAdS, FSS and FFSI have voluntarily waived a portion of their fees. For the year
ended August 31, 1998, fees waived were as follows:
<TABLE>
<CAPTION>
TRANSFER SHAREHOLDER
ADMINISTRATION AGENT SERVICING DISTRIBUTION
FEE FEE FEE FEE TOTAL
-------------- ------------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Treasury Cash Fund
Institutional Shares $ 27,121 $ 32,971 $ 50,048 -- $ 110,140
Investor Shares 3,411 101 26,709 126 30,347
Government Cash Fund
Universal Shares 107,575 61,758 -- -- 169,333
Institutional Shares -- -- 48,347 -- 48,347
Cash Fund
Universal Shares 25,795 31,621 -- -- 57,416
Institutional Shares -- -- 78,293 -- 78,293
Investor Shares -- -- 43,447 -- 43,447
</TABLE>
NOTE 5. SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
The following matter was submitted to a vote of shareholders of the Funds at a
special meeting held December 12, 1997, and then continued on December 18, 1997:
to approve a new Investment Advisory Agreement between Core Trust and Forum
Advisors with respect to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio. Shares of the Funds were voted as follows: Treasury Cash Fund--
58,795,398 For; 215,956 Against; Government Cash Fund--175,365,665 For;
1,714,095 Abstained; Cash Fund--137,726,363 For; 3,000 Against; 5,210,719
Abstained.
10
<PAGE>
TREASURY CASH PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
ANNUAL REPORT
AUGUST 31, 1998
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Interestholders
Core Trust (Delaware)
We have audited the accompanying statements of assets and liabilities of
Treasury Cash Portfolio, Government Cash Portfolio, and Cash Portfolio, each a
series of Core Trust (Delaware) (the Portfolios), including the schedules of
investments, as of August 31, 1998, and the related statements of operations for
the year then ended and the statements of changes in net assets for each of the
years in the two-year period then ended. These financial statements are the
responsibility of the Portfolios' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of August 31, 1998 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Treasury Cash Portfolio,
Government Cash Portfolio, and Cash Portfolio as of August 31, 1998, the results
of their operations for the year then ended and the changes in their net assets
for each of the years in the two-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 6, 1998
13
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
TREASURY CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ -----------
<C> <S> <C>
U.S. TREASURY BILLS (A) (69.6%)
$20,000,000 5.04%, 10/22/98............... $19,857,342
15,000,000 5.09%, 12/24/98............... 14,758,462
150,000,000 5.43%, 9/15/98................ 149,683,250
-----------
Total U.S Treasury Bills 184,299,054
-----------
REPURCHASE AGREEMENTS (30.4%)
40,570,000 Bank of America, 5.78%,
9/1/98, to be repurchased at
$40,576,514; Collateralized
by $40,200,000 U.S. Treasury
Notes, 6.25%, 3/31/99....... 40,570,000
40,000,000 Donaldson, Lufkin & Jenrette
Securities Corp., 5.80%,
9/1/98, to be repurchased at
$40,006,444; Collateralized
by $49,737,000 U.S. Treasury
Strips IO, 4.87%, 11/15/09;
$36,950,000 U.S. Treasury
Strips IO, 5.37%, 2/15/17... 40,000,000
-----------
Total Repurchase Agreements 80,570,000
-----------
Total Investments (100.0%) (B) $264,869,054
-----------
-----------
</TABLE>
(A) Annualized yields at time of purchase.
(B) Tax cost of investments is $264,869,054.
See Notes to Financial Statements.
14
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
GOVERNMENT CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
<C> <S> <C>
U.S. GOVERNMENT SECURITIES (83.3%)
FEDERAL FARM CREDIT BANK (B) (2.5%)
$18,000,000 5.30%, 4/1/99................. $ 18,000,000
------------
FEDERAL HOME LOAN BANK--DISCOUNT
NOTES (A) (14.4%)
35,000,000 5.40%, 11/4/98................ 34,664,000
20,000,000 5.33%, 2/1/99................. 19,546,950
20,000,000 5.32%, 2/3/99................. 19,542,321
30,000,000 5.33%, 2/12/99................ 29,272,250
------------
Total Federal Home Loan Bank--Discount Notes
103,025,521
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--DISCOUNT
NOTES (A) (50.9%)
50,000,000 5.42%, 9/10/98................ 49,932,250
35,318,000 5.41%, 10/1/98................ 35,158,775
35,000,000 5.58%, 10/16/98............... 34,763,750
50,000,000 5.44%, 10/20/98............... 49,629,777
50,000,000 5.36%, 11/23/98............... 49,382,111
28,058,000 5.36%, 1/4/99................. 27,535,810
50,000,000 5.35%, 2/8/99................. 48,811,112
40,000,000 5.54%, 2/22/99................ 38,971,467
30,000,000 5.55%, 2/22/99................ 29,227,875
------------
Total Federal National Mortgage
Association--Discount Notes 363,412,927
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (3.5%)
25,000,000 5.45%, 3/16/99................ 25,000,000
------------
SMALL BUSINESS ADMINISTRATION (B) (11.3%)
308,114 Pool #500545, 8.38%,
3/25/03..................... 308,114
315,984 Pool #500746, 7.75%,
11/25/01.................... 315,984
916,751 Pool #501077, 7.00%,
11/25/14.................... 923,821
2,465,304 Pool #501308, 7.00%,
10/25/15.................... 2,518,496
2,811,122 Pool #501543, 6.88%,
7/25/16..................... 2,822,268
424,567 Pool #501628, 8.38%,
9/25/04..................... 424,567
1,187,786 Pool #501690, 6.63%,
12/25/16.................... 1,197,107
1,927,861 Pool #501898, 6.75%,
7/25/17..................... 1,936,198
5,581,658 Pool #502150, 6.50%,
2/25/18..................... 5,664,269
305,607 Pool #502161, 6.50%,
2/25/18..................... 306,264
2,752,875 Pool #502208, 6.50%,
2/25/18..................... 2,797,075
1,620,060 Pool #502306, 6.50%,
2/25/18..................... 1,644,270
1,977,575 Pool #502613, 6.50%,
4/25/19..................... 1,977,575
1,092,686 Pool #503058, 6.38%,
7/25/15..................... 1,092,686
1,706,555 Pool #503082, 6.38%,
8/25/20..................... 1,706,555
1,580,958 Pool #503120, 6.38%,
11/25/20.................... 1,580,958
461,643 Pool #503121, 6.38%,
8/25/15..................... 461,643
2,696,003 Pool #503232, 6.13%,
12/25/15.................... 2,696,003
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
<C> <S> <C>
SMALL BUSINESS ADMINISTRATION, CONTINUED:
$ 950,552 Pool #503278, 6.13%,
2/25/21..................... $ 950,518
2,900,520 Pool #503431, 6.25%,
7/25/21..................... 2,902,187
3,035,608 Pool #503461, 6.25%,
9/25/21..................... 3,037,480
1,739,665 Pool #503472, 6.25%,
8/25/21..................... 1,740,618
1,067,337 Pool #503553, 6.13%,
11/25/21.................... 1,064,678
5,037,804 Pool #503671, 6.13%,
3/25/22..................... 5,037,804
1,873,064 Pool #503754, 6.13%,
5/25/22..................... 1,873,064
1,194,471 Pool #503780, 6.13%,
3/25/22..................... 1,195,914
5,153,881 Pool #503882, 6.00%,
9/25/22..................... 5,147,671
4,359,648 Pool #503892, 6.13%,
7/25/22..................... 4,370,149
5,794,480 Pool #503909, 6.00%,
10/25/22.................... 5,790,936
2,973,358 Pool #504015, 6.00%,
1/25/23..................... 2,972,484
5,254,135 Pool #504062, 6.00%,
2/25/23..................... 5,254,135
5,327,203 Pool #504074, 6.00%,
2/25/23..................... 5,327,203
3,538,056 Pool #504203, 6.13%,
7/25/13..................... 3,549,046
------------
Total Small Business Administration 80,587,740
------------
STUDENT LOAN MARKETING ASSOCIATION (0.7%)
5,000,000 5.26%, 1/13/99................ 5,000,000
------------
Total U.S. Government Securities 595,026,188
------------
REPURCHASE AGREEMENTS (16.7%)
59,500,000 Bankers Trust Co., 5.80%,
9/1/98, to be repurchased at
$59,509,586; Collateralized
by $52,102,000 U.S. Treasury
Bonds, 6.50%, 11/15/26...... 59,500,000
60,000,000 Bear, Stearns & Co., Inc.,
5.78%, 9/1/98, to be
repurchased at $60,009,633;
Collateralized by
$19,380,000 U.S. Treasury
Notes, 6.13%, 12/31/01;
$25,300,000 U.S. Treasury
Bonds, 10.63%, 8/15/15...... 60,000,000
------------
Total Repurchase Agreements 119,500,000
------------
Total Investments (100.0%) (C) $714,526,188
------------
------------
</TABLE>
(A) Annualized yields at time of purchase.
(B) Certain securities are deemed to have a maturity remaining until the next
readjustment of the interest rate, the demand period or a combination of the
longer or the earlier of the demand period or readjustment. The interest
rates shown reflect the rate in effect on August 31, 1998.
(C) Tax cost of investments is $714,527,744.
See Notes to Financial Statements.
15
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
<C> <S> <C>
U.S. GOVERNMENT SECURITIES (8.7%)
FEDERAL HOME LOAN BANK--DISCOUNT NOTES (A) (3.2%)
$20,000,000 5.32%, 2/3/99................. $ 19,542,321
------------
SMALL BUSINESS ADMINISTRATION (B) (5.5%)
267,344 Pool #500536, 7.50%,
5/25/13..................... 271,172
510,939 Pool #500730, 8.38%,
2/25/04..................... 518,751
1,039,579 Pool #501733, 6.50%,
2/25/17..................... 1,059,150
1,075,499 Pool #501989, 6.63%,
10/25/12.................... 1,081,013
289,483 Pool #502914, 6.50%,
3/25/15..................... 289,765
1,846,572 Pool #503121, 6.38%,
9/25/15..................... 1,846,572
4,645,734 Pool #503429, 6.25%,
6/25/16..................... 4,645,734
758,902 Pool #503461, 6.25%,
9/25/21..................... 759,377
3,932,381 Pool #503553, 6.13%,
11/25/21.................... 3,921,933
2,809,596 Pool #503754, 6.13%,
5/25/22..................... 2,809,596
4,925,248 Pool #503882, 6.00%,
9/25/22..................... 4,919,307
5,454,681 Pool #503912, 6.00%,
10/25/22.................... 5,451,390
5,680,350 Pool #504015, 6.00%,
1/25/23..................... 5,678,613
------------
Total Small Business Administration 33,252,373
------------
Total U.S. Government Securities 52,794,694
------------
BANKERS ACCEPTANCES (A) (2.9%)
11,000,000 Bank of America, 5.53%,
2/16/99..................... 10,723,828
7,000,000 Bank of America, 5.53%,
2/17/99..................... 6,823,207
------------
Total Bankers Acceptances 17,547,035
------------
CERTIFICATES OF DEPOSITS (B) (0.7%)
4,000,000 Bankers Trust New York Co.,
5.64%, 9/11/98.............. 3,999,988
------------
COMMERCIAL PAPER (A) (55.4%)
25,000,000 American Express Credit Corp.,
5.48%, 9/16/98.............. 24,942,917
25,000,000 Associates Corp. of North
America, 5.48%, 9/16/98..... 24,942,917
25,000,000 CIT Group Holdings, Inc.,
5.49%, 9/30/98.............. 24,889,438
25,000,000 Caterpillar Financial Services
Corp., 5.57%, 2/22/99....... 24,345,085
28,000,000 Ford Motor Credit Co.,
5.47%, 2/8/99............... 27,319,290
7,000,000 General Electric Capital
Corp., 5.50%, 9/14/98....... 6,986,097
20,000,000 General Electric Capital
Corp., 5.47%, 1/20/99....... 19,571,518
25,000,000 General Motors Acceptance
Corp., 5.50%, 10/5/98....... 24,870,139
15,000,000 International Lease Finance
Corp., 5.49%, 10/5/98....... 14,922,225
10,000,000 International Lease Finance
Corp., 5.56%, 10/14/98...... 9,934,545
15,000,000 Merrill Lynch & Co., Inc.,
5.51%, 10/9/98.............. 14,912,758
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
$10,000,000 Merrill Lynch & Co., Inc.,
5.50%, 10/30/98............. $ 9,909,862
14,000,000 Monsanto Co., 5.49%,
10/8/98..................... 13,921,005
11,000,000 Monsanto Co., 5.48%,
12/8/98..................... 10,835,905
5,000,000 Monsanto Co., 5.47%,
1/28/99..................... 4,886,802
25,000,000 Prudential Funding Corp.,
5.47%, 1/21/99.............. 24,460,597
25,000,000 Salomon Smith Barney Holdings,
5.51%, 10/15/98............. 24,831,638
28,000,000 Transamerica Financial Corp.,
5.47%, 12/15/98............. 27,553,283
2,000,000 Transamerica Financial Corp.,
5.47%, 1/26/99.............. 1,955,330
------------
Total Commercial Paper 335,991,351
------------
CORPORATE NOTES (B) (4.1%)
15,000,000 Bear, Stearns & Co., Inc.,
5.64% V/R, 1/6/99........... 15,000,000
10,000,000 Bear, Stearns & Co., Inc.,
5.63% V/R, 4/6/99........... 10,000,000
------------
Total Corporate Notes 25,000,000
------------
REPURCHASE AGREEMENTS (28.2%)
85,650,000 Bankers Trust Corp., 5.80%,
9/1/98, to be repurchased at
$85,663,799; Collateralized
by $1,032,000 U.S. Treasury
Bonds, 11.75%, 11/15/14;
$75,000,000 U.S. Treasury
Bonds, 6.50%, 11/15/26...... 85,650,000
85,000,000 Bear, Stearns & Co., Inc.,
5.78%, 9/1/98, to be
repurchased at $85,013,647;
Collateralized by $6,035,000
U.S. Treasury Notes, 6.13%,
12/31/01; $50,000,000 U.S.
Treasury Bonds, 10.63%,
8/15/15..................... 85,000,000
------------
Total Repurchase Agreements 170,650,000
------------
Total Investments (100.0%) (C) $605,983,068
------------
------------
</TABLE>
(A) Annualized yields at time of purchase.
(B) Certain securities are deemed to have a maturity remaining until the next
readjustment of the interest rate, the demand period or a combination of the
longer or the earlier of the demand period or readjustment. The interest
rates shown reflect the rate in effect on August 31, 1998.
(C) Tax cost of investments is $605,984,702.
V/R - Variable Rate
See Notes to Financial Statements.
16
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- --------------- --------------
<S> <C> <C> <C>
ASSETS:
Investments: (Note 2)
Securities at amortized cost................................ $ 184,299,054 $ 595,026,188 $ 435,333,068
Repurchase agreements at cost............................... 80,570,000 119,500,000 170,650,000
-------------- --------------- --------------
Total investments at value................................ 264,869,054 714,526,188 605,983,068
Cash.......................................................... 18,156 12,272 17,591
Interest and other receivables................................ 12,958 2,688,859 1,413,946
Organization costs, net of amortization (Note 2).............. 479 8,779 2,374
-------------- --------------- --------------
Total assets.................................................... 264,900,647 717,236,098 607,416,979
-------------- --------------- --------------
LIABILITIES:
Payable to adviser (Note 3)................................... 7,678 24,524 18,592
Payable to administrator (Note 3)............................. 30,255 34,722 26,323
Accrued expenses.............................................. 17,767 52,495 31,220
-------------- --------------- --------------
Total liabilities............................................... 55,700 111,741 76,135
-------------- --------------- --------------
NET ASSETS...................................................... $ 264,844,947 $ 717,124,357 $ 607,340,844
-------------- --------------- --------------
-------------- --------------- --------------
COMPONENTS OF NET ASSETS:
Interestholders' capital...................................... $ 264,844,947 $ 717,124,357 $ 607,340,844
-------------- --------------- --------------
NET ASSETS...................................................... $ 264,844,947 $ 717,124,357 $ 607,340,844
-------------- --------------- --------------
-------------- --------------- --------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income.................................................. $8,226,210 $ 35,902,478 $ 24,178,266
------------ --------------- -------------
EXPENSES:
Investment advisory (Note 3)..................................... 55,735 238,860 158,716
Administration (Note 3).......................................... 74,964 317,754 212,800
Custody.......................................................... 37,482 158,877 106,400
Accounting (Note 3).............................................. 48,000 48,000 48,000
Legal (Note 3)................................................... 3,826 4,848 4,551
Audit............................................................ 9,522 22,255 17,758
Trustees......................................................... 565 2,723 1,615
Rating fees...................................................... 22,000 -- --
Amortization of organization costs............................... 239 4,390 1,187
Miscellaneous.................................................... 2,259 6,661 5,331
------------ --------------- -------------
Total expenses..................................................... 254,592 804,368 556,358
Fees waived (Note 4)............................................... (29,678) -- --
------------ --------------- -------------
Net expenses....................................................... 224,914 804,368 556,358
------------ --------------- -------------
NET INVESTMENT INCOME.............................................. 8,001,296 35,098,110 23,621,908
------------ --------------- -------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS SOLD....................... 9,432 (43,555) 853
------------ --------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $8,010,728 $ 35,054,555 $ 23,622,761
------------ --------------- -------------
------------ --------------- -------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 1997 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ----------------- ---------------
<S> <C> <C> <C>
NET ASSETS--AUGUST 31, 1996................................. $ 83,471,666 $ 508,099,794 $ 126,282,923
- ---------------------------- --------------- ----------------- ---------------
OPERATIONS:
Net investment income..................................... 2,525,129 27,216,340 10,105,993
Net realized gain (loss) on investments sold.............. 2,441 (27,824) (8,648)
--------------- ----------------- ---------------
Net increase in net assets resulting from operations.... 2,527,570 27,188,516 10,097,345
--------------- ----------------- ---------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions............................................. 292,088,302 1,552,918,166 633,698,622
Withdrawals............................................... (306,985,018) (1,611,437,731) (510,587,879)
--------------- ----------------- ---------------
Net transactions in investors' beneficial interests..... (14,896,716) (58,519,565) 123,110,743
--------------- ----------------- ---------------
Net increase (decrease) in net assets................... (12,369,146) (31,331,049) 133,208,088
--------------- ----------------- ---------------
NET ASSETS--AUGUST 31, 1997................................. 71,102,520 476,768,745 259,491,011
- ---------------------------- --------------- ----------------- ---------------
OPERATIONS:
Net investment income..................................... 8,001,296 35,098,110 23,621,908
Net realized gain (loss) on investments sold.............. 9,432 (43,555) 853
--------------- ----------------- ---------------
Net increase in net assets resulting from operations.... 8,010,728 35,054,555 23,622,761
--------------- ----------------- ---------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions............................................. 630,794,381 1,930,394,761 1,309,647,918
Withdrawals............................................... (445,062,682) (1,725,093,704) (985,420,846)
--------------- ----------------- ---------------
Net transactions in investors' beneficial interests..... 185,731,699 205,301,057 324,227,072
--------------- ----------------- ---------------
Net increase in net assets.............................. 193,742,427 240,355,612 347,849,833
--------------- ----------------- ---------------
NET ASSETS--AUGUST 31, 1998................................. $ 264,844,947 $ 717,124,357 $ 607,340,844
- ---------------------------- --------------- ----------------- ---------------
--------------- ----------------- ---------------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF ORGANIZATION
Core Trust (Delaware) ("Core Trust") was organized as a Delaware business trust
on September 1, 1994. Core Trust, which is registered as an open-end, management
investment company under the Investment Company Act of 1940 (the "Act"),
currently has twenty-one separate investment portfolios. These financial
statements relate to Treasury Cash Portfolio, Government Cash Portfolio and Cash
Portfolio (each a "Portfolio" and collectively the "Portfolios"), each of which
is diversified. The Portfolios commenced operations on September 1, 1995.
Interests in the Portfolios are sold in private placement transactions without
any sales charge to institutional clients, including open-end management
investment companies.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of increase and decrease in net assets from operations
during the fiscal period. Actual results could differ from those estimates. The
following represent significant accounting policies of the Portfolios:
SECURITY VALUATION-Each Portfolio determines its net asset value per share as of
1:00 p.m., Pacific time, on each business day, utilizing the amortized cost
method pursuant to Rule 2a-7 under the Act. Under this method, all investments
purchased at a discount or premium are valued by accreting or amortizing,
respectively, the difference between the original purchase price and the
maturity value of the investment over the period to the investment's maturity.
REPURCHASE AGREEMENTS-The Portfolios may invest in repurchase agreements. Each
Portfolio, through its custodian, receives delivery of the underlying
collateral, whose market value must always equal or exceed the repurchase price.
The investment adviser is responsible for determining the value of the
underlying collateral. In the event of default, a Portfolio may have
difficulties with the disposition of such securities held as collateral.
ORGANIZATIONAL COSTS-The costs incurred by each Portfolio in connection with its
organization have been capitalized and are being amortized using the
straight-line method over a five year period beginning on the commencement of
each Portfolio's operations.
FEDERAL TAXES-The Portfolios are not required to pay federal income taxes on
their net investment income and net capital gain, as they are treated as
partnerships for federal income tax purposes. All interest, dividends, gain and
loss of a Portfolio are deemed to have been "passed through" to the partners in
proportion to their interest in the Portfolio regardless of whether such
interest, dividends or gain has been distributed by the Portfolio.
SECURITIES TRANSACTIONS, INTEREST INCOME AND REALIZED GAIN AND LOSS-Securities
transactions are recorded on a trade date basis, interest income is accrued as
earned and realized gain and loss on investments sold are recorded on the basis
of identified cost.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER-The investment adviser of each Portfolio is Forum Investment
Advisors, LLC ("Forum Advisors"). Prior to January 2, 1998, Linden Asset
Management, Inc. ("Linden") served as investment adviser of the Portfolios. On
January 2, 1998, Forum Advisors, Inc. acquired Linden and reorganized as Forum
Advisors. Forum Advisors receives an advisory fee from each Portfolio based upon
the total average daily net assets of the Portfolios ("Total Portfolio Assets")
that is calculated on a cumulative basis at the following annual rates: 0.06%
for the first $200 million of Total Portfolio Assets, 0.04% of the next $300
million of Total Portfolio Assets and 0.03% of the remaining Total Portfolio
Assets.
20
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (concluded)
AUGUST 31, 1998
- --------------------------------------------------------------------------------
ADMINISTRATOR-The administrator of each Portfolio is Forum Administrative
Services, LLC ("FAdS"). For its administrative services and facilities, FAdS
receives from each Portfolio an administration fee at an annual rate of 0.05% of
the average daily net assets of the Portfolio. In addition, certain legal
expenses are charged to the Portfolios by FAdS. For the year ended August 31,
1998, the respective amounts charged to Treasury Cash Portfolio, Government Cash
Portfolio and Cash Portfolio were $48, $319 and $162.
PLACEMENT AGENT-Forum Financial Services, Inc. ("FFSI"), a registered
broker-dealer and a member of the National Association of Securities Dealers,
Inc., acts as each Portfolio's placement agent.
OTHER SERVICE PROVIDERS-Forum Accounting Services, LLC ("FAcS") serves as the
Portfolios' fund accountant and interestholder recordkeeper. For these services,
FAcS receives a fee from each Portfolio of $48,000 per year, plus additional
amounts depending on the number and type of portfolio transactions and number of
interest holders.
NOTE 4. WAIVER OF FEES
For the year ended August 31, 1998, FAdS voluntarily waived administration fees
for Treasury Cash Portfolio in the amount of $29,678.
NOTE 5. INCOME AND EXPENSE RATIOS
Income and expense ratios are presented below. During certain periods, various
fees were waived and expenses reimbursed. The ratio of Gross Expenses to Average
Net Assets reflects the expense ratio excluding any waivers and reimbursements.
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
-------------------------------------
NET
INVESTMENT GROSS
EXPENSES INCOME EXPENSES
----------- ----------- -----------
<S> <C> <C> <C>
Treasury Cash Portfolio
Year Ended August 31, 1998.................................................... 0.15% 5.34% 0.17%
Year Ended August 31, 1997.................................................... 0.15% 5.20% 0.18%
Year Ended August 31, 1996.................................................... 0.15% 5.30% 0.20%
Government Cash Portfolio
Year Ended August 31, 1998.................................................... 0.13% 5.52% 0.13%
Year Ended August 31, 1997.................................................... 0.14% 5.38% 0.14%
Year Ended August 31, 1996.................................................... 0.14% 5.49% 0.14%
Cash Portfolio
Year Ended August 31, 1998.................................................... 0.13% 5.55% 0.13%
Year Ended August 31, 1997.................................................... 0.15% 5.45% 0.15%
Year Ended August 31, 1996.................................................... 0.15% 5.50% 0.16%
</TABLE>
NOTE 6. SPECIAL MEETING OF INTERESTHOLDERS (UNAUDITED)
The following matter was submitted to a vote of Portfolio interestholders at a
special meeting held December 12, 1997, and then continued on December 18, 1997:
to approve a new Investment Advisory Agreement between Core Trust and Forum
Advisors with respect to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio. Interests in the Portfolios were voted as follows: Treasury Cash
Portfolio--99.63% For; 0.37% Against; Government Cash Portfolio--99.00% For;
1.00% Against; Cash Portfolio--96.45% For; 3.55% Against.
21
