As filed with the Securities and Exchange Commission on December 23, 1998
File Nos. 33-49570 and 811-6742
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 18
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 19
MONARCH FUNDS
Two Portland Square
Portland, Maine 04101
207-879-1900
David I. Goldstein
Forum Fund Services, LLC
Two Portland Square
Portland, Maine 04101
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to Rule 485, paragraph (b)
[X] on December 30, 1998 pursuant to Rule 485, paragraph (b)
[ ] 60 days after filing pursuant to Rule 485, paragraph (a)(1)
[ ] on _________________ pursuant to Rule 485, paragraph (a)(1)
[ ] 75 days after filing pursuant to Rule 485, paragraph (a)(2)
[ ] on _________________ pursuant to Rule 485, paragraph (a)(2)
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Each Fund of the Registrant is 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).
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(Treasury Cash Fund, Government Cash Fund and Cash Fund)
PART A
<TABLE>
<S> <C> <C> <C>
Form N-1A Item No.
Location in Prospectus
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary
Item 3. Condensed Financial Information Financial Highlights; Other Information
Item 4. General Description of Registrant Cover Page; Investment Objective and Policies;
Other Information
Item 5. Management of the Fund Management
Item 5A. Management's Discussion of Fund Performance Not Applicable
Item 6. Capital Stock and Other Securities Investment Objective and Policies; Distributions
and Tax Matters; Other Information; Purchases of
Shares; Redemptions of Shares
Item 7. Purchase of Securities Being Offered Purchases of Shares; Redemptions of Shares; Other
Information; Management
Item 8. Redemption or Repurchase Purchases of Shares; Redemptions of Shares
Item 9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(Treasury Cash Fund, Government Cash Fund and Cash Fund)
PART B
<TABLE>
<S> <C> <C> <C>
Form N-1A Item No.
Location in Statement of Additional Information
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 Holders of Management; Other Information
Securities
Item 16. Investment Advisory and Other Services Management; Other Information
Item 17. Brokerage Allocation and Other Practices Portfolio Transactions
Item 18. Capital Stock and Other Securities Other Information
Item 19. Purchase, Redemption and Pricing of Other Information; Additional Purchase and
Securities Being Offered Redemption Information
Item 20. Tax Status Taxation
Item 21. Underwriters Management
Item 22. Calculation of Performance Data Performance Data and Advertising
Item 23. Financial Statements Financial Statements
</TABLE>
<PAGE>
M O N A R C H F U N D S
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNIVERSAL SHARES
Treasury Cash Fund
Government Cash Fund
Cash Fund
PROSPECTUS
January 1, 1999
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 substantially all of its assets in
obligations of the U.S. Treasury and in repurchase agreements backed by
these obligations.
GOVERNMENT CASH FUND invests substantially all of its assets 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, 1999 ("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 Fund Services, LLC, at Two Portland Square, Portland, Maine
04101.
<TABLE>
<S> <C> <C> <C>
TABLE OF CONTENTS
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>
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. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
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 (the "1940 Act").
MANAGEMENT. Forum Administrative Services, LLC ("Forum") supervises the overall
management of the Funds and the Portfolios. Forum Fund Services, LLC ("FFS") 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 Shareholder Services, LLC. 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 5:00 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, 1998 except that expenses for Treasury Cash Fund are estimated for
its fiscal year ending August 31, 1999.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
<S> <C> <C> <C> <C>
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% 0.09% 0.09%
Total Operating Expenses 0.25% 0.18% 0.18%
</TABLE>
All information includes the Fund's pro rata portion of the expenses of its
corresponding Portfolio. Absent expense reimbursements and fee waivers,
Mangement Fees would be 0.14%, 0.14% and 0.14%; Other Expenses would be
0.26%, 0.12% and 0.15%; and Total Operating Expenses would be 0.40%, 0.26%
and 0.29%.
(2) Includes all advisory and administration fees.
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:
<TABLE>
<S> <C> <C> <C> <C> <C>
One Year Three Years Five Years Ten Years
Treasury Cash Fund $3 $8 $14 $32
Government Cash Fund $2 $6 $10 $23
Cash Fund $2 $6 $10 $23
</TABLE>
<PAGE>
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, 1999, 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 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>
Ratios to Average
Net
Assets
---------------------
Beginning
Net Net Assets Ratio of
Asset Distributions Ending End of Average Net
Value Net From Net Net Asset Net Period Assets
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, 1998 $ 1.00 $0.05 $(0.05) $ 1.00 0.45% 5.00% 5.11% $91,122 0.67%
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, 1998 1.00 0.05 (0.05) 1.00 0.18% 5.48% 5.63% 253,644 0.26%
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, 1998 1.00 0.06 (0.06) 1.00 0.18% 5.48% 5.65% 91,671 0.29%
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, 1998, the net assets of each Fund (combining the assets of
each class of shares) was: Treasury Cash Fund, $149,079,267, Government
Cash Fund, $697,261,873 , and Cash Fund, $572,644,920 .
<PAGE>
3. INVESTMENT OBJECTIVE AND POLICIES
Each Fund invests 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 corresponding Portfolio 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 , A Division of The McGraw Hill
Companies, 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 the 1940 Actand maintains
a dollar-weighted average portfolio maturity of 90 days or less. Except to the
extent permitted by Rule 2a-7 and the 1940 Act 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 attain 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. 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
<PAGE>
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-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 Fund 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. Each
portfolio, 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 such securities. The Adviser monitors the liquidity of the
Portfolios' investments, but there can be no guarantee that an active secondary
market will exist.
WHEN-ISSUED AND DELAYED DELIVERY 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.
<PAGE>
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
behind short-term market 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.
INVESTMENT ADVISER AND ADMINISTRATOR
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 seven other mutual funds, including two money
market funds. 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.
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 average
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.
FFS, a registered broker-dealer and member of the National Association of
Securities Dealers, Inc., serves as each Fund's distributor. FFS acts as the
agent of the Trust in connection with the offering of shares of the Funds.
As of the date hereof Forum and its affiliates acted as administrator and
distributor of registered investment companies with assets of approximately $60
billion. As of the date of this Prospectus,the Adviser, Forum, FFS and the
Trust's transfer agent were each controlled by John Y. Keffer, an officer and
Trustee of the Trust and of Core Trust. Each of these companies is located at
Two Portland Square, Portland, Maine 04101.
<PAGE>
SHAREHOLDER SERVICING
Forum Shareholder Services, LLC (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. 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 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 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 Shareholder Services, LLC
Account #: 09075-933
Re: [Name of Fund] - Universal Shares
Account #:
Account Name:
<PAGE>
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 a sub-transfer agent or processing agent. 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 FFS.
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 FFS 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.
<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 and in some cases
must have a signature guarantee. 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 of net investment
income reinvested in additional Fund shares or received in cash. In addition,
shareholders may have all distributions of net capital gain reinvested in
additional Fund shares or 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.
<PAGE>
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
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 net asset value per share of each Fund is determined 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
<PAGE>
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 10, 1998, there were no outstanding Universal Shares of Treasury
Cash Fund. As of that same date, no shareholder owned more than 25% of the total
outstanding Universal Shares of Government Cash Fund. Also as of that same date,
Imperial Asset Management Inc. of Inglewood, California owned of record for the
benefit of its various customers; Imperial Bank of Inglewood, California; and
Coastcast Corporation of Rancho Dominguez, California each owned more than 25%
of the total outstanding Universal Shares of Cash Fund. From time to time
various shareholders may own a large percentage of a class or 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 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. 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.. Besides the Funds, other investment
companies invest in the Portfolios. All investors in a Portfolio invest on the
same terms and conditions as the Funds and pays 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 is
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.
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. 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. 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,
<PAGE>
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.
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 FFS
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.
<PAGE>
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.
<PAGE>
M O N A R C H F U N D S
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INSTITUTIONAL SHARES
Treasury Cash Fund
Government Cash Fund
Cash Fund
PROSPECTUS
January 1, 1999
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 substantially all of its assets in
obligations of the U.S. Treasury and in repurchase agreements backed by
these obligations.
GOVERNMENT CASH FUND invests substantially all of its assets 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, 1999 ("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 Fund Services, LLC, at Two Portland Square, Portland, Maine
04101.
<TABLE>
<S> <C> <C>
TABLE OF CONTENTS
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>
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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<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 (the "1940
Act).
MANAGEMENT. Forum Administrative Services, LLC ("Forum") supervises the overall
management of the Funds and the Portfolios. Forum Fund Services, LLC ("FFS") 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 Shareholder Services, LLC. See "Management"
for a description of the services provided and fees charged to the Funds.
SHAREHOLDER SERVICING. The Trust has adopted a Shareholder Service Agreement
relating to Institutional Shares under which Forum 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 5:00 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, 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) 0.07% 0.14% 0.14%
Rule 12b-1 Fees None None None
Other Expenses (after expense reimbursements) 0.38% 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,
Management Fees would be 0.14%, 0.14% and 0.14%; Other Expenses would be
0.53%, 0.45% and 0.47%; and Total Operating Expenses would be 0.67%, 0.59%
and 0.61%.
(2) Includes advisory and administration fees.
<PAGE>
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:
<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 $72
Cash Fund $6 $18 $32 $72
</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 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
Assets
---------------------
Beginning Net
Net Assets at Ratio of
Asset Distributions Ending End of Average Net
Value Net From Net Net Asset Net Period Assets
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, 1998 $ 1.00 $ 0.05 $ (0.05) $ 1.00 0.45% 5.00% 5.11% $ 91,122 0.67%
Year Ended August 31, 1997 0.05 (0.05) 1.00 0.45% 4.89% 4.98% 40,830 0.66%
1.00
Year Ended August 31, 1996 0.05 (0.05) 1.00 0.45% 5.01% 5.15% 79,259 0.69%
1.00
Year Ended August 31, 1995 0.05 (0.05) 1.00 0.42% 5.18% 5.28% 28,530 0.86%
1.00
Year Ended August 31, 1994 0.03 (0.03) 1.00 0.42% 3.03% 3.11% 41,194 0.74%
1.00
July 12 to Aug. 31, 1993 ------ ------ 1.00 0.45%(b) 2.65%(b) 2.81%(b) 39,660 1.09%(b)
1.00
GOVERNMENT CASH FUND(C)
INSTITUTIONAL SHARES
Year Ended August 31, 1998 0.05 (0.05) 1.00 0.57% 5.09% 5.22% 443,618 0.58%
1.00
Year Ended August 31, 1997 0.05 (0.05) 1.00 0.57% 4.95% 5.06% 245,147 0.57%
1.00
Year Ended August 31, 1996 0.05 (0.05) 1.00 0.57% 5.06% 5.18% 256,244 0.57%
1.00
Year Ended August 31, 1995 0.05 (0.05) 1.00 0.54% 5.39% 5.46% 186,620 0.66%
1.00
Year Ended August 31, 1994 0.03 (0.03) 1.00 0.56% 3.45% 3.35% 61,738 0.68%
1.00
July 15 to Aug. 31, 1993 ------ ------ 1.00 0.53%(b) 2.91%(b) 2.89%(b) 31,483 1.04%(b)
1.00
UNIVERSAL SHARES
Oct. 29, 1992 to Aug. 31, 0.03 (0.03) 1.00 0.21%(b) 3.19%(b) 3.23%(b) 158,516 0.52%(b)
1993 1.00
CASH FUND(C)
INSTITUTIONAL SHARES
Year Ended August 31, 1998 0.05 (0.05) 1.00 0.57% 5.11% 5.24% 299,220 0.61%
1.00
Year Ended August 31, 1997 0.05 (0.05) 1.00 0.57% 4.97% 5.07% 152,041 0.60%
1.00
Year Ended August 31, 1996 0.05 (0.05) 1.00 0.57% 5.10% 5.22% 89,733 0.60%
1.00
Year Ended August 31, 1995 0.05 (0.05) 1.00 0.54% 5.33% 5.23% 73,802 0.69%
1.00
Year Ended August 31, 1994 0.03 (0.03) 1.00 0.54% 3.43% 3.40% 55,771 0.72%
1.00
July 15 to Aug. 31, 1993 ------ ------ 1.00 0.53%(b) 2.94%(b) 2.97%(b) 34,383 1.07%(b)
1.00
UNIVERSAL SHARES
Dec. 1, 1992 to Aug. 31, 0.03 (0.03) 1.00 0.25%(b) 3.29%(b) 3.36%(b) 47,854 0.62%(b)
1993 1.00
</TABLE>
<PAGE>
(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, 1998, the net assets of each Fund (combining the assets of
each class of shares) was: Treasury Cash Fund, $149,079,267 , Government
Cash Fund, $697,261,873, and Cash Fund, $572,644,920.
<PAGE>
3. INVESTMENT OBJECTIVE AND POLICIES
Each Fund invests 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 corresponding Portfolio 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 , A Division of The McGraw Hill
Companies, 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 1940 Act and maintains a
dollar-weighted average portfolio maturity of 90 days or less. Except to the
extent permitted by Rule 2a-7 and the 1940 Act 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 attain 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. 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
<PAGE>
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-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. Each
Portfolio, 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 such securities. The Adviser monitors the liquidity of the
Portfolios' investments, but there can be no guarantee that an active secondary
market will exist.
WHEN-ISSUED AND DELAYED DELIVERY 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.
<PAGE>
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
behind short-term market 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.
INVESTMENT ADVISER AND ADMINISTRATOR
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 seven other mutual funds, including two money
market funds. 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.
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 average
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.
FFS, a registered broker-dealer and member of the National Association of
Securities Dealers, Inc., serves as each Fund's distributor. FFS acts as the
agent of the Trust in connection with the offering of shares of the Funds.
As of the date hereof Forum and its affiliates acted as administrator and
distributor of registered investment companies with assets of approximately $60
billion. As of the date of this Prospectus, the Adviser, Forum, FFS and the
Trust's transfer agent were each controlled by John Y. Keffer, an officer and
Trustee of the Trust and of Core Trust. Each of these companies is located at
Two Portland Square, Portland, Maine 04101.
<PAGE>
SHAREHOLDER SERVICING
TRANSFER AND DIVIDEND DISBURSING AGENT. Forum Shareholder Services, LLC (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. 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 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. As compensation for Forum's shareholder service
activities with respect to Institutional Shares, the Trust pays Forum a fee at
an annual rate of 0.20% of the average daily net assets of each Fund
attributable to Institutional Shares. Forum 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 is paid a fee by Forum of up to 0.20% 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, redemptions and
exchanges 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 $100,000. 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
<PAGE>
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:
Imperial Bank
ABA# 122201444
For Credit To: Forum Shareholder Services, LLC
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 a sub-transfer agent or processing agent. 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 FFS.
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
<PAGE>
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 FFS 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
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 and in some cases
must have a signature guarantee . 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.
<PAGE>
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 of net investment
income reinvested in additional Fund shares or received in cash. In addition,
shareholders may have all distributions of net capital gain reinvested in
additional Fund shares or 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.
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
<PAGE>
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 net asset value per share of each Fund is determined 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 10, 1998, no shareholder owned more than 25% of the outstanding
Institutional Shares of Government Cash Fund. As of that same date, Imperial
Trust Company of Inglewood, 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 the State of California, Department of
Health Services of Sacramento, California each owned more than 25% of the total
outstanding Institutional Shares of Treasury Cash Fund. From time to time
various shareholders may own a large percentage of a class or 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. 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.
<PAGE>
THE PORTFOLIOS. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. Besides the Funds, other investment
companies invest in the Portfolios. All investors in a Portfolio invest on the
same terms and conditions as the Funds and pays 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 is
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.
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. 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. 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.
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 FFS
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.
<PAGE>
M O N A R C H F U N D S
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTOR SHARES
Treasury Cash Fund
Government Cash Fund
Cash Fund
PROSPECTUS
January 1, 1999
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 substantially all of its assets in
obligations of the U.S. Treasury and in repurchase agreements backed by
these obligations.
GOVERNMENT CASH FUND invests substantially all of its assets 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, 1999 ("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 Fund Services, LLC, at Two Portland Square, Portland, Maine
04101.
<TABLE>
<S> <C> <C>
TABLE OF CONTENTS
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>
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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<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 (the "1940 Act").
MANAGEMENT. Forum Administrative Services, LLC ("Forum") supervises the overall
management of the Funds and the Portfolios. Forum Fund Services, LLC ("FFS") 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 Shareholder Services, LLC. 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 Agreement and a Plan of Distribution relating to Investor Shares under
which Forum and FFS, respectively, are 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 5:00 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 Government Cash Fund are estimated for its fiscal
year ending August 31, 1999. Expenses for the other Funds are based on the
Funds' fiscal year ended August 31, 1998.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) (1)
<TABLE>
<S> <C> <C> <C> <C>
Treasury Government
Cash Fund Cash Fund Cash Fund
Management Fees (2) (after fee waivers) 0.11% 0.14% 0.14%
Rule 12b-1 Fees 0.25% 0.25% 0.25%
Other Expenses (after expense reimbursements) 0.47% 0.44% 0.44%
----- ----- -----
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
Management Fees would be0.14%, 0.14% and 0.14%; Other Expenses would be
0.52%, 0.51% and 0.46%; and Total Operating Expenses would be 0.91%, 0.90%
and 0.85%.
<PAGE>
(2) Includes all advisory, 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 $101
Government Cash Fund $8 $26 $46 $1032
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 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>
Ratios to Average Net Net Assets
at
Beginning Assets End of Ratio of
Distributions Ending ----------------------- 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, 1998 $ 1.00 $0.05 $(0.05) $ 1.00 0.82% 4.62% 4.72% $57,957 0.91%
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, 1998 1.00 0.05 (0.05) 1.00 0.18% 5.48% 5.63% 253,644 0.26%
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
1993 0.52%(b)
CASH FUND(C)
INVESTOR SHARES
Year Ended August 31, 1998 1.00 0.05 (0.05) 1.00 0.83% 4.86% 4.97% 181,754 0.86%
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
1993 0.62%(b)
</TABLE>
<PAGE>
(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, 1998, the net assets of each Fund (combining the assets of
each class of shares) was: Treasury Cash Fund, $149,079,267 , Government
Cash Fund, $697,261,873, and Cash Fund, $572,644,920.
<PAGE>
3. INVESTMENT OBJECTIVE AND POLICIES
Each Fund invests 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 corresponding Portfolio 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 , A Division of The McGraw Hill
Companies, 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 1940 Act and maintains a
dollar-weighted average portfolio maturity of 90 days or less. Except to the
extent permitted by Rule 2a-7 and the 1940 Act 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 attain 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
<PAGE>
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-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. Each
Portfolio, 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 such securities. The Adviser monitors the liquidity of the
Portfolios' investments, but there can be no guarantee that an active secondary
market will exist.
WHEN-ISSUED AND DELAYED DELIVERY 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.
<PAGE>
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
behind short-term market 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.
INVESTMENT ADVISER AND ADMINISTRATOR
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 seven other mutual funds, including two money
market funds. 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.
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 average
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.
FFS, a registered broker-dealer and member of the National Association of
Securities Dealers, Inc., serves as each Fund's distributor. FFS acts as the
agent of the Trust in connection with the offering of shares of the Funds. As of
the date hereof Forum and its affiliates acted as administrator and distributor
of registered investment companies with assets of approximately $60 billion. As
of the date of this Prospectus the Adviser, Forum, FFS and the Trust's transfer
agent were each controlled by John Y. Keffer, an officer and Trustee of the
Trust and of Core Trust. Each of these companies is located at Two Portland
Square, Portland, Maine 04101.
<PAGE>
DISTRIBUTOR
FFS, a registered broker-dealer and member of the National Association of
Securities Dealers, Inc., serves as each Fund's distributor. FFS 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, FFS 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 FFS's services as distributor. From this
amount, FFS 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 FFS exceed its Rule 12b-1 fees for any Fund, the Fund will not be obligated
to pay FFS an additional amount and if FFS's distribution related expenses are
less than its Rule 12b-1 fees, FFS will realize a profit.
SHAREHOLDER SERVICING
TRANSFER AND DIVIDEND DISBURSING AGENT. Forum Shareholder Services, LLC (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. 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 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. As compensation for Forum's shareholder service
activities with respect to Investor Shares, the Trust pays Forum a fee at an
annual rate of 0.20% of the average daily net assets of each Fund attributable
to Investor Shares. Forum 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 is paid a fee by Forum of up to 0.20% 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, redemptions and
exchanges 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.
<PAGE>
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:
<TABLE>
<S> <C> <C>
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.
</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 Shareholder Services, LLC
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 a sub-transfer agent or processing agent. 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 FFS.
<PAGE>
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.
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 FFS 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
<PAGE>
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 and in some cases
must have a signature guarantee. 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.
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.
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 of net investment
income reinvested in additional Fund shares or received in cash. In addition,
shareholders may have all distributions of net capital gain reinvested in
additional Fund shares or 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
<PAGE>
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
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 net asset value per share of each Fund is determined 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 10, 1998, there were no outstanding Investor Shares of Government
Cash Fund. As of that same date, Imperial Bank of Inglewood, California owned of
record for the benefit of its various customers, substantially all of the total
outstanding Investor Shares of Treasury Cash Fund and Cash Fund. From time to
time various shareholders may own a large percentage of a class or 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.
<PAGE>
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 acquires an indirect interest in those
securities. 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. Besides the Funds, other investment
companies invest in the Portfolios. All investors in a Portfolio invest on the
same terms and conditions as the Funds and pays 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 is
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.
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. 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. 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.
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 FFS
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.
<PAGE>
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.
<PAGE>
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, 1999
Monarch Funds is a registered, open-end management investment company. This
Statement of Additional Information supplements the Prospectuses (dated January
1, 1999) 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 OF CONTENTS
Page
----
1. INVESTMENT POLICIES 3
2. INVESTMENT LIMITATIONS 7
3. INVESTMENTS BY FINANCIAL INSTITUTIONS 8
4. PERFORMANCE DATA AND ADVERTISING 10
5. MANAGEMENT 11
6. DETERMINATION OF NET ASSET VALUE 20
7. PORTFOLIO TRANSACTIONS 21
8. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 21
9. TAXATION 23
10. OTHER INFORMATION 24
11. FINANCIAL STATEMENTS 25
APPENDIX A - DESCRIPTION OF CERTAIN SECURITIES RATINGS 26
APPENDIX B - PERFORMANCE DATA 28
APPENDIX C - MISCELLANEOUS TABLES 30
<PAGE>
DEFINITIONS
As used in this Statement of Additional Information, the following terms shall
have the meanings listed:
"Forum" 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.
"FSS" means Forum Shareholder Services, LLC.
"FFS" means Forum Fund Services, LLC.
"FAcS" 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 and 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.
<PAGE>
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. 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.
Each Fund has an 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).
A Fund might withdraw its investment in a Portfolio 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.
If other investors redeemed their interest in a Portfolio, the Portfolio's
remaining investors (including the Fund) might, as a result, experience higher
pro rata operating expenses.
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.
Following is information pertaining to the investment policies of each
Portfolio, which supplements the investment policy information contained in the
Funds' Prospectuses.
FEDERAL HOME LOAN MORTGAGE CORPORATION
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, a
Division of The McGraw Hill Companies ("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.
<PAGE>
SMALL BUSINESS ADMINISTRATION SECURITIES
Each Portfolio may purchase securities issued by the Small Business
Administration ("SBA"). SBA securities are variable rate securities that are
backed by 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, (1) the Portfolio would have more than 15% of its net assets
invested in SBA securities, (2) 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 (3) 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-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 in 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.
<PAGE>
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 a 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 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, cash, U.S. Government Securities or other liquid
securities will be segregated 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
<PAGE>
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 a Portfolio as
illiquid securities if there is no readily available market for the instrument.
REPURCHASE AGREEMENTS
In connection with entering into repurchase agreements , 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 procedures adopted by the Core Trust Board.
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.
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 may invest up to 15% of its total assets in money market funds. Each
Portfolio only invests in money market funds when it has excess cash and the
<PAGE>
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.
(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:
<PAGE>
(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) 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.
<PAGE>
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
United States branches and agencies of foreign 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, no such
security will be (1) a stripped mortgage backed security ("SMBS"), (2) a
collateralized mortgaged obligation ("CMO") or real estate mortgage investment
conduit ("REMIC") that does not meet each of the tests outlined in 12 C.F.R.
Section 703.100(e) or (3) a residual interest in a CMO or REMIC. Each Portfolio
also may invest in reverse repurchase agreements in accordance with 12 C.F.R.
703.100(j)4(e) to the extent otherwise permitted hereunder and in the
Prospectus.
INVESTMENTS BY SHAREHOLDERS THAT ARE SAVINGS ASSOCIATIONS - GOVERNMENT 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.
<PAGE>
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 Fund's
shareholders and Portfolio's interestholders, as applicable.
4. PERFORMANCE DATA AND ADVERTISING
For a listing of certain performance data as of August 31, 1998, 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
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.
<PAGE>
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:
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 these 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 (1)
portfolio holdings and portfolio allocation as of certain dates, such as
portfolio diversification by instrument type, by instrument or by maturity, (2)
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, (3) 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, (4) 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 (5) 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.
<PAGE>
Rudolph I. Estrada, Trustee (age 50)
President and Chief Executive Officer of Summit Group, a banking and business
consulting company, since 1987. He is Professor (Adjunct) of Finance and
Management and Director of the Small Business Institute at California State
University; and Director, Pacific Crest Loan & Investment, Augura, California.
His address is 625 Fair Oaks Avenue, Suite 101, South Pasadena, California
91030.
Maurice J. DeWald, Trustee (age 58)
Chairman and Chief Executive Officer, Verity Financial Group, Inc. (a financial
advisory firm) since May 1991. Mr. DeWald also serves as a director of Tenet
Healthcare Corporation, ARV AssistedLiving, Inc.,Dai-Ichi Kangyo Bank and
Advanced Materials Group, Inc. of California. His address is 19200 Von Karman
Avenue, Suite 400, Irvine, California 92612.
Robert M. Franko, Trustee (age 51)
President of Imperial Financial Group, Inc. from February 1997, Chairman of
Imperial Trust Company from March 1995 and President of Imperial Trust Company
from September 1997 to September 1998. From February 1995 to April 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 served 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 Boulevard,
14th Floor, Inglewood, California 90301.
John Y. Keffer,* Trustee, Chairman and President (age 56)
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 54)
President, Imperial Securities Corp. since November 1992, Senior Vice President,
Imperial Bank since November 1987 and Chairman and President of Imperial Asset
Management, Inc. since August 1997. His address is 9920 South LaCienega
Boulevard, Inglewood, California 90301.
David I. Goldstein, Vice President and Secretary (age 37)
General Counsel, Forum Financial Group, LLC, with which he has been associated
since 1991. 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.
Stacey Hong, Treasurer (age 32)
Director, Fund Accounting, Forum Financial Group, LLC, with which he has been
associated since April 1992. Mr. Hong 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.
Dawn Taylor, Assistant Treasurer (Age 34)
Tax Manager, Forum Financial Group, LLC, with which she has been associated
since 1994. Prior thereto, Ms. Taylor was a tax consultant for The New England
Mutual Life Insurance Company, Boston, Massachusetts. Ms. Taylor is also an
officer of various registered investment companies for which the various Forum
Financial Group of Companies provides services. Her address is Two Portland
Square, Portland, Maine 04101.
Beth P. Hanson, Assistant Secretary (age 32)
Fund Administration Manager, 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.
<PAGE>
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, Goldstein and Hong, 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
Costas Azariadis, Trustee (age 55)
Professor of Economics, University of California, Los Angeles, since
July 1992. His address is Department of Economics, University of
California, Los Angeles, 405 Hilgard Avenue, Los Angeles, California
90024.
James C. Cheng, Trustee (age 56)
President of Technology Marketing Associates (a marketing consulting
company)since September 1991. His address is 27 Temple Street, Belmont,
Massachusetts 02178.
J. Michael Parish, Trustee (age 54)
Partner at the law firm of Reid and Priest, LLP, since 1995. Prior
thereto, he was a partner at Winthrop Stimson Putnam & Roberts from
1989-1995. His address is 40 West 57th Street,, New York, New York
10019.
Thomas G. Sheehan, Vice President (age 44)
Managing Director, Forum Financial Group, LLC, with which he has been
associated since October, 1993. Mr. Sheehan also serves as an officer
of other registered investment companies for which the various Forum
Financial Group of Companies provides services. His address is Two
Portland Square, Portland, Maine 04101.
Stacey Hong, Treasurer
David I. Goldstein, Vice President and Secretary
Pamela J. Wheaton, Assistant Treasurer (age 38)
Senior Manager, Fund Accounting, Forum Financial Group, LLC, with which
she has been associated since 1989. Ms. Wheaton is also an officer of
other registered investment companies for which the Forum Financial
Group of Companies provides services. Her address is Two Portland
Square, Portland, Maine 04101.
<PAGE>
Leslie K. Klenk, Assistant Secretary (age 34)
Assistant Counsel, Forum Financial Group, LLC, with which she has been
associated since April 1998. Prior thereto, Ms. Klenk was Vice
President and Associate General Counsel at Smith Barney Inc. Ms. Klenk
is also an officer of other investment companies for which the Forum
Financial Group of Companies provides services. Her address is Two
Portland Square, Portland, Maine 04101.
Pamela Stutch, Assistant Secretary (age 31)
Fund Administrator, Forum Financial Group, LLC, with which she has
been associated since May 1998. Prior thereto, Ms. Stutch attended
Temple University School of Law and graduated in 1997. Ms. Stutch was
a legal intern for the Maine Department of the Attorney General. Ms.
Stutch is also an officer of other investment companies for which the
Forum Financial Group of Companies provides services. Her address is
Two Portland Square, Portland, Maine 04101.
TRUSTEE AND OFFICER COMPENSATION
Each Trustee of the Trust is paid $3,000 ($2,000 prior to September 1, 1998) for
each Board meeting attended (whether in person or by electronic communication)
and is paid $3,000 (also $2,000 prior to September 1, 1998) 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 and Singer
have not accepted any fees (other than reimbursement for travel and related
expenses) for their services as Trustees.
The following table provides the aggregate compensation excluding travel and
related expenses, paid to each Trustee for the twelve months ended August 31,
1998. The Trust has not adopted any form of retirement plan covering Trustees or
officers.
<TABLE>
<S> <C> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. DeWald $8,000 None None $8,000
Mr. Estrada $8,000 None None $8,000
Mr. Franko $0 None None $0
Mr. Keffer $0 None None $0
Mr. Singer $0 None None $0
</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. 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 (other than reimbursement for travel and
related expenses) for his services as Trustee. The following table provides the
aggregate compensation excluding travel and related expenses, paid to each
trustee of Core Trust for the twelve months ended August 31, 1998. Core Trust
has not adopted any form of retirement plan covering trustees or officers of
Core Trust.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Azariadis $12,100 None None $12,100
Mr. Parish $12,100 None None $12,100
Mr. Cheng $12,100 None None $12,100
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, except for willful misfeasance, bad faith
or gross negligence in the performance of the Advisor's duties or by reason of
reckless disregard of the Adviser's obligations and duties under the Investment
Advisory Agreement.
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 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 a Senior Vice President and Treasurer of United
California Savings Bank, Santa Ana, California from 1984 to 1989 and,
immediately prior thereto, a Manager for five years at PaineWebber Jackson &
Curtis, New York, New York.
<PAGE>
Table 1 in Appendix C shows the dollar amount of investment advisory fees paid
by the Portfolios and the Funds.
ADMINISTRATOR AND DISTRIBUTOR
ADMINISTRATION SERVICES. Forum 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 Forum 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 Forum's duties or by reason of reckless
disregard of its obligations and duties under the Administration Agreement.
At the request of the Board, Forum provides persons satisfactory to the Board to
serve as officers of the Trust. Similarly, at the request of the Core Trust
Board, Forum 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
Forum, the Adviser, FFS 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 Financial Services, Inc. acted as
administrator of the Trust under an agreement substantially identical to the
Administration Agreement.
Forum 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 Financial Services, Inc. acted as
administrator of Core Trust under an agreement substantially identical to the
administration agreement between Core Trust and Forum.
DISTRIBUTION SERVICES. FFS 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 (1) are
not parties to the Distribution Agreement, (2) are not interested persons of any
such party or of the Trust and (3) 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 FFS are directed to the Trust for
acceptance and are not binding on the Trust until accepted by it. FFS 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. Prior
to January 1, 1999, Forum Financial Services, Inc. acted as distributor of the
Trust under an agreement substantially identical to the Distribution Agreement.
The Distribution Agreement provides that FFS 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 FFS's duties or
<PAGE>
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 FFS 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 (1) are not interested persons of the Trust and (2) 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.
FFS acts as sole placement agent for interests in the Portfolios and receives no
compensation for those services from the Portfolios. Prior to January 1, 1999,
Forum Financial Services, Inc. acted as placement agent for 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, FFS or their respective
affiliates and costs of other personnel (who may be employees of the Adviser,
FFS 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.
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 FFS 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 FFS'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 FFS 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.
<PAGE>
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, 1998, 1997 and 1996, all amounts paid to FFS
under the Investor Class Plan were paid out to various financial intermediaries
not affiliated with FFS for their distribution services.
TRANSFER AGENT
Forum Shareholder Services, LLC ("FSS") acts as transfer agent 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 FSS as transfer agent for the Trust are, with
respect to shareholders of record: (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 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.
Any sub-transfer agent or processing agent 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. FSS 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 FSS with respect to
assets of those customers or clients invested in the Funds. FSS, FFS or
sub-transfer agents or processing agents retained by the FSS may be
Participating Organizations and, in the case of sub-transfer agents or
processing agents, may also be affiliated persons of FSS or FFS.
For its transfer agency services, FSS receives an annual fee from each Fund of
0.05% of each Fund's average daily net assets attributable to Universal Class
and 0.20% of each Fund's average daily net assets attributable to Institutional
Class and Investor Class. In addition, FSS 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
Class shareholder and $24 per Institutional Shares and Investor Shares
shareholder. Table 4 in Appendix C shows the dollar amount of fees paid under
the Transfer Agent Agreement with respect to each Fund. Prior to November 1,
1998, Forum Financial Corp. served as transfer agent of the Trust under an
agreement substantially identical to the Transfer Agency Agreement.
SHAREHOLDER SERVICE AGREEMENTS
The Trust has adopted a shareholder service agreement ("Shareholder Service
Agreement") with respect to the Institutional Class and the Investor Class of
each Fund which provides that Forum may obtain the services of financial
<PAGE>
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 Agreement, the Trustees considered among
other things whether (1) the Shareholder Service Agreement is in the best
interests of the applicable classes and their respective shareholders, (2) the
services to be performed pursuant to the Shareholder Service Agreement are
required for the operation of the applicable classes, (3) 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
(4) 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 Agreement 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 Agreement (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 Agreement 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
Agreement further provides material amendments of the agreement must be approved
by the Qualified Trustees. The Shareholder Service Agreement may be terminated
at any time by the Board or by a majority of the Qualified Trustees.
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: (1) 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;
(2) provide necessary personnel and facilities to establish and maintain
shareholder accounts and records; (3) assist shareholders in arranging for
processing purchase, exchange and redemption transactions; (4) arrange for the
wiring of funds; (5) guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
(6) integrate periodic statements with other shareholder transactions; and (7)
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 Agreement with respect to Institutional Class and Investor Class of each
Fund. Prior to February 1, 1998, the fee payable under the Shareholder Service
Agreement was 0.15% of the average net assets of each Fund attributable to
Institutional Class and Investor Class.
FUND ACCOUNTANT
FAcS provides accounting services for the Funds and interestholder recordkeeper
and accounting services for each Portfolio.
Under its agreement with Core Trust, FAcS 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
<PAGE>
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. FAcS 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 FFS and its affiliates), $6,000 per year. In
addition, FAcS 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.
FAcS 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.
FAcS 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 FAcS, 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 FAcS'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 FAcS by an officer of the Trust duly authorized. This
indemnification does not apply to FAcS's actions taken or failures to act in
cases of FAcS's own bad faith, willful misconduct or gross negligence.
The Trust has retained FAcS 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 currently is payable for
fund accounting services to the Funds. A fee may be charged, subject to Board
approval. 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 Forum, the Adviser, FFS, FSS and FAcS 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 (or the days on which they are observed): New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, 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.
<PAGE>
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 (1) 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 (2) 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
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 or its 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 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, FSS, 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.
<PAGE>
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.
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
FFS 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
<PAGE>
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.
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.
<PAGE>
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. Effective September 1, 1998, Core Trust pays the
custodian a fee at an annual rate of 0.025% of the first $1.5 billion, 0.020% of
the next $1.0 billion and 0.015% of the balance of the average daily net assets
of the Portfolios combined. Prior to September 1, 1998, Core Trust paid the
custodian a fee at an annual rate of 0.025% of each Portfolio's average daily
net assets.
AUDITORS
KPMG LLP, independent auditors, acts as auditors for the Funds 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 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. FFS 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.
The Trust or any series may be terminated upon the sale of its assets to, or
merger with, another open-end management investment company or series thereof,
or upon liquidation and distribution of its assets. 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
<PAGE>
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 10, 1998, 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, 1998 and the Independent Auditors' Report
thereon (included in the Annual Report to Shareholders), which are delivered
along with this SAI, 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, 1998
and the Independent Auditors' Report thereon (included in the Annual Report to
Shareholders).
<PAGE>
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 , A DIVISION OF THE MCGRAW HILL COMPANIES ("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, L.P. ("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
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.
<PAGE>
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.
S&P
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
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.
<PAGE>
APPENDIX B - PERFORMANCE DATA
For the seven day period ended August 31, 1998, the annualized yields of each of
the classes of the Funds that were then operating were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
7 Day 30 Day
7 Day Yield Effective Yield 30 Day Yield Effective Yield
----------- --------------- ------------ ---------------
Treasury Cash Fund
Institutional Shares 5.04% 5.16% 5.00% 5.12%
Investor Shares 4.66% 4.77% 4.63% 4.73%
Government Cash Fund
Universal Shares 5.40% 5.55% 5.40% 5.54%
Institutional Shares 5.00% 5.13% 5.00% 5.12%
Cash Fund
Universal Shares 5.48% 5.63% 5.48% 5.62%
Institutional Shares 5.09% 5.22% 5.09% 5.21%
Investor Shares 4.83% 4.94% 4.83% 4.93%
</TABLE>
<PAGE>
For the periods ended August 31, 1998, the total return of each of the classes
of the Funds were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
One Month Three Months Calendar Year to Date One Three Years
--------- ------------ --------------------- ---- -----------
Year
----
Cumulative Annualized Cumulative Annualized Cumulative Annualized Cumulative Annualized
Treasury Cash Fund
Institutional Shares 0.43 5.12 1.26 5.11 3.37 5.10 5.11 16.04 5.08
Investor Shares 0.39 4.73 1.17 4.72 3.11 4.71 4.72 n/a n/a
Government Cash Fund
Universal Shares 0.46 5.54 1.38 5.58 3.70 5.62 5.63 17.65 5.57
Institutional Shares 0.43 5.12 1.28 5.16 3.44 5.21 5.22 16.28 5.16
Cash Fund
Universal Shares 0.47 5.62 1.39 5.62 3.72 5.64 5.65 17.56 5.54
Institutional Shares 0.43 5.21 1.29 5.21 3.45 5.23 5.24 16.36 5.18
Investor Shares 0.41 4.94 1.22 4.94 3.28 4.96 4.97 15.47 4.91
</TABLE>
- -------------
Five Years Since Inception
---------- ---------------
Cumulative Annualized Cumulative Annualized
25.97 4.73 26.44 4.67
n/a n/a 13.91 4.67
28.98 5.22 32.48 4.93
26.74 4.85 30.13 4.61
28.89 5.20 32.14 4.96
26.88 4.88 30.14 4.67
n/a n/a 16.77 4.95
Inception dates are listed in the Funds' annual report.
<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' prior investment adviser.
For the fiscal year ended August 31, 1998, the fees paid under the Investment
Advisory Agreement with respect to each Portfolio were:
Treasury Cash Portfolio $44,687
Government Cash Portfolio $167,904
Cash Portfolio $122,199
For the period ended January 1, 1998, the fees paid under the prior Investment
Advisory Agreement with respect to each Portfolio were:
Treasury Cash Portfolio $11,048
Government Cash Portfolio $70,957
Cash Portfolio $36,516
For the fiscal year ended August 31, 1997, the fees paid under the prior
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 prior
Investment Advisory Agreement with respect to each Portfolio were:
Treasury Cash Portfolio $12,930
Government Cash Portfolio $156,552
Cash Portfolio $38,083
TABLE 2 - ADMINISTRATION FEES
For the fiscal year ended August 31, 1998, 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 $50,255 $30,532 $19,723
Government Cash Fund $312,844 $107,575 $205,269
Cash Fund $203,477 $25,795 $177,682
For the fiscal year ended August 31, 1997, the fees payable by the Funds under
the Administration Agreement were:
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
</TABLE>
<PAGE>
For the fiscal year ended August 31, 1998, the fees payable by the Portfolios
for administrative services were:
<TABLE>
<S> <C> <C> <C>
Accrued Fee Fee Waived Fee Paid
Treasury Cash Portfolio $49,866 $33,171 $16,695
Government Cash Portfolio $313,973 $0 $313,973
Cash Portfolio $203,628 $0 $203,628
For the fiscal year ended August 31, 1997, the fees payable by the Portfolios
for administrative services were:
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 $29,678 $1,506
Government Cash Portfolio $230,634 $0 $230,634
Cash Portfolio $56,113 $12,698 $43,415
TABLE 3 - INVESTOR CLASS DISTRIBUTION FEES
For the fiscal year ended August 31, 1998, the fees payable under the Investor
Class Plan were as follows.
Accrued Fee Fee Waived Fee Paid
Treasury Cash Fund $114,707 $126 $114,581
Government Cash Fund n/a n/a n/a
Cash Fund $350,059 $0 $350,059
For the fiscal year ended August 31, 1997, the fees payable under the Investor
Class Plan were as follows.
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
</TABLE>
TABLE 4 - TRANSFER AGENT FEES
For the fiscal year ended August 31, 1998, 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 $119,247 $32,971 $86,276
Investor Shares $101,975 $101 $101,874
Government Cash Fund
Universal Shares $144,599 $61,758 $82,841
Institutional Shares $815,003 $0 $815,003
Cash Fund
Universal Shares $34,429 $31,621 $2,808
Institutional Shares $441,229 $0 $441,229
Investor Shares $289,208 $0 $289,208
For the fiscal year ended August 31, 1997, the fees payable by the Funds under
the Transfer Agency Agreement were:
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
For the fiscal year ended August 31, 1996, the fees payable by the Funds under
the Transfer Agency Agreement were:
Accrued Fee Fee Waived Fee Paid
Treasury Cash Fund
Institutional Shares $82,722 $0 $82,722
Investor Shares $12,110 $0 $12,110
Government Cash Fund
Universal Shares $127,832 $0 $127,832
Institutional Shares $518,144 $0 $158,144
Investor Shares $3,758 $0 $3,758
Cash Fund
Universal Shares $11,705 $0 $11,705
Institutional Shares $191,176 $0 $191,176
Investor Shares $39,450 $0 $39,450
</TABLE>
<PAGE>
TABLE 5 - SHAREHOLDER SERVICE FEES
INSTITUTIONAL SHARES
For the fiscal year ended August 31, 1998, the shareholder service fees payable
to Forum with respect to Institutional Shares were as follows.
<TABLE>
<S> <C> <C> <C>
Accrued Fee Fee Waived Fee Paid
Treasury Cash Fund $99,026 $50,048 $48,978
Government Cash Fund $726,580 $48,347 $678,233
Cash Fund $396,602 $78,293 $318,309
For the fiscal year ended August 31, 1997, the shareholder service fees payable
to Forum under the Shareholder Service Agreement 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 shareholder service fees payable
to Forum under the Shareholder Service Agreement 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
INVESTOR SHARES
For the fiscal year ended August 31, 1998, the shareholder service fees payable
to Forum with respect to Investor Shares were as follows.
Accrued Fee Fee Waived Fee Paid
Treasury Cash Fund $83,999 $26,709 $57,290
Cash Fund $256,286 $43,447 $212,839
For the fiscal year ended August 31, 1997, the shareholder service fees payable
to Forum 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
</TABLE>
<PAGE>
For the fiscal year ended August 31, 1996, the shareholder service fees payable
to Forum with respect to Investor Shares were as follows.
<TABLE>
<S> <C> <C> <C>
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
TABLE 6 - FUND ACCOUNTING FEES
For the fiscal year ended August 31, 1998, the fees payable by the Portfolios
under the Portfolio and Unitholder Accounting Agreement were:
Accrued Fee Fee Waived Fee Paid
Treasury Cash Portfolio $48,000 $0 $48,000
Government Cash Portfolio $48,000 $0 $48,000
Cash Portfolio $48,000 $0 $48,000
For the fiscal year ended August 31, 1997, the fees payable by the Portfolios
under the Portfolio and Unitholder Accounting 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 Portfolio and Unitholder Accounting 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
</TABLE>
TABLE 7 - 5% SHAREHOLDERS
As of December 10, 1998, 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 of the same date, no shareholder beneficially owned more than 25% of the
outstanding shares of the Trust as a whole.
<PAGE>
<TABLE>
<S> <C> <C>
Holders of record only are noted as such.
Percentage
TREASURY CASH FUND Percentage of of Fund
Institutional Shares Shareholders Shares Owned Shares Owned
State of California
Dept. of Health Services
Sacramento, CA 92434 48.36 26.11
Imperial Trust Company (recordholder)
Los Angeles, CA 90012 34.31 18.52
Antrim Design Systems Inc.
Scotts Valley, CA 95066 5.62 3.03
Percentage
TREASURY CASH FUND Percentage of of Fund
Investor Shares Shareholders Shares Owned Shares Owned
Imperial Bank (recordholder)
Inglewood, CA 90301 88.57 40.75
Percentage
GOVERNMENT CASH FUND Percentage of of Fund
Universal Shares Shareholders Shares Owned Shares Owned
J&J Properties
Inglewood, CA 90301 10.42 4.15
Los Angeles Lakers
Inglewood, CA 90306 9.85 3.92
County of Alameda
Oakland, CA 94612 8.13 3.24
Life Bank
Riverside, CA 92505 5.96 2.37
Visions Federal Credit Union
Endicott, NY 13760 5.65 2.25
Imperial Bancorp
Inglewood, CA 90301 5.19 2.07
PFF Bank & Trust
Pomona, CA 91767 5.15 2.05
First Fidelity Thrift & Loan
Irvine, CA 92614 5.07 2.02
Percentage
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Percentage
GOVERNMENT CASH FUND Percentage of of Fund
Institutional Shares Shareholders Shares Owned Shares Owned
Imperial Trust Company (recordholder)
Los Angeles, CA 90012 12.76 7.67
Nations Holding Group
Los Angeles, CA 90020 11.12 6.69
Fidelity National Title Insurance Co.
Santa Barbara, CA 93105 8.97 5.40
International Family Entertainment Inc.
Los Angeles, CA 90024 8.62 5.18
Legato Systems Inc.
Palo Alto, CA 94304 8.44 5.08
Mother Lode Holding Co.
Auburn, CA 95603 5.38 3.24
United Title Companies DC
Lakewood, CO 80215 5.38 3.24
CASH FUND Percentage of of Fund
Universal Shares Shareholders Shares Owned Shares Owned
Imperial Asset Management Inc. (recordholder)
Inglewood, CA 90301 33.51 4.68
Imperial Bank
Los Angeles, CA 90009 33.37 4.66
Coastcast Corporation
Rancho Dominguez, CA 90221 31.15 4.35
Percentage
CASH FUND Percentage of of Fund
Institutional Shares Shareholders Shares Owned Shares Owned
Imperial Trust Company (recordholder)
Los Angeles, CA 90012 39.80 18.76
Tegal Corporation
Petaluma, CA 94955 6.84 3.22
Percentage
CASH FUND Percentage of of Fund
Investor Shares Shareholders Shares Owned Shares Owned
Imperial Bank (recordholder)
Inglewood, CA 90301 98.03 38.13
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. EXHIBITS
(a) Financial Statements
Location in the Prospectus: Financial Highlights
Location in the SAI: 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, 1998 and the Independent Auditors' report thereon (included
in the Annual Report to Shareholder), are incorporated into the SAI by
reference. Also incorporated by reference into the SAI are the
Schedules of Investments, Statements of Assets and Liabilities,
Statements of Operations, Statement of Changes in Net Assets, and notes
thereto, of the Portfolios for the fiscal year ended August 31, 1998
and the Independent Auditors' Report thereon (included in the Annual
Report to Shareholders).
(b) (1) Trust Instrument of Registrant dated July 10, 1992 (see Note
1).
(2) By-Laws of Registrant dated July 10, 1992, as amended May
12, 1995 (see Note 1).
(3) None.
(4) Not required.
(5) None.
(6) Form of Distribution Agreement between Registrant and Forum
Fund Services, LLC dated as of the 1st day of January, 1999,
relating to Treasury Cash Fund, Government Cash Fund and
Cash Fund (see Note 2).
(7) None.
(8) Custodian Contract between Registrant and Imperial Trust
Company dated the 23rd day of October, 1992, as amended the
1st day of September, 1995 (see Note 1).
(9) (a) Administration Agreement between Registrant and Forum
Administrative Services, LLC dated as of December 1, 1997,
relating to Treasury Cash Fund, Government Cash Fund and
Cash Fund (see Note 1).
(b) Transfer Agency Agreement between Registrant and Forum
Shareholder Services, LLC dated as of the 29th day of
October, 1998, relating to Treasury Cash Fund, Government
Cash Fund and Cash Fund (see Note 2).
(c) Shareholder Service Agreement between Registrant and Forum
Administrative Services, LLC, as amended June 1, 1998,
relating to Treasury Cash Fund, Government Cash Fund and
Cash Fund (see Note 2).
(d) Fund Accounting Agreement between Registrant and Forum
Accounting Services, LLC dated as of the 1st day of
December, 1997, relating to Treasury Cash Fund, Government
Cash Fund and Cash Fund (see Note 1).
(10) Opinion of Kirkpatrick & Lockhart LLP (see Note 1).
(11) Consent of KPMG LLP (Included herewith).
(12) None.
(13) Investment Representation letter (see Note 1).
(14) None.
(15) Investor Class Distribution (Rule 12b-1) Plan dated July 12,
1993, relating to Treasury Cash Fund, Government Cash Fund and
Cash Fund (see Note 1).
<PAGE>
(16) Schedule for Computation of Performance (see Note 1).
(17) Financial Data Schedules (see Note 2).
(18) Multiclass (Rule 18f-3) Plan dated May 12, 1995, as amended
January 22, 1996 (see Note 1).
Other Exhibits:
(1) Powers of Attorney, Maurice J. DeWald, Jack J. Singer, John Y.
Keffer, Rudolph I. Estrada and Robert M. Franko, Trustees of
Registrant (see Note 1).
(2) Powers of Attorney, John Y. Keffer, James C. Cheng, J. Michael
Parish and Costas Azariadis, Trustees of Core Trust (Delaware)
(see Note 1).
- ---------------
Notes:
(1) Exhibit incorporated by reference as filed in Post-Effective Amendment No.
15 via EDGAR on December 19, 1997, accession number 0001004402-97-000264.
(2) Exhibit incorporated by reference as filed in Post-Effective Amendment No.
17 via EDGAR on November 30, 1998, accession number 0001004402-98-000616.
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
Not required.
ITEM 27. INDEMNIFICATION
The general effect of Section 10.02 of the Registrant's Trust
Instrument is to indemnify existing or former trustees and officers of
the Trust to the fullest extent permitted by law against liability and
expenses. There is no indemnification if, among other things, any such
person is adjudicated liable to the Registrant 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. This
description is modified in its entirety by the provisions of Section
10.02 of the Registrant's Trust Instrument contained in this
Registration Statement as Exhibit 1 and incorporated herein by
reference.
The Registrant's Distribution Agreement provides that the Registrant's
principal underwriter is protected against liability to the extent
permitted by Section 17(i) of the Investment Company Act of 1940.
Similar provisions are contained in the Administration Agreement,
Transfer Agency Agreement and Fund Accounting Agreement. The
Registrant's principal underwriter is also provided with
indemnification against various liabilities and expenses under Section
8 of the Distribution Agreement between the Registrant and the
principal underwriter; provided, however, that in no event shall the
indemnification provision be construed as to protect the principal
underwriter against any liability to the Registrant or its security
holders to which the principal underwriter would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of its reckless disregard of
its obligations and duties under Section 8 of the Distribution
Agreement. The Registrant's transfer agent and certain related
individuals are also provided with indemnification against various
liabilities and expenses under Section 10 of the Transfer Agency
Agreement between the Registrant and the transfer agent; provided,
however, that in no event shall the transfer agent or such persons be
indemnified against any liability or expense that is the direct result
of willful misfeasance, bad faith or gross negligence by the transfer
agent or such persons.
The preceding paragraph is modified in its entirety by the provisions
of Section 8 of the Distribution Agreement, Section 3 of the
Administration Agreement, Section 10 of the Transfer Agency Agreement
and Section 3 of the Fund Accounting Agreement of the Registrant filed
as Exhibits 6, 9(a), 9(b) and 9(d), respectively, to Registrant's
Registration Statement and incorporated herein by reference.
<PAGE>
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The description of Forum Investment Advisors, LLC (investment adviser
to each of Treasury Cash Portfolio, Government Cash Portfolio, Cash
Portfolio and Treasury Portfolio of Core Trust (Delaware) under the
caption "Management" in the Prospectuses and Statements 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.I
Forum Trust, LLC
Both Forum Holdings Corp.I and Forum Trust, LLC are controlled by John
Y. Keffer, Chairman and President of the Registrant. Mr. Keffer is a
Director and President of Forum Trust, LLC. Mr. Keffer is also a
director and/or officer of various registered investment companies for
which the various Forum Financial Group of Companies provide services.
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.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Mark D. Kaplan Director Forum Investment Advisors, LLC
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Sara M. Morris Treasurer Forum Investment Advisors, LLC
------------------------------------ ----------------------------------
Chief Financial Officer Forum Financial Group, LLC
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer other Forum affiliated companies
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David I. Goldstein Assistant Secretary Forum Investment Advisors, LLC
------------------------------------ ----------------------------------
General Counsel Forum Financial Group, LLC
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer other Forum affiliated companies
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Forum Fund Services, LLC, Registrant's underwriter, or its affiliate,
Forum Financial Services, Inc., serve as underwriter for the following
investment companies registered under the Investment Company Act of
1940, as amended:
The CRM Funds The Cutler Trust Forum Funds Memorial Funds Monarch Funds
Norwest Advantage Funds Norwest Select Funds Sound Shore Fund, Inc.
(b) The following directors and officers of Forum Fund Services, LLC,
Registrant's underwriter, hold the following positions with registrant.
Their business address is Two Portland Square, Portland, Maine 04101.
<TABLE>
<S> <C> <C>
Name Position with Underwriter Position with Registrant
John Y. Keffer President Trustee, Chairman and President
David I. Goldstein Secretary Vice President and Secretary
(c) Not Applicable.
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS 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 Fund
Services, LLC, Forum Accounting Services, LLC and Forum Shareholder
Services, LLC, 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 include 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this registration statement
under rule 485(b) under the Securities Act of 1933, as amended, and has duly
caused this post-effective amendment number 18 to Registrant's registration
statement to be signed on its behalf by the undersigned, duly authorized in the
City of Portland, State of Maine on December 23, 1998.
MONARCH FUNDS
By: /s/ John Y. Keffer
_______________________
John Y. Keffer, President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed below by the
following persons on December 23, 1998.
(a) Principal Executive Officer
/s/ John Y. Keffer
___________________________
John Y. Keffer, Chairman and President
(b) Principal Financial Officer
/s/ Stacey E. Hong
___________________________
Stacey E. Hong, Treasurer
(c) A majority of the Trustees
/s/ John Y. Keffer
___________________________
John Y. Keffer, Trustee
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 previously filed as an Exhibit to this
Registration Statement.
<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 December 23, 1998.
CORE TRUST (DELAWARE)
By: /s/ John Y. Keffer
__________________________
John Y. Keffer, President
On behalf of Core Trust (Delaware), this amendment to the Registration Statement
of Monarch Funds has been signed below by the following persons in the
capacities indicated on December 23, 1998.
(a) Principal Executive Officer
/s/ John Y. Keffer
__________________________
John Y. Keffer, Chairman and President
(b) Principal Financial Officer
/s/ Stacey E. Hong
__________________________
Stacey E. Hong, Treasurer
(c) A majority of the Trustees
/s/ John Y. Keffer
__________________________
John Y. Keffer, Chairman
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 previously filed as an Exhibit to this
Registration Statement.
<PAGE>
INDEX TO EXHIBITS
Exhibit
(11) Consent of KPMG LLP.
Exhibit (11)
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Monarch Funds:
We consent to the use of our reports dated October 6, 1998 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 herein 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.
Boston, Massachusetts
December 21, 1998