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As filed with the Securities and Exchange Commission on May 2, 2000
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. 21
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 22
MONARCH FUNDS
Two Portland Square
Portland, Maine 04101
(207) 879-1900
David I. Goldstein, Esq.
Forum Fund Services, LLC
Two Portland Square
Portland, Maine 04101
Copies to:
R. Darrell Mounts, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
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It is proposed that this filing become effective:
immediately upon filing pursuant to Rule 485, paragraph (b)
on ________________ pursuant to Rule 485, paragraph (b)
X 60 days after filing pursuant to Rule 485, paragraph (a)(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.
Title of Securities Being Registered: [New Class] Shares of Cash Fund.
The Fund is structured as a master-feeder fund. This amendment is also
executed by Core Trust (Delaware).
<PAGE>
PROSPECTUS
July 1, 2000
A MONEY MARKET FUND THAT SEEKS NEW CLASS SHARES
TO NEW CLASS SHARES PROVIDE
HIGH CURRENT INCOME TO THE EXTENT CASH FUND
CONSISTENT WITH THE CASH FUND
PRESERVATION OF CAPITAL AND THE
MAINTENANCE OF LIQUIDITY.
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TABLE OF CONTENTS
Summary................................................... Your Account................................................
Performance............................................... Other Information...........................................
Fee Tables................................................ Financial Highlights........................................
Management................................................ For More Information........................................
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
FUND'S SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NEW CLASS SHARES OF CASH FUND ARE DESIGNED TO REPLICATE A STANDARD FINANCIAL
INSTITUTION CHECKING ACCOUNT. THIS INCLUDES CERTAIN EXPENSES THAT MAKE NEW CLASS
SHARES INAPPROPRIATE FOR YOU IF YOU DO NOT INTEND TO USE YOUR ACCOUNT FOR THAT
PURPOSE.
<PAGE>
SUMMARY
DEFINITIONS
MONEY MARKET SECURITY means a high credit quality, short-term, U.S. dollar
denominated debt security
GOVERNMENT SECURITY means a security that is issued or guaranteed by the U.S.
Government, its agencies or instrumentalities
REPURCHASE AGREEMENT means a transaction in which securities are purchased and
simultaneously committed to be resold to the other party at an agreed-upon date
and at a price reflecting a market rate of interest
This Prospectus offers New Class Shares of Cash Fund (the "Fund"). New Class
Shares have a $10,000 minimum initial investment.
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity.
PRINCIPAL INVESTMENT STRATEGY
The Fund invests in a diversified portfolio of Money Market Securities and:
o seeks to maintain a stable net asset value of $1.00 per share
o invests in securities with remaining maturities of 397 days or less
o maintains a dollar weighted average maturity of its investments of 90 days or
less.
The Fund invests substantially all of its assets in Cash Portfolio, another
mutual fund (the "Portfolio") which has the same investment objective and
substantially similar investment policies. The Portfolio and its primary
investments are:
PRIMARY INVESTMENTS
A broad spectrum of Money Market Securities including:
o securities issued by financial institutions, such as certificates
of deposit, bankers' acceptances and time deposits
o securities issued by domestic companies, such as commercial paper
o Government Securities
o Repurchase Agreements
The investment adviser for the Portfolio (the "Adviser") continuously monitors
economic factors such as interest rate outlooks and technical factors such as
prevailing interest rates and Federal Reserve policy to determine an appropriate
maturity profile for the Portfolio's investments. The Adviser searches for
securities that satisfy the maturity profile of the Portfolio and that provide
the greatest potential return relative to the risk of the security.
The Adviser may sell a security if:
o revised economic forecasts or interest rate outlook requires a
repositioning of the Portfolio
o the security subsequently fails to meet the Adviser's investment
criteria
o funds are needed for another purpose
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PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
There is no assurance that the Fund will achieve its investment objective. An
investment in the Fund is not by itself a complete or balanced investment
program. The principal risks of investing in the Fund are described below. These
risks can result in a decrease in the value of a security or all the securities
owned by the Fund and, therefore, a change in the Fund's $1.00 per share value.
These risks also can result in lower investment performance.
You should not invest in the Fund unless you intend to use the checkwriting
privileges.
INTEREST RATE RISK Interest rates affect the value of the Portfolio's
investments. Increases in interest rates may cause a decline in value. In
addition, those increases may cause the Fund's investment performance to
underperform currently available investments.
CREDIT RISK The value of a security held by the Portfolio may decline if the
security's credit rating is downgraded or its credit quality otherwise falls. In
the worst case, an issuer of a security or a Repurchase Agreement counterparty
may default or otherwise be unable to make timely payments of interest or
principal. Not all Government Securities are supported by the full faith and
credit of the U.S. Government.
MANAGEMENT RISK As with all mutual funds, the Adviser may make poor investment
decisions.
PERFORMANCE
The following chart and table provide some indication of the risks of investing
in the Fund's New Class Shares by showing changes in performance from year to
year and investment returns. Because New Class Shares of Cash Fund have operated
less than a year, the information provided below is for Cash Fund's Investor
Shares. The returns for New Class Shares will be lower than those of Investor
Shares because of the higher expenses of New Class Shares. To obtain current
yield information, call toll-free (800) 754-8757. PERFORMANCE INFORMATION
PRESENTED HERE REPRESENTS ONLY PAST PERFORMANCE AND DOES NOT NECESSARILY
INDICATE FUTURE RESULTS.
The following chart shows the annual total return for each full calendar year
that the Fund has operated.
YEAR ENDED 12/31
CASH FUND
Best Quarter: 1.24% (quarter ended 12/31/97)
Worst Quarter: 0.95% (quarter ended 3/31/99)
[EDGAR Representation of Bar Chart]
1996 4.78%
1997 4.90%
1998 4.87%
1999 4.49%
The following table lists the average annual total return for the Fund as of
December 31, 1999.
ONE YEAR FIVE YEARS SINCE INCEPTION INCEPTION DATE
CASH FUND 4.49% N/A 4.83% 6/16/95
<PAGE>
FEE TABLES
The following table describes the various fees and expenses that you will pay if
you invest in New Class Shares. Expenses are estimated for the fiscal year
ending August 31, [2000]. Expenses are stated as a percentage of average net
assets. There are no charges for purchasing or redeeming Fund shares.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)(1)
Management Fees(2) 0.13%
Distribution (Rule 12b-1) Fees 0.75%
Other Expenses 0.82%
Total Annual Fund Operating Expenses(3) 1.70%
(1) The Fund's expenses include its pro-rata share of the expenses of the
Portfolio.
(2) Includes all investment advisory and administration fees.
EXAMPLE
The following is a hypothetical example intended to help you compare the cost of
investing in New Class Shares to the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% annual return, that the
operating expenses remain the same as stated in the above table, and that
distributions are reinvested. Although your actual costs may be higher or lower,
under these assumptions your costs would be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
CASH FUND $ 158 $ 490 $ 845 $ 1,845
MANAGEMENT
The Fund is a series of Monarch Funds (the "Trust"), an open-end, management
investment company. The business of the Trust and of the Fund is managed under
the direction of the Board of Trustees (the "Board"). The Board formulates the
general policies of the Fund and meets periodically to review the Fund's
performance, monitor investment activities and practices and discuss other
matters affecting the Fund. Additional information about the Board and the
Trust's executive officers is in the SAI.
THE ADVISER
The Portfolio's investment adviser is Forum Investment Advisors, LLC, Two
Portland Square, Portland, Maine 04101. The Adviser's primary business is fixed
income investment management and, in addition to the Portfolio, advises two
other money market funds and five taxable and tax-free bond funds. The Adviser
is a privately owned company controlled by John Y. Keffer, who is Chairman of
the Board.
The Adviser makes investment decisions for the Portfolio. During the Fund's last
fiscal year, the advisory fees paid to the Adviser for the Portfolio were 0.03%
of the Portfolio's average daily net assets.
OTHER SERVICE PROVIDERS
The Forum Financial Group ("Forum") of companies provides various services to
the Fund. As of June 30, 2000, Forum provided administration and distribution
services to investment companies and collective investment funds with assets of
approximately $[94] billion.
Forum Shareholder Services, LLC (the "Transfer Agent") is the Fund's transfer
agent.
<PAGE>
Forum Fund Services, LLC, a registered broker-dealer and member of the National
Association of Securities Dealers, Inc., is the distributor (principal
underwriter) of the Fund's shares. The distributor acts as the representative of
the Trust in connection with the offering of the Fund's shares. The distributor
may enter into arrangements with banks, broker-dealers or other financial
institutions through which investors may purchase or redeem shares.
The Fund has adopted a distribution or "Rule 12b-1" plan under which the Fund
pays the distributor 0.75% of the average daily net assets of New Class Shares
for the sale and distribution of the shares. The Fund has also entered into a
shareholder service agreement under which the Fund pays 0.25% of the average
daily net assets of New Class shares for the servicing of shareholder accounts.
The fees paid under the distribution plan and shareholder service agreement may
be paid to various financial institutions that provide services to their
customers invested in New Class Shares. Because New Class Shares pay
distribution fees on an on-going basis, your investment cost over time may be
higher than paying other types of sales charges.
FUND EXPENSES
The Fund pays for all of its expenses. Expenses of New Class Shares include the
Shares' own expenses as well as Trust expenses that are allocated among the
Fund, its classes of shares and any other funds of the Trust. The Adviser or
other service providers may voluntarily waive all or any portion of their fees
and/or reimburse certain expenses. Any fee waiver or expense reimbursement
increases investment performance for the period during which the waiver or
reimbursement is in effect.
YOUR ACCOUNT
HOW TO CONTACT THE FUND
You may either contact the Trust or your financial intermediary for an account
application or for further information regarding the Fund.
WRITE TO US AT: WIRE INVESTMENTS TO US AT:
Monarch Funds Imperial Bank
P.O. Box 446 ABA #122201444
Portland, Maine 04112 FOR CREDIT TO:
Forum Shareholder Services, LLC
Account # 09075-933
TELEPHONE US AT: Cash Fund - New Class Shares
(800) 754-8757 (Your Name)
(Your Account Number)
GENERAL INFORMATION
You may purchase or sell (redeem) shares at the net asset value of a share
("NAV") next calculated after the Transfer Agent receives your request in proper
form accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"). Investments are not accepted or invested by the Fund during the period
before the receipt of Federal Funds.
Shares become entitled to receive distributions on the day of purchase if the
order and payment are received in proper form 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
On days that the Board Market Association recommends an early close of the
government securities market or that those markets or the Federal Reserve Bank
of San Francisco close early, the Trust may advance the time by which the
Transfer Agent must receive completed purchase and redemption orders.
If you purchase shares directly from the Fund, you will receive monthly
statements and a confirmation of each transaction. You should verify the
accuracy of all transactions in your account as soon as you receive your
confirmations. The Fund reserves the right to waive minimum investment amounts
<PAGE>
and may temporarily suspend (during unusual market conditions) or discontinue
any service or privilege.
WHEN AND HOW NAV IS DETERMINED The Fund calculates its NAV as of 1:00 p.m.,
Pacific time on each weekday except on Federal holidays and other days that the
Federal Reserve Bank of San Francisco is closed ("Fund Business Days"). The time
at which NAV is calculated may change in case of an emergency. In order to
maintain a stable NAV of $1.00 per share, the Portfolio values the securities in
its portfolio on an amortized cost basis.
TRANSACTIONS THROUGH THIRD PARTIES If you invest through your financial
institution, the policies and fees charged by that institution may be different
than those of the Fund. Financial institutions may charge transaction fees and
may set different minimum investments or limitations on buying or selling
shares. These institutions also may provide you with certain shareholder
services such as periodic account statements. Consult a representative of your
financial institution for more information.
BUYING SHARES
HOW TO MAKE PAYMENTS All investments must be in U.S. dollars and checks must be
drawn on U.S. banks.
CHECKS For individual, sole proprietorship, joint and gifts or
transfers to minors accounts, the check must be made payable to
"Monarch Funds" or to one or more owners of the account and endorsed to
"Monarch Funds." For all other accounts, the check must be made payable
on its face to "Monarch Funds." No other method of check payment is
acceptable (for instance, you may not pay by travelers check).
ACH Refers to the "Automated Clearing House" system maintained by the
Federal Reserve Bank which allows banks to process checks, transfer
funds and perform other tasks.
WIRES Instruct your financial institution to make a Federal Funds wire
payment to us. Your financial institution may charge you a fee for this
service.
MINIMUM INVESTMENT The minimum initial investment in New Class Shares is
$10,000.
ACCOUNT REQUIREMENTS
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TYPE OF ACCOUNT REQUIREMENT
INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS: o Instructions must be signed by all persons
Individual accounts are owned by one person, as are sole required to sign exactly as their names appear on the
proprietorship accounts. Joint accounts can have two or more account.
owners.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA): o Depending on state laws, you can set up a
These custodial accounts provide a way to give money to a custodial account under the UGMA or the UTMA.
child and obtain tax benefits. o The custodian must sign instructions in a manner
indicating custodial capacity.
BUSINESS ENTITIES o Submit a Corporate/Organization Resolution form
or similar document.
TRUSTS o The trust must be established before an account
can be opened.
o Submit a Corporate/Organization Resolution
form or similar document.
<PAGE>
INVESTMENT PROCEDURES
HOW TO OPEN AN ACCOUNT HOW TO ADD TO YOUR ACCOUNT
BY CHECK BY CHECK
o Call or write us for an account application and/or a o Fill out an investment slip from a confirmation
Corporate/Organization Resolution form. or write us a letter.
o Complete the application. o Write your account number on your check.
o Mail us your application and a check. o Mail us the slip (or your letter) and the check.
BY WIRE BY WIRE
o Call or write us for an account application and/or a o Call to notify us of your incoming wire.
Corporate/Organization Resolution form. o Instruct your bank to wire your money to us.
o Complete the application.
o Call us and we will assign you an account number.
o Mail us your application.
o Instruct your bank to wire your money to us.
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LIMITATIONS ON PURCHASES The Fund reserves the right to refuse any purchase
request, particularly requests that could adversely affect the Fund or its
operations.
SELLING SHARES
Generally, the Fund will send redemption proceeds to you immediately after
receiving your redemption request in proper form. Shares are not entitled to
receive distributions declared on or after the day on which a redemption order
is accepted by the Transfer Agent.
HOW TO SELL SHARES FROM YOUR ACCOUNT
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account number
o Cash Fund - New Class Shares
o The dollar amount or number of shares you want to sell
o How and where to send the redemption proceeds.
o Obtain a signature guarantee (if required).
o Obtain other documentation (if required).
o Mail us your request and documentation.
BY WIRE
o Wire redemptions are only available if your redemption is for $[______] or
more and you did not decline wire redemption privileges on your account
application.
o Call us with your request (unless you declined telephone redemption
privileges on your account application) (See "By Telephone") OR
o Mail us your request (See "By Mail").
BY CHECK
o Write a check against your account balance (See "Check Writing
Privileges").
o Your investment will continue to earn distributions until your check is
presented to the Fund for payment.
BY TELEPHONE
o Call us with your request (unless you declined telephone redemption
privileges on your account application).
o Provide the following information:
o Your account number
o Exact name(s) in which the account is registered
o Additional form of identification.
o Redemption proceeds will be:
o Mailed to you OR
o Wired to you (unless you declined wire redemption privileges on your
account application) (See "By Wire").
<PAGE>
CHECK WRITING PRIVILEGES You may redeem shares by writing checks provided by the
Fund against your account balance. When your check is presented for payment, the
Trust will deduct shares from your shareholder account in an amount equal to the
amount of the check.
TELEPHONE REDEMPTION PRIVILEGES You may redeem your shares by telephone unless
you declined telephone redemption privileges on your account application. You
may be responsible for any fraudulent telephone order as long as the Transfer
Agent takes reasonable measures to verify the order.
WIRE REDEMPTION PRIVILEGES You may redeem your shares by wire unless you
declined wire redemption privileges on your account application. The minimum
amount that may be redeemed by wire is $[5,000]. If the Transfer Agent receives
your wire redemption order after 11:00 a.m., Pacific time (or other time as may
be determined), the Transfer Agent will wire proceeds to you on the next Fund
Business Day.
SIGNATURE GUARANTEE REQUIREMENTS To protect you and the Fund against fraud,
signatures on certain requests must have a "signature guarantee." A signature
guarantee verifies the authenticity of your signature. You can obtain one from
most banking institutions or securities brokers, but not from a notary public.
Specific requirements are listed in the SAI or may be obtained by calling the
Transfer Agent.
SMALL ACCOUNTS If the value of your account falls below $10,000, the Fund may
ask you to increase your balance. If the account value is still below $10,000
after 60 days, the Fund may close your account and send you the proceeds.
REDEMPTIONS IN KIND The Fund reserves the right to pay redemption proceeds in
portfolio securities rather than cash.
OTHER INFORMATION
ADDITIONAL INVESTMENT POLICIES
The Fund and Portfolio operate in accordance with "Rule 2a-7" under the
Investment Company Act of 1940. All restrictions relating to maturity, credit
quality and diversification are interpreted in accordance with that rule.
The Portfolio may from time to time take temporary defensive positions in
response to adverse market, economic, political or other conditions. For
instance, the Portfolio may hold cash in any amount. The Portfolio may invest in
other money market mutual funds that have substantially similar policies.
Securities in which the Portfolio invests 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 Portfolio limits these securities to those
with an interest rate that is adjusted based solely on a single short-term rate
or index, such as the Prime Rate.
CORE AND GATEWAY(R)
The Fund is a "gateway" fund in a "Core and Gateway" structure. The Fund invests
substantially all of its assets in the Portfolio, which is a series of Core
Trust (Delaware) ("Core Trust"), another mutual fund. The Fund may withdraw its
entire investment from the Portfolio at anytime that the Board decides it is in
the Fund's best interest to do so.
The board of trustees of Core Trust formulates the general policies of the
Portfolio and meets periodically to review the Portfolio's performance, monitor
investment activities and practices and discuss other matters affecting the
Portfolio. Additional information about Core Trust's board and executive
officers is in the SAI.
CLASSES OF SHARES
In addition to New Class Shares, the Fund offers Universal Shares, Institutional
Shares and Investor shares. You may obtain prospectuses describing these classes
of shares from the Fund's distributor by contacting the Transfer Agent.
Universal Shares are sold to institutional investors, Institutional Shares are
sold to banks, trust companies and certain other financial institutions for
<PAGE>
their own and their customer accounts and Investor Shares are sold to
___________________________. Each class has different fees and investment
minimums.
DISTRIBUTIONS
The Fund declares distributions from net investment income daily and pays those
distributions monthly. In addition, the Fund pays capital gain distributions, if
any, at least annually.
All distributions are reinvested in additional shares, unless you elect to
receive distributions in cash. For Federal income tax purposes, distributions
are treated the same whether they are received in cash or reinvested.
TAXES
The Fund intends to operate in a manner such that it will not be liable for
Federal income or excise tax.
The Fund's distribution of net income (including short-term capital gain) is
taxable to you as ordinary income. The Fund's distribution of long-term capital
gain, if any, is taxable to you as long-term capital gain regardless of how long
you have held Fund shares.
The Fund will send you information about the income tax status of distributions
paid during the year shortly after December 31 of each year. For further
information about the tax effects of investing in the Fund, including state and
local tax matters, please see the SAI and consult your tax adviser.
<PAGE>
FINANCIAL HIGHLIGHTS
Financial highlights are not provided because New Class Shares have not been
offered prior to the date of this prospectus.
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FOR MORE INFORMATION
The following documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about the Fund's investments are available in the Fund's
annual and semi-annual reports to shareholders. NEW CLASS SHARES
STATEMENT OF ADDITIONAL INFORMATION ("SAI") CASH FUND
The SAI provides more detailed information about the Fund and is incorporated
by reference into this Prospectus.
CONTACTING THE FUND
You can get a free copy of reports to shareholders and the SAI, request other
information and discuss your questions about the Fund by contacting the Fund at:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
(800) 754-8757
(207) 879-0001
SECURITIES AND EXCHANGE COMMISSION INFORMATION
You can also review the Fund's reports (when available) and SAI at the
Public Reference Room of the Securities and Exchange Commission
("SEC"). You can get copies, for a fee, by writing to the following:
Public Reference Room
Securities and Exchange Commission
Washington, D.C. 20549-0102
E-mail address: [email protected]
The scheduled hours of operation of the Public Reference Room may be
obtained by calling the SEC at (202) 942-8090. Free copies of the reports to
shareholders and the SAI are available from the SEC's Internet Web Site
at http://www.sec.gov.
Two Portland Square
Portland, Maine 04101
(800) 754-8757
Investment Company Act File
No. 811-6742
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
July 1, 2000
FUND INFORMATION: CASH FUND
Two Portland Square NEW CLASS SHARES
Portland, Maine 04101
(800) 754-8757
ACCOUNT INFORMATION AND
SHAREHOLDER SERVICES:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
(800) 754-8757
This Statement of Additional Information or "SAI" supplements the Prospectus
dated July 1, 2000, as may be amended from time to time, offering New Class
Shares of Cash Fund. This SAI is not a prospectus and should only be read in
conjunction with the prospectus. You may obtain the Prospectus without charge by
contacting Forum Shareholder Services, LLC at the address or telephone number
listed above.
Certain information about the Fund is included in the prospectus and the Annual
Report to shareholders, and is incorporated into this SAI by reference. Copies
of the Annual Report may be obtained, without charge, upon request by contacting
Forum Shareholder Services, LLC at the address or telephone number listed above.
<PAGE>
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TABLE OF CONTENTS
Glossary........................................................................
Core and Gateway(R)Structure....................................................
Investment Policies and Risks...................................................
Investment Limitations..........................................................
Investments by Financial Institutions...........................................
Performance Data and Advertising................................................
Management......................................................................
Portfolio Transactions..........................................................
Purchase and Redemption Information.............................................
Taxation........................................................................
Other Matters...................................................................
Appendix A - Description of Certain Securities Ratings..........................
Appendix B - Performance Data...................................................
Appendix C - Miscellaneous Tables...............................................
<PAGE>
GLOSSARY
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"Adviser" means Forum Investment Advisors, LLC.
"Board" means the Board of Trustees of the Trust.
"Code" means the Internal Revenue Code of 1986, as amended.
"Core Trust" means Core Trust (Delaware).
"Core Trust Board" means the Board of Trustees of Core Trust.
"Custodian" means the custodian of the Fund's assets.
"FAcS" means Forum Accounting Services, LLC, fund accountant of the Fund.
"FAdS" means Forum Administrative Services, LLC, administrator of the Fund.
"FFS" means Forum Fund Services, LLC, distributor of the Fund's shares.
"FSS" means Forum Shareholder Services, LLC, the transfer agent and distribution
disbursing agent of the Fund.
"Fund" means Cash Fund.
"Fitch" means Fitch IBCA, Inc.
"Government Securities" means securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (See prospectus).
"Moody's" means Moody's Investors Service.
"NAV" means net asset value per share (See prospectus).
"NRSRO" means a nationally recognized statistical rating organization.
"Portfolio" means Cash Portfolio, a series of Core Trust.
"SEC" means the U.S. Securities and Exchange Commission.
"S&P" means Standard & Poor's Corporation, a Division of the McGraw Hill
Companies.
"Treasury Securities" means securities issued or guaranteed by the U.S. Treasury
(See prospectus).
"Trust" means Monarch Funds.
"1933 Act" means the Securities Act of 1933, as amended.
"1940 Act" means the Investment Company Act of 1940, as amended.
<PAGE>
CORE AND GATEWAY(R) STRUCTURE
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The Fund is a "gateway" fund in a Core and Gateway(R) structure. Under this
structure the Fund invests substantially all of its assets in Cash Portfolio, a
separate Portfolio of Core Trust, another open-end, management investment
company with an identical investment objective and substantially similar
investment policies as the Fund.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO
The Fund's investment in the Portfolio may be affected by the actions of other
investors in the Portfolio. The Fund may withdraw its entire investment from the
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 the Fund (and any other investment company that invests in the
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 concerning any other investment companies that invest in the
Portfolio, investors may contact FFS at 800-754-8757.
INVESTMENT POLICIES AND RISKS
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The following discussion supplements the disclosure in the prospectus about the
Fund's investment objective, principal investment strategies and principal
risks. Unless otherwise indicated below, the discussion of the investment
policies of the Fund also refers to the investment policies of the Portfolio in
which the Fund invests.
SEC RULE 2A-7
Under Rule 2a-7, the Portfolio normally must invest at least 95% of its total
assets in securities that are rated in the highest short-term rating category
(by NRSROs such as S&P) for debt obligations, or are unrated and determined to
be of comparable quality.
Pursuant to Rule 2a-7, the Board has established procedures to stabilize the
Fund's 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 the Fund's
$1.00 amortized cost price per share. Should that deviation exceed 1/2 of 1%,
the Board 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. The Fund will
maintain a dollar-weighted average portfolio maturity of 90 days or less, will
not purchase any instrument with a remaining maturity greater than 397 days or
subject to a Repurchase Agreement having a duration of greater than 397 days,
will limit portfolio investments, including Repurchase Agreements, to those U.S.
dollar-denominated instruments that the Board has determined present minimal
credit risks and will comply with certain reporting and record keeping
procedures. The Trust has also established procedures to ensure that portfolio
securities meet the Fund's high quality criteria.
SECURITY RATINGS INFORMATION
Moody's, S&P and other NRSROs are private services that provide ratings of the
credit quality of debt obligations, including convertible securities. A
description of the range of ratings assigned to various types of securities by
several NRSROs is included in Appendix A. The Portfolio may use these ratings to
determine whether to purchase, sell or hold a security. Ratings are general and
are not absolute standards of quality. Securities with the same maturity,
interest rate and rating may have different market prices. Credit ratings
attempt to evaluate the safety of principal and interest payments, and do not
3
<PAGE>
evaluate the risks of fluctuations in market value. Also, rating agencies may
fail to make timely changes in credit ratings. An issuer's current financial
condition may be better or worse than a rating indicates.
Unrated securities may not be as actively traded as rated securities. The
Portfolio may retain securities whose rating has been lowered below the lowest
permissible rating category (or that are unrated and determined by the Adviser
to be of comparable quality) if the Adviser determines that retaining such
security is in the best interests of the Portfolio. Because a downgrade often
results in a reduction in the market price of the security, sale of a downgraded
security may result in a loss.
GENERAL RISKS
INTEREST RATE RISK
Changes in interest rates affect the market value of the interest-bearing fixed
income securities held by the Portfolio. There is normally an inverse
relationship between the market value of securities sensitive to prevailing
interest rates and actual changes in interest rates. The longer the remaining
maturity (and duration) of a security, the more sensitive the security is to
changes in interest rates. All fixed income securities, including Government
Securities, can change in value when there is a change in interest rates.
CREDIT RISK
The Portfolio's investment in fixed income securities is subject to credit risk
relating to the financial condition of the issuers of the securities that the
Portfolio holds. Credit risk is the risk that a counterparty to a transaction
will be unable to honor its financial obligation. To limit credit risk, the
Portfolio only invests in securities rated in the highest rating category of an
NRSRO or those that are unrated and deemed to be of comparable credit quality by
the Adviser.
ASSET BACKED SECURITIES
The value of asset backed securities may be significantly affected by changes in
interest rates, the markets' perception of the issuers, the structure of the
securities and the creditworthiness of the parties involved. The ability of the
Portfolio to successfully utilize asset backed securities depends in part upon
the ability of the Adviser to forecast interest rates and other economic factors
correctly. Some asset backed securities have structures that make their reaction
to interest rate changes and other factors difficult to predict.
Prepayments of principal of asset backed securities by borrowers or foreclosures
on the borrowers affect the average life of asset backed securities. Prepayments
may be triggered by various factors, including the level of interest rates,
general economic conditions, the location and age of the assets underlying the
security and other social and demographic conditions. In periods of rising
interest rates, the prepayment rate tends to decrease, lengthening the average
life of a pool of asset backed securities. A decrease in the rate of prepayments
may extend the effective maturities of asset backed securities, increasing their
sensitivity to changes in market interest rates. In periods of falling interest
rates, the prepayment rate tends to increase, shortening the average life of a
pool and the Portfolio may have to reinvest the proceeds of prepayments at lower
interest rates than those of its previous investments. When this occurs, the
Portfolio's yield will decline. The volume of prepayments of principal in the
assets underlying a particular asset backed security will influence the yield of
that security and the Portfolio's yield. To the extent that the Portfolio
purchases asset backed securities at a premium, unscheduled prepayments, which
are made at par, result in a loss equal to any unamortized premium.
FIXED INCOME SECURITIES
VARIABLE AND FLOATING RATE SECURITIES
The Portfolio may invest in fixed income securities with variable or floating
rates. The yield of variable and floating rate securities varies in relation to
changes in specific money market rates. 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. Accordingly, as interest rates increase or
decrease, the appreciation or depreciation may be less on these obligations than
for fixed rate obligations. To the extent that the Portfolio invests in
long-term variable or floating rate securities, the Adviser believes that the
Portfolio may be able to take advantage of the higher yield that is usually paid
on long-term securities.
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<PAGE>
The Portfolio will only purchase variable or floating rate securities, whose
interest rate is adjusted based on a single short-term rate or index such as the
Prime Rate. Under Rule 2a-7, the Portfolio may only purchase securities with
maturities of greater than 397 days if they have demand features that meet
certain requirements or they are certain Government Securities.
The Portfolio may purchase variable and floating rate corporate master notes and
similar securities. Master notes with variable or floating interest rates are
unsecured obligations that are redeemable upon notice. You may invest
fluctuating amounts in these instruments at varying rates of interest under a
direct arrangement with the issuer. These obligations include master demand
notes. The issuer of these obligations often has the right, after a given
period, to prepay its outstanding principal obligations upon a specified number
of days' notice. These obligations generally are not traded and there is
generally no 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.
ASSET BACKED SECURITIES
The Portfolio may purchase adjustable rate mortgage or other asset backed
securities (such as Small Business Association securities) that are Government
Securities. These securities directly or indirectly represent a participation
in, or are secured by and payable from, adjustable rate mortgages or other loans
that may be secured by real estate or other assets. Most mortgage backed
securities are pass-through securities, which means that investors receive
payments consisting of a pro-rata share of both principal and interest (less
servicing and other fees), as well as unscheduled prepayments, as loans in the
underlying mortgage pool are paid off by the borrowers. Additional prepayments
to holders of these securities are caused by prepayments resulting from the sale
or foreclosure of the underlying property or refinancing of the underlying
loans. Prepayments of the principal of underlying loans may shorten the
effective maturities of asset backed securities.
ADJUSTABLE RATE MORTGAGE BACKED SECURITIES
Adjustable rate mortgage securities ("ARMs") are pass-through securities
representing interests in pools of mortgage loans with adjustable interest rates
that are reset at periodic intervals, usually by reference to some interest rate
index or market interest rate, and that may be subject to certain limits.
Although the rate adjustment feature may reduce sharp changes in the value of
adjustable rate securities, these securities can change in value based on
changes in market interest rates or changes in the issuer's creditworthiness.
Changes in the interest rates on ARMs may lag behind changes in prevailing
market interest rates. This may result in a slightly lower net value until the
interest rate resets to market rates. Thus, the Portfolio could suffer principal
loss if the Portfolio sold the securities before the interest rates on the
underlying mortgages were adjusted to reflect current market rates. Some ARMs
(or the underlying mortgages) are subject to caps or floors that limit the
maximum change in interest rates during a specified period or over the life of
the security.
COLLATERALIZED MORTGAGE OBLIGATIONS
The Portfolio may purchase collateralized mortgage obligations ("CMOs"), which
are collateralized by ARMs or by pools of conventional mortgages. CMOs typically
have a number of classes or series with different maturities that 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 1" 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.
SMALL BUSINESS ADMINISTRATION SECURITIES
Small Business Administration securities ("SBA") 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 40 years. The Portfolio may not 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 or (2) the total unamortized premium (or the total
unaccreted discount) on SBA securities would exceed 0.25% of the Portfolio's net
assets.
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<PAGE>
FEDERAL HOME LOAN MORTGAGE CORPORATION SECURITIES
The Portfolio currently may not purchase any security issued by the Federal Home
Loan Mortgage Corporation. This does not prohibit the Portfolio from entering
into repurchase agreements collateralized with securities issued by the Federal
Home Loan Mortgage Corporation.
REPURCHASE AGREEMENTS
GENERAL
The Portfolio may enter into repurchase agreements. Repurchase agreements are
transactions in which the Portfolio purchases securities from a bank or
securities dealer and simultaneously commits to resell the securities to the
bank or dealer at an agreed-upon date and at a price reflecting a market rate of
interest unrelated to the purchased security. During the term of a repurchase
agreement, the Portfolio's custodian, subcustodian or other third party
custodian maintains possession of the purchased securities and any underlying
collateral, which is maintained at not less than 100% of the repurchase price.
Repurchase agreements allow the Portfolio to earn income for periods as short as
overnight, while retaining the flexibility to pursue longer-term investments.
RISKS
Repurchase agreements involve credit risk. In the event that bankruptcy,
insolvency or similar proceedings are commenced against a counterparty, the
Portfolio may have difficulties in exercising its rights to the underlying
securities. The Portfolio may incur costs and expensive time delays in disposing
of the underlying securities and it may suffer a loss. Failure by the other
party to deliver a security purchased by the Portfolio may result in a missed
opportunity to make an alternative investment. Favorable insolvency laws that
allow the Portfolio, among other things, to liquidate the collateral held in the
event of the bankruptcy of the counterparty reduce counterparty insolvency risk
with respect to repurchase agreements. The Portfolio will only enter into a
repurchase agreement with a seller that the Adviser believes presents minimal
credit risk.
BORROWING
GENERAL
The Portfolio may borrow money from banks for temporary or emergency purposes in
an amount up to 33 1/3% of the Portfolio's total assets. The Portfolio may
borrow money for other purposes so long as such borrowings do not exceed 5% of
the Portfolio's total assets. The purchase of securities is prohibited if the
Portfolio's borrowing exceeds 5% or more of its total assets.
RISKS
Interest costs on borrowing may offset or exceed the return earned on borrowed
funds (or on the assets that were retained rather than sold to meet the needs
for which funds were borrowed). Under adverse market conditions, the Fund might
have to sell portfolio securities to meet interest or principle payments at a
time when investment considerations would not favor such sales. Reverse
repurchase agreements and other similar investments that involve a form of
leverage have characteristics similar to borrowings but are not considered
borrowings if the Fund maintains a segregated account.
WHEN-ISSUED SECURITIES
GENERAL
The Portfolio may purchase securities offered on a when-issued or
delayed-delivery basis. When these transactions are negotiated, the price, which
is generally expressed in yield terms, is fixed at the time the commitment is
made, but delivery and payment for the securities take place at a later date.
Normally, the settlement date occurs within a certain period of time after the
transaction, but delayed settlements beyond that period may be negotiated.
During the period between a commitment and settlement, no payment is made for
the securities purchased by the purchaser and thus, no interest accrues to the
purchaser from the transaction. At the time the Portfolio makes the commitment
to purchase securities on a when-issued or delayed delivery basis, the Portfolio
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<PAGE>
will record the transaction as a purchase and thereafter reflect the value each
day of such securities in determining its net asset value.
RISKS
At the time the Portfolio makes a commitment to purchase securities in this
manner, the Portfolio immediately assumes the risk of ownership, including the
risk that the value of the security may decline. The use of when-issued
transactions enables the Portfolio to protect against anticipated changes in
interest rates and prices, but may also increase the volatility of the
Portfolio's asset value per unit. Failure by a counterparty to deliver a
security purchased by the Portfolio on a when-issued or delayed delivery basis
may result in a loss to the Portfolio or a missed opportunity to make an
alternative investment.
ILLIQUID SECURITIES
GENERAL
The Portfolio may invest up to 10% of its net assets in illiquid securities. The
term "illiquid securities" means repurchase agreements not entitling the holder
to payment of principal within seven days and securities with legal or
contractual restrictions on resale or the absence of a readily available market.
Certificates of deposit and other fixed time deposits that carry an early
withdrawal penalty or mature in greater than seven days are treated as illiquid
securities if there is no readily available market for the instrument.
RISKS
Limitations on resale may have an adverse effect on the marketability of a
security and the Portfolio might also have to register a restricted security in
order to dispose of it, resulting in expense and delay. The Portfolio might not
be able to dispose of restricted or illiquid securities promptly or at
reasonable prices and might thereby experience difficulty satisfying
redemptions. There can be no assurance that a liquid market will exist for any
security at any particular time. Any security, including securities determined
by the Adviser to be liquid, can become illiquid.
DETERMINATION OF LIQUIDITY
The Adviser determines and monitors the liquidity of the portfolio securities.
The Adviser takes into account a number of factors in reaching liquidity
decisions, including but not limited to: (1) the frequency of trades and
quotations for 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; and (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.
An institutional market has developed for certain restricted securities.
Accordingly, contractual or legal restrictions on the resale of a security may
not be indicative of the liquidity of the security. If such securities are
eligible for purchase by institutional buyers in accordance with Rule 144A under
the 1933 Act or other exemptions, the Adviser may determine that the securities
are not illiquid.
YEAR 2000
The date change transition to the Year 2000 prompted concern that certain
computer systems may not process date-related information properly on and after
January 1, 2000. The Adviser and the Fund's administrator have addressed and
continue to monitor this Year 2000 issue and its possible impact on their
systems. The Fund's other service providers have informed the Fund that they are
taking similar measures. Services provided to the Fund or any companies in which
it invests could still be adversely affected by a computer's failure to
accurately process date related information and, therefore, may lower the value
of your shares. While no adverse consequences have yet arisen, or have been
reported to the Adviser or the Fund's administrator, there is still the
possibility that certain computer systems may not be able to process
date-related information at some point during the year.
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INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the same investment limitations as the Portfolio in which
it invests. The investment objective of the Portfolio and Fund is fundamental.
The Portfolio and Fund have also adopted a fundamental policy which provides
that, notwithstanding any other investment policy or restriction (whether
fundamental or not), the Portfolio or Fund may invest all of its assets in the
securities of a single pooled investment fund having substantially the same
investment objective, policies and restrictions as the Fund or Portfolio, as
applicable.
A fundamental policy of the Portfolio or Fund cannot be changed without the
affirmative vote of the lesser of: (1) 50% of the outstanding shares of the Fund
(or interests in case of the Portfolio); or (2) 67 % of the shares of the Fund
(or interests of the Portfolio) present or represented at a shareholders meeting
at which the holders of more than 50% of the outstanding shares of the Fund (or
interests of the Portfolio) are present or represented. The Board may change a
nonfundamental policy of the Fund without shareholder approval and the Core
Trust Board may change a nonfundamental policy of the Portfolio without
interestholder consent.
For purposes of all investment policies of the Portfolio or Fund: (1) the term
1940 Act includes the rules thereunder, SEC interpretations and any exemptive
order upon which the Portfolio or Fund may rely; and (2) the term Code includes
the rules thereunder, IRS interpretations and any private letter ruling or
similar authority upon which the Portfolio or Fund may rely.
Except as required by the 1940 Act or the Code, if any 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 the Fund's assets or purchases and redemptions of shares will not be
considered a violation of the limitation.
FUNDAMENTAL LIMITATIONS
The Portfolio may not:
DIVERSIFICATION With respect to 75% of its assets, purchase a security other
than a 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.
CONCENTRATION 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 Government
Securities.
For purposes of concentration: (1) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (2)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (3) 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.
UNDERWRITING 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.
REAL ESTATE 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.
COMMODITIES 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.
BORROWING 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.
SENIOR SECURITIES 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 classes that the Core Trust Board may
establish.
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LENDING 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.
NONFUNDAMENTAL LIMITATIONS
The Portfolio may not:
DIVERSIFICATION With respect to 100% of its assets, purchase a security other
than a 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 otherwise permitted under the 1940 Act.
BORROWING 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.
SECURITIES WITH VOTING RIGHTS 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.
MARGIN; SHORT SALES 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.
PERFORMANCE DATA AND ADVERTISING
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PERFORMANCE DATA
The Fund may quote performance in various ways. All performance information
supplied in advertising, sales literature, shareholder reports or other
materials is historical and is not intended to indicate future returns.
The Fund may compare any of its performance information with:
o Data published by independent evaluators such as Morningstar, Inc.,
Lipper Inc., iMoneyNet, Inc. (IBC Financial Data, Inc.),
CDA/Wiesenberger or other companies which track the investment
performance of investment companies ("Fund Tracking Companies").
o The performance of other mutual funds.
o The performance of recognized stock, bond and other indices, including
but not limited to U.S. Treasury bonds, bills or notes and changes in
the Consumer Price Index as published by the U.S. Department of
Commerce.
Performance information may be presented numerically or in a table, graph or
similar illustration.
Indices are not used in the management of the Fund but rather are standards by
which the Adviser and shareholders may compare the performance of the Fund to an
unmanaged composite of securities with similar, but not identical,
characteristics as the Fund.
The Fund may refer to: (1) general market performance over past time periods
such as those published by Ibbotson Associates (for instance, its "Stocks,
Bonds, Bills and Inflation Yearbook"); (2) mutual fund performance rankings and
other data published by Fund Tracking Companies; and (3) material and
comparative mutual fund data and ratings reported in independent periodicals,
such as newspapers and financial magazines.
The Funds' performance will fluctuate in response to market conditions and other
factors.
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PERFORMANCE CALCULATIONS
The Fund's performance may be quoted in terms of yield or total return. Appendix
B includes certain performance information for the Fund.
SEC YIELD
Yield quotations for the Fund will include an annualized historical yield,
carried at least to the nearest hundredth of one percent, based on a specific
seven-calendar-day period and are 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 reflects the value of additional shares purchased with
dividends declared on the original share and dividends 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 the Fund is 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. The
standardized tax equivalent yield is the rate an investor would have to earn
from a fully taxable investment in order to equal the Fund's yield after taxes.
Tax equivalent yields are calculated by dividing the Fund's yield by one minus
the stated Federal or combined Federal and state tax rate. If a portion of the
Fund's yield is tax-exempt, only that portion is adjusted in the calculation.
TOTAL RETURN CALCULATIONS
The Fund's total return shows its overall change in value, assuming that all of
the Fund's distributions are reinvested.
AVERAGE ANNUAL TOTAL RETURN Average annual total return is calculated using a
formula prescribed by the SEC. To calculate standard average annual total
returns, the Fund: (1) determines the growth or decline in value of a
hypothetical historical investment in the Fund over a stated period; and (2)
calculates 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. For example, a cumulative return of 100% over ten years would produce an
average annual total return of 7.18%. While average annual returns are a
convenient means of comparing investment alternatives, investors should realize
that 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 Fund.
Average annual total return is calculated 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
Because average annual returns tend to smooth out variations in a Fund's
returns, shareholders should recognize that they are not the same as actual
year-to-year results.
OTHER MEASURES OF TOTAL RETURN Standardized total return quotes may be
accompanied by non-standardized total return figures calculated by alternative
methods.
The Fund may quote unaveraged or cumulative total returns that reflect the
Fund's performance over a stated period of time.
Total returns may be stated in 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 total return 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.
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Period total return is calculated according to the following formula:
PT = (ERV/P-1)
Where:
PT = period total return
The other definitions are the same as in average annual total
return above
OTHER MATTERS
The Fund may also include various information in its advertising, sales
literature, shareholder reports or other materials including, but not limited
to: (1) portfolio holdings and portfolio allocation as of certain dates, such as
portfolio diversification by instrument type, by instrument, by location of
issuer or by maturity; (2) statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
by an investor to meet specific financial goals, such as funding retirement,
paying for children's education and financially supporting aging parents; (3)
information (including charts and illustrations) showing the effects of
compounding interest (compounding is the process of earning interest on
principal plus interest that was earned earlier; interest can be compounded at
different intervals, such as annually, quarterly or daily); (4) information
relating to inflation and its effects on the dollar; (for example, after ten
years the purchasing power of $25,000 would shrink to $16,621, $14,968, $13,465
and $12,100, respectively, if the annual rates of inflation were 4%, 5%, 6% and
7%, respectively); (5) biographical descriptions of the Portfolio's portfolio
manager and the portfolio management staff of the Portfolio's Adviser, summaries
of the views of the portfolio managers with respect to the financial markets, or
descriptions of the nature of the Adviser's and its staff's management
techniques; (6) the results of a hypothetical investment in the Fund over a
given number of years, including the amount that the investment would be at the
end of the period; (7) the effects of investing in a tax-deferred account, such
as an individual retirement account or Section 401(k) pension plan; (8) the net
asset value, net assets or number of shareholders of the Fund as of one or more
dates; and (9) a comparison of the Fund's operations to the operations of other
funds or similar investment products, such as a comparison of the nature and
scope of regulation of the products and the products' weighted average maturity,
liquidity, investment policies, and the manner of calculating and reporting
performance.
In connection with its advertisements, the Fund may provide "shareholder
letters" that provide shareholders or investors with an introduction to the
Fund's, the Trust's or any of the Trust's service provider's policies or
business practices.
MANAGEMENT
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TRUSTEES AND OFFICERS OF THE TRUST
The names of the Trustees and officers of the Trust, their position with the
Trust, address, date of birth and 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 the Trust is indicated by an asterisk (*). The Board
formulates the general policies of the Fund and meets periodically to review the
Fund's performance, monitor investment activities and practices and discuss
other matters affecting the Fund.
<TABLE>
<S> <C> <C>
NAME, DATE OF POSITION PRINCIPAL OCCUPATION(S) DURING
BIRTH AND ADDRESS WITH THE TRUST PAST 5 YEARS
.................................... ................. .....................................................................
John Y. Keffer* Chairman and Member and Director, Forum Financial Group, LLC (a mutual fund
Born: July 15, 1942 President services holding company)
Two Portland Square Director, Forum Fund Services, LLC (Trust's underwriter)
Portland, Maine 04101 Officer of six other investment companies for which Forum Financial
Group, LLC provides services
.................................... ................. .....................................................................
Maurice J. DeWald Trustee Chairman and CEO, Verity Financial Group (financial advisory firm)
Born: March 20, 1940 Director, Tenet Healthcare Corporation
19200 Von Karman Avenue Director, Dai-Ichi Kangyo Bank
Suite 400 Director, ARV Assisted Living, Inc., since November 1995
Irvine, California 92612 Director, Advanced Materials Group, Inc. since January 1998
.................................... ................. .....................................................................
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NAME, DATE OF POSITION PRINCIPAL OCCUPATION(S) DURING
BIRTH AND ADDRESS WITH THE TRUST PAST 5 YEARS
.................................... ................. .....................................................................
Rudolph I. Estrada Trustee President and Chief Executive Officer of Summit Group (banking and
Born: February 28, 1948 business consulting company)
625 Fair Oaks Ave., Suite 101 Professor (Adjunct), Finance and Management, California State
South Pasadena, CA 91030 University Director, Pacific Crest Bank Director, Tel Star
Communication Systems since June 1998
Director, Uniboz since March 2000 (telecommunications
company)
Director, e-Diva.com since March 2000 (technology company)
.................................... ................. .....................................................................
Christine M. McCarthy Trustee Senior Vice President and Treasurer, The Walt Disney Company since
Born: June 24, 1955 December 1999
500 S. Buena Vista Boulevard Executive Vice President and CFO, Imperial Bank/Imperial Bancorp
Burbank, California 91521 April 1997 to December 1999
Executive Vice President, First Interstate Bancorp prior to April
1997
.................................... ................. .....................................................................
Robert M. Franko Trustee President, Generations Trust Bank, N.A. since August 1999
Born: President, Imperial Financial Group, Inc.- February 1997 - August
111 West Ocean Boulevard 1999
23rd Floor Chairman, Imperial Trust Company - March 1995- August 1999
P.O. Box 1070 President, Imperial Trust Company - February 1997- September 1998
Long Beach, CA 90802 Executive Vice President and CEO of Imperial Bank/Imperial Bancorp
- February 1995- April 1997
.................................... ................. .....................................................................
Jack J. Singer Trustee Senior Vice President and Investment Department Manager, Imperial
Born: May 24, 1944 Bank
9920 S. LaCienega Boulevard President, Imperial Securities Corp.
Inglewood, California 90301 Chairman and President, Imperial Asset Management since November
1997
.................................... ................. .....................................................................
David I. Goldstein Vice President General Counsel, Forum Financial Group, LLC
Born: August 3, 1961 Officer of five other investment companies for which Forum
Two Portland Square Financial Group, LLC provides services
Portland, Maine 04101
.................................... ................. .....................................................................
Anthony R. Fischer, Jr. Vice President Portfolio Manager, Forum Investment Advisors, LLC since 1998
Born: April 15, 1948 President, Linden Asset Management, Inc. prior to 1998
Two Portland Square
Portland, Maine 04101
.................................... ................. .....................................................................
Ronald H. Hirsch Treasurer Managing Director, Operations and Sales, Forum Financial Group, LLC
Born: October 14, 1943 since 1999
Two Portland Square Member of the Board, Citibank Germany 1991-1998
Portland, Maine 04101 Officer of six other investment companies for which Forum Financial
Group, LLC provides services
.................................... ................. .....................................................................
Beth P. Hanson Vice President Senior Manager of Fund Administration, Forum Financial Group, LLC
Born: July 15, 1966 and Assistant since 1995
Two Portland Square Secretary English Language Instructor, Overseas Training Center, Inc. (Osaka,
Portland, Maine 04101 Japan) prior thereto
.................................... ................. .....................................................................
Don L. Evans Secretary Counsel, Forum Financial Group, LLC since 1995
Born: August 12, 1948 Associate, Weiner & Strother (law firm), 1994 - 1995
Two Portland Square Officer of two other investment companies for which Forum Financial
Portland, Maine 04101 Group, LLC provides services.
</TABLE>
COMPENSATION OF TRUSTEES AND OFFICERS
As of April 12, 2000, each Trustee of the Trust is paid a quarterly retainer of
$1,500. In addition, each Trustee is paid $1,500 for each Board meeting attended
(whether in person or by telephone) and $500 for each Nominating or Audit
Committee meeting attended (whether in person or by telephone). 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
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the Board. Messrs. Keffer and Singer and Ms. McCarthy have not in the past
accepted any fees (other than reimbursement for travel and related expenses) for
their services as Trustees.
The following table sets forth the fees paid to each Trustee by the Trust and
the Fund Complex for the fiscal year ended August 31, 1999.
<TABLE>
<S> <C> <C>
COMPENSATION TOTAL COMPENSATION FROM
TRUSTEE FROM TRUST TRUST AND FUND COMPLEX
.......................................... ........................................ ........................................
Maurice J. DeWald $12,000 $12,000
.......................................... ........................................ ........................................
Rudolph I. Estrada $12,000 $12,000
.......................................... ........................................ ........................................
Robert M. Franko $12,000 $12,000
</TABLE>
TRUSTEES AND OFFICERS OF CORE TRUST
The names of the Trustees and officers of Core Trust, their position with Core
Trust, address, date of birth and 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 (*). The Core
Trust Board formulates the general policies of the Portfolio and meets
periodically to review the Portfolio's performance, monitor investment
activities and practices and discuss other matters affecting the Portfolio.
<TABLE>
<S> <C> <C>
NAME, DATE OF POSITION PRINCIPAL OCCUPATION(S) DURING
BIRTH AND ADDRESS WITH THE TRUST PAST 5 YEARS
.................................... .................... .................................................................
John Y. Keffer* Chairman and
President
.................................... .................... .................................................................
Born: February 15, 1943 Visiting Professor of Economics, Athens University of Economics
Department of Economics and Business 1998 - 1999
University of California Trustee of one other investment company for which Forum
Los Angeles, CA 90024 Financial Group, LLC provides services
.................................... .................... .................................................................
James C. Cheng Trustee President, Technology Marketing Associates
Born: July 26, 1942 (marketing company for small and medium size businesses in New
27 Temple Street England)
Belmont, MA 02718 Trustee of one other investment company for which Forum
Financial Group, LLC provides services
.................................... .................... .................................................................
J. Michael Parish Trustee Partner, Thelen Reid & Priest LLP (law firm) since 1995
Born: November 9, 1943 Partner, Winthrop Stimson Putnam & Roberts (law firm) 1989 -
40 West 57th Street 1995
New York, NY 10019 Trustee of one other investment company for which Forum
Financial Group, LLC provides services
.................................... .................... .................................................................
David I. Goldstein Vice President
.................................... .................... .................................................................
Ronald H. Hirsch Treasurer
.................................... .................... .................................................................
Don L. Evans Assistant Secretary
.................................... .................... .................................................................
</TABLE>
INVESTMENT ADVISER
SERVICES
Forum Investment Advisors, LLC serves as the investment adviser to the Portfolio
pursuant to an investment advisory agreement with Core Trust. Under its
agreement, the Adviser furnishes at its own expense all services, facilities and
personnel necessary in connection with managing the Portfolio's investments and
effecting portfolio transactions for the Portfolio. Since inception of the
Portfolio, Anthony R. Fischer, Jr., has been the portfolio manager responsible
for the day to day management of the Portfolio. Mr. Fischer has over 25 years of
experience in the money market industry.
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<PAGE>
FEES
The Adviser's fees are calculated as a percentage of the Portfolio's average net
assets.
Table 1 in Appendix C shows the dollar amount payable by the Portfolio to the
Adviser, the amount of fees waived by the Adviser, and the actual fee paid by
the Portfolio. This information is for the past three fiscal years.
OTHER
The Advisers' agreement with respect to the Portfolio must be approved at least
annually by the Core Trust Board or by majority vote of the interestholders of
the Portfolio, and in either case by a majority of the Core Trust Trustees who
are not parties to the agreement or interested persons of any such party
("Disinterested Trustees").
The agreement is terminable without penalty by the Core Trust Board with respect
to the Portfolio on 60 days' written notice when authorized either by vote of
the Portfolio's interestholders or by a majority vote of the Core Trust Board,
or by the Adviser on 90 days' written notice to Core Trust. The agreement
terminates immediately upon assignment. Under the agreement, the Adviser is not
liable for any action or inaction in the absence of bad faith, willful
misconduct or gross negligence in the performance of its duties.
DISTRIBUTOR
SERVICES
Forum Fund Services, LLC serves as the distributor (also known as principal
underwriter) of the shares of the Fund pursuant to a distribution agreement with
the Trust. FFS is located at Two Portland Square, Portland, Maine 04101, is a
registered broker-dealer and is a member of the National Association of
Securities Dealers, Inc.
Under its agreement, FFS acts as the representative of the Trust in connection
with the offering of shares of the Fund. FFS continually distributes shares of
the Fund on a best effort basis. FFS has no obligation to sell any specific
quantity of Fund shares.
FFS may enter into arrangements with various financial institutions through
which you may purchase or redeem shares. FFS may, at its own expense and from
its own resources, compensate certain persons who provide services in connection
with the sale or expected sale of shares of the Fund.
FFS may enter into agreements with selected broker-dealers, banks or other
financial institutions for distribution of shares of the Fund. These financial
institutions may charge a fee for their services and may receive shareholders
service fees even though shares of the Fund are sold with sales charges or
distribution fees. These financial institutions may otherwise act as FFS's
agent, and will be responsible for promptly transmitting purchase, redemption
and other requests to the Funds.
FEES
FFS does not receive a fee for any distribution services performed except the
distribution service fees with respect to the Shares of those Classes for which
a Plan is effective.
OTHER
FFS's agreement with respect to the Fund must be approved at least annually by
the Board or by majority vote of the shareholders of the Fund, and in either
case by a majority of the Disinterested Trustees.
FFS's agreement is terminable without penalty by the Trust with respect to the
Fund on 60 days' written notice when authorized either by vote of the Fund's
shareholders or by a majority vote of the Board, or by FFS on 60 days' written
notice to the Trust.
Under the agreement, FFS is not liable for any action or inaction in the absence
of bad faith, willful misconduct or gross negligence in the performance of its
duties.
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<PAGE>
Under the agreement, FFS and certain related parties (such as FFS's officers and
persons that control FFS) are indemnified by the Trust against all claims and
expenses in any way related to alleged untrue statements of material fact
contained in the Trust's Registration Statement or any alleged omission of a
material fact required to be stated in the Registration Statement to make
statements contained therein not misleading. The Trust, however, will not
indemnify FSS for any such misstatements or omissions if they were made in
reliance upon information provided in writing by FSS in connection with the
preparation of the Registration Statement.
DISTRIBUTION PLAN - NEW CLASS SHARE CLASS
In accordance with Rule 12b-1 under the 1940 Act, with respect to the New Class
of the Fund, the Trust has adopted a distribution plan (the "Plan") which
provides for the payment to FFS of a Rule 12b-1 fee at the annual rate of 0.75%
of the average daily net assets of the New Class of the Fund.
The Plan provides that FFS may incur expenses for such activities including: (1)
any sales, marketing and other activities primarily intended to result in the
sale of New Class shares; and (2) responding to New Class shareholder inquiries
regarding the Fund's investment objective, policies and other operational
features. Expenses for such activities include compensation to employees, and
expenses, including overhead and telephone and other communication expenses, of
FFS and various financial institutions or other persons who engage in or support
the distribution of New Class shares, or who respond to New Class shareholder
inquiries regarding the Fund's operations; the incremental costs of printing
(excluding typesetting) and distributing prospectuses, statements of additional
information, annual reports and other periodic reports for use in connection
with the offering or sale of New Class shares to any prospective investors; and
the costs of preparing, printing and distributing sales literature and
advertising materials used by FFS or others in connection with the offering of
New Class shares for sale to the public.
The Plan provides that all written agreements relating to the plan must be
approved by the Board, including a majority of the Disinterested Trustees. In
addition, the Plan requires the Trust and FFS to prepare and submit to the
Board, at least quarterly, and the Board to review written reports setting forth
all amounts expended under the Plan and identifying the activities for which
those expenditures were made.
The 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
Disinterested Trustees. The Plan further provides that it may not be amended to
materially increase the costs which the Trust bears for distribution pursuant to
the Plan without shareholder approval and that other material amendments of the
Plan must be approved by the Disinterested Trustees. The Board may terminate the
Plan at any time, by a majority of the Disinterested Trustees, or by the Fund's
New Class shareholders.
OTHER FUND SERVICE PROVIDERS
ADMINISTRATOR - THE TRUST
Forum Administrative Services, LLC serves as administrator pursuant to an
administration agreement with the Trust. Under its agreement FAdS is responsible
for supervising the overall management of the Trust, providing the Trust with
general office facilities and providing persons satisfactory to the Board to
serve as officers of the Trust.
For its services, FAdS receives a fee from the Fund at an annual rate of 0.05%
of the average daily net assets of the Fund.
Table 2 in Appendix C shows the dollar amount payable by the Fund to FAdS, the
amount of fees waived by FAdS, and the actual fee paid by the Fund. This
information is for the past three fiscal years.
The agreement must be approved at least annually by the Board or by majority
vote of the shareholders, and in either case by a majority of the Disinterested
Trustees. The agreement is terminable without penalty by the Trust or by FAdS
with respect to the Fund on 60 days' written notice.
Under the Administration Agreement, FAdS is not liable for any action or
inaction in the absence of bad faith, willful misconduct or gross negligence in
the performance of its duties. Under the agreement, FAdS and certain related
15
<PAGE>
parties (such as FAdS' officers and persons who control FAdS) are indemnified by
the Trust against any and all claims and expenses related to FAdS' actions or
omissions that are consistent with FAdS's contractual standard of care.
ADMINISTRATOR - CORE TRUST
FAdS also manages all aspects of Core Trust's operations with respect to the
Portfolio. With respect to the Portfolio, FAdS has entered into an
administration agreement ("Core Administration Agreement") that will continue in
effect only if such continuance is specifically approved at least annually by
the Core Trust Board or by a majority vote of the outstanding voting securities
of the Portfolio and, in either case, by a majority of the Trustees who are not
interested persons of any party to the Core Administration Agreement. Under the
Core Administration Agreement, FAdS performs similar services to those provided
to the Fund.
The Core Administration Agreement provides that FAdS shall not be liable for any
action or inaction in the administration of Core Trust, except for willful
misfeasance, bad faith, or gross negligence in the performance of FAdS' duties
or by reason of reckless disregard of FAdS' and obligations under this
agreement. The Core Administration Agreement may be terminated with respect to
the Portfolio at any time, without the payment of any penalty: (1) by the Core
Trust Board on 60 days' written notice to FAdS; or (2) by FAdS on 60 days'
written.
Table 2 in Appendix C shows the dollar amount payable by the Portfolio to FAdS,
the amount of the fee waived by FAdS, and the actual fees received by FAdS. The
information is for the past three fiscal years.
FUND ACCOUNTANT - THE TRUST
Forum Accounting Services, LLC serves as fund accountant, pursuant to an
accounting agreement with the Trust. Under its agreement, FAcS provides fund
accounting services to the Fund. These services include calculating the NAV of
the Fund and preparing the Fund's financial statements and tax returns.
FAcS is currently not paid a fee for services provided to the Fund. A fee may be
charged in the future, subject to Board approval.
The agreement must be approved at least annually by the Board or by majority
vote of the shareholders, and in either case by a majority of the Disinterested
Trustees. The agreement is terminable without penalty by the Trust or by FAcS
with respect to the Fund on 60 days' written notice.
Under the agreement, FAcS is not liable for any action or inaction in the
absence of bad faith, willful misconduct or gross negligence in the performance
of its duties. Under the agreement, FAcS and certain related parties (such as
FAcS' officers and persons who control FAcS) are indemnified by the Trust
against any and all claims and expenses related to FAcS' actions or omissions
that are consistent with FAcS' contractual standard of care.
Under the agreement, in calculating the Fund's NAV, FAcS is deemed not to have
committed an error if the NAV it calculates is within 1/10 of 1% of the actual
NAV (after recalculation). The agreement also provides that FAcS will not be
liable to a shareholder for any loss incurred due to an NAV difference if such
difference is less than or equal 1/2 of 1% or less than or equal to $10. In
addition, FAcS is not liable for the errors of others, including the companies
that supply securities prices to FAcS and the Fund.
FUND ACCOUNTANT - CORE TRUST
FAcS performs similar services for the Portfolio pursuant to a Portfolio and
Unitholder Accounting Agreement ("Core Accounting Agreement"). The Core
Accounting Agreement shall continue in effect with respect to the Portfolio
until terminated; provided, that the Board specifically approves continuance at
least annually. The Core Accounting Agreement may be terminated with respect to
the Portfolio at any time, without the payment of any penalty: (1) by the Board
on 60 days' written notice to FAcS or (2) by FAcS on 60 days' written notice to
the Trust. FAcS is required to use its best judgment and efforts in rendering
fund accounting services and is not liable to Core Trust for any action or
inaction in the absence of bad faith, willful misconduct or gross negligence.
16
<PAGE>
Table 3 in Appendix C shows the dollar amount payable by the Portfolio to FAcS,
the amount of the fee waived by FAcS, and the actual fees received by FAcS. The
information is for the past three fiscal years.
TRANSFER AGENT
Forum Shareholder Services, LLC serves as transfer agent and distribution paying
agent pursuant to a transfer agency agreement with the Trust. Under its
agreement, FSS maintains an account for each shareholder of record of the Fund
and is responsible for processing purchase and redemption requests and paying
distributions to shareholders of record. FSS is located at Two Portland Square,
Portland, Maine 04101 and is registered as a transfer agent with the SEC.
For its services, FSS receives with respect to the Fund an annual fee of $12,000
plus $6,000 for each class above one. FSS also receives a fee of 0.20% of the
average daily net assets of New class. Certain shareholder account fees are also
charged. The fee is accrued daily by the Fund and is paid monthly based on the
average net assets for the previous month.
The agreement must be approved at least annually by the Board or by majority
vote of the shareholders, and in either case by a majority of the Disinterested
Trustees. The agreement is terminable without penalty by the Trust or by FSS
with respect to the Fund on 60 days' written notice.
Under the agreement, FSS is not liable for any act in the performance of its
duties to the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties under the agreement. Under the
agreement, FSS and certain related parties (such as FSS's officers and persons
who control FSS) are indemnified by the Trust against any and all claims and
expenses related to FSS's actions or omissions that are consistent with FSS's
contractual standard of care.
Table 4 in Appendix C shows the dollar amount of the fees payable by the Fund to
FSS, the amount of the fee waived by FSS, and the actual fees received by FSS.
The information is for the past three fiscal years.
SHAREHOLDER SERVICE AGREEMENT
The Trust has adopted a shareholder service agreement ("Shareholder Service
Agreement") with respect to New Class Shares of the Fund under which the Trust
may pay FAdS a shareholder servicing fee at an annual rate of 0.25% of the
average daily net assets of New Class Shares. FAdS may pay any or all amounts of
these payments to various institutions that provide shareholder servicing to
their customers holding New Class Shares.
The Shareholder Service Agreement shall remain in effect for a period of one
year from the date of its effectiveness and thereafter shall continue in effect
for successive annual periods, provided that such continuance is specifically
approved at least annually by the Board and a majority of the Disinterested
Trustees. Any material amendment to the Shareholder Service Plan must be
approved by a majority of the Disinterested Trustees. The Plan may be terminated
without penalty at any time by a vote of a majority of the Disinterested
Trustees or FAdS.
FAdS 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.
In offering or redeeming Fund shares, 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 Fund
with respect to assets invested in the Fund. 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 Fund.
17
<PAGE>
Table 5 in Appendix C shows the dollar amount of the fees payable by the Fund to
FAdS, the amount of the fee waived by FAdS, and the actual fees received by
FAdS. The information is for the past three fiscal years.
CUSTODIAN
As custodian, pursuant to an agreement with Core Trust, Forum Trust, LLC
safeguards and controls the Portfolio's cash and securities, determines income
and collects interest on Fund investments. The Custodian may employ
subcustodians to provide custody of the Fund's domestic and foreign assets. The
Custodian is located at Two Portland Square, Portland, Maine 04101.
For its services, the Custodian receives an annualized percentage of the average
daily net assets of the Portfolio in which the Fund invests. The Portfolio also
pays an annual domestic custody fee as well as certain other transaction fees.
These fees are accrued daily by the Portfolio and are paid monthly based on
average net assets and transactions for the previous month.
SUBCUSTODIAN
Union Bank of California, N.A. serves as subcustodian of the Portfolio. The
Subcustodian is located at 445 South Figueroa Street, 5th Floor, Los Angeles,
California 90071.
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Washington, D.C.
20036 passes upon legal matters in connection with the issuance of shares of the
Trust.
INDEPENDENT AUDITORS
__________, 99 High Street, Boston, MA 02110, is the independent auditor of the
Fund and the Portfolio. The auditor audits the annual financial statements of
the Fund and Portfolio. The auditor also reviews the tax returns and certain
regulatory filings of the Fund and Portfolio.
18
<PAGE>
PORTFOLIO TRANSACTIONS
The Fund invests substantially all of its assets in a corresponding Portfolio
and not directly in portfolio securities. Therefore, the Fund does not engage in
portfolio transactions.
Purchases and sales of portfolio securities for the 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 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. While the Trust does not
anticipate that the Portfolio will pay any amounts of brokerage commissions, in
the event the Portfolio pays brokerage commissions or other transaction-related
compensation, the payments may be made to broker-dealers who pay expenses of the
Portfolio that the Portfolio would otherwise be obligated to pay itself. The
broker-dealer effecting the transaction effects all transactions for which the
Portfolio pays transaction-related compensation at the best price and execution
available, taking into account the amount of any payments made on behalf of the
Portfolio.
Allocations of transactions to dealers and the frequency of transactions are
determined for the Portfolio by the Adviser in its best judgment and in a manner
deemed to be in the best interest of interest holders of the 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.
The Adviser monitors the creditworthiness of counterparties to the Portfolio's
transactions and intends to enter into a transaction only when it believes that
the counterparty presents minimal and appropriate credit risks. No portfolio
transactions are executed with FIA or any of its affiliates.
OTHER ACCOUNTS OF THE ADVISER
Investment decisions for the Portfolio are made independently from those for any
other account or investment company that is or may in the future become advised
by the Adviser or its affiliates. Investment decisions are the product of many
factors, including suitability for the particular client involved. Thus, a
particular security may be bought or sold for certain clients even though it
could have been bought or sold for other clients at the same time. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling the security. In some instances, one client may sell a
particular security to another client. In addition, two or more clients may
simultaneously purchase or sell the same security, in which event each day's
transactions in such security are, insofar as is possible, averaged as to price
and allocated between such clients in a manner which, in the Adviser's opinion,
is equitable to each and in accordance with the amount being purchased or sold
by each. There may be circumstances when purchases or sales of a portfolio
security for one client could have an adverse effect on another client that has
a position in that security. When purchases or sales of the same security for
the Portfolio and other client accounts managed by the Adviser occurs
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
SECURITIES OF REGULAR BROKER-DEALERS
As of August 31, 1999, the Portfolio maintained investments in dealers (or their
parent companies) with whom it conducts portfolio transactions. Table 6 of
Appendix C provides details of these investments.
19
<PAGE>
PURCHASE AND REDEMPTION INFORMATION
GENERAL INFORMATION
Shareholders of record may purchase or redeem shares or request any shareholder
privilege in person at the offices of the FSS located at Two Portland Square,
Portland, Maine 04101.
The Fund accepts orders for the purchase or redemption of shares on each weekday
except on Federal holidays and other days that the Federal Reserve Bank of San
Francisco is closed ("Fund Business Days"). The Fund cannot accept orders that
request a particular day or price for the transaction or any other special
conditions.
Not all classes or funds of the Trust may be available for sale in the state in
which you reside. Please check with your investment professional to determine a
class or fund's availability.
ADDITIONAL PURCHASE INFORMATION
The distributor sells shares of the Fund on a continuous basis. The Fund
reserves the right to refuse any purchase request.
Fund shares are normally issued for cash only. At the Adviser's discretion,
however, the Fund may accept portfolio securities that meet the investment
objective and policies of the Fund as payment for Fund shares. The Fund will
only accept securities that: (1) are not restricted as to transfer by law and
are not illiquid; and (2) have a value that is readily ascertainable (and not
established only by valuation procedures).
UGMAS/UTMAS
These custodial accounts provide a way to give money to a child and obtain tax
benefits. Depending on state laws, you can set up a custodial account under the
UGMA or the UTMA. If the custodian's name is not in the account registration of
a gift or transfer to minor ("UGMA/UTMA") account, the custodian must sign
instructions in a manner indicating custodial capacity.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks and
other financial institutions. Financial institutions may charge their customers
a fee for their services and are responsible for promptly transmitting purchase,
redemption and other requests to the Fund.
If you purchase shares through a financial institution, you will be subject to
the institution's procedures, which may include charges, limitations, investment
minimums, cutoff times and restrictions in addition to, or different from, those
applicable when you invest in the Fund directly. When you purchase the Fund's
shares through a financial institution, you may or may not be the shareholder of
record and, subject to your institution's procedures; you may have Fund shares
transferred into your name. There is typically a three-day settlement period for
purchases and redemptions through broker-dealers. Certain financial institutions
may also enter purchase orders with payment to follow.
You may not be eligible for certain shareholder services when you purchase
shares through a financial institution. Contact your institution for further
information. If you hold shares through a financial institution, the Fund may
confirm purchases and redemptions to the financial institution, which will
provide you with confirmations and periodic statements. The Fund is not
responsible for the failure of any financial institution to carry out its
obligations.
Investors purchasing shares of the Fund through a financial institution should
read any materials and information provided by the financial institution to
acquaint themselves with its procedures and any fees that the institution may
charge.
20
<PAGE>
SIGNATURE GUARANTEES
For requests made in writing, a signature guarantee is required for any of the
following:
o Sales of over $50,000 worth of shares
o Changes to a shareholder's record name
o Redemptions from an account for which the address or account
registration has changed within the last 30 days
o Sending redemption proceeds to any person, address, brokerage firm
or bank account not on record
o Sending redemption proceeds to an account with a different
registration (name or ownership) from yours
o Changes to systematic investment or withdrawal, distribution,
telephone redemption or exchange option or any other election in
connection with your account
LOST ACCOUNTS
FSS will consider your account lost if correspondence to your address of record
is returned as undeliverable, unless FSS determines your new address. When an
account is lost, all distributions on the account will be reinvested in
additional Fund shares. In addition, the amount of any outstanding (unpaid for
six months or more) checks for distributions that have been returned to FSS will
be reinvested and the checks will be cancelled.
ADDITIONAL REDEMPTION INFORMATION
The Fund may redeem shares involuntarily to reimburse the 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
the Fund's shares as provided in the Prospectus or herein.
A delay may occur in cases of very large redemptions, excessive trading or
during unusual market conditions. Normally, redemption proceeds are paid
immediately following receipt of a redemption order in proper form. In any
event, you will be paid within 7 days, unless: (1) your bank has not cleared the
check to purchase the shares (which may take up to 15 days); (2) the Federal
Reserve Bank of San Francisco is closed for any reason other than normal weekend
or holiday closings; (3) there is an emergency in which it is not practical for
the Fund to sell its portfolio securities or for the Fund to determine its net
asset value; or (4) the SEC deems it inappropriate for redemption proceeds to be
paid. You can avoid the delay of waiting for your bank to clear your check by
paying for shares with wire transfers. Unless otherwise indicated, redemption
proceeds normally are paid by check mailed to your record address.
SUSPENSION OF REDEMPTION RIGHT
The right of redemption may not be suspended, except for any period during
which: (1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings) or during which the SEC determines that trading thereon is
restricted; (2) an emergency (as determined by the SEC) exists as a result of
which disposal by the Fund of its securities is not reasonably practicable or as
a result of which it is not reasonably practicable for the Fund fairly to
determine the value of its net assets; or (3) the SEC may by order permit for
the protection of the shareholders of the Fund.
REDEMPTION IN KIND
Redemption proceeds normally are paid in cash. Payments may be made wholly or
partly in portfolio securities, however, if the Board determines conditions
exist which would make payment in cash detrimental to the best interests of the
Portfolio or if the amount to be redeemed is large enough to affect the
Portfolio's operations. If redemption proceeds are paid wholly or partly in
portfolio securities, shareholders may incur brokerage costs by converting the
securities to cash. The Trust has filed an election with the SEC pursuant to
which the Fund may only effect a redemption in portfolio securities if the
particular shareholder is redeeming more than $250,000 or 1% of the Fund's total
net assets, whichever is less, during any 90-day period.
21
<PAGE>
DISTRIBUTIONS
Distributions of net investment income will be reinvested at the Fund's NAV per
share as of the last business day of the period with respect to which the
distribution is paid. Distributions of capital gain will be reinvested at the
NAV per share of the Fund on the payment date for the distribution. Cash
payments may be made more than seven days following the date on which
distributions would otherwise be reinvested.
As described in the Prospectus, under certain circumstances the Fund may close
early and advance the time by which the Fund must receive a purchase or
redemption order and payments. In this case, if an investor places an order
after the cut-off time, the order will be processed on the follow-up business
day and your access to the Fund would be temporarily limited.
TAXATION
The tax information set forth in the prospectus and the information in this
section relates solely to U.S. federal income tax law and assumes that the Fund
qualifies as a regulated investment company (as discussed below). This
information is only a summary of certain key federal income tax considerations
affecting the Fund and its shareholders. No attempt has been made to present a
complete explanation of the federal tax treatment of the Fund or the
implications to shareholders. The discussions here and in the prospectus are not
intended as substitutes for careful tax planning.
This section is based on the Code and applicable regulations in effect on the
date hereof. Future legislative or administrative changes or court decisions may
significantly change the tax rules applicable to the Fund and its shareholders.
Any of these changes or court decisions may have a retroactive effect.
The tax year-end of the Fund is August 31 (the same as the Fund's fiscal year
end).
The sale or exchange of Fund shares is a taxable transaction for federal income
tax purposes. All investors should consult their own tax adviser as to the
federal, state, local and foreign tax provisions applicable to them.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Fund intends for each tax year to qualify as a "regulated investment
company" under the Code. This qualification does not involve governmental
supervision of management or investment practices or policies of the Fund.
MEANING OF QUALIFICATION
As a regulated investment company, the Fund will not be subject to federal
income tax on the portion of its net investment income (that is, taxable
interest and other taxable ordinary income, net of expenses) and capital gain
net income (that is, the excess of long-term capital gain over long-term capital
loss) that it distributes to shareholders. In order to qualify as a regulated
investment company the Fund must satisfy the following requirements:
o The Fund must distribute at least 90% of its investment company
taxable income (that is, net investment income and capital gain net
income) for the tax year. (Certain distributions made by the Fund
after the close of its tax year are considered distributions
attributable to the previous tax year for purposes of satisfying this
requirement.)
o The Fund must derive at least 90% of its gross income from certain
types of income derived with respect to its business of investing.
o The Fund must satisfy the following asset diversification test at the
close of each quarter of the Fund's tax year: (1) at least 50% of the
value of the Fund's assets must consist of cash and cash items,
Government Securities, securities of other regulated investment
companies, and securities of other issuers; and (2) no more than 25%
of the value of the Fund's total assets may be invested in the
securities of any one issuer (other than Government Securities and
securities of other regulated investment companies), or in two or more
issuers which the Fund controls and which are engaged in the same or
similar trades or businesses.
22
<PAGE>
FAILURE TO QUALIFY
If for any tax year the Fund does not qualify as a regulated investment company,
all of its taxable income (including its net capital gain) will be subject to
tax at regular corporate rates without any deduction for dividends to
shareholders, and the distributions will be taxable to the shareholders as
ordinary income to the extent of the Fund's current and accumulated earnings and
profits. A portion of these distributions generally may be eligible for the
dividends-received deduction in the case of corporate shareholders.
Failure to qualify as a regulated investment company would have a negative
impact on the Fund's income and performance. It is possible that the Fund will
not qualify as a regulated investment company in any given tax year.
FUND DISTRIBUTIONS
The Fund anticipates distributing substantially all of its net investment income
for each tax year.
The Fund anticipates distributing substantially all of its net capital gain for
each tax year. These distributions generally are made only once a year, but the
Fund may make additional distributions of net capital gain at any time during
the year. These distributions are taxable to you as long-term capital gain,
regardless of how long you have held shares.
The Fund may have capital loss carryovers (unutilized capital losses from prior
years). These capital loss carryovers (which can be used for up to eight years)
may be used to offset any current capital gain (whether short- or long-term).
Any such losses may not be carried back.
Distributions by the Fund that do not constitute ordinary income dividends or
capital gain dividends will be treated as a return of capital. Return of capital
distributions reduce your tax basis in the shares.
All distributions by the Fund will be treated in the manner described above
regardless of whether the distribution is paid in cash or reinvested in
additional shares of the Fund. If you receive a distribution in the form of
additional shares, it will be treated as receiving a distribution in an amount
equal to the fair market value of the shares received, determined as of the
reinvestment date.
Ordinarily, you are required to take distributions by the Fund into account in
the year in which they are made. A distribution declared in October, November or
December of any year and payable to you on a specified date in those months,
however, is deemed to be received by you on December 31 of that calendar year
even if the distribution is actually paid in January of the following year.
You will be advised annually as to the U.S. federal income tax consequences of
distributions made (or deemed made) during the year.
FEDERAL EXCISE TAX
A 4% non-deductible excise tax is imposed on a regulated investment company that
fails to distribute in each calendar year an amount equal to: (1) 98% of its
ordinary taxable income for the calendar year; and (2) 98% of its capital gain
net income for the one-year period ended on October 31 of the calendar year. The
balance of the Fund's income must be distributed during the next calendar year.
The Fund will be treated as having distributed any amount on which it is subject
to income tax for any tax year.
For purposes of calculating the excise tax, the Fund: reduces its capital gain
net income (but not below its net capital gain) by the amount of any net
ordinary loss for the calendar year.
The Fund intends to make sufficient distributions of its ordinary taxable income
and capital gain net income prior to the end of each calendar year to avoid
liability for the excise tax. Investors should note, however, that the Fund
might in certain circumstances be required to liquidate portfolio investments to
make sufficient distributions to avoid excise tax liability.
23
<PAGE>
BACKUP WITHHOLDING
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of distributions, and the proceeds of redemptions of shares, paid
to any shareholder: (1) who has failed to provide a correct tax payer
identification number; (2) who is subject to backup withholding by the Internal
Revenue Service for failure to report the receipt of interest or dividend income
properly; or (3) who has failed to certify to the Fund that it is not subject to
backup withholding or that it is a corporation or other "exempt recipient."
Backup withholding is not an additional tax; any amounts so withheld may be
credited against a shareholder's federal income tax liability or refunded.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who under the Code is a nonresident alien individual,
foreign trust or estate, foreign corporation, or foreign partnership ("foreign
shareholder"), depends on whether the income from the Fund is "effectively
connected" with a U.S. trade or business carried on by the foreign shareholder.
If the income from the Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income distributions paid
to a foreign shareholder will be subject to U.S. withholding tax at the rate of
30% (or lower applicable treaty rate) upon the gross amount of the distribution.
The foreign shareholder generally would be exempt from U.S. federal income tax
on gain realized on the sale of shares of the Fund, capital gain distributions
from the Fund, and amounts retained by the Fund that are designated as
undistributed capital gain.
In the case of a non-corporate foreign shareholder, the Fund may be required to
withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding (or taxable at a reduced treaty rate), unless
the shareholder furnishes the Fund with proper notification of its foreign
status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein.
The tax rules of other countries with respect to distributions from the Fund can
differ from the rules from the U.S. federal income taxation rules described
above. These foreign rules are not discussed herein. Foreign shareholders are
urged to consult their own tax advisers as to the consequences of foreign tax
rules with respect to an investment in the Fund.
STATE AND LOCAL TAXES
The tax rules of the various states of the U.S. and their local jurisdictions
with respect to distributions from the Fund can differ from the U.S. federal
income taxation rules described above. These state and local rules are not
discussed herein. Shareholders are urged to consult their tax advisers as to the
consequences of state and local tax rules with respect to an investment in the
Fund, distributions from the Fund and the applicability of state and local taxes
and related matters.
24
<PAGE>
OTHER MATTERS
THE TRUST AND ITS SHAREHOLDERS
GENERAL INFORMATION
The Trust was organized as a business trust under the laws of the State of
Delaware on July 10, 1992. No Fund expects to hold shareholders' meetings unless
required by Federal or Delaware law. Shareholders of each Fund are entitled to
vote at shareholders' meetings unless a matter relates only to a specific series
or class (such as approval of an advisory agreement for a Fund or a distribution
plan). From time to time, large shareholders may control a class of a Fund, a
Fund or the Trust.
The Trust is registered as an open-end, management investment company under the
1940 Act. The Trust offers shares of beneficial interest in its series. As of
the date hereof, the Trust consisted of a Treasury Cash Fund, Government Cash
Fund and Cash Fund.
In addition to new class Shares, the Trust offers shares of beneficial interest
in an institutional, universal and investor share class of these series. Each
class of a Fund may have a different expense ratio and its expenses will affect
each class' performance.
The Trust has an unlimited number of authorized shares of beneficial interest.
The Board may, without shareholder approval, divide the authorized shares into
an unlimited number of separate series and may divide series into classes of
shares; the costs of doing so will be borne by the Trust.
Not all classes or funds of the Trust may be available in the state in which you
reside. Please check with your investment professional to determine a class or
fund's availability.
The Funds are not required to maintain a code of ethics pursuant to Rule 17j-1,
as amended, of the 1940 Act (the "Rule"). However, the Portfolios' investment
adviser and the Funds' distributor have adopted codes of ethics under the Rule;
these codes permit personnel subject to the codes to invest in securities,
including securities that may be purchased or held by the Portfolios.
The Trust and each Fund will continue indefinitely until terminated.
SHAREHOLDER VOTING AND OTHER RIGHTS
Each share of each series of the Trust and each class of shares has equal
distribution, liquidation and voting rights. Fractional shares have these rights
proportionately, except that expenses related to the distribution of the shares
of each class (and certain other expenses such as transfer agency, shareholder
service and administration expenses) are borne solely by those shares. Each
class votes separately with respect to the provisions of any Rule 12b-1 plan,
which pertains to the class and other matters for which separate class voting is
appropriate under applicable law. Generally, shares will be voted separately by
individual series except if: (1) the 1940 Act requires shares to be voted in the
aggregate and not by individual series; and (2) when the Trustees determine that
the matter affects more than one series and all affected series must vote. The
Trustees may also determine that a matter only affects certain classes of the
Trust and thus only those classes are entitled to vote on the matter. Delaware
law does not require the Trust to hold annual meetings of shareholders, and it
is anticipated that shareholder meetings will be held only when specifically
required by federal or state law. There are no conversion or preemptive rights
in connection with shares of the Trust.
All shares, when issued in accordance with the terms of the offering, will be
fully paid and nonassessable.
A shareholder in a series is entitled to the shareholder's pro rata share of all
distributions arising from that series' assets and, upon redeeming shares, will
receive the portion of the series' net assets represented by the redeemed
shares.
Shareholders representing 10% or more of the Trust's (or a series) shares may,
as set forth in the Trust Instrument, call meetings of the Trust (or series) for
any purpose related to the Trust (or series), including, in the case of a
meeting of the Trust, the purpose of voting on removal of one or more Trustees.
25
<PAGE>
CERTAIN REORGANIZATION TRANSACTIONS
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 a Fund. The Trustees may, without prior shareholder
approval, change the form of organization of the Trust by merger, consolidation
or incorporation. 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 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.
FUND OWNERSHIP
As of June 1, 2000, the Trustees and officers of the Trust in the aggregate
owned less than 1% of the outstanding Shares of the Fund and Class.
Also as of that date, certain shareholders of record owned 5% or more of the
Fund. These shareholders and any shareholder known by the Fund to own
beneficially 5% or more of the Fund are listed in Table 7 in Appendix C.
From time to time, certain shareholders may own a large percentage of the shares
of the Fund or Class. Accordingly, those shareholders may be able to require the
Trust to hold a shareholder meeting to vote on certain issues and may be able to
greatly affect (if not determine) the outcome of a shareholder vote. As of June
1, 2000, the following persons beneficially or of record owned 25% or more of
the shares of the Fund or of the Trust and may be deemed to control the Fund or
the Trust. For each person listed that is a company, the jurisdiction under the
laws of which the company is organized (if applicable) and the company's parents
are listed.
CONTROLLING PERSON INFORMATION
<TABLE>
<S> <C> <C> <C> <C>
TREASURY CASH FUND NAME AND ADDRESS SHARES % OF CLASS % OF FUND
Institutional Shares Union Bank of California
(recordholder)
P.O. Box 85602
San Diego, CA 92186-5602 27,590,678 79.51 9.44
Investor Shares Imperial Bank (recordholder)
9920 S La Cienega Blvd.
Investment Dept - 14th Floor
Inglewood, CA 90301 243,682,296 94.55 83.33
CASH FUND
Universal Shares Coastcast Corporation
3025 East Victoria St
Rancho Dominguez, CA 90221 42,351,954 86.52 2.90
Investor Shares Imperial Bank (recordholder)
9920 S La Cienega Blvd.
Investment Dept - 14th Floor
Inglewood, CA 90301 557,656,897 99.72 38.25
</TABLE>
LIMITATIONS ON SHAREHOLDERS' AND TRUSTEES' LIABILITY
Delaware law provides that Fund shareholders are entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. The Trust's Trust Instrument (the document that governs
the operation of the Trust) contains an express disclaimer of shareholder
liability for the debts, liabilities, obligations and expenses of the Trust. The
Trust Instrument provides for indemnification out of the Fund's property of any
shareholder or former shareholder held personally liable for the obligations of
the Fund. The Trust Instrument also provides that the Fund 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 Fund is unable to meet its
obligations.
26
<PAGE>
The Trust Instrument provides that the Trustees shall not be liable to any
person other than the Trust and its shareholders. In addition, the Trust
Instrument provides that the Trustees shall not be liable for any conduct
whatsoever. A Trustee is not, however, protected against any liability to which
he would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included in the
Trust's registration statement filed with the SEC under the 1933 Act with
respect to the securities offered hereby. The registration statement, including
the exhibits filed therewith, may be examined at the office of the SEC in
Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents are not necessarily complete, and, in each instance,
are qualified by reference to the copy of such contract or other documents filed
as exhibits to the registration statement.
FINANCIAL STATEMENTS
The financial statements of the Fund and its corresponding Portfolio for the
year ended August 31, 1999, which are included in the Fund's Annual Report to
Shareholders, are incorporated herein by reference. These financial statements
are the schedules of investments, statements of assets and liabilities,
statements of operations, statements of changes in net assets, financial
highlights, notes and independent auditors' reports.
27
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX A - DESCRIPTION OF CERTAIN SECURITIES RATINGS
CORPORATE BONDS
MOODY'S
AAA Bonds that are rated Aaa are judged 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.
AA Bonds that 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 that make
the long-term risk appear somewhat larger than the Aaa securities.
A Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment some time in the future.
NOTE Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from Aa through Caa. The modifier 1 indicates
that the obligation ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates a ranking in the lower end of that generic
rating category.
S&P
AAA An obligation rated AAA has the highest rating assigned by Standard
& Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
AA An obligation rated AA differs from the highest-rated obligations
only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's
capacity to meet its financial commitment on the obligation is still
strong.
BAA Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
NOTE Plus (+) or minus (-). The ratings from AA to A may be modified by
the addition of a plus or minus sign to show relative standing
within the major rating categories.
The `r' symbol is attached to the ratings of instruments with
significant noncredit risks. "R" numbers highlight risks to
principal or volatility of expected returns that are not addressed
in the credit rating. Examples include: obligations linked or
indexed to equities, currencies, or commodities; obligations
exposed to severe prepayment risk-such as interest-only or
principal-only mortgage securities; and obligations with unusually
risky interest terms, such as inverse floaters.
A-1
<PAGE>
DUFF & PHELPS CREDIT RATING CO.
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is modest
AA but may vary slightly from time to time because of economic
conditions.
A+,A, Protection factors are average but adequate. However, risk factors
A- are more variable in periods of greater A- economic stress.
FITCH
AAA
Highest credit quality. `AAA' ratings denote the lowest expectation
of credit risk. They are assigned only in case of exceptionally
strong capacity for timely payment of financial commitments. This
capacity is highly unlikely to be adversely affected by foreseeable
events.
AA
Very high credit quality. `AA' ratings denote a very low expectation
of credit risk. They indicate very strong capacity for timely
payment of financial commitments. This capacity is not significantly
vulnerable to foreseeable events.
A
High credit quality. `A' ratings denote a low expectation of credit
risk. The capacity for timely payment of financial commitments is
considered strong. This capacity may, nevertheless, be more
vulnerable to changes in circumstances or in economic conditions
than is the case for higher ratings.
SHORT - TERM RATINGS
MOODY'S
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
PRIME-1 Issuers rated Prime-1 (or supporting institutions) 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:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
o Well-established access to a range of financial markets and
assured sources of alternate liquidity.
PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics
cited above 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.
NOT PRIME Issuers rated Not Prime do not fall within any of the Prime
rating categories.
A-2
<PAGE>
S&P
A-1 A short-term obligation rated A-1 is rated in the highest
category by S&P. The obligor's capacity to meet its financial
commitment on the obligation is strong. Within this category,
certain obligations are designated with a plus sign (+). This
indicates that the obligor's capacity to meet its financial
commitment on these obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than obligations in higher rating categories.
However, the obligor's capacity to meet its financial commitment
on the obligation is satisfactory.
FITCH
F1 Obligations assigned this rating have the highest capacity for
timely repayment under Fitch's national rating scale for that
country, relative to other obligations in the same country. This
rating is automatically assigned to all obligations issued or
guaranteed by the sovereign state. Where issues possess a
particularly strong credit feature, a "+" is added to the
assigned rating.
F2 Obligations supported by a strong capacity for timely repayment
relative to other obligors in the same country. However, the
relative degree of risk is slightly higher than for issues
classified as `A1' and capacity for timely repayment may be
susceptible to adverse change sin business, economic, or
financial conditions.
F3 Obligations supported by an adequate capacity for timely
repayment relative to other obligors in the same country. Such
capacity is more susceptible to adverse changes in business,
economic, or financial conditions than for obligations in higher
categories.
A-3
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX B - PERFORMANCE DATA
For the seven-day period ended _________________, the annualized yields of each
Class of the Fund that were then operating were as follows:
<TABLE>
<S> <C> <C> <C> <C>
7 DAY 7 DAY EFFECTIVE YIELD 30 DAY 30 DAY EFFECTIVE YIELD
YIELD YIELD
CASH FUND
Universal Shares % % % %
Institutional Shares % % % %
Investor Shares % % % %
</TABLE>
For the period ended _________________, the total return of each Class of the
Fund that were then operating were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
CALENDAR SINCE
ONE THREE YEAR TO ONE THREE FIVE INCEPTION
MONTH MONTHS DATE YEAR YEARS* YEARS* CUMULATIVE ANNUALIZED
CASH FUND
Universal Shares % % % % % % % %
(Inception 12/1/92)
Institutional Shares % % % % % % % %
(Inception 7/15/93)
Investor Shares % % % % % % %
(Inception. 6/16/95)
* Annualized return.
</TABLE>
B-1
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX C - MISCELLANEOUS TABLES
TABLE 1 - INVESTMENT ADVISORY FEES
Prior to January 1, 1998, the Portfolio paid advisory fees to Linden Asset
Management, Inc., the Portfolio's prior investment adviser. The fees payable by
the Portfolio under the Investment Advisory Agreement were:
<TABLE>
<S> <C> <C> <C>
CONTRACTUAL FEE FEE
CASH PORTFOLIO FEE WAIVED PAID
Year ended August 31, 1999 $266,660
Year ended August 31, 1998 $122,199
Period ended January 1, 1998 $36,516
Year ended August 31, 1997 $72,872
TABLE 2 - ADMINISTRATION FEES
The fees payable by the Fund under the Administration Agreement were:
CONTRACTUAL FEE FEE
CASH FUND FEE WAIVED PAID
YEAR ENDED
August 31, 1999 $349,221 $12,269 $336,952
August 31, 1998 $203,477 $25,795 $177,682
August 31, 1997 $89,942 $2,893 $87,049
The fees payable by the Portfolio under the Core Administrative Agreement were:
CONTRACTUAL FEE FEE
CASH PORTFOLIO FEE WAIVED PAID
YEAR ENDED
August 31, 1999 $385,799 $0 $385,799
August 31, 1998 $203,628 $0 $203,628
August 31, 1997 $92,652 $7,621 $85,031
TABLE 3 - FUND ACCOUNTING FEES
The fees payable by the Portfolio under the Accounting Agreement were:
CONTRACTUAL FEE FEE
CASH PORTFOLIO FEE WAIVED PAID
YEAR ENDED
August 31, 1999 $49,500 $0 $49,500
August 31, 1998 $48,000 $0 $48,000
August 31, 1997 $48,000 $0 $48,000
TABLE 4 - TRANSFER AGENT FEES
The fees payable by the Fund under the Transfer Agency Agreement were:
CONTRACTUAL FEE FEE
CASH FUND FEE WAIVED PAID
YEAR ENDED
August 31, 1999
Universal Shares $40,499 $12,269 $28,230
Institutional Shares $803,870 $0 $803,870
Investor Shares $488,963 $0 $488,963
C-1
<PAGE>
YEAR ENDED
August 31, 1998
Universal Shares $34,429 $31,621 $2,808
Institutional Shares $441,229 $0 $441,229
Investor Shares $289,208 $0 $289,208
YEAR ENDED
August 31, 1997
Universal Shares $11,015 $7,247 $3,768
Institutional Shares $123,240 $7 $123,233
Investor Shares $244,861 $0 $244,861
TABLE 5 - SHAREHOLDER SERVICE FEES
The fees payable by the Fund under the Shareholder Services Agreement were:
CONTRACTUAL FEE FEE
INSTITUTIONAL SHARES FEE WAIVED PAID
YEAR ENDED
August 31, 1999 $791,359 $114,258 $677,101
August 31, 1998 $396,602 $78,293 $318,309
August 31, 1997 $85,650 $29,315 $56,335
CONTRACTUAL FEE FEE
INVESTOR SHARES FEE WAIVED PAID
YEAR ENDED
August 31, 1999 $479,276 $32,940 $446,336
August 31, 1998 $256,286 $43,447 $212,839
August 31, 1997 $175,845 $10,704 $165,141
</TABLE>
TABLE 6 - PORTFOLIO HOLDINGS IN BROKER/DEALERS
CASH PORTFOLIO VALUE
Goldman Sachs & Co. $39,984,000
C-2
<PAGE>
TABLE 7 - 5% SHAREHOLDERS
As of June 1, 2000, the shareholders listed below owned of record 5% or more of
the outstanding shares of each class of shares of the Fund. 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.
<TABLE>
<S> <C> <C> <C> <C>
CASH FUND NAME AND ADDRESS SHARES % OF CLASS % OF FUND
Universal Shares Coastcast Corporation 42,351,954 86.52 2.90
3025 East Victoria Street
Rancho Dominguez, CA 90221
Imperial Securities Corp. 6,143,705 12.55 0.42
9920 S La Cienega Blvd
Inglewood, CA 90301
Institutional Shares Cobalt Microserver, Inc. 139,154,641 16.38 9.54
555 Ellis Street
Mountain View, CA 94043
E-Stamp Corporation 125,695,707 14.79 8.62
2855 Campus Drive
San Mateo, CA 94403-2510
Telocity Inc 65,048,859 7.65 4.46
992 S. De Anza Blvd.
San Jose, CA 95129
Union Bank of California (recordholder) 51,528,121 6.06 3.53
P.O. Box 58602
San Diego, CA 92186-5602
Mother Nature.com, Inc. 45,500,000 5.35 3.12
One Concord Farms
490 Virginia Road
Concord, MA 01742
Egroups Inc. 42,522,376 5.00 2.92
350 Brannan Street
San Francisco, CA 94107
Investor Shares Imperial Bank (recordholder) 557,656,898 99.72 38.25
9920 S. La Cienega Blvd.
Inglewood, CA 90301
</TABLE>
C-3
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Trust Instrument of Registrant dated July 10, 1992 (see Note 1).
(b) By-Laws of Registrant dated July 10, 1992, as amended May 12, 1995 (see
Note 1).
(c) None.
(d) None.
(e) Distribution Agreement between Registrant and Forum Fund Services, LLC
dated as of January 1, 1999, relating to Treasury Cash Fund, Government
Cash Fund and Cash Fund (see Note 2).
(f) None.
(g) (1) Custodian Agreement between Registrant and Union Bank of California,
N.A., dated May 7, 1999 (see Note 3).
(2) Form of Custodial Services Agreement between Registrant and Forum
Trust, LLC (filed herewith).
(h) (1) 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).
(2) Transfer Agency Agreement between Registrant and Forum Shareholder
Services, LLC dated as of October 29, 1998, relating to Treasury Cash
Fund, Government Cash Fund and Cash Fund (see Note 2).
(3) 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).
(4) Fund Accounting Agreement between Registrant and Forum Accounting
Services, LLC dated as of December 1, 1997, relating to Treasury Cash
Fund, Government Cash Fund and Cash Fund (see Note 1).
(i) (1) Opinion and Consent of Kirkpatrick & Lockhart LLP (see Note 3).
(j) Not applicable.
(k) None.
(l) Investment Representation letter (see Note 1).
(m) Investor Class Distribution Plan dated July 12, 1993 (see Note 1).
(n) Multiclass (Rule 18f-3) Plan dated May 12, 1995, as amended January
22, 1996 (see Note 1).
(p) Not required.
Other Exhibits:
(1) Powers of Attorney, Maurice J. DeWald, Jack J. Singer, John Y. Keffer
and Rudolph I. Estrada, 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.
(3) Exhibit incorporated by reference as filed in Post-Effective Amendment
No. 20 via EDGAR on December 30, 1999, accession number
0001004402-99-000485.
Part C-1
<PAGE>
ITEM 24. 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 25. 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.
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 26. 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 and Cash
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 is the member of Forum Investment Advisors, LLC, Two
Portland Square, Portland, Maine 04101, including it's business
connections, which are of a substantial nature.
Forum Trust, LLC
Part C-2
<PAGE>
Forum Trust, LLC is 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>
<CAPTION>
Name Title Business Connection
<S> <C> <C>
.................................... ................................... ..................................
David I. Goldstein Secretary Forum Investment Advisors, LLC
................................... ..................................
................................... ..................................
General Counsel Forum Financial Group, LLC
................................... ..................................
................................... ..................................
Officer other Forum affiliated companies
.................................... ................................... ..................................
.................................... ................................... ..................................
John F. Burns Director Forum Investment Advisors, LLC
................................... ..................................
.................................... ................................... ..................................
Marc Keffer Assistant Secretary Forum Investment Advisors, LLC
................................... ..................................
................................... ..................................
Corporate Counsel Forum Financial Group, LLC
................................... ..................................
................................... ..................................
Officer other Forum affiliated companies
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Forum Fund Services, LLC, Registrant's underwriter serves as
underwriter for the following investment companies registered under the
Investment Company Act of 1940, as amended:
The Cutler Trust Monarch Funds
Memorial Funds Sound Shore Fund, Inc.
Forum Funds TrueCrossing Funds
(b) The following 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>
<CAPTION>
Name Position with Underwriter Position with Registrant
<S> <C> <C>
.............................. ..................................... ....................................
.............................. ..................................... ....................................
John Y. Keffer President Chairman, President
.............................. ..................................... ....................................
.............................. ..................................... ....................................
David I Goldstein Secretary Vice President
.............................. ..................................... ....................................
.............................. ..................................... ....................................
Ronald H. Hirsch Treasurer Treasurer
</TABLE>
(c) Not Applicable.
Part C-3
<PAGE>
ITEM 28. 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
Administrative 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 26 hereof.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
None.
Part C-4
<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 has duly caused this
amendment 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 May
2, 2000.
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 May 2,
2000
(a) Principal Executive Officer
/s/ John Y. Keffer
John Y. Keffer, Chairman and President
(b) Principal Financial Officer
/s/ Ronald H. Hirsch
Ronald H. Hirsch, Treasurer
(c) A majority of the Trustees
/s/ John Y. Keffer
John Y. Keffer, Trustee
Rudolph I. Estrada, Trustee
Maurice J. DeWald, 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 May 2, 2000.
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 May 2, 2000.
(a) Principal Executive Officer
/s/ John Y. Keffer
John Y. Keffer, Chairman and President
(b) Principal Financial Officer
/s/ Ronald H. Hirsch
Ronald H. Hirsch, 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
(g)(2) Form of Custodial Services Agreement between Registrant and Forum Trust,
LLC
Exhibit (g)(2)
CUSTODIAL SERVICES AGREEMENT
AGREEMENT dated as of the ___ day of May, 2000, between Forum Trust,
LLC ("Custodian"), a limited liability company organized under the laws of the
State of Maine doing business as a nondepository trust company, and Monarch
Funds, a business trust organized under the laws of the State of Delaware
("Customer").
WHEREAS, Customer is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act"),
and may offer one or more series of shares, each of which shall represent an
interest in a separate portfolio of Securities and Cash (each as hereinafter
defined) (all such existing and additional series now or hereafter listed on
Exhibit A being hereafter referred to individually as a "Portfolio," and
collectively, as the "Portfolios"); and
WHEREAS, Custodian proposes to enter into a certain Subcustodian
Agreement with Union Bank of California ("Union Bank") dated as of the ___ day
of May, 2000 (the "Subcustodian Agreement") under which Union Bank provides
certain sub-custody services on behalf of the Portfolios to Custodian; and
WHEREAS, Customer wishes to retain Custodian to provide certain
custodial services to Customer for the benefit of the Portfolios, and Custodian
is willing to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment of Custodian. Customer, on behalf of each Portfolio, hereby
employs Custodian as custodian of all assets of each Portfolio that are
delivered to and accepted by Custodian or any Subcustodian (as that term is
defined in Section 4) (the "Property") pursuant to the terms and conditions set
forth herein. For purposes of this Agreement, "delivery" of Property shall
include the acquisition by Customer of a security entitlement (as that term is
defined in the New York Uniform Commercial Code ("UCC")). Without limitation,
such Property shall include stocks and other equity interests of every type,
evidences of indebtedness, other instruments representing same or rights or
obligations to receive, purchase, deliver or sell same and other non-cash
investment property of a Portfolio ("Securities") and cash from any source and
in any currency ("Cash"), provided that Custodian shall have the right, in its
sole discretion, to refuse to accept as Property any property of a Portfolio
that Custodian considers not to be appropriate or in proper form for deposit for
any reason. Custodian shall not be responsible for any property of a Portfolio
held or received by Customer or others and not delivered to Custodian or any
Subcustodian.
2. Maintenance of Securities and Cash at Custodian and Subcustodian
Locations. Pursuant to Instructions (as hereinafter defined in Section 15),
Customer shall direct Custodian to (a) settle Securities transactions and
maintain Cash in the country or other jurisdiction in which the principal
trading market for such Securities is located, where such Securities are to be
presented for payment or where such Securities are acquired and (b) maintain
Cash and cash equivalents in such countries in amounts reasonably necessary to
effect Customer's transactions in such Securities. Instructions to settle
Securities transactions in any country shall be deemed to authorize the holding
of such Securities and Cash in that country.
3. Custody Account. Except as provided in the last paragraph of Section 4,
Custodian agrees to establish and maintain one or more custody accounts on its
books each in the name of Customer on behalf of a Portfolio (each, an "Account")
for any and all Property from time to time received and accepted by Custodian or
any Subcustodian for the account of such Portfolio. Upon delivery by Customer to
Custodian of any acceptable Property belonging to a Portfolio, Customer shall,
by Instructions, specifically indicate in which Portfolio such Property belongs
or if such Property belongs to more than one Portfolio, shall allocate such
Property to the appropriate Portfolio, and Custodian shall allocate such
Property to the Accounts in accordance with the Instructions. Customer, on
behalf of each Portfolio, acknowledges (i) its responsibility as a principal for
all of its obligations to Custodian arising under or in connection with this
Agreement, notwithstanding, that it may be acting on behalf of other persons,
and (ii) warrants its authority to deposit in the appropriate Account any
Property received therefor by Custodian or a Subcustodian and to give, and
authorize others to give, instructions relative thereto. Custodian may deliver
securities of the same class in place of those deposited in the Account.
Custodian shall hold, keep safe and protect as custodian for each Account
all Property in such Account and, to the extent such Property constitutes
"financial assets" as defined in the UCC, shall maintain those financial assets
in such Account as security entitlements in favor of the Portfolio in whose name
the Account is maintained. All transactions, including, but not limited to,
foreign exchange transactions, involving the Property shall be executed or
settled solely in accordance with Instructions (which shall specifically
reference the Account for which such transaction is being settled), except that
until Custodian receives Instructions to the contrary, Custodian will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property,
as the same become payable and credit the same to the
appropriate Account;
(b) present for payment all Securities held in an Account that
are called, redeemed or retired or otherwise become payable
and all coupons and other income items that call for payment
upon presentation to the extent that Custodian or
Subcustodian is actually aware of such opportunities and
hold the cash received in such Account pursuant to this
Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than
ministerial exchanges described in (i) above) is received
for an Account, endeavor to receive Instructions, provided
that if such Instructions are not received in time for
Custodian to take timely action, no action shall be taken
with respect thereto;
(d) whenever notification of a rights entitlement or a
fractional interest resulting from a rights issue, stock
dividend or stock split is received for an Account and such
rights entitlement or fractional interest bears an
expiration date, if after endeavoring to obtain Instructions
such Instructions are not received in time for Custodian to
take timely action or if actual notice of such actions was
received too late to seek Instructions, sell in the
discretion of Custodian (which sale Customer hereby
authorizes Custodian to make) such rights entitlement or
fractional interest and credit the Account with the net
proceeds of such sale;
(e) execute in Customer's name for an Account, whenever
Custodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of
income from the Property in such Account;
(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any
governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies,
Custodian shall notify Customer of the amount of the
shortfall and Customer may, or may cause the Portfolio to,
at its option, deposit additional Cash in such Account or
take steps to have sufficient Cash available. Customer, on
behalf of the Portfolios agrees, when and if requested by
Custodian and required in connection with the payment of any
such taxes, to cooperate with Custodian in furnishing
information, executing documents or otherwise;
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - f),
including, without limitation, affiliates of Custodian or
any Subcustodian; and
(h) in the event of any loss of Securities or Cash, use its best
efforts to ascertain the circumstances relating to such loss
and promptly report the same to Customer.
4. Subcustodians and Securities Systems. Customer authorizes and instructs
Custodian to maintain the Property in each Account directly in one of its United
States ("U.S.") branches or indirectly through custody accounts that have been
established by Custodian with the following other securities intermediaries: (a)
another U.S. bank or trust company (including Union Bank pursuant to the
Subcustodian Agreement) or branch thereof located in the U.S. that is itself
qualified under the 1940 Act, to act as custodian or a non-U.S. branch of
Custodian or of any U.S. Subcustodian, or a U.S. securities depository or
clearing agency or system in which Custodian or a U.S. Subcustodian participates
(individually, a "U.S. Securities System") or (b) one of Custodian's
majority-owned non-U.S. subsidiaries, a majority-owned subsidiary of a U.S.
Subcustodian or a non-U.S. bank or trust company, acting as custodian
(individually, a "non-U.S. Subcustodian"; U.S. Subcustodians and non-U.S.
Subcustodians, collectively, "Subcustodians"), or a non-U.S. depository or
clearing agency or system in which Custodian or any Subcustodian participates
(individually, a "non-U.S. Securities System"; U.S. Securities System and
non-U.S. Securities System, collectively, "Securities System"), provided that in
each case in which a U.S. Subcustodian or U.S. Securities System is employed,
Custodian shall notify Customer of the appointment of such U.S. Subcustodian or
U.S. Securities System; provided further that in each case in which a non-U.S.
Subcustodian or non-U.S. Securities System is employed, (a) such Subcustodian or
Securities System either is (i) a "qualified U.S. bank" as defined by Rule 17f-5
under the 1940 Act ("Rule 17f-5") or (ii) an "eligible foreign custodian" within
the meaning of Rule 17f-5 or such Subcustodian or Securities System is the
subject of an order granted by the U.S. Securities and Exchange Commission
("SEC") exempting such agent or the subcustody arrangements thereto from all or
part of the provisions of Rule 17f-5,and (b) the identity of the non-U.S.
Subcustodian and the agreement between Custodian and such non-U.S. Subcustodian
has been approved by Instructions; it being understood that Custodian shall have
no liability or responsibility for determining whether the approval of any
Subcustodian or Securities System by Instructions is proper under the 1940 Act
or any rule or regulation thereunder. Exhibit D attached hereto lists all
Subcustodians and Securities Systems that have been approved by Instructions.
Notwithstanding Section 20 hereof or any other provision hereof to the contrary,
Exhibit D may be amended solely by the delivery to Custodian of Instructions
pursuant to Section 15 hereof.
Upon receipt of Instructions from Customer, Custodian agrees to cease the
employment of any Subcustodian or Securities System with respect to Customer,
and if desirable and practicable, appoint a replacement Subcustodian or
securities system in accordance with the provisions of this Section. In
addition, Custodian may, at any time in its discretion, upon written
notification to Customer, terminate the employment of any Subcustodian or
Securities System.
Custodian shall deliver to Customer annually a certificate stating: (a) the
identity of each non-U.S. Subcustodian and non-U.S. Securities System then
acting on behalf of Custodian and the name and address of the governmental
agency or other regulatory authority that supervises or regulates such non-U.S
Subcustodian and non-U.S. Securities System; (b) the countries in which each
non-U.S. Subcustodian or non-U.S. Securities System is located; and (c) if
requested by Customer's Board of Trustees or if the Board of Trustees directly
approves its foreign custody arrangements, such other information relating to
such non-U.S. Subcustodians and non-U.S. Securities Systems as may reasonably be
requested by Customer to ensure compliance with Rule 17f-5. If requested by the
Customer's Board of Trustees or the Board of Trustees responsible for any
Portfolio directly approves its foreign custody arrangements, Custodian also
shall furnish annually to Custodian information concerning such non-U.S.
Subcustodians and non-U.S. Securities Systems similar in kind and scope as that
furnished to Customer in connection with the initial approval of this Agreement.
Custodian agrees to promptly notify Customer if, in the normal course of its
custodial activities, Custodian learns of a material adverse change in the
financial condition of a non-U.S. Subcustodian or a non-U.S. Securities System
suffers a material loss of Property, or Custodian has reason to believe that any
non-U.S. Subcustodian or non-U.S. Securities System has ceased to be a qualified
U.S. bank or an eligible foreign custodian each within the meaning of Rule 17f-5
or has ceased to be subject to an exemptive order from the SEC.
Notwithstanding any other provision hereof to the contrary, (i) all
Property shall be delivered (as contemplated by Section 1) by or on behalf of
Customer only to Union Bank or another Subcustodian, and (ii) all Instructions
and other directions (as contemplated by Section 2) shall be delivered by
Customer only to Union Bank or another Subcustodian. All provisions of this
Agreement (including, without limitation, the final paragraph of Section 3)
shall be interpreted to give effect to the preceding sentence and Forum shall
have authority to enter the Subcustodian Agreement as agent of Customer.
5. Use of Subcustodian. With respect to Property in an Account that is
maintained by Custodian through a Subcustodian -------------------- employed
pursuant to Section 4:
(a) Custodian will identify on its books as belonging to
Customer on behalf of a Portfolio, any Property maintained
through such Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of Custodian or its agents.
(c) Property deposited with a Subcustodian will be maintained in
an account holding only assets for customers of Custodian.
(d) Any agreement Custodian shall enter into with a non-U.S.
Subcustodian with respect to maintaining Property shall
require that (i) the Account will be adequately indemnified
or its losses adequately insured; (ii) the Property so
maintained is not subject to any right, charge, security
interest, lien or claim of any kind in favor of such
Subcustodian or its creditors except a claim for payment in
accordance with such agreement for its safe custody or
administration; (iii) beneficial ownership of Securities be
freely transferable without the payment of money or value
other than for safe custody or administration; (iv) adequate
records will be maintained identifying the Property
maintained pursuant to such Agreement as belonging to
Customer or as being held by Custodian, on behalf of
Customer or all its customers; (v) to the extent permitted
by applicable law, officers of or auditors employed by, or
other representatives of or designated by, Custodian,
including the independent public accountants of or
designated by, Customer be given access to the books and
records of such Subcustodian relating to Property or
confirmation of the contents of those records; and (vi)
Custodian on behalf of Customer will receive periodic
reports with respect to the safekeeping of the Property,
including but not limited to notification of any transfer of
Property into or out of an Account.
6. Use of Securities System. With respect to Property in the Account(s)
that is maintained by Custodian or any -------------------------- Subcustodian
through a Securities System employed pursuant to Section 4:
(a) Custodian shall, and the Subcustodian will be required by
its agreement with Custodian to, identify on its books such
Property as being maintained for the account of Custodian or
Subcustodian for its customers.
(b) Any Property maintained through a Securities System for the
account of Custodian or a Subcustodian will be subject only
to the instructions of Custodian or such Subcustodian, as
the case may be.
(c) Property deposited with a Securities System will be
maintained in an account holding only assets for customers
of Custodian or Subcustodian, as the case may be, unless
precluded by applicable law, rule, or regulation.
(d) Custodian shall provide Customer with any report obtained by
Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System.
7. Agents. Custodian may at any time or times in its sole discretion
appoint (or remove) as its agent to carry out such of the provisions of this
Agreement as Custodian may from time to time direct any other U.S. bank or trust
company which is itself qualified under the 1940 Act to act as custodian,
including Union Bank; provided, however, that the appointment of any agent shall
not relieve Custodian of its responsibilities or liabilities hereunder.
Custodian shall provide reasonable notice to Customer of the appointment or
removal of any agent.
8. Records, Ownership of Property, Statements, Opinions of Independent
Certified Public Accountants.
(a) The ownership of the Property, whether maintained directly
by Custodian or indirectly through a Subcustodian or a
Securities System as authorized herein, shall be clearly
recorded on Custodian 's books as belonging to the
appropriate Account and not to the Custodian. Custodian
shall keep accurate and detailed accounts of all
investments, receipts, disbursements and other transactions
for each Account. All accounts, books and records of
Custodian relating thereto shall be open to inspection and
audit at all reasonable times during normal business hours
by any person designated by Customer. All such accounts
shall be maintained and preserved in the form reasonably
requested by Customer. Custodian will supply to Customer
from time to time, as mutually agreed upon, a statement in
respect to any Property in an Account maintained by
Custodian or by a Subcustodian. In the absence of the filing
in writing with Custodian by Customer of exceptions or
objections to any such statement within sixty (60) days of
the mailing thereof, Customer shall be deemed to have
approved such statement and in such case or upon written
approval of Customer of any such statement, such statement
shall be presumed to be for all purposes correct with
respect to all information set forth therein.
(b) Custodian shall take all reasonable action as Customer may
request to obtain from year to year favorable opinions from
Customer's independent certified public accountants with
respect to Custodian 's activities hereunder in connection
with the preparation of Customer's registration statement on
Form N-1A and Customer's Form N-SAR or other periodic
reports to the SEC and with respect to any other
requirements of the SEC.
(c) At the request of Customer, Custodian shall deliver, and
shall cause the Subcustodians to deliver, to Customer a
written report prepared by Custodian 's independent
certified public accountants with respect to the services
provided by Custodian under this Agreement, including,
without limitation, Custodian's accounting system, internal
accounting control and procedures for safeguarding Cash and
Securities, including Cash and Securities deposited and/or
maintained in a securities system or with a Subcustodian.
Such report shall be of sufficient scope and in sufficient
detail as may reasonably be required by Customer and as may
reasonably be obtained by Custodian.
(d) Customer may elect to participate in any of the electronic
on-line service and communications systems offered by
Custodian or a Subcustodian that can provide Customer, on a
daily basis, with the ability to view on-line or to print in
hard copy various reports of Account activity and of
Securities and/or Cash being held in any Account. To the
extent that such service shall include market values of
Securities in an Account, Customer hereby acknowledges that
Custodian or such Subcustodian now obtains and may in the
future obtain information on such values from outside
sources that Custodian or such Subcustodian considers to be
reliable, and Customer agrees that Custodian and such
Subcustodian (i) does not verify or represent or warrant
either the reliability of such service nor the accuracy or
completeness of any such information furnished or obtained
by or through such service and (ii) shall be subject to the
standard of care set forth in Section 16 of this Agreement
in selecting and utilizing such service or furnishing any
information derived therefrom.
9. Holding of Securities, Nominees, etc. Securities in an Account that are
maintained by Custodian or any Subcustodian may be held directly by such entity
in the name of Customer or in bearer form or maintained, on behalf of a
Portfolio, in Custodian's or Subcustodian's name or in the name of Custodian's
or Subcustodian's nominee. Securities that are maintained through a Subcustodian
or which are eligible for deposit in a Securities System as provided above may
be maintained with the Subcustodian or the Securities System in an account for
Custodian's or Subcustodian's customers, unless prohibited by law, rule, or
regulation. Custodian or Subcustodian, as the case may be, may combine
certificates representing Securities held in an Account with certificates of the
same issue held by Custodian or Subcustodian as fiduciary or as a custodian. In
the event that any Securities in the name of Custodian or its nominee or held by
a Subcustodian and registered in the name of such Subcustodian or its nominee
are called for partial redemption by the issuer of such Security, Custodian may,
subject to the rules or regulations pertaining to allocation of any Securities
System in which such Securities have been deposited, allot, or cause to be
allotted, the called portion of the respective beneficial holders of such class
of security in any manner Custodian deems to be fair and equitable. Securities
maintained with a Securities System shall be maintained subject to the rules of
that Securities System governing the rights and obligations among the Securities
System and its participants.
10. Proxies, etc. With respect to any proxies, notices, reports or other
communications pertaining to any of the Securities in any Account, Custodian
shall perform such services and only such services as are (i) set forth in
Section 3 of this Agreement, (ii) described in the applicable Service Standards
(the "Proxy Service"), and (iii) as may otherwise be agreed upon between
Custodian and Customer. The liability and responsibility of Custodian in
connection with the Proxy Service referred to in (ii) of the immediately
preceding sentence and in connection with any additional services which
Custodian and Customer may agree upon as provided in (iii) of the immediately
preceding sentence shall be as set forth in the description of the Proxy Service
and as may be agreed upon by Custodian and Customer in connection with the
furnishing of any such additional service and shall not be affected by any other
term of this Agreement. Neither Custodian nor its nominees or agents shall vote
upon or in respect of any of the Securities in an Account, execute any form of
proxy to vote thereon, or give any consent or take any action (except as
provided in Section 3) with respect thereto except upon the receipt of
Instructions.
11. Segregated Account. To assist Customer in complying with the
requirements of the 1940 Act and the rules and ------------------- regulations
thereunder, Custodian shall, upon receipt of Instructions, establish and
maintain a segregated account or accounts on its books for and on behalf of a
Portfolio.
12. Settlement Procedures. Securities will be transferred, exchanged or
delivered by Custodian or a Subcustodian upon receipt by Custodian of
Instructions that include all information required by Custodian. Settlement and
payment for Securities received for an Account and delivery of Securities out of
such Account may be effected in accordance with the customary or established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering Securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such Securities from such purchaser
or dealer, as such practices and procedures may be modified or supplemented in
accordance with the standard operating procedures of Custodian in effect from
time to time for that jurisdiction or market. Custodian shall not be liable for
any loss which results from effecting transactions in accordance with the
customary or established securities trading or securities processing practices
and procedures in the applicable jurisdiction or market.
Custodian or a Subcustodian may settle purchases and sales against, or
credit income to, an Account, and Custodian may, at its sole option upon written
notice to Customer, reverse such credits or debits to the appropriate Account in
the event that the transaction does not settle, or the income is not received in
a timely manner, and Customer agrees to hold Custodian harmless from any losses
that may result therefrom. With respect to the activities of Union Bank as
Subcustodian under the Subcustodian Agreement, such credits and reversals, if
any, shall be on a contractual basis, as outlined in the Union Bank Service
Standards, as described below and provided to Customer by Custodian.
The applicable Service Standards shall mean the Global Guide, the Policies
and Standards Manual, and any other documents issued by the Custodian, Union
Bank and other Subcustodians from time to time specifying the procedures for
communicating with a customer, the terms of any additional services to be
provided to a customer, and such other matters as may be agreed between the
parties from time to time. Copies of the current Service Standards have been
delivered to Customer.
13. Conditional Credits. -------------------
(a) Notwithstanding any other provision of this Agreement,
Custodian or a Subcustodian shall not be required to comply
with any Instructions to settle the purchase of any
securities for the Account unless there are sufficient
immediately available funds in the relevant currency in the
Account, provided that, if, after all expenses, debits
-------- ---- and withdrawals of Cash in the relevant
currency ("Debits") applicable to the Account have been made
and if after all Conditional Credits, as defined below,
applicable to the Account have become final entries as set
forth in (c) below, the amount of immediately available
funds of the relevant currency in such Account is at least
equal to the aggregate purchase price of all securities for
which Custodian has received Instructions to settle on that
date ("Settlement Date"), Custodian, upon settlement, shall
credit the Securities to the Account by making a final entry
on its books and records.
(b) Notwithstanding the foregoing, if after all Debits
applicable to the Account have been made, the amount of
immediately available funds in a given currency in such
Account are less than the aggregate purchase price in such
currency of all securities for which Custodian has received
Instructions to settle on any Settlement Date, Custodian,
upon settlement, may credit the securities to the Account by
making a conditional entry on its books and records
("Conditional Credit"), pending receipt of sufficient
immediately available funds in the relevant currency in the
Account.
(c) If, within a reasonable time from the posting of a
Conditional Credit and after all Debits applicable to the
Account have been made, immediately available funds in the
relevant currency at least equal to the aggregate purchase
price in such currency of all securities subject to a
Conditional Credit on a Settlement Date are deposited into
the Account, Custodian shall make the Conditional Credit a
final entry on its books and records. In such case, Customer
shall be liable to Custodian only for late charges at a rate
that Custodian customarily charges for similar extensions of
credit.
(d) If (i) within a reasonable time from the posting of a
Conditional Credit, immediately available funds at least
equal to the resultant Debit on a Settlement Date are not
deposited in the Account, or (ii) any Proceeding (as defined
below) shall occur, Custodian may sell such of the
Securities subject to the Conditional Credit as it selects
in its sole discretion and shall apply the net proceeds of
such sale to cover such Debit, including related late
charges, and any remaining proceeds shall be credited to the
Account. If such proceeds are insufficient to satisfy such
Debit in full, Customer shall continue to be liable to
Custodian for any shortfall. Custodian shall make the
Conditional Credit a final entry on its books as to the
Securities not required to be sold to satisfy such Debit.
Pending payment in full by Customer of the purchase price
for Securities subject to a Conditional Credit, and
Custodian's making a Conditional Credit a final entry on its
books, and, unless consented to by Custodian, Customer shall
have no right to give further Instructions in respect of
Securities subject to a Conditional Credit. Custodian shall
have the sole discretion to determine which Securities shall
be deemed to have been paid for by Customer out of funds
available in the Account. Any such Conditional Credit may be
reversed (and any corresponding Debit shall be canceled) by
Custodian unless and until Custodian makes a final entry on
its books crediting such Securities to the Account. The term
"Proceeding" shall mean any insolvency, bankruptcy,
receivership, reorganization or similar proceeding relating
to Customer, whether voluntary or involuntary.
(e) Customer agrees that it will not use the Account to
facilitate the purchase of securities without sufficient
funds in the Account (which funds shall not include the
expected proceeds of the sale of the purchased securities).
14. Permitted Transactions. Customer agrees that it will cause transactions
to be made pursuant to this Agreement only ----------------------- upon
Instructions in accordance with Section 15 (but subject to Section 3) and only
for the purposes listed below.
(a) In connection with the purchase or sale of Securities at
prices as confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or
otherwise become payable.
(c) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan or
merger, consolidation, reorganization, recapitalization or
readjustment.
(d) Upon conversion of Securities pursuant to their terms into
other securities.
(e) Upon exercise of subscription, purchase or other similar
rights represented by Securities.
(f) For the payment of interest, taxes, management or
supervisory fees, distributions or operating expenses.
(g) In connection with any borrowings by Customer requiring a
pledge of Securities, but only against receipt of amounts
borrowed or in order to satisfy requirements for additional
or substitute collateral.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect
any restrictions applicable to Customer.
(i) For the purpose of redeeming shares of the capital stock of
Customer against delivery of the shares to be redeemed to
Custodian, a Subcustodian or Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of Customer
against delivery of the shares to be redeemed to Custodian,
a Subcustodian or Customer's transfer agent.
(k) For delivery in accordance with the provisions of any
agreement among Customer, on behalf of a Portfolio, the
Portfolio's investment adviser and a broker-dealer
registered under the Securities Exchange Act of 1934 and a
member of the National Association of Securities Dealers,
Inc., relating to compliance with the rules of The Options
Clearing Corporation, the Commodities Futures Trading
Commission or of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by Customer.
(l) For release of Securities to designated brokers under
covered call options, provided, however, that such
Securities shall be released only upon payment to Custodian
of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of
the option, or at expiration, Custodian will receive the
Securities previously deposited from broker. Custodian will
act strictly in accordance with Instructions in the delivery
of Securities to be held in escrow and will have no
responsibility or liability for any such Securities which
are not returned promptly when due other than to make proper
request for such return.
(m) For spot or forward foreign exchange transactions to
facilitate security trading or receipt of income from
Securities related transactions.
(n) Upon the termination of this Agreement as set forth in
Section 21.
(o) For other proper purposes.
Customer agrees that Custodian and any Subcustodian shall have no
obligation to verify the purpose for which a transaction is being effected.
15. Instructions. The term "Instructions" means instructions from Customer
in respect of any of Custodian's duties hereunder that have been received by
Custodian at its address set forth in Section 22 below (i) in writing
(including, without limitation, facsimile transmission) or by tested telex
signed or given by such one or more person or persons as Customer shall have
from time to time authorized in writing to give the particular class of
Instructions in question and whose name and (if applicable) signature and office
address have been filed with Custodian; or (ii) which have been transmitted
electronically through an electronic on-line service and communications system
offered by Custodian or other electronic instruction system acceptable to
Custodian; or (iii) a telephonic or oral communication by one or more persons as
Customer shall have from time to time authorized to give the particular class of
Instructions in question and whose name has been filed with Custodian; or (iv)
upon receipt of such other form of instructions as Customer may from time to
time authorize in writing and which Custodian has agreed in writing to accept.
Instructions in the form of oral communications shall be confirmed by Customer
by tested telex or writing in the manner set forth in clause (i) above, but the
lack of such confirmation shall in no way affect any action taken by Custodian
in reliance upon such oral instructions prior to Custodian 's receipt of such
confirmation. Instructions may relate to specific transactions or to types or
classes of transactions, and may be in the form of standing instructions.
Custodian shall have the right to assume in the absence of notice to the
contrary from Customer that any person whose name is on file with Custodian
pursuant to this Section has been authorized by Customer to give the
Instructions in question and that such authorization has not been revoked.
Custodian may act upon and conclusively rely on, without any liability to
Customer or any other person or entity for any losses resulting therefrom, any
Instructions reasonably believed by it to be furnished by the proper person or
persons as provided above.
16. Standard of Care. So long as and to the extent that it is in the
exercise of reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement and shall be held
harmless in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement, but shall be
kept indemnified by and shall be without liability to the Trust for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel acceptable to the Trust (who may be
counsel for the Trust) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice.
If the Trust on behalf of a Fund requires the Custodian to take any action
with respect to securities, which action involves the payment of money or which
action may, in the opinion of the Custodian, result in the Custodian or its
nominee assigned to the Trust or the Fund being liable for the payment of money
or incurring liability of some other form, the Trust on behalf of the Fund, as a
prerequisite to requiring the Custodian to take such action, shall provide
indemnity to the Custodian in an amount and form satisfactory to it.
If the Trust requires the Custodian to advance cash or securities for any
purpose for the benefit of a Fund or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Agreement,
except such as may arise from its or its nominees own negligent action,
negligent failure to act or willful misconduct, the Custodian promptly shall
notify the Trust of the existence of any such advances, their amount and the
Fund to which the advance applies. Such advances shall be payable on demand, on
the first business day following the Trust's receipt of notice of such demand.
17. Investment Limitations and Legal or Contractual Restrictions or
Regulations. Neither Custodian nor any Subcustodians shall be liable to Customer
or a Portfolio and Customer agrees to indemnify Custodian, all Subcustodians and
their nominees, for any loss, damage or expense suffered or incurred by
Custodian, any Subcustodian or their nominees arising out of any violation of
any investment restriction or other restriction or limitation applicable to
Customer or any Portfolio pursuant to any contract or any law or regulation.
18. Fees and Expenses. Customer agrees to pay to Custodian such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time. The initial fee schedule is attached
hereto as Exhibit B. Such fees will not be abated by, nor shall Custodian be
required to account for, any profits or commissions received by Custodian in
connection with its provision of custody services under this agreement. Customer
hereby agrees to hold Custodian harmless from any liability or loss resulting
from any taxes or other governmental charges, and any expense related thereto,
which may be imposed, or assessed with respect to any Property in an Account and
also agree to hold Custodian, its Subcustodians, and their respective nominees
harmless from any liability as a record holder of Property in such Account.
Custodian is authorized to charge the applicable Account for such items, and
Custodian shall have a lien on the Property in the applicable Account for any
amount payable to Custodian under this Agreement, including but not limited to
amounts payable pursuant to Section 13 and pursuant to indemnities granted by
Customer under this Agreement.
19. Tax Reclaims. With respect to withholding taxes deducted and which may
be deducted from any income received from any Property in an Account, Custodian
shall perform such services with respect thereto as are described in the
applicable Service Standards and shall in connection therewith be subject to the
standard of care set forth in such Service Standards. Such standard of care
shall not be affected by any other term of this Agreement.
20. Amendment, Modifications, etc. No provision of this Agreement may be
amended, modified or waived except in a writing signed by the parties hereto
(except that Exhibit D may be amended as provided in Section 4 hereof and
Exhibit B may be amended as provided for therein). No waiver of any provision
hereto shall be deemed a continuing waiver unless it is so designated. No
failure or delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or partial
exercise of any power or right preclude any other or further exercise thereof or
the exercise of any other power or right.
21. Termination. -----------
(a) This Agreement may be terminated by Customer or Custodian by
ninety (90) days' written notice to the other; provided
-------- that notice by Customer shall specify the names of
the persons to whom Custodian shall deliver the Securities
in each Account and to whom the Cash in such Account shall
be paid. If notice of termination is given by Custodian,
Customer shall, within ninety (90) days following the giving
of such notice, deliver to Custodian a written notice
specifying the names of the persons to whom Custodian shall
deliver the Securities in each Account and to whom the Cash
in such Account shall be paid. In either case, Custodian
will deliver such Property to the persons so specified,
after deducting therefrom any amounts that Custodian
determines to be owed to it hereunder. In addition,
Custodian may in its discretion withhold from such delivery
such Property as may be necessary to settle transactions
pending at the time of such delivery. Customer grants to
Custodian a lien and right of setoff against the Account and
all Property held therein from time to time in the full
amount of the foregoing obligations. If within ninety (90)
days following the giving of a notice of termination by
Custodian, Custodian does not receive the aforementioned
written notice specifying the names of the persons to whom
Custodian shall deliver the Securities in each Account and
to whom the Cash in such Account shall be paid, Custodian,
at its election, may deliver such Securities and pay such
Cash to a bank or trust company doing business in the State
of New York to be held and disposed of pursuant to the
provisions of this Agreement, or may continue to hold such
Securities and Cash until a written notice as aforesaid is
delivered to Custodian, provided that from and after the
ninetieth day Custodian 's obligations shall be limited to
safekeeping.
(b) This Agreement may be terminated by Customer or Custodian as
to one or more Portfolios (but less than all of the
Portfolios) by delivery of an amended Exhibit A deleting
such Portfolios, in which case termination as to such
deleted Portfolios shall take effect ninety (90) days after
the date of such delivery, or such earlier time as mutually
agreed. The execution and delivery of an amended Exhibit A
that deletes one or more Portfolios shall constitute a
termination of this Agreement only with respect to such
deleted Portfolio(s), shall be governed by Section 21(a) as
to the identification of a successor custodian and the
delivery of Cash and Securities of the Portfolio(s) so
deleted to such successor custodian, and shall not affect
the obligations of Custodian and Customer hereunder with
respect to the other Portfolios set forth in Exhibit A, as
amended from time to time.
(c) Sections 16, 17, 18, 27 and 31 shall survive the termination
of this Agreement as to one or more or all Portfolios.
22. Notices. Except as otherwise provided in this Agreement, all requests,
demands or other communications between the parties or notices in connection
herewith (a) shall be in writing, hand delivered or sent by registered mail,
telex or facsimile addressed to such other address as shall have been furnished
by the receiving party pursuant to the provisions hereof and (b) shall be deemed
effective when received, or, in the case of a telex, when sent to the proper
number and acknowledged by a proper answerback.
23. Several Obligations of the Portfolios. With respect to any obligations
of Customer on behalf of each Portfolio and each of its related Accounts arising
out of this Agreement, Custodian shall look for payment or satisfaction of any
obligation solely to the assets and property of the Portfolio and such Accounts
to which such obligation relates as though Customer had separately contracted
with Custodian by separate written instrument with respect to each Portfolio and
its related Accounts.
24. Security for Payment. To secure payment of all obligations due
hereunder, Customer hereby grants to Custodian a continuing security interest in
and right of setoff against each Account and all Property held therein from time
to time in the full amount of such obligations; provided that, if there is more
than one Account and the obligations secured pursuant to this Section can be
allocated to a specific Account or the Portfolio related to such Account, such
security interest and right of setoff will be limited to Property held for that
Account only and its related Portfolio. Should Customer fail to pay promptly any
amounts owed hereunder, Custodian shall be entitled to use available Cash in the
Account or applicable Account, as the case may be, and to dispose of Securities
in the Account or such applicable Account as is necessary. In any such case and
without limiting the foregoing, Custodian shall be entitled to take such other
actions or exercise such other options, powers and rights as Custodian now or
hereafter has as a secured creditor under the UCC or any other applicable law,
including, without limitation, granting to any Subcustodian a security interest
in such Accounts on terms similar to those set forth in this Section 24.
25. Representations and Warranties. ------------------------------
(a) Customer hereby represents and warrants to Custodian that:
(i) the employment of Custodian and the allocation of fees,
expenses and other charges to any Account as herein
provided, is not prohibited by law or any governing
documents or contracts to which it is subject;
(ii) the terms of this Agreement do not violate any
obligation by which Customer is bound, whether arising
by contract, operation of law or otherwise;
(iii)this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding
upon Customer and each Portfolio in accordance with its
terms; and
(iv) it will deliver to Custodian a duly executed
Secretary's Certificate in the form of Exhibit C hereto
or such other evidence of such authorization as
Custodian may reasonably require, whether by way of a
certified resolution or otherwise.
(b) Custodian hereby represents and warrants to Customer that:
(i) the terms of this Agreement do not violate any
obligation by which Custodian is bound, whether arising
by contract, operation of law or otherwise;
(ii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding
upon Custodian in accordance with its terms;
(iii)it will deliver to Customer such evidence of such
authorization as Customer may reasonably require,
whether by way of a certified resolution or otherwise;
(iv) it is qualified as a custodian under Section 26(a) of
the 1940 Act and that it will remain so qualified or
upon ceasing to be so qualified shall promptly notify
Customer in writing; and
(v) it has taken steps (a) believed by it in good faith to
be reasonably designed to address the risk that
critical computer systems and equipment containing the
embedded microchips that it uses relating to its
operations (the "Systems") may be unable to process
properly and calculate date-related information and
data from and after January 1, 2000 (the "Year 2000
Problem"), and (b) to obtain assurances deemed
reasonable by Custodian that its material service
providers, including each Subcustodian, Securities
System, agent or other financial institution employed
by Custodian to provide services to Customer under this
Agreement, have taken reasonable steps to address the
Year 2000 Problem. Custodian reasonably expects that
the effects of the Year 2000 Problem should not result
in a material adverse effect on the business, financial
condition or ability to timely perform any of its
material obligations under this Agreement (a "Material
Adverse Effect"). In addition, Custodian agrees to
notify Customer promptly if it has reason to believe
that a Material Adverse Effect is likely to result from
a Year 2000 Problem with respect to Custodian or its
material service providers.
26. Limitations of Liability of the Trustees and Shareholders, Officers,
Employees and Agent. A copy of the Trust Instrument of the Trust is on file with
the Secretary of the Trust. The parties agree that neither the Shareholders,
Trustees, officers, employees nor any agent of the Trust shall be liable
hereunder and that the parties to this Agreement other than the Trust shall look
solely to the Trust property for the performance of this Agreement or payment of
any claim under this Agreement.
27. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and
- ----------------------------------------- shall not be assignable by either
party, but shall bind the successors in interest of Customer and Custodian.
28. Third-Party Beneficiary. Customer hereby acknowledges and agrees that
with respect to the Accounts: -----------------------
(a) Customer authorizes Custodian to appoint Union Bank as a
Subcustodian pursuant to the Subcustodian Agreement and to
engage Union Bank to perform any and all functions under
this Agreement on behalf of Customer, including those
enumerated in the last paragraph of Section 4.
(b) As an inducement to Union Bank to act as a Subcustodian,
Customer authorizes the Custodian to bind the Customer to
those terms of the Subcustodian Agreement, including Section
23 thereof, which will obligate the Customer to pay
obligations of each Portfolio for Property of such Portfolio
custodied pursuant to the Subcustodian Agreement.
(c) Union Bank may rely, as fully as if it were a party hereto
and named as "Custodian" herein, on the representations,
warranties, covenants and indemnities of Customer set forth
in Sections 8(d), 16, 17, 24 and 28 of this Agreement.
29. Representative Capacity and Binding Obligation. A copy of the
Certificate of Trust of Customer is on file with the Secretary of State of the
State of Delaware. Notice is hereby given that this Agreement is not executed on
behalf of the Trustees of Customer as individuals, and the obligations of this
Agreement are not binding upon any of the Trustees, officers or shareholders of
Customer individually but are binding only upon the assets and property of the
Portfolios.
Custodian agrees that no shareholder, Trustee or officer of Customer may be
held personally liable or responsible for any obligations of Customer arising
out of this Agreement.
30. Submission to Jurisdiction. Intentionally Left Blank.
- --------------------------
31. Confidentiality. The Custodian agrees to treat all records and other
information relative to the Trust and its prior, present or potential
Shareholders confidentially and the Custodian on behalf of itself and its
employees agrees to keep confidential all such information, except after prior
notification to and approval in writing by the Trust, which approval shall not
be unreasonably withheld. The preceding notwithstanding, in the event legal
process is served upon the Custodian requiring certain disclosure, the Custodian
may divulge such information. In such event, the Custodian shall, if legally
permissible, advise the Trust of its receipt of such legal process.
32. Severability. If any provision of this Agreement is determined to be
invalid or unenforceable, such determination ------------ shall not affect the
validity or enforceability of any other provision of this Agreement.
33. Entire Agreement. This Agreement together with its Exhibits, contains
the entire agreement between the parties ------------------ relating to the
subject matter hereof and supersedes any oral statements and prior writings with
respect thereto.
34. Headings. The headings of the sections hereof are included for
convenience of reference only and do not form a part -------- of this Agreement.
35. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an ------------ original. This
Agreement shall become effective when one or more counterparts have been signed
and delivered by each of the parties hereto.
IN WITNESS WHEREOF, each of the parties has caused it's duly authorized
signatories to execute this Agreement as of the date first written above.
FORUM TRUST, LLC
By:
Name: John Y. Keffer
Title: President
MONARCH FUNDS
By:
Name:
Title:
<PAGE>
A-1
CUSTODIAL SERVICES AGREEMENT
EXHIBIT A
LIST OF PORTFOLIOS
Treasury Cash Fund
Government Cash Fund
Cash Fund
FORUM TRUST, LLC
By:
Name: John Y. Keffer
Title: President
MONARCH FUNDS
By:
Name:
Title:
<PAGE>
B-1
CUSTODIAL SERVICES AGREEMENT
EXHIBIT B
FEE SCHEDULE
This Exhibit B shall be amended upon delivery by Custodian of a new Exhibit B to
Customer and acceptance thereof by Customer and shall be effective as of the
date of acceptance by Customer or a date agreed upon between Custodian and
Customer.
Annual Fee as a % of
Portfolio Average Daily Net Assets
Total of all Funds 0.025% of the first $1.5 billion,
0.020% of the next $1.0 billion and
0.015% of the balance
Such fees shall be accrued by the Trust daily and payable monthly in arrears on
the first day of the next month, however, no fee shall be payable hereunder with
respect to a Fund during any period in which the Fund invests all (or
substantially all) of its investment assets in a registered, open-end management
investment company, or separate series thereof, in accordance with Section
12(d)(1)(E) under the Act.
<PAGE>
C-2
CUSTODIAL SERVICES AGREEMENT
EXHIBIT C
FORM OF SECRETARY'S CERTIFICATE
I, Don L. Evans, hereby certify that I am the Secretary of Monarch
Funds, a business trust organized under the laws of the State of Delaware (the
"Trust"), and as such I am duly authorized to, and do hereby, certify that:
1. Organizational Documents. The Trust's organizational documents, and all
amendments thereto, have been filed with the appropriate governmental officials
of Delaware, the Trust continues to be in existence and is in good standing, and
no action has been taken to repeal such organizational documents, the same being
in full force and effect on the date hereof.
2. Bylaws. The Trust's Bylaws have been duly adopted and no action has been
taken to repeal such Bylaws, the same ------ being in full force and effect.
3. Resolutions. Resolutions have been duly adopted on behalf of the Trust,
which resolutions (i) have not in any way been revoked or rescinded, (ii) have
been in full force and effect since their adoption, to and including the date
hereof, and are now in full force and effect, and (iii) are the only proceedings
of the Trust now in force relating to or affecting the matters referred to
therein, including, without limitation, confirming that the Trust is duly
authorized to enter into a certain custody agreement with Forum Trust, LLC (the
"Agreement"), and that certain designated officers, including those identified
in paragraph 4 of this Certificate, are authorized to execute said Agreement on
behalf of the Trust, in conformity with the requirements of the Trust's
organizational documents, Bylaws, and other pertinent documents to which the
Trust may be bound.
4. Incumbency. The following named individuals are duly elected (or
appointed), qualified, and acting officers of the Trust holding those offices
set forth opposite their respective names as of the date hereof, each having
full authority, acting individually, to bind the Trust, as a legal matter, with
respect to all matters pertaining to the Agreement, and to execute and deliver
said Agreement on behalf of the Trust, and the signatures set forth opposite the
respective names and titles of said officers are their true, authentic
signatures:
Name Title Signature
[Name] [Position]
[Name] [Position]
[Name] [Position]
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of May,
2000.
Monarch Funds
By:
Name: Don L. Evans
Title: Secretary
I, John Y. Keffer, President of the Trust, hereby certify that on this
___ day of May, 2000, Don L. Evans is the duly elected Secretary of the Trust
and that the signature above is his genuine signature.
Monarch Funds
By:
Name: John Y. Keffer
Title: President
<PAGE>
- 12 -
CUSTODIAL SERVICES AGREEMENT
EXHIBIT D
APPROVED SUBCUSTODIANS AND SECURITIES SYSTEMS
Union Bank of California
