<PAGE>
TREASURY CASH PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
SEMI-ANNUAL REPORT
FEBRUARY 28, 1999
<PAGE>
M O N A R C H F U N D S
- --------------------------------------
- --------------------------------------
Treasury Cash Fund
Government Cash Fund
Cash Fund
SEMI-ANNUAL REPORT
February 28, 1999
- --------------------------------------------------------------------------------
Dear Shareholders:
Government Cash Fund Universal Shares, our oldest fund and our performance
leader, was ranked #1 for total return out of 46 funds in the Government and
Agencies Institutional category for the five years ended December 31, 1998 (as
tracked by IBC Financial Data, Inc.'s MONEY FUND REPORT AVERAGES-TM- for that
period). The Fund also ranked #3 out of 89 funds for the 1998 calendar year. In
addition to this good news, we are pleased to tell you that Monarch Funds ended
its semi-annual period with over $1.5 billion in total assets. As usual, we
caution you to remember that investment return will fluctuate and past
performance is no guarantee of future results.
As you must already know from news reports, the last six months have been a
period of great economic instability in world markets. The various crises in
Russia, the Far East, and in Brazil contributed to the Federal Reserve Bank's
decision to ease the Federal Funds' Rate three times, for a total of 75 basis
points. In response, we extended the average lives of all of our Funds to take
advantage of the falling Federal Funds' Rate. Now it appears that the crisis is
behind us, and that Federal Reserve Bank policy should remain unchanged for the
rest of the year. As always, we remain committed to providing investors with the
highest possible yield while maintaining a constant share price of $1.00.
As we approach our 7th anniversary, we assure you we remain committed to helping
you meet your financial goals. We thank you for your past and continuing
confidence. Please feel free to call us with questions and concerns at
800-754-8757.
Sincerely,
/s/ John Y. Keffer
John Y. Keffer
Chairman
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS OF MONARCH FUNDS
- -------------------------------------------------------
<S> <C>
Statements of Assets and Liabilities.............. 2
Statements of Operations.......................... 3
Statements of Changes in Net Assets............... 4
Financial Highlights.............................. 5
Notes to Financial Statements..................... 6
FINANCIAL STATEMENTS OF CORE TRUST (DELAWARE)
- -------------------------------------------------------
Schedules of Investments.......................... 10
Statements of Assets and Liabilities.............. 13
Statements of Operations.......................... 14
Statements of Changes in Net Assets............... 15
Notes to Financial Statements..................... 16
</TABLE>
- --------------------------------------------------------------------------------
ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. AN INVESTMENT IN
THE FUNDS IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT ENDORSED OR GUARANTEED BY
ANY BANK OR ANY AFFILIATE OF A BANK. THIS REPORT IS AUTHORIZED FOR DISTRIBUTION
ONLY TO CURRENT SHAREHOLDERS AND TO OTHERS WHO HAVE RECEIVED A COPY OF A MONARCH
FUNDS PROSPECTUS.
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
-------------- --------------- --------------
<S> <C> <C> <C>
ASSETS:
Investment in Portfolios of Core Trust (Delaware) at value
(Notes 1 & 2)............................................... $ 132,546,941 $ 790,400,734 $ 613,316,999
-------------- --------------- --------------
LIABILITIES:
Dividends payable............................................. 108,668 1,199,401 273,840
Payable to administrator (Note 3)............................. 9,517 51,337 21,004
Accrued expenses.............................................. 102,521 245,782 334,149
-------------- --------------- --------------
Total liabilities............................................... 220,706 1,496,520 628,993
-------------- --------------- --------------
NET ASSETS...................................................... $ 132,326,235 $ 788,904,214 $ 612,688,006
-------------- --------------- --------------
-------------- --------------- --------------
COMPONENTS OF NET ASSETS:
Paid in capital............................................... $ 132,309,745 $ 788,987,526 $ 612,705,284
Undistributed (distributions in excess of) net investment
income...................................................... -- (34,950) --
Accumulated net realized gain (loss).......................... 16,490 (48,362) (17,278)
-------------- --------------- --------------
NET ASSETS...................................................... $ 132,326,235 $ 788,904,214 $ 612,688,006
-------------- --------------- --------------
-------------- --------------- --------------
NET ASSETS BY CLASS OF SHARES:
Universal Shares.............................................. $ -- $ 289,656,488 $ 60,767,278
Institutional Shares.......................................... 47,617,942 499,247,726 292,538,398
Investor Shares............................................... 84,708,293 -- 259,382,330
-------------- --------------- --------------
NET ASSETS...................................................... $ 132,326,235 $ 788,904,214 $ 612,688,006
-------------- --------------- --------------
-------------- --------------- --------------
SHARES OF BENEFICIAL INTEREST:
Universal Shares.............................................. -- 289,709,059 60,767,462
Institutional Shares.......................................... 47,609,493 499,278,466 292,550,396
Investor Shares............................................... 84,700,252 -- 259,387,425
NET ASSET VALUE PER SHARE (OFFERING AND REDEMPTION PRICE PER
SHARE)........................................................ $ 1.00 $ 1.00 $ 1.00
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
------------ --------------- -------------
<S> <C> <C> <C>
NET INVESTMENT INCOME ALLOCATED FROM PORTFOLIOS OF CORE TRUST
(DELAWARE):
Interest income.................................................. $ 4,413,935 $ 21,692,320 $ 15,145,976
Net expenses..................................................... (132,211) (534,342) (365,861)
------------ --------------- -------------
Net investment income allocated from Portfolios of Core Trust
(Delaware) (Note 2)............................................... 4,281,724 21,157,978 14,780,115
------------ --------------- -------------
EXPENSES:
Administration (Note 3)
Universal Shares............................................... -- 73,217 16,024
Institutional Shares........................................... 23,291 135,971 72,632
Investor Shares................................................ 21,658 -- 53,883
Transfer agent (Note 3)
Universal Shares............................................... -- 90,160 20,563
Institutional Shares........................................... 98,285 553,309 296,810
Investor Shares................................................ 92,270 -- 220,435
Shareholder services (Note 3)
Institutional Shares........................................... 93,166 543,884 290,531
Investor Shares................................................ 86,631 -- 215,534
Distribution--Investor Shares (Note 3)........................... 108,289 -- 269,417
Legal (Note 3)................................................... 855 4,283 2,682
Audit............................................................ 397 2,040 1,257
Trustees......................................................... 2,643 13,008 8,834
Miscellaneous.................................................... 11,268 45,717 31,366
------------ --------------- -------------
Total expenses..................................................... 538,753 1,461,589 1,499,968
Fees waived (Note 4)............................................. (101,504) (180,989) (84,791)
------------ --------------- -------------
Net expenses....................................................... 437,249 1,280,600 1,415,177
------------ --------------- -------------
NET INVESTMENT INCOME.............................................. 3,844,475 19,877,378 13,364,938
------------ --------------- -------------
NET REALIZED GAIN ON INVESTMENTS ALLOCATED FROM PORTFOLIOS OF CORE
TRUST (DELAWARE).................................................. 3,642 23,137 1,322
------------ --------------- -------------
NET INCREASE IN NET ASSETS FROM OPERATIONS......................... $ 3,848,117 $ 19,900,515 $ 13,366,260
------------ --------------- -------------
------------ --------------- -------------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31, 1998 AND THE SIX MONTHS
ENDED FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
------------- ---------------- ----------------
<S> <C> <C> <C>
NET ASSETS--AUGUST 31, 1997........................................... $ 70,948,273 $ 475,566,735 $ 246,974,489
- ---------------------------- ------------- ---------------- ----------------
OPERATIONS:
Net investment income............................................... 4,847,158 32,746,304 20,646,746
Net realized gain (loss) on investments allocated from Portfolios of
Core Trust (Delaware)............................................. 6,934 (43,518) 896
------------- ---------------- ----------------
Net increase in net assets from operations........................ 4,854,092 32,702,786 20,647,642
------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Universal Shares............................. -- (12,434,504) (2,829,163)
Net investment income--Institutional Shares......................... (2,730,320) (20,311,800) (11,009,468)
Net investment income--Investor Shares.............................. (2,116,838) -- (6,808,115)
------------- ---------------- ----------------
Total distributions to shareholders............................... (4,847,158) (32,746,304) (20,646,746)
------------- ---------------- ----------------
CAPITAL SHARE TRANSACTIONS (at $1.00 per share):
Sale of shares--Universal Shares.................................... -- 5,089,256,401 1,364,748,919
Sale of shares--Institutional Shares................................ 792,223,786 2,912,199,423 774,989,103
Sale of shares--Investor Shares..................................... 337,141,622 -- 1,421,668,593
Reinvestment of distributions--Universal Shares..................... -- 6,626,988 2,264,797
Reinvestment of distributions--Institutional Shares................. 899,824 10,058,549 5,703,260
Reinvestment of distributions--Investor Shares...................... 2,094,927 -- 6,808,022
Redemption of shares--Universal Shares.............................. -- (5,072,628,157) (1,293,795,619)
Redemption of shares--Institutional Shares.......................... (742,834,980) (2,723,774,548) (633,514,099)
Redemption of shares--Investor Shares............................... (311,401,119) -- (1,323,203,441)
------------- ---------------- ----------------
Net increase from capital transactions............................ 78,124,060 221,738,656 325,669,535
------------- ---------------- ----------------
Net increase in net assets........................................ 78,130,994 221,695,138 325,670,431
------------- ---------------- ----------------
NET ASSETS--AUGUST 31, 1998........................................... 149,079,267 697,261,873 572,644,920
- ---------------------------- ------------- ---------------- ----------------
OPERATIONS:
Net investment income............................................... 3,844,475 19,877,378 13,364,938
Net realized gain on investments allocated from Portfolios of Core
Trust (Delaware).................................................. 3,642 23,137 1,322
------------- ---------------- ----------------
Net increase in net assets from operations........................ 3,848,117 19,900,515 13,366,260
------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Universal Shares............................. -- (7,305,989) (1,645,963)
Net investment income--Institutional Shares......................... (2,085,465) (12,571,389) (6,907,475)
Net investment income--Investor Shares.............................. (1,759,010) -- (4,811,500)
------------- ---------------- ----------------
Total distributions to shareholders............................... (3,844,475) (19,877,378) (13,364,938)
------------- ---------------- ----------------
CAPITAL SHARE TRANSACTIONS (at $1.00 per share):
Sale of shares--Universal Shares.................................... -- 2,535,000,530 766,168,054
Sale of shares--Institutional Shares................................ 704,074,990 1,696,095,750 546,898,260
Sale of shares--Investor Shares..................................... 341,485,610 -- 730,508,038
Reinvestment of distributions--Universal Shares..................... -- 4,612,041 1,039,193
Reinvestment of distributions--Institutional Shares................. 389,310 5,541,565 3,951,806
Reinvestment of distributions--Investor Shares...................... 1,753,561 -- 4,803,862
Redemption of shares--Universal Shares.............................. -- (2,503,609,196) (798,110,760)
Redemption of shares--Institutional Shares.......................... (747,970,173) (1,646,021,486) (557,532,416)
Redemption of shares--Investor Shares............................... (316,489,972) -- (657,684,273)
------------- ---------------- ----------------
Net increase (decrease) from capital transactions................. (16,756,674) 91,619,204 40,041,764
------------- ---------------- ----------------
Net increase (decrease) in net assets............................. (16,753,032) 91,642,341 40,043,086
------------- ---------------- ----------------
NET ASSETS--FEBRUARY 28, 1999......................................... $ 132,326,235 $ 788,904,214 $ 612,688,006
- ------------------------------ ------------- ---------------- ----------------
------------- ---------------- ----------------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (Unaudited)
- --------------------------------------------------------------------------------
Following is selected data for a share of each class of each Fund outstanding
during the years or periods indicated. See Note 1 for the date each share class
commenced operations.
<TABLE>
<CAPTION>
ENDING RATIOS TO AVERAGE RATIO TO
NET NET ASSETS NET ASSETS AVERAGE NET
BEGINNING DISTRIBUTIONS ASSET ---------------------- AT END OF ASSETS
NET ASSET NET FROM NET VALUE NET PERIOD ------------
VALUE PER INVESTMENT INVESTMENT PER INVESTMENT TOTAL (000'S GROSS
SHARE INCOME INCOME SHARE EXPENSES INCOME RETURN OMITTED) EXPENSES(a)
---------- -------- -------------- ------- --------- ----------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TREASURY CASH FUND
Institutional Shares
Six months ended
February 28,
1999............ $1.00 $0.02 $(0.02) $1.00 0.45%(b) 4.48%(b) 2.24% $ 47,618 0.63%(b)
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% 40,830 0.66%
Year ended
August 31,
1996............ 1.00 0.05 (0.05) 1.00 0.45% 5.01% 5.15% 79,259 0.69%
Year ended
August 31,
1995............ 1.00 0.05 (0.05) 1.00 0.42% 5.18% 5.28% 28,530 0.86%
Year ended
August 31,
1994............ 1.00 0.03 (0.03) 1.00 0.42% 3.03% 3.11% 41,194 0.74%
Investor Shares
Six months ended
February 28,
1999............ 1.00 0.02 (0.02) 1.00 0.83%(b) 4.06%(b) 2.05% 84,708 0.88%(b)
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%
Period ended
August 31,
1996............ 1.00 0.04 (0.04) 1.00 0.83%(b) 4.50%(b) 4.00% 3,980 1.33%(b)
GOVERNMENT CASH FUND
Universal Shares
Six months ended
February 28,
1999............ 1.00 0.02 (0.02) 1.00 0.18%(b) 4.99%(b) 2.51% 289,656 0.26%(b)
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%
Institutional Shares
Six months ended
February 28,
1999............ 1.00 0.02 (0.02) 1.00 0.57%(b) 4.62%(b) 2.31% 499,248 0.60%(b)
Year ended
August 31,
1998............ 1.00 0.05 (0.05) 1.00 0.57% 5.09% 5.22% 443,618 0.58%
Year ended
August 31,
1997............ 1.00 0.05 (0.05) 1.00 0.57% 4.95% 5.06% 245,157 0.57%
Year ended
August 31,
1996............ 1.00 0.05 (0.05) 1.00 0.57% 5.06% 5.18% 256,244 0.57%
Year ended
August 31,
1995............ 1.00 0.05 (0.05) 1.00 0.54% 5.39% 5.46% 186,620 0.66%
Year ended
August 31,
1994............ 1.00 0.03 (0.03) 1.00 0.56% 3.45% 3.35% 61,738 0.68%
CASH FUND
Universal Shares
Six months ended
February 28,
1999............ 1.00 0.03 (0.03) 1.00 0.18%(b) 5.14%(b) 2.57% 60,767 0.26%(b)
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% 18,453 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%
Institutional Shares
Six months ended
February 28,
1999............ 1.00 0.02 (0.02) 1.00 0.57%(b) 4.76%(b) 2.37% 292,538 0.60%(b)
Year ended
August 31,
1998............ 1.00 0.05 (0.05) 1.00 0.57% 5.11% 5.24% 299,220 0.61%
Year ended
August 31,
1997............ 1.00 0.05 (0.05) 1.00 0.57% 4.97% 5.07% 152,041 0.60%
Year ended
August 31,
1996............ 1.00 0.05 (0.05) 1.00 0.57% 5.10% 5.22% 89,733 0.60%
Year ended
August 31,
1995............ 1.00 0.05 (0.05) 1.00 0.54% 5.33% 5.23% 73,802 0.69%
Year ended
August 31,
1994............ 1.00 0.03 (0.03) 1.00 0.54% 3.43% 3.40% 55,771 0.72%
Investor Shares
Six months ended
February 28,
1999............ 1.00 0.02 (0.02) 1.00 0.83%(b) 4.46%(b) 2.24% 259,382 0.85%(b)
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%
Period ended
August 31,
1995............ 1.00 0.01 (0.01) 1.00 0.84%(b) 5.32%(b) 5.14%(b) 4,665 3.76%(b)
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding any fee waivers and expense reimbursements for the Fund and
its corresponding Portfolio.
(b) Annualized.
See Notes to Financial Statements.
5
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF ORGANIZATION
Monarch Funds (the "Trust") was organized as a Delaware business trust on July
10, 1992. The Trust, which is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "Act"), currently has
three diversified investment portfolios, Treasury Cash Fund, Government Cash
Fund and Cash Fund (individually, a "Fund" and, collectively, the "Funds"). The
Funds are authorized under the Trust's Trust Instrument to issue an unlimited
number of shares of beneficial interest without par value. Each Fund currently
is authorized to issue three classes of shares, Universal Shares, Institutional
Shares and Investor Shares. The Trust commenced the offering of each class of
shares as follows and no other class of shares currently is outstanding:
<TABLE>
<S> <C>
Treasury Cash Fund (Institutional Shares) July 12, 1993
Treasury Cash Fund (Investor Shares) October 25, 1995
Government Cash Fund (Universal Shares) October 29, 1992
Government Cash Fund (Institutional Shares) July 15, 1993
Cash Fund (Universal Shares) December 1, 1992
Cash Fund (Institutional Shares) July 15, 1993
Cash Fund (Investor Shares) June 16, 1995
</TABLE>
MASTER FEEDER ARRANGEMENT-Each Fund currently seeks to achieve its investment
objective by investing all its investable assets in a separate portfolio
(individually, a "Portfolio" and, collectively, the "Portfolios") of Core Trust
(Delaware) ("Core Trust"), a registered open-end management investment company
that has the same investment objective and substantially similar policies as the
Fund. Accordingly, each Portfolio directly acquires securities, and a Fund
investing in the Portfolio acquires an indirect interest in those securities.
The Funds account for their investments in the Portfolios as partnership
investments. This is commonly referred to as a master-feeder arrangement.
The financial statements of the Portfolios are in this report and should be read
in conjunction with the Funds' financial statements. As of February 28, 1999,
the percentage of Treasury Cash Portfolio owned by Treasury Cash Fund was 55.9%;
the percentage of Government Cash Portfolio owned by Government Cash Fund was
93.0%; and the percentage of Cash Portfolio owned by Cash Fund was 87.9%.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets during the fiscal
period. Actual results could differ from those estimates. The following
summarizes the significant accounting policies of the Funds:
SECURITY VALUATION-Each Fund determines its net asset value per share as of 1:00
p.m., Pacific time, on each business day. Each Fund records its investment in
its Portfolio at value. Valuation of securities held in the Portfolios is
discussed in the Notes to Financial Statements of Core Trust, included elsewhere
in this report.
INVESTMENT INCOME AND EXPENSES-Each Fund records daily its pro rata share of its
Portfolio's income, expenses and realized gain and loss. In addition, each Fund
accrues its own expenses.
CLASS SPECIFIC EXPENSES-Each share of each class of a Fund represents an
undivided, proportionate interest in the Fund. The Funds' class specific
expenses include administration fees, shareholder servicing fees, transfer agent
fees and certain other expenses as determined by the Trust's Board of Trustees
(the "Board"). Institutional Shares and Investor Shares incur shareholder
servicing fees and Investor Shares incur distribution fees. In addition, there
are differences between the classes of shares with respect to the minimum
investment required.
6
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
FEDERAL TAXES-Each Fund intends to continue to qualify each year as a regulated
investment company and distribute all of its net investment income. In addition,
by distributing in each calendar year substantially all its net investment
income, capital gain and certain other amounts, each Fund will not be subject to
a federal excise tax. Therefore, no federal income or excise tax provision is
required.
As of February 28, 1999, certain of the Funds had capital loss carryovers
available to offset future capital gains as follows: Cash Fund - $6,209 expiring
in 2004 and $10,851 expiring in 2005; Government Cash Fund - $27,824 expiring in
2005 and $41,999 expiring in 2006.
DISTRIBUTIONS TO SHAREHOLDERS-Distributions to shareholders of net investment
income are declared daily and paid monthly. Net capital gain, if any, is
distributed to shareholders at least annually. Distributions are based on
amounts calculated in accordance with applicable income tax regulations.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER-The investment adviser of each Portfolio is Forum Investment
Advisors, LLC ("Forum Advisors"). Each Fund may withdraw its investment from its
respective Portfolio at any time if the Board determines that it is in the best
interest of the Fund and its shareholders to do so.
ADMINISTRATOR-The administrator of each Fund is Forum Administrative Services,
LLC. ("FAdS"). For its administrative services and facilities, FAdS receives
from each Fund an administration fee at an annual rate of 0.05% of the Fund's
average daily net assets.
TRANSFER AGENT-The transfer agent and dividend disbursing agent for the Funds is
Forum Shareholder Services, LLC ("FSS"). FSS is paid a transfer agent fee at an
annual rate of 0.20% of the average daily net assets of Institutional Shares and
Investor Shares of each Fund and 0.05% of the average daily net assets of
Universal Shares of each Fund, plus certain account and additional Fund and
class charges.
SHAREHOLDER SERVICE AGENT-The Trust has adopted a shareholder servicing plan
with respect to Institutional Shares and Investor Shares under which the Trust
pays FAdS a shareholder servicing fee at an annual rate of 0.20% of the average
daily net assets of Institutional Shares and Investor Shares of each Fund. FAdS
may pay any or all amounts of these payments to various institutions that
provide shareholder servicing to their customers who hold Institutional Shares
or Investor Shares.
DISTRIBUTOR-Forum Fund Services, LLC ("FFS"), a registered broker-dealer and a
member of the National Association of Securities Dealers, Inc., acts as each
Fund's distributor. The Trust has adopted a plan of distribution pursuant to
Rule 12b-1 under the Act with respect to Investor Shares under which the Trust
pays FFS a distribution fee at an annual rate of 0.25% of the average daily net
assets of Investor Shares of each Fund. FFS may pay any or all amounts of these
payments to various institutions that provide distribution or shareholder
services for Investor Shares. The plan obligates the Funds to pay FFS as
compensation for FFS's services and not as reimbursement for certain expenses
incurred. Prior to January 16, 1999, Forum Financial Services, Inc. provided
distribution services to the Funds for which it received the same compensation
as FFS.
NOTE 4. WAIVER OF FEES
FAdS, FSS and FFS (and its predecessor distributor) have voluntarily waived a
portion of their fees. For the six months ended February 28, 1999, fees waived
were as follows. Investor Shares distribution fee: Treasury Cash Fund, $20,042,
and Cash Fund, $20,238. Institutional Shares shareholder servicing fee: Treasury
Cash Fund, $81,462, Government Cash Fund, $70,617, and Cash Fund, $39,459.
Universal Shares administration and transfer agent fees: Government Cash Fund,
$37,155 and $73,217, respectively, and Cash Fund, $9,070 and $16,024,
respectively.
7
<PAGE>
TREASURY CASH PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
SEMI-ANNUAL REPORT
FEBRUARY 28, 1999
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
TREASURY CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
<C> <S> <C>
U.S. TREASURY BILLS (A) (86.5%)
$47,000,000 4.58%, 4/22/99................ $ 46,695,519
60,000,000 4.61%, 4/22/99................ 59,609,134
50,000,000 4.42%, 5/27/99................ 49,481,625
50,000,000 4.48%, 7/22/99................ 49,141,007
------------
Total U.S. Treasury Bills 204,927,285
------------
REPURCHASE AGREEMENTS (11.5%)
27,340,000 Donaldson Lufkin & Jenrette
Securities Corp., 4.75%,
3/1/99, to be repurchased at
$27,350,822; collateralized
by $27,897,950 U.S. Treasury
Strip, I/O, 5.70%,
5/15/09..................... 27,340,000
------------
CASH MANAGEMENT ACCOUNTS (2.0%)
4,717,000 Dreyfus Treasury Cash
Management Fund............. 4,717,000
------------
Total Investments (100.0%) $236,984,285
------------
------------
</TABLE>
(A) Annualized yields at time of purchase.
I/O - Interest only
See Notes to Financial Statements.
10
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
GOVERNMENT CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
<C> <S> <C>
U.S. GOVERNMENT SECURITIES (79.8%)
FEDERAL FARM CREDIT BANK (B) (2.1%)
$18,000,000 4.66%, 4/1/99................. $ 18,000,000
------------
FEDERAL HOME LOAN BANK--DISCOUNT
NOTES (A) (2.8%)
24,000,000 4.88%, 6/30/99................ 23,620,867
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--DISCOUNT
NOTES (A) (55.6%)
25,000,000 5.09%, 3/2/99................. 24,996,583
25,000,000 4.69%, 3/15/99................ 24,955,521
20,000,000 4.93%, 4/1/99................. 19,917,161
50,000,000 5.09%, 4/1/99................. 49,789,028
50,000,000 4.95%, 4/7/99................. 49,753,848
50,000,000 4.81%, 4/15/99................ 49,706,563
20,000,000 4.92%, 5/3/99................. 19,833,050
40,000,000 4.96%, 5/7/99................. 39,643,114
25,000,000 4.90%, 5/20/99................ 24,736,111
12,094,000 4.92%, 6/9/99................. 11,934,427
60,000,000 4.93%, 6/10/99................ 59,200,417
60,000,000 4.92%, 6/10/99................ 59,202,100
3,888,000 4.90%, 6/10/99................ 3,836,406
35,000,000 4.82%, 7/9/99................. 34,413,556
------------
Total Federal National Mortgage
Association-- Discount Notes 471,917,885
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (2.9%)
25,000,000 5.05%, 3/16/99................ 25,000,000
------------
SMALL BUSINESS ADMINISTRATION (B) (9.3%)
279,155 Pool #500545, 7.63%,
3/25/03..................... 279,155
689,555 Pool #501077, 6.25%,
11/25/14.................... 691,683
2,065,854 Pool #501308, 6.25%,
10/25/15.................... 2,107,089
2,213,511 Pool #501543, 6.13%,
7/25/16..................... 2,220,803
396,523 Pool #501628, 7.63%,
9/25/04..................... 396,523
1,043,917 Pool #501690, 5.88%,
12/25/16.................... 1,051,052
1,496,729 Pool #501898, 6.00%,
6/25/17..................... 1,502,341
4,203,925 Pool #502150, 5.75%,
2/25/18..................... 4,260,568
231,523 Pool #502161, 5.75%,
2/25/18..................... 231,523
2,302,976 Pool #502208, 5.75%,
2/25/18..................... 2,333,861
1,273,267 Pool #502306, 5.75%,
2/25/18..................... 1,295,658
1,892,770 Pool #502613, 5.75%,
4/25/19..................... 1,892,770
666,771 Pool #503058, 5.63%,
7/25/15..................... 666,771
1,529,498 Pool #503082, 5.63%,
8/25/20..................... 1,529,498
1,279,285 Pool #503120, 5.63%,
11/25/20.................... 1,279,285
368,050 Pool #503121, 5.63%,
8/25/15..................... 368,050
2,065,639 Pool #503232, 5.38%,
2/25/15..................... 2,065,639
884,094 Pool #503278, 5.38%,
2/25/21..................... 884,071
2,066,232 Pool #503431, 5.50%,
7/25/21..................... 2,067,484
2,565,975 Pool #503461, 5.50%,
9/25/21..................... 2,567,389
1,721,374 Pool #503472, 5.50%,
8/25/21..................... 1,722,288
726,121 Pool #503553, 5.38%,
11/25/21.................... 724,300
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
<C> <S> <C>
SMALL BUSINESS ADMINISTRATION, CONTINUED:
$ 4,986,320 Pool #503671, 5.38%,
3/25/22..................... $ 4,986,320
1,803,326 Pool #503754, 5.38%,
5/25/22..................... 1,803,326
1,060,472 Pool #503780, 5.38%,
3/25/22..................... 1,061,803
4,809,506 Pool #503882, 5.25%,
9/25/22..................... 4,803,805
4,316,225 Pool #503892, 5.38%,
7/25/22..................... 4,326,405
5,349,791 Pool #503909, 5.25%,
10/25/22.................... 5,346,549
2,552,325 Pool #504015, 5.25%,
1/25/23..................... 2,551,517
4,960,268 Pool #504062, 5.25%,
2/25/23..................... 4,960,268
5,275,522 Pool #504074, 5.25%,
2/25/23..................... 5,275,522
2,603,490 Pool #504203, 5.38%,
7/25/13..................... 2,612,557
1,596,920 Pool #504269, 5.38%,
5/25/15..................... 1,600,801
1,590,811 Pool #504345, 5.38%,
5/25/18..................... 1,590,811
6,337,248 Pool #504366, 5.13%,
2/25/24..................... 6,331,342
------------
Total Small Business Administration 79,388,827
------------
STUDENT LOAN MARKETING ASSOCIATION (B) (7.1%)
25,000,000 5.23%, 7/15/99................ 25,000,000
15,000,000 4.89%, 11/5/99................ 15,000,000
20,000,000 5.24%, 3/3/00................. 20,000,000
------------
Total Student Loan Marketing Association 60,000,000
------------
Total U.S. Government Securities 677,927,579
------------
REPURCHASE AGREEMENTS (16.2%)
100,000,000 Bear, Stearns & Co., Inc.,
4.86%, 3/1/99, to be
repurchased at $100,094,500;
collateralized by
$105,116,269 FNMA Strip,
P/O, 7/15/27 - 11/25/27..... 100,000,000
37,210,000 Salomon Smith Barney, 4.85%,
3/1/99, to be repurchased at
$37,225,039; collateralized
by $42,999,230 FNMA Strip,
P/O, 12/1/24................ 37,210,000
------------
Total Repurchase Agreements 137,210,000
------------
CASH MANAGEMENT ACCOUNTS (4.0%)
34,360,000 Dreyfus Government Cash
Management Fund............. 34,360,000
------------
Total Investments (100.0%) $849,497,579
------------
------------
</TABLE>
(A) Annualized yields at time of purchase.
(B) Certain securities are deemed to have a maturity remaining until the next
readjustment of the interest rate, the demand period or a combination of the
longer or the earlier of the demand period or readjustment. The interest
rates shown reflect the rate in effect on February 28, 1999.
FNMA- Federal National Mortgage Association
P/O - Principal only
See Notes to Financial Statements.
11
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
<C> <S> <C>
U.S. GOVERNMENT SECURITIES (19.2%)
FEDERAL NATIONAL MORTGAGE ASSOCIATION--DISCOUNT NOTES (A)
(10.0%)
$20,000,000 4.96%, 4/1/99................. $ 19,916,817
10,000,000 4.92%, 6/9/99................. 9,868,056
21,000,000 4.92%, 6/30/99................ 20,665,435
20,000,000 4.92%, 7/1/99................. 19,678,734
------------
Total Federal National Mortgage
Association-- Discount Notes 70,129,042
------------
SMALL BUSINESS ADMINISTRATION (B) (7.0%)
180,950 Pool #500536, 6.75%,
5/25/13..................... 184,233
472,227 Pool #500730, 7.63%,
2/25/04..................... 477,788
949,157 Pool #501733, 5.75%,
2/25/17..................... 962,111
1,051,508 Pool #501989, 5.88%,
10/25/12.................... 1,056,582
284,382 Pool #502914, 5.75%,
3/25/15..................... 284,634
1,472,199 Pool #503121, 5.63%,
8/25/15..................... 1,472,199
3,980,356 Pool #503429, 5.50%,
6/25/16..................... 3,980,356
641,494 Pool #503461, 5.50%,
9/25/21..................... 641,855
2,675,142 Pool #503553, 5.38%,
11/25/21.................... 2,667,785
2,704,988 Pool #503754, 5.38%,
5/25/22..................... 2,704,988
4,596,150 Pool #503882, 5.25%,
9/25/22..................... 4,590,655
5,000,901 Pool #503912, 5.25%,
10/25/22.................... 4,997,739
4,876,002 Pool #504015, 5.25%,
1/25/23..................... 4,874,341
19,967,037 Pool #504366, 5.13%,
2/26/24..................... 19,948,414
------------
Total Small Business Administration 48,843,680
------------
STUDENT LOAN MARKETING ASSOCIATION (B) (2.2%)
15,000,000 4.89%, 11/5/99................ 15,000,000
------------
Total U.S. Government Securities 133,972,722
------------
BANKERS ACCEPTANCES (A) (1.7%)
12,000,000 Bank of America, 5.02%,
4/22/99..................... 11,914,894
------------
COMMERCIAL PAPER (A) (46.3%)
30,000,000 American Express Credit Corp.,
5.00%, 3/23/99.............. 29,908,333
25,000,000 Associates Corp. of North
America, 4.80%, 5/24/99..... 24,720,000
15,000,000 Bank of America, 4.84%,
5/24/99..................... 14,830,601
10,000,000 Bank of America, 4.79%,
8/5/99...................... 9,791,104
14,200,000 Cargill Inc., 4.95%,
4/20/99..................... 14,102,375
25,000,000 CIT Group Holdings, Inc.,
4.81%, 4/26/99.............. 24,812,945
25,000,000 Ford Motor Credit Corp.,
4.81%, 4/9/99............... 24,869,729
5,000,000 Ford Motor Credit Corp.,
4.81%, 5/25/99.............. 4,943,216
5,000,000 General Electric Capital
Corp., 4.82%, 5/25/99....... 4,943,098
25,000,000 General Electric Capital
Corp., 4.75%, 7/19/99....... 24,538,195
20,000,000 General Motors Acceptance
Corp., 4.80%, 3/5/99........ 19,989,333
30,000,000 International Lease Finance
Corp., 4.81%, 4/21/99....... 29,795,575
<CAPTION>
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
$15,000,000 Merrill Lynch & Co., Inc.,
4.91%, 4/30/99.............. $ 14,877,250
25,000,000 Prudential Funding Corp.,
4.73%, 7/22/99.............. 24,530,285
30,000,000 Salomon Smith Barney Holdings,
4.82%, 4/19/99.............. 29,803,184
27,000,000 Transamerica Financial Corp.,
4.98%, 4/16/99.............. 26,828,190
------------
Total Commercial Paper 323,283,413
------------
CORPORATE NOTES (B) (10.0%)
10,000,000 Bear, Stearns & Co., Inc.,
5.00%, 4/6/99............... 10,000,000
15,000,000 Bear, Stearns & Co., Inc.,
5.00%, 1/6/00............... 15,000,000
20,000,000 Chase Manhattan Corp., 4.97%,
1/14/00..................... 19,989,492
5,000,000 General Motors Acceptance
Corp., 5.23%, 9/20/99....... 5,000,152
20,000,000 Goldman Sachs Group L.P.,
5.19%, 1/7/00............... 20,000,000
------------
Total Corporate Notes 69,989,644
------------
REPURCHASE AGREEMENTS (21.3%)
100,000,000 Bear, Stearns & Co., Inc.,
4.86%, 3/1/99, to be
repurchased at $100,094,500;
collateralized by
$105,116,269 FNMA Strip,
P/O, 7/15/27 - 11/25/27..... 100,000,000
48,800,000 Salomon Smith Barney, 4.85%,
3/1/99, to be repurchased at
$48,819,723; collateralized
by $56,392,184 FNMA Strip,
P/O, 12/1/24................ 48,800,000
------------
Total Repurchase Agreements 148,800,000
------------
CASH MANAGEMENT ACCOUNTS (1.5%)
10,044,000 Dreyfus Cash Management Plus
Fund........................ 10,044,000
------------
Total Investments (100%) $698,004,673
------------
------------
</TABLE>
(A) Annualized yields at time of purchase.
(B) Certain securities are deemed to have a maturity remaining until the next
readjustment of the interest rate, the demand period or a combination of the
longer or the earlier of the demand period or readjustment. The interest
rates shown reflect the rate in effect on February 28, 1999.
FNMA- Federal National Mortgage Association
P/O - Principal only
12
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- --------------- --------------
<S> <C> <C> <C>
ASSETS:
Investments: (Note 2)
Securities at amortized cost................................ $ 209,644,285 $ 712,287,579 $ 549,204,673
Repurchase agreements at cost............................... 27,340,000 137,210,000 148,800,000
-------------- --------------- --------------
Total investments at value................................ 236,984,285 849,497,579 698,004,673
Cash.......................................................... 25,542 26,215 11,021
Interest and other receivables................................ 13,275 2,909,456 2,465,806
Organization costs, net of amortization (Note 2).............. 359 6,584 1,781
-------------- --------------- --------------
Total assets.................................................... 237,023,461 852,439,834 700,483,281
-------------- --------------- --------------
LIABILITIES:
Payable to adviser (Note 3)................................... 8,690 24,001 17,514
Payable to administrator (Note 3)............................. 12,490 34,500 25,174
Accrued expenses.............................................. 31,332 57,763 28,021
-------------- --------------- --------------
Total liabilities............................................... 52,512 116,264 70,709
-------------- --------------- --------------
NET ASSETS...................................................... $ 236,970,949 $ 852,323,570 $ 700,412,572
-------------- --------------- --------------
-------------- --------------- --------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income.................................................. $7,250,481 $ 22,636,801 $ 16,418,890
------------ --------------- -------------
EXPENSES:
Investment advisory (Note 3)..................................... 52,045 153,101 108,425
Administration (Note 3).......................................... 74,400 218,854 154,981
Custody.......................................................... 35,791 105,287 74,564
Accounting (Note 3).............................................. 24,000 24,000 24,000
Legal (Note 3)................................................... 799 3,586 4,451
Audit............................................................ 5,633 16,394 11,999
Trustees......................................................... 234 681 499
Rating fees...................................................... 22,000 -- --
Amortization of organization costs (Note 2)...................... 120 2,195 594
Miscellaneous.................................................... 3,349 33,445 17,175
------------ --------------- -------------
Total expenses..................................................... 218,371 557,543 396,688
------------ --------------- -------------
NET INVESTMENT INCOME.............................................. 7,032,110 22,079,258 16,022,202
------------ --------------- -------------
NET REALIZED GAIN ON INVESTMENTS SOLD.............................. 5,944 24,163 1,439
------------ --------------- -------------
NET INCREASE IN NET ASSETS FROM OPERATIONS......................... $7,038,054 $ 22,103,421 $ 16,023,641
------------ --------------- -------------
------------ --------------- -------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31, 1998 AND THE SIX
MONTHS ENDED FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ----------------- ---------------
<S> <C> <C> <C>
NET ASSETS--AUGUST 31, 1997................................. $ 71,102,520 $ 476,768,745 $ 259,491,011
- ---------------------------- --------------- ----------------- ---------------
OPERATIONS:
Net investment income..................................... 8,001,296 35,098,110 23,621,908
Net realized gain (loss) on investments sold.............. 9,432 (43,555) 853
--------------- ----------------- ---------------
Net increase in net assets from operations.............. 8,010,728 35,054,555 23,622,761
--------------- ----------------- ---------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Contributions............................................. 630,794,381 1,930,394,761 1,309,647,918
Withdrawals............................................... (445,062,682) (1,725,093,704) (985,420,846)
--------------- ----------------- ---------------
Net transactions in investors' beneficial interests..... 185,731,699 205,301,057 324,227,072
--------------- ----------------- ---------------
Net increase in net assets.............................. 193,742,427 240,355,612 347,849,833
--------------- ----------------- ---------------
NET ASSETS--AUGUST 31, 1998................................. 264,844,947 717,124,357 607,340,844
- ---------------------------- --------------- ----------------- ---------------
OPERATIONS:
Net investment income..................................... 7,032,110 22,079,258 16,022,202
Net realized gain on investments sold..................... 5,944 24,163 1,439
--------------- ----------------- ---------------
Net increase in net assets from operations.............. 7,038,054 22,103,421 16,023,641
--------------- ----------------- ---------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Contributions............................................. 534,243,807 1,318,006,695 823,780,074
Withdrawals............................................... (569,155,859) (1,204,910,903) (746,731,987)
--------------- ----------------- ---------------
Net transactions in investors' beneficial interests..... (34,912,052) 113,095,792 77,048,087
--------------- ----------------- ---------------
Net increase (decrease) in net assets................... (27,873,998) 135,199,213 93,071,728
--------------- ----------------- ---------------
NET ASSETS--FEBRUARY 28, 1999............................... $ 236,970,949 $ 852,323,570 $ 700,412,572
- ------------------------------ --------------- ----------------- ---------------
--------------- ----------------- ---------------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF ORGANIZATION
Core Trust (Delaware) ("Core Trust") was organized as a Delaware business trust
on September 1, 1994. Core Trust, which is registered as an open-end management
investment company under the Investment Company Act of 1940 (the "Act"),
currently has twenty-two separate investment portfolios. These financial
statements relate to Treasury Cash Portfolio, Government Cash Portfolio and Cash
Portfolio (individually, a "Portfolio" and, collectively, the "Portfolios"),
each of which is diversified. The Portfolios commenced operations on September
1, 1995. Interests in the Portfolios are sold in private placement transactions
without any sales charge to institutional clients, including open-end management
investment companies.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of increase and decrease in net assets from operations
during the fiscal period. Actual results could differ from those estimates. The
following summarizes the significant accounting policies of the Portfolios:
SECURITY VALUATION-Each Portfolio determines its net asset value per share as of
1:00 p.m., Pacific time, on each business day, utilizing the amortized cost
method pursuant to Rule 2a-7 under the Act. Under this method, all investments
purchased at a discount or premium are valued by accreting or amortizing,
respectively, the difference between the original purchase price and the
maturity value of the investment over the period to the investment's maturity.
REPURCHASE AGREEMENTS-Each Portfolio may invest in repurchase agreements. Each
Portfolio, through its custodian, receives delivery of the underlying
collateral, whose market value must always equal or exceed the repurchase price.
The investment adviser is responsible for determining the value of the
underlying collateral. In the event of default, the Portfolios may have
difficulty with the disposition of any securities held as collateral.
ORGANIZATION COSTS-The costs incurred by each Portfolio in connection with its
organization have been capitalized and are being amortized using the
straight-line method over a five-year period beginning on the commencement of
each Portfolio's operations.
FEDERAL TAXES-The Portfolios are not required to pay federal income taxes on
their net investment income and net capital gain as they are treated as
partnerships for federal income tax purposes. All interest, dividends, gain and
loss of the Portfolios are deemed to have been "passed through" to the
interestholders in proportion to their holdings of the Portfolios regardless of
whether such interest, dividends or gain have been distributed by the
Portfolios.
SECURITIES TRANSACTIONS, INTEREST INCOME AND REALIZED GAIN AND LOSS-Securities
transactions are recorded on the trade date. Interest income is accrued as
earned and realized gain and loss on investments sold are recorded on the basis
of identified cost.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER-The investment adviser of each Portfolio is Forum Investment
Advisors, LLC ("Forum Advisors"). Forum Advisors receives an advisory fee from
each Portfolio based upon the total average daily net assets of the Portfolios
("Total Portfolio Assets") that is calculated on a cumulative basis at the
following annual rates: 0.06% for the first $200 million of Total Portfolio
Assets, 0.04% of the next $300 million of Total Portfolio Assets and 0.03% of
the remaining Total Portfolio Assets.
16
<PAGE>
CORE TRUST (DELAWARE)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
ADMINISTRATOR-The administrator of each Portfolio is Forum Administrative
Services, LLC ("FAdS"). For its administrative services and facilities, FAdS
receives from each Portfolio an administration fee at an annual rate of 0.05% of
the Portfolio's average daily net assets.
PLACEMENT AGENT-Forum Financial Services, Inc. ("FFSI"), a registered
broker-dealer and a member of the National Association of Securities Dealers,
Inc., acts as each Portfolio's placement agent.
OTHER SERVICE PROVIDER-Forum Accounting Services, LLC ("FAcS") serves as the
Portfolios' fund accountant and interestholder recordkeeper. For these services,
FAcS receives a fee from each Portfolio of $48,000 per year, plus additional
amounts depending on the number and type of portfolio transactions and number of
interestholders.
NOTE 4. INCOME AND EXPENSE RATIOS
Income and expense ratios are presented below. During certain periods, various
fees were waived and expenses reimbursed. The ratio of Gross Expenses to Average
Net Assets reflects the expense ratio excluding any waivers and reimbursements
if any. All numbers for periods of less than a year are annualized.
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
------------------------------
NET
INVESTMENT GROSS
EXPENSES INCOME EXPENSES
-------- -------- --------
<S> <C> <C> <C>
Treasury Cash Portfolio
Six Months Ended February 28, 1999.............. 0.15% 4.73% 0.15%
Year Ended August 31, 1998...................... 0.15% 5.34% 0.17%
Year Ended August 31, 1997...................... 0.15% 5.20% 0.18%
Year Ended August 31, 1996...................... 0.15% 5.30% 0.20%
Government Cash Portfolio
Six Months Ended February 28, 1999.............. 0.13% 5.04% 0.13%
Year Ended August 31, 1998...................... 0.13% 5.52% 0.13%
Year Ended August 31, 1997...................... 0.14% 5.38% 0.14%
Year Ended August 31, 1996...................... 0.14% 5.49% 0.14%
Cash Portfolio
Six Months Ended February 28, 1999.............. 0.13% 5.17% 0.13%
Year Ended August 31, 1998...................... 0.13% 5.55% 0.13%
Year Ended August 31, 1997...................... 0.15% 5.45% 0.15%
Year Ended August 31, 1996...................... 0.15% 5.50% 0.16%
</TABLE>
17
