--------------------------------------------------------------------------------
MONARCH FUNDS
Treasury Cash Fund
Government Cash Fund
Cash Fund
--------------------------------------------
ANNUAL REPORT
August 31, 2000
Dear Shareholders:
We have very positive news to report about the growth of Monarch Funds. We are
delighted to report that during our fiscal year ended August 31, 2000, the
Fund's assets hit the $3 billion mark. To appreciate how big a leap this is,
recall that one year ago, the Funds assets stood at just $1.9 billion.
We are just as pleased to report that Government Cash Fund, our oldest Fund [and
performance leader], continued to exhibit very strong performance. For the five
years ended September 30, 2000, Universal Shares of the Fund were ranked #2 for
total return out of 58 funds in the Government and Agencies Institutional
category (as tracked by iMoneyNet, Inc.'s MONEY FUND REPORT AVERAGES(TM) for
that period).(1)
This last year was also a successful one for Treasury Cash Fund and Cash Fund.
Investor Shares' assets in these Funds more than doubled during the year,
increasing from $500 million to over $1.3 billion. Offered since late 1995, this
share class has lower investment minimums as well as check writing privileges,
features designed to appeal to a broader range of investors. Institutional
Shares, which are designed and customized to meet the needs of the business
community, also continue to attract new investors.
During last year's strong economic growth our portfolio management team kept a
close watch on any action by the Federal Reserve Bank that might affect the
Funds' performance. When the Fed responded to both economic growth and rapidly
increasing oil prices by engineering a series of rate increases, our portfolio
management team took advantage of the increases by keeping the Funds' average
lives relatively short. Just recently we extended the Funds' average maturities,
a move based on the likelihood that the Fed has no further rate increases
planned for the remainder of 2000.
As we approach the beginning of our ninth year we take this opportunity to thank
you for your continued confidence and support. Maintenance of your $1.00 per
share price through skilled portfolio management is, as always, our primary
goal. Please feel free to call us with your questions or comments at (800)
754-8757.
Sincerely,
/s/ John Y. Keffer
John Y. Keffer
Chairman
(1) The Fund also ranked #6 out of 105 funds for the year ended September 30,
2000. Three other funds had the same return for the one year period.
iMoneyNet, Inc. was formerly IBC Financial Data, Inc.
--------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
FINANCIAL STATEMENTS OF MONARCH FUNDS
Independent Auditors' Report.................. 2
Statements of Assets and Liabilities.......... 3
Statements of Operations...................... 4
Statements of Changes in Net Assets........... 5
Financial Highlights.......................... 6
Notes to Financial Statements................. 7
FINANCIAL STATEMENTS OF CORE TRUST 9
(DELAWARE)..................................
</TABLE>
--------------------------------------------------------------------------------
ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. AN INVESTMENT IN
THE FUNDS IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT ENDORSED OR GUARANTEED BY
ANY BANK OR ANY AFFILIATE OF A BANK. THIS REPORT IS AUTHORIZED FOR DISTRIBUTION
ONLY TO CURRENT SHAREHOLDERS AND TO OTHERS WHO HAVE RECEIVED A COPY OF A MONARCH
FUNDS PROSPECTUS.
<PAGE>
MONARCH FUNDS
--------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders
Monarch Funds
We have audited the accompanying statements of assets and liabilities of
Treasury Cash Fund, Government Cash Fund, and Cash Fund, each a series of
Monarch Funds (the Funds), as of August 31, 2000, and the related statements of
operations for the year then ended, statements of changes in net assets for each
of the years in the two-year period then ended and financial highlights for each
of the years or periods in the five-year period ended August 31, 2000. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Treasury Cash Fund, Government Cash Fund, and Cash Fund, as of August 31, 2000,
the results of their operations for the year then ended, changes in their net
assets for each of the years in the two-year period then ended and financial
highlights for each of the years or periods in the five-year period then ended,
in conformity with accounting principles generally accepted in the United States
of America.
/s/ KPMG LLP
Boston, Massachusetts
October 6, 2000
2
<PAGE>
MONARCH FUNDS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
August 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
------------ ------------ --------------
Assets
Investment in Portfolios at value (Notes 1 and 2)....... $351,065,220 $663,584,841 $1,929,658,381
Liabilities
Dividends payable....................................... 96,863 1,109,153 279,095
Payable to Administrator (Note 3)....................... 14,038 31,106 81,043
Accrued expenses........................................ 193,575 238,529 1,052,879
------------ ------------ --------------
Total Liabilities......................................... 304,476 1,378,788 1,413,017
------------ ------------ --------------
Net Assets................................................ $350,760,744 $662,206,053 $1,928,245,364
============ ============ ==============
Components of Net Assets
Paid in capital......................................... $350,753,715 $662,286,147 $1,928,270,080
Undistributed (distributions in excess of) net
investment income.................................... 12,850 (34,950) --
Accumulated net realized loss........................... (5,821) (45,144) (24,716)
------------ ------------ --------------
Net Assets................................................ $350,760,744 $662,206,053 $1,928,245,364
============ ============ ==============
Net Assets by Class of Shares
Universal Shares........................................ $ 5,975,897 $225,696,882 $ 70,450,694
Institutional Shares.................................... 30,480,141 400,417,700 863,603,429
Investor Shares......................................... 314,304,706 36,091,471 994,191,241
------------ ------------ --------------
Net Assets................................................ $350,760,744 $662,206,053 $1,928,245,364
============ ============ ==============
Shares of Beneficial Interest
Universal Shares........................................ 5,975,897 225,748,346 70,451,176
Institutional Shares.................................... 30,474,555 400,446,432 863,619,773
Investor Shares......................................... 314,303,264 36,091,370 994,199,128
Net Asset Value Per Share (Offering and Redemption
Price Per Share)........................................ $ 1.00 $ 1.00 $ 1.00
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
MONARCH FUNDS
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended August 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
----------- ----------- -----------
Net Investment Income Allocated from Portfolios
Interest income........................................... $18,061,528 $47,803,085 $99,882,365
Net expenses.............................................. (403,815) (940,201) (1,833,884)
----------- ----------- -----------
Net Investment Income Allocated from Portfolios (Note 2).... 17,657,713 46,862,884 98,048,481
----------- ----------- -----------
Expenses
Administration (Note 3)
Universal Shares....................................... 2,907 121,828 38,231
Institutional Shares................................... 21,367 273,009 465,124
Investor Shares........................................ 130,331 5,406 307,516
Transfer Agent (Note 3)
Universal Shares....................................... 8,514 148,735 47,620
Institutional Shares................................... 94,681 1,111,098 1,882,030
Investor Shares........................................ 537,569 27,109 1,244,656
Shareholder Services (Note 3)
Institutional Shares................................... 85,468 1,092,034 1,860,497
Investor Shares........................................ 521,324 21,624 1,230,065
Distribution -- Investor Shares (Note 3).................. 651,655 27,030 1,537,581
Legal..................................................... 4,163 11,804 19,291
Audit..................................................... 4,347 6,473 10,554
Trustees.................................................. 7,065 19,000 36,355
Compliance................................................ 28,151 14,550 241,977
Miscellaneous............................................. 10,252 32,494 43,648
----------- ----------- -----------
Total Expenses.............................................. 2,107,794 2,912,194 8,965,145
Fees waived (Note 4)...................................... (104,009) (128,183) (167,087)
----------- ----------- -----------
Net Expenses................................................ 2,003,785 2,784,011 8,798,058
----------- ----------- -----------
Net Investment Income....................................... 15,653,928 44,078,873 89,250,423
Net Realized Gain (Loss) on Investments Allocated from
Portfolios (Note 2)....................................... 194 2,735 (5,573)
----------- ----------- -----------
Net Increase in Net Assets from Operations.................. $15,654,122 $44,081,608 $89,244,850
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
MONARCH FUNDS
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended August 31, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
--------------- --------------- ---------------
Net Assets -- August 31, 1998............................... $ 149,079,267 $ 697,261,873 $ 572,644,920
------------------------------- --------------- --------------- ---------------
Operations
Net investment income..................................... 8,344,852 38,481,948 31,487,584
Net realized gain (loss) on investments allocated from
Portfolios.............................................. (6,015) 23,462 (540)
--------------- --------------- ---------------
Net Increase in Net Assets from Operations.................. 8,338,837 38,505,410 31,487,044
--------------- --------------- ---------------
Distributions to Shareholders from
Net investment income -- Universal Shares................. -- (14,457,237) (3,148,222)
Net investment income -- Institutional Shares............. (3,087,529) (24,024,711) (18,027,323)
Net investment income -- Investor Shares.................. (5,244,477) -- (10,312,039)
Net realized gain on investments -- Universal Shares...... -- -- --
Net realized gain on investments -- Institutional
Shares.................................................. (2,466) -- --
Net realized gain on investments -- Investor Shares....... (10,380) -- --
--------------- --------------- ---------------
Total Distributions to Shareholders......................... (8,344,852) (38,481,948) (31,487,584)
--------------- --------------- ---------------
Capital Share Transactions (at $1.00 per share)
Sale of shares -- Universal Shares........................ -- 4,992,484,737 1,617,048,054
Sale of shares -- Institutional Shares.................... 1,124,348,109 3,506,430,546 1,884,729,920
Sale of shares -- Investor Shares......................... 942,002,721 -- 1,768,540,044
Reinvestment of distributions -- Universal Shares......... -- 8,688,552 2,084,403
Reinvestment of distributions -- Institutional Shares..... 618,067 12,692,772 11,407,856
Reinvestment of distributions -- Investor Shares.......... 5,248,499 -- 10,302,231
Redemption of shares -- Universal Shares.................. -- (4,977,278,007) (1,612,097,627)
Redemption of shares -- Institutional Shares.............. (1,160,952,295) (3,507,516,470) (1,625,948,769)
Redemption of shares -- Investor Shares................... (772,580,277) -- (1,691,175,653)
--------------- --------------- ---------------
Net Increase from Capital Transactions...................... 138,684,824 35,502,130 364,890,459
--------------- --------------- ---------------
Net Increase in Net Assets.................................. 138,678,809 35,525,592 364,889,919
--------------- --------------- ---------------
Net Assets -- August 31, 1999 (including line (A)).......... 287,758,076 732,787,465 937,534,839
-------------------------------------------------- --------------- --------------- ---------------
Operations
Net investment income..................................... 15,653,928 44,078,873 89,250,423
Net realized gain (loss) on investments allocated from
Portfolios.............................................. 194 2,735 (5,573)
--------------- --------------- ---------------
Net Increase in Net Assets from Operations.................. 15,654,122 44,081,608 89,244,850
--------------- --------------- ---------------
Distributions to Shareholders from
Net investment income -- Universal Shares................. (339,053) (13,952,557) (4,465,977)
Net investment income -- Institutional Shares............. (2,266,106) (29,512,239) (51,589,852)
Net investment income -- Investor Shares.................. (13,048,767) (614,077) (33,194,594)
--------------- --------------- ---------------
Total Distributions to Shareholders......................... (15,653,926) (44,078,873) (89,250,423)
--------------- --------------- ---------------
Capital Share Transactions (at $1.00 per share)
Sale of shares -- Universal Shares........................ 940,765,898 5,120,325,506 1,785,175,725
Sale of shares -- Institutional Shares.................... 750,398,342 4,040,262,664 4,664,700,821
Sale of shares -- Investor Shares......................... 1,826,331,425 82,825,736 2,503,871,391
Reinvestment of distributions -- Universal Shares......... 339,053 9,133,703 3,847,672
Reinvestment of distributions -- Institutional Shares..... 875,322 23,172,643 47,241,273
Reinvestment of distributions -- Investor Shares.......... 13,049,576 614,077 33,192,507
Redemption of shares -- Universal Shares.................. (935,129,054) (5,181,311,673) (1,817,278,026)
Redemption of shares -- Institutional Shares.............. (775,928,356) (4,118,258,360) (4,417,744,073)
Redemption of shares -- Investor Shares................... (1,757,699,734) (47,348,443) (1,812,291,192)
--------------- --------------- ---------------
Net Increase (Decrease) from Capital Transactions........... 63,002,472 (70,584,147) 990,716,098
--------------- --------------- ---------------
Net Increase (Decrease) in Net Assets....................... 63,002,668 (70,581,412) 990,710,525
--------------- --------------- ---------------
Net Assets -- August 31, 2000 (including line (B)).......... $ 350,760,744 $ 662,206,053 $ 1,928,245,364
-------------------------------------------------- =============== =============== ===============
(A) Undistributed (distributions in excess of) net
investment income, August 31, 1999........................ $ 12,848 $ (34,950) $ --
(B) Undistributed (distributions in excess of) net
investment income, August 31, 2000........................ $ 12,850 $ (34,950) --
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
MONARCH FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
These financial highlights reflect selected data for an outstanding share of
each class of each Fund during the periods indicated.
<TABLE>
<CAPTION>
SELECTED DATA FOR A SINGLE SHARE
---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning Net
Net Assets at
Asset Distributions Ending End of
Value Net from Net Net Asset Period
Per Investment Investment Value Per Total (000's
Year Ended August 31, Share Income Income Share Return Omitted)
-------------------------------------------------------------------------------------------------------
TREASURY CASH FUND
Universal Shares
-------------------------------------------------------------------------------------------------------
2000(d) $1.00 $0.04 ($0.04) $1.00 4.02% $ 5,976
Institutional Shares
-------------------------------------------------------------------------------------------------------
2000 1.00 0.05 (0.05) 1.00 5.47% 30,480
1999 1.00 0.04 (0.04) 1.00 4.50% 55,134
1998 1.00 0.05 (0.05) 1.00 5.11% 91,122
1997 1.00 0.05 (0.05) 1.00 4.98% 40,830
1996 1.00 0.05 (0.05) 1.00 5.15% 79,259
Investor Shares
-------------------------------------------------------------------------------------------------------
2000 1.00 0.05 (0.05) 1.00 5.06% 314,305
1999 1.00 0.04 (0.04) 1.00 4.10% 232,624
1998 1.00 0.05 (0.05) 1.00 4.72% 57,957
1997 1.00 0.05 (0.05) 1.00 4.58% 30,118
1996(c) 1.00 0.04 (0.04) 1.00 4.00% 3,980
GOVERNMENT CASH FUND
Universal Shares
-------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) 1.00 5.94% 225,697
1999 1.00 0.05 (0.05) 1.00 5.00% 277,548
1998 1.00 0.05 (0.05) 1.00 5.63% 253,644
1997 1.00 0.05 (0.05) 1.00 5.49% 230,410
1996 1.00 0.05 (0.05) 1.00 5.59% 248,986
Institutional Shares
-------------------------------------------------------------------------------------------------------
2000 1.00 0.05 (0.05) 1.00 5.54% 400,418
1999 1.00 0.05 (0.05) 1.00 4.59% 455,239
1998 1.00 0.05 (0.05) 1.00 5.22% 443,618
1997 1.00 0.05 (0.05) 1.00 5.06% 245,157
1996 1.00 0.05 (0.05) 1.00 5.18% 256,244
Investor Shares
-------------------------------------------------------------------------------------------------------
2000(d) 1.00 0.04 (0.04) 1.00 3.68% 36,091
CASH FUND
Universal Shares
-------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) 1.00 6.04% 70,451
1999 1.00 0.05 (0.05) 1.00 5.09% 98,705
1998 1.00 0.06 (0.06) 1.00 5.65% 91,671
1997 1.00 0.05 (0.05) 1.00 5.43% 18,453
1996 1.00 0.05 (0.05) 1.00 5.53% 3,272
Institutional Shares
-------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) 1.00 5.65% 863,603
1999 1.00 0.05 (0.05) 1.00 4.68% 569,409
1998 1.00 0.05 (0.05) 1.00 5.24% 299,220
1997 1.00 0.05 (0.05) 1.00 5.07% 152,041
1996 1.00 0.05 (0.05) 1.00 5.22% 89,733
Investor Shares
-------------------------------------------------------------------------------------------------------
2000 1.00 0.05 (0.05) 1.00 5.38% 994,191
1999 1.00 0.04 (0.04) 1.00 4.41% 269,421
1998 1.00 0.05 (0.05) 1.00 4.97% 181,754
1997 1.00 0.05 (0.05) 1.00 4.81% 76,480
1996 1.00 0.05 (0.05) 1.00 4.95% 32,731
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
-----------------------------------
Ratios to
Average Net Assets
-----------------------------------
Net
Net Investment Gross
Year Ended August 31, Expenses Income Expenses(a)
TREASURY CASH FUND
Universal Shares
--------------------------------------------------------------------------------
2000(d) 0.20%(b) 5.86%(b) 0.38%(b)
Institutional Shares
--------------------------------------------------------------------------------
2000 0.45% 5.30% 0.62%
1999 0.45% 4.43% 0.62%
1998 0.45% 5.00% 0.67%
1997 0.45% 4.89% 0.66%
1996 0.45% 5.01% 0.69%
Investor Shares
--------------------------------------------------------------------------------
2000 0.84% 5.01% 0.85%
1999 0.83% 4.02% 0.89%
1998 0.82% 4.62% 0.91%
1997 0.83% 4.55% 0.97%
1996(c) 0.83%(b) 4.50%(b) 1.33%(b)
GOVERNMENT CASH FUND
Universal Shares
--------------------------------------------------------------------------------
2000 0.20% 5.73% 0.24%
1999 0.18% 4.88% 0.25%
1998 0.18% 5.48% 0.26%
1997 0.17% 5.35% 0.26%
1996 0.19% 5.43% 0.28%
Institutional Shares
--------------------------------------------------------------------------------
2000 0.57% 5.41% 0.58%
1999 0.57% 4.50% 0.59%
1998 0.57% 5.09% 0.58%
1997 0.57% 4.95% 0.57%
1996 0.57% 5.06% 0.57%
Investor Shares
--------------------------------------------------------------------------------
2000(d) 0.85%(b) 5.70%(b) 0.97%(b)
CASH FUND
Universal Shares
--------------------------------------------------------------------------------
2000 0.20% 5.84% 0.23%
1999 0.18% 4.99% 0.25%
1998 0.18% 5.48% 0.29%
1997 0.23% 5.32% 0.47%
1996 0.27% 5.48% 0.43%
Institutional Shares
--------------------------------------------------------------------------------
2000 0.58% 5.55% 0.58%
1999 0.57% 4.56% 0.60%
1998 0.57% 5.11% 0.61%
1997 0.57% 4.97% 0.60%
1996 0.57% 5.10% 0.60%
Investor Shares
--------------------------------------------------------------------------------
2000 0.83% 5.40% 0.85%
1999 0.83% 4.30% 0.85%
1998 0.83% 4.86% 0.86%
1997 0.83% 4.72% 0.85%
1996 0.83% 4.68% 0.96%
</TABLE>
(a) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding any fee waivers and expense reimbursements for the Fund and
its corresponding Portfolio.
(b) Annualized.
(c) Commenced operations on October 25, 1995.
(d) Commenced operations on December 30, 1999.
See Notes to Financial Statements.
6
<PAGE>
MONARCH FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
NOTE 1. SUMMARY OF ORGANIZATION
Monarch Funds (the "Trust") was organized as a Delaware business trust on July
10, 1992. The Trust, which is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "Act"), currently has
three diversified investment portfolios, Treasury Cash Fund, Government Cash
Fund and Cash Fund (each, a "Fund"). The Funds are authorized under the Trust's
Trust Instrument to issue an unlimited number of shares of beneficial interest
without par value. Each Fund currently is authorized to issue three classes of
shares, Universal Shares, Institutional Shares and Investor Shares. The Trust
commenced the offering of each class of shares as follows:
Treasury Cash Fund (Universal Shares) December 30, 1999
Treasury Cash Fund (Institutional Shares) July 12, 1993
Treasury Cash Fund (Investor Shares) October 25, 1995
Government Cash Fund (Universal Shares) October 29, 1992
Government Cash Fund (Institutional Shares) July 15, 1993
Government Cash Fund (Investor Shares) December 30, 1999
Cash Fund (Universal Shares) December 1, 1992
Cash Fund (Institutional Shares) July 15, 1993
Cash Fund (Investor Shares) June 16, 1995
Subsequent to the date of these financial statements, Service Shares commenced
operations in Cash Fund on September 7, 2000.
MASTER-FEEDER ARRANGEMENT Each Fund currently seeks to achieve its investment
objective by investing all its investable assets in a separate portfolio (each,
a "Portfolio") of Core Trust (Delaware) ("Core Trust"), a registered open-end
management investment company that has the same investment objective and
substantially similar policies as the Fund. Each Portfolio directly acquires
securities, and a Fund investing in the Portfolio acquires an indirect interest
in those securities. Each Fund accounts for its investment in a Portfolio as a
partnership investment, and records daily its share of the Portfolio's income,
expenses and realized and unrealized gain and loss. Each Fund may withdraw its
investment from its corresponding Portfolio at any time if the Trust's Board of
Trustees (the "Board") determines that it is in the best interest of the Fund
and its shareholders to do so. This is commonly referred to as a master-feeder
arrangement.
The financial statements of the Portfolios are included elsewhere in this report
and should be read in conjunction with the Funds' financial statements. As of
August 31, 2000, the percentage of Treasury Cash Portfolio owned by Treasury
Cash Fund was 75.1%; the percentage of Government Cash Portfolio owned by
Government Cash Fund was 87.7%; and the percentage of Cash Portfolio owned by
Cash Fund was 95.1%.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States, which require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in net
assets during the fiscal period. Actual results could differ from those
estimates. The following summarizes the significant accounting policies of the
Funds:
SECURITY VALUATION Each Fund determines its net asset value per share as of 1:00
p.m., Pacific time, on each business day. Each Fund records its investment in
its Portfolio at value. Valuation of securities held in the Portfolios is
discussed in the Notes to Financial Statements of Core Trust (Delaware), which
are included elsewhere in this report.
INVESTMENT INCOME AND EXPENSES Each Fund records daily its pro rata share of its
Portfolio's income, expenses and realized gain and loss. In addition, each Fund
accrues its own expenses.
CLASS SPECIFIC EXPENSES Each share of each class of a Fund represents an
undivided, proportionate interest in the Fund. The Funds' class specific
expenses include administration fees, shareholder servicing fees, transfer agent
fees and certain other expenses as determined by the Board. Institutional Shares
and Investor Shares incur shareholder
7
<PAGE>
MONARCH FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
servicing fees and Investor Shares incur distribution fees. In addition, there
are differences between the classes of shares with respect to the minimum
investment required.
FEDERAL TAXES Each Fund intends to continue to qualify each year as a regulated
investment company and distribute all its net investment income. In addition, by
distributing in each calendar year substantially all its net investment income,
capital gain and certain other amounts, each Fund will not be subject to a
federal excise tax. Therefore, no federal income or excise tax provision is
required.
As of August 31, 2000 certain Funds had capital loss carryovers available to
offset future capital gains as follows:
Treasury Cash Fund - $5,819 expiring in 2008; Government Cash Fund - $3,926
expiring in 2005 and $40,840 expiring in 2006; Cash Fund - $6,210 expiring in
2004, $10,851 expiring in 2005 and $540 expiring in 2008.
DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders of net investment
income are declared daily and paid monthly. Net capital gain, if any, is
distributed to shareholders at least annually. Distributions are based on
amounts calculated in accordance with applicable income tax regulations, which
may differ from accounting principles generally accepted in the United States.
These differences are due primarily to differing treatments of income and gain
on various investment securities held by each Fund or Portfolio, timing
differences and differing characterizations.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER The investment adviser of each Portfolio is Forum Investment
Advisors, LLC ("Forum Advisors"). Forum Advisors receives an advisory fee from
each Portfolio based upon the total average daily net assets of the Portfolios
("Total Portfolio Assets") that is calculated on a cumulative basis at the
following annual rates: 0.06% for the first $200 million of Total Portfolio
Assets, 0.04% of the next $300 million of Total Portfolio Assets and 0.03% of
the remaining Total Portfolio Assets.
ADMINISTRATOR The administrator of each Fund is Forum Administrative Services,
LLC ("FAdS"). For its administrative services and facilities, FAdS receives from
each Fund a fee at an annual rate of 0.05% of the Fund's average daily net
assets.
TRANSFER AGENT The transfer agent and dividend disbursing agent for the Funds is
Forum Shareholder Services, LLC ("FSS"). FSS is paid a transfer agent fee at an
annual rate of 0.20% of the average daily net assets of Institutional Shares and
Investor Shares of each Fund and 0.05% of the average daily net assets of
Universal Shares of each Fund, plus certain account and additional Fund and
class charges. In addition, FSS is paid $12,000 per fund plus $6,000 per Fund,
for each class above one.
SHAREHOLDER SERVICE AGENT The Trust has adopted a shareholder servicing plan
with respect to Institutional Shares and Investor Shares under which the Trust
pays FAdS a shareholder servicing fee at an annual rate of 0.20% of the average
daily net assets attributable to Institutional Shares and Investor Shares of
each Fund. FAdS may pay any or all amounts of these fees to various institutions
that provide shareholder servicing to their customers who hold Institutional
Shares or Investor Shares.
DISTRIBUTOR Forum Fund Services, LLC ("FFS"), a registered broker-dealer and a
member of the National Association of Securities Dealers, Inc., acts as each
Fund's distributor. The Trust has adopted a Distribution Plan pursuant to Rule
12b-1 under the Act with respect to Investor Shares under which the Trust pays
FFS a distribution fee at an annual rate of 0.25% of the average daily net
assets of Investor Shares of each Fund. FFS may pay any or all amounts of these
payments to various institutions that provide distribution or shareholder
services for Investor Shares. The plan obligates the Funds to pay FFS as
compensation for FFS's services and not as reimbursement for certain expenses
incurred.
NOTE 4. WAIVER OF FEES
FAdS and FSS voluntarily waived a portion of their fees for the year ended
August 31, 2000 as follows:
Investor Shares shareholder servicing fee: Treasury Cash Fund - $24,074,
Government Cash Fund - $13,504, and Cash Fund - $99,907. Institutional Shares
shareholder servicing fee: Treasury Cash Fund - $69,880, Government Cash
Fund - $29,195, and Cash Fund - $41,949. Universal Shares administration fee:
Treasury Cash Fund - $2,907. Universal Shares transfer agent fee: Treasury Cash
Fund - $7,148, Government Cash Fund - $85,484 and Cash Fund - $25,231.
8
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--------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Interestholders
Core Trust (Delaware)
We have audited the accompanying statements of assets and liabilities of
Treasury Cash Portfolio, Government Cash Portfolio, and Cash Portfolio, each a
series of Core Trust (Delaware) (the Portfolios), including the schedules of
investments, as of August 31, 2000, and the related statements of operations for
the year then ended and the statements of changes in net assets for each of the
years in the two-year period then ended. These financial statements are the
responsibility of the Portfolios' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 2000 by correspondence with custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Treasury Cash Portfolio,
Government Cash Portfolio, and Cash Portfolio as of August 31, 2000, the results
of their operations for the year then ended and the changes in their net assets
for each of the years in the two-year period then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/ KPMG LLP
Boston, Massachusetts
October 6, 2000
9
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--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS -- TREASURY CASH PORTFOLIO
August 31, 2000
FACE SECURITY
AMOUNT DESCRIPTION VALUE
------------ --------------------------------- ------------
U.S. TREASURY BILLS (A) (79.9%)
$375,000,000 6.48%, 9/21/00................... $373,677,083
------------
REPURCHASE AGREEMENTS (20.1%)
20,000,000 Banc of America Securities Corp.,
6.40%, 9/1/00, to be repurchased
at $20,003,556, collateralized by
various U.S. Treasury
Obligations...................... 20,000,000
40,000,000 Donaldson, Lufkin & Jenrette
Securities Corp., 6.60%, 9/1/00,
to be repurchased at $40,007,333;
collateralized by various U.S.
Treasury Obligations............. 40,000,000
33,800,000 Salomon Smith Barney, 6.58%,
9/1/00, to be repurchased at
$33,806,178; collateralized by
various U.S. Treasury
Obligations...................... 33,800,000
------------
Total Repurchase Agreements 93,800,000
------------
Total Investments (100.0%) at Amortized Cost $467,477,083
============
(A) Annualized yields at time of purchase.
See Notes to Financial Statements.
10
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--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS -- GOVERNMENT CASH PORTFOLIO
August 31, 2000
FACE SECURITY
AMOUNT DESCRIPTION VALUE
------------ --------------------------------- ------------
U.S. GOVERNMENT SECURITIES (86.8%)
FEDERAL HOME LOAN BANK (B) (7.3%)
$ 30,000,000 6.62%, 10/12/00.................. $ 30,000,000
25,000,000 6.67%, 4/12/01................... 25,000,000
------------
Total Federal Home Loan Bank 55,000,000
------------
FEDERAL HOME LOAN BANK -- DISCOUNT NOTES (A) (53.1%)
50,000,000 6.70%, 1/24/01................... 48,713,125
80,000,000 6.71%, 1/24/01................... 77,937,778
60,000,000 6.71%, 2/2/01.................... 58,359,900
100,000,000 6.62%, 9/6/00.................... 99,910,556
50,000,000 6.68%, 9/15/00................... 49,874,097
65,000,000 6.70%, 9/15/00................... 64,835,821
------------
Total Federal Home Loan Bank -- Discount Notes 399,631,277
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION --
DISCOUNT NOTES (A) (9.9%)
75,000,000 6.66%, 10/5/00................... 74,543,834
------------
SMALL BUSINESS ADMINISTRATION (B) (8.5%)
183,133 Pool #500545, 9.38%, 3/25/03..... 183,133
403,014 Pool #501077, 8.00%, 11/25/14.... 403,014
1,834,224 Pool #501308, 8.00%, 10/25/15.... 1,861,863
1,472,766 Pool #501543, 7.88%, 7/25/16..... 1,473,325
296,127 Pool #501628, 9.38%, 9/25/04..... 296,127
569,899 Pool #501690, 7.63%, 12/25/16.... 570,571
873,405 Pool #501898, 7.75%, 7/25/17..... 875,288
3,209,130 Pool #502150, 7.50%, 2/25/18..... 3,239,645
188,143 Pool #502161, 7.50%, 2/25/18..... 188,143
2,014,219 Pool #502208, 7.50%, 2/25/18..... 2,037,474
260,749 Pool #502306, 7.50%, 2/25/18..... 260,749
1,000,593 Pool #502613, 7.50%, 4/25/19..... 1,000,593
606,823 Pool #503058, 7.38%, 7/25/15..... 606,823
1,169,628 Pool #503082, 7.38%, 9/25/20..... 1,169,628
714,183 Pool #503120, 7.38%, 10/25/20.... 714,183
347,846 Pool #503121, 7.38%, 9/25/15..... 347,846
1,171,298 Pool #503232, 7.13%, 2/25/15..... 1,171,298
523,376 Pool #503278, 7.13%, 2/25/21..... 523,402
1,998,086 Pool #503431, 7.25%, 7/25/21..... 1,999,093
1,647,687 Pool #503461, 7.25%, 9/25/21..... 1,648,356
824,116 Pool #503472, 7.25%, 8/25/21..... 824,541
608,246 Pool #503553, 7.13%, 11/25/21.... 606,893
2,812,514 Pool #503671, 7.13%, 3/25/22..... 2,812,514
FACE SECURITY
AMOUNT DESCRIPTION VALUE
------------ --------------------------------- ------------
SMALL BUSINESS ADMINISTRATION, CONCLUDED:
$ 1,154,892 Pool #503754, 7.13%, 5/25/22..... $ 1,154,892
763,635 Pool #503780, 7.13%, 3/25/22..... 764,624
2,958,627 Pool #503882, 7.00%, 9/25/22..... 2,955,755
1,486,117 Pool #503892, 7.13%, 7/25/22..... 1,488,824
4,045,635 Pool #503909, 7.00%, 10/25/22.... 4,043,513
1,886,259 Pool #504015, 7.00%, 1/25/23..... 1,885,758
3,472,953 Pool #504062, 7.00%, 2/25/23..... 3,472,953
3,741,342 Pool #504074, 7.00%, 2/25/23..... 3,741,342
1,534,946 Pool #504203, 7.13%, 7/25/13..... 1,539,554
1,504,950 Pool #504269, 7.13%, 5/25/15..... 1,507,997
1,081,162 Pool #504345, 7.13%, 5/25/18..... 1,081,162
4,601,877 Pool #504366, 6.88%, 2/25/24..... 4,597,772
11,273,569 Pool #504719, 7.13%, 7/25/24..... 11,273,569
------------
Total Small Business Administration 64,322,217
------------
STUDENT LOAN MARKETING ASSOCIATION (B) (8.0%)
30,000,000 6.82%, 7/26/01................... 30,000,000
15,000,000 6.82%, 8/14/01................... 15,000,000
15,000,000 6.76%, 2/21/01................... 15,000,000
------------
Total Student Loan Marketing Association 60,000,000
------------
Total U.S. Government Securities 653,497,328
------------
REPURCHASE AGREEMENTS (13.2%)
49,635,000 Bear, Stearns & Co., Inc., 6.70%,
9/1/2000, to be repurchased at
$49,644,238; collateralized by
various U.S. Government Agency
Securities....................... 49,635,000
50,000,000 Goldman Sachs, 6.50%, 9/1/00, to
be repurchased at $50,009,028;
collateralized by various U.S.
Government Agency Securities..... 50,000,000
------------
Total Repurchase Agreements 99,635,000
------------
Total Investments (100.0%) at Amortized Cost $753,132,328
============
(A) Annualized yields at time of purchase.
(B) Certain securities are deemed to have a maturity
remaining until the next adjustment of the interest
rate, or the longer of the demand period or
readjustment. The interest rates shown reflect the rate
in effect on August 31, 2000.
See Notes to Financial Statements.
11
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SCHEDULE OF INVESTMENTS -- CASH PORTFOLIO
August 31, 2000
FACE SECURITY
AMOUNT DESCRIPTION VALUE
------------ -------------------------------- --------------
U.S. GOVERNMENT SECURITIES (5.3%)
FEDERAL HOME LOAN BANK (B) (0.9%)
$ 18,000,000 6.67%, 4/12/01.................. $ 18,000,000
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (B) (1.5%)
30,000,000 6.72%, 5/10/01.................. 30,000,000
--------------
SMALL BUSINESS ADMINISTRATION (B) (1.7%)
149,279 Pool #500536, 8.50%, 5/25/13.... 149,906
255,944 Pool #500730, 9.38%, 2/25/04.... 255,944
481,897 Pool #501733, 7.50%, 2/25/17.... 486,012
670,314 Pool #501989, 7.63%, 10/25/12... 671,574
91,619 Pool #502914, 7.50%, 3/25/15.... 91,619
1,391,382 Pool #503121, 7.38%, 8/25/15.... 1,391,382
2,021,034 Pool #503429, 7.25%, 6/25/16.... 2,021,034
411,922 Pool #503461, 7.25%, 9/25/21.... 412,111
2,240,874 Pool #503553, 7.13%, 11/25/21... 2,235,294
1,732,338 Pool #503754, 7.13%, 5/25/22.... 1,732,338
2,827,379 Pool #503882, 7.00%, 9/25/22.... 2,824,539
3,198,234 Pool #503912, 7.00%, 10/25/22... 3,196,485
3,603,538 Pool #504015, 7.00%, 1/25/23.... 3,602,470
14,499,330 Pool #504366, 6.88%, 2/26/24.... 14,486,016
--------------
Total Small Business Administration 33,556,724
--------------
STUDENT LOAN MARKETING ASSOCIATION (B) (1.2%)
25,000,000 6.77%, 2/1/01................... 25,007,096
--------------
Total U.S. Government Securities 106,563,820
--------------
COMMERCIAL PAPER (55.5%)
50,000,000 Associates First Capital Corp.,
6.53%, 10/11/00................. 49,637,222
75,000,000 AT & T Corp., 6.52%, 1/12/01.... 73,193,417
42,238,000 Avon Capital Corp., 6.59%,
9/13/00......................... 42,145,217
90,000,000 Coca Cola Co., 6.55%, 9/1/00.... 90,000,000
90,000,000 DaimlerChrysler AG, 6.50%,
11/20/00........................ 88,700,000
90,000,000 Deutsche Bank Financial, Inc.,
6.56%, 10/4/00.................. 89,458,800
90,000,000 General Electric Capital, 6.53%,
1/25/01......................... 87,616,550
90,000,000 General Motors Acceptance Corp.,
6.53%, 1/26/01.................. 87,600,225
90,000,000 Goldman Sachs & Co., 6.64%,
11/6/00......................... 88,904,400
90,000,000 International Lease Financial
Corp., 6.50%, 1/16/01........... 87,773,750
90,000,000 Merrill Lynch & Co., Inc.,
6.52%, 10/10/00................. 89,364,300
90,000,000 Prudential Funding Corp., 6.60%,
10/18/00........................ 89,224,500
90,000,000 Salomon Smith Barney, 6.58%,
9/6/00.......................... 89,917,750
25,000,000 Transamerica Financial, 6.52%,
1/8/01.......................... 24,415,918
46,486,000 Transamerica Financial, 6.52%,
1/12/01......................... 45,366,256
--------------
Total Commercial Paper 1,123,318,305
--------------
FACE SECURITY
AMOUNT DESCRIPTION VALUE
------------ -------------------------------- --------------
CORPORATE NOTES (B) (11.3%)
$ 95,000,000 Bank of America Corp., 6.67%,
4/3/01.......................... $ 95,000,000
50,000,000 Bear, Stearns & Co., Inc.,
6.67%, 1/5/01................... 50,000,000
25,000,000 Bear, Stearns & Co., Inc.,
6.84%, 4/6/01................... 25,000,000
20,000,000 Bear, Stearns & Co., Inc.,
7.03%, 7/26/01.................. 20,000,000
10,000,000 Salomon Smith Barney Holdings,
6.79%, 4/30/01.................. 10,001,808
30,000,000 Unilever Capital Corp, 6.65%,
9/7/01.......................... 30,000,000
--------------
Total Corporate Notes 230,001,808
--------------
REPURCHASE AGREEMENTS (27.9%)
43,910,000 Bear Stearns & Co., Inc., 6.70%,
9/1/00, to be repurchased at
$43,918,172; collateralized by
various U.S. Government Agency
Securities...................... 43,910,000
170,000,000 Bear Stearns & Co., Inc., 6.57%,
9/5/00, to be repurchased at
$170,217,175; collateralized by
various U.S. Government Agency
Securities...................... 170,000,000
170,000,000 Donaldson Lufkin Jenrette, 6.57%
9/5/00, to be repurchased at
$170,217,175; collateralized by
various U.S. Government Agency
Securities...................... 170,000,000
31,000,000 Goldman Sachs, 6.50%, 9/1/00, to
be repurchased at $31,005,597;
collateralized by various U.S.
Government Agency Securities.... 31,000,000
150,000,000 Salomon Smith Barney, 6.70%,
9/1/00, to be repurchased at
$150,027,917; collateralized by
various U.S. Government Agency
Securities...................... 150,000,000
--------------
Total Repurchase Agreements 564,910,000
--------------
Total Investments (100.0%) at Amortized Cost $2,024,793,933
==============
(A) Annualized yields at time of purchase.
(B) Certain securities are deemed to have a maturity
remaining until the next adjustment of the interest
rate, or the longer of the demand period or
readjustment. The interest rates shown reflect the rate
in effect on August 31, 2000.
See Notes to Financial Statements.
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STATEMENTS OF ASSETS AND LIABILITIES -- PORTFOLIOS
August 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ --------------
Assets
Investments (Note 2)
Securities at amortized cost......................... $373,677,083 $653,497,328 $1,459,883,933
Repurchase agreements at cost........................ 93,800,000 99,635,000 564,910,000
------------ ------------ --------------
Total Investments, at Amortized Cost.................... 467,477,083 753,132,328 2,024,793,933
Cash.................................................... 10,445 19,425 25,849
Interest and other receivables.......................... 17,067 3,570,615 4,263,379
------------ ------------ --------------
Total Assets.............................................. 467,504,595 756,722,368 2,029,083,161
------------ ------------ --------------
Liabilities
Payable to Adviser (Note 3)............................. 12,950 22,908 55,855
Payable to Administrator (Note 3)....................... 19,790 35,007 85,355
Accrued expenses and other liabilities.................. 24,674 36,413 61,008
------------ ------------ --------------
Total Liabilities......................................... 57,414 94,328 202,218
------------ ------------ --------------
Net Assets................................................ $467,447,181 $756,628,040 $2,028,880,943
============ ============ ==============
</TABLE>
See Notes to Financial Statements.
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--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS -- PORTFOLIOS
For the Year Ended August 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ------------
Investment Income
Interest income........................................... $24,783,322 $52,030,135 $105,366,476
----------- ----------- ------------
Expenses
Investment advisory (Note 3).............................. 140,443 288,058 565,516
Administration (Note 3)................................... 212,726 436,043 857,926
Custody................................................... 94,568 194,285 380,481
Accounting (Note 3)....................................... 49,500 49,500 49,500
Legal..................................................... 3,628 8,154 13,326
Audit..................................................... 13,347 17,250 24,324
Trustees.................................................. 3,463 7,650 14,074
Amortization of organization costs (Note 2)............... 239 4,390 1,187
Miscellaneous............................................. 36,411 16,419 29,815
----------- ----------- ------------
Total Expenses.............................................. 554,325 1,021,749 1,936,149
----------- ----------- ------------
Net Investment Income....................................... 24,228,997 51,008,386 103,430,327
Net Realized Gain (Loss) on Investments Sold................ 194 3,028 (5,850)
----------- ----------- ------------
Net Increase in Net Assets Resulting from Operations........ $24,229,191 $51,011,414 $103,424,477
=========== =========== ============
</TABLE>
See Notes to Financial Statements.
14
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--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS -- PORTFOLIOS
For the Years Ended August 31, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- ---------------
Net Assets -- August 31, 1998......................... $ 264,844,947 $ 717,124,357 $ 607,340,844
----------------------------------- --------------- --------------- ---------------
Operations
Net investment income............................... 14,338,620 43,247,634 38,566,190
Net realized gain (loss) on investments sold........ (11,696) 24,483 (663)
--------------- --------------- ---------------
Net Increase in Net Assets from Operations............ 14,326,924 43,272,117 38,565,527
--------------- --------------- ---------------
Transactions in Investors' Beneficial Interests
Contributions....................................... 1,235,422,406 2,886,646,104 2,464,999,269
Withdrawals......................................... (1,121,452,949) (2,863,580,162) (2,074,003,392)
--------------- --------------- ---------------
Net Transactions in Investors' Beneficial Interests... 113,969,457 23,065,942 390,995,877
--------------- --------------- ---------------
Net Increase (Decrease) in Net Assets................. 128,296,381 66,338,059 429,561,404
--------------- --------------- ---------------
Net Assets -- August 31, 1999......................... 393,141,328 783,462,416 1,036,902,248
---------------------------------- --------------- --------------- ---------------
Operations
Net investment income............................... 24,228,997 51,008,386 103,430,327
Net realized gain (loss) on investments sold........ 194 3,028 (5,850)
--------------- --------------- ---------------
Net Increase in Net Assets from Operations............ 24,229,191 51,011,414 103,424,477
--------------- --------------- ---------------
Transactions in Investors' Beneficial Interests
Contributions....................................... 2,068,127,015 3,688,015,715 3,662,395,443
Withdrawals......................................... (2,018,050,353) (3,765,861,505) (2,773,841,225)
--------------- --------------- ---------------
Net Transactions in Investors' Beneficial Interests... 50,076,662 (77,845,790) 888,554,218
--------------- --------------- ---------------
Net Increase (Decrease) in Net Assets................. 74,305,853 (26,834,376) 991,978,695
--------------- --------------- ---------------
Net Assets -- August 31, 2000......................... $ 467,447,181 $ 756,628,040 $ 2,028,880,943
----------------------------------- =============== =============== ===============
</TABLE>
See Notes to Financial Statements.
15
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--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- PORTFOLIOS
August 31, 2000
NOTE 1. SUMMARY OF ORGANIZATION
Core Trust (Delaware) ("Core Trust") was organized as a Delaware business trust
on September 1, 1994. Core Trust, which is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"Act"), currently has five diversified investment portfolios. These financial
statements relate to Treasury Cash Portfolio, Government Cash Portfolio and Cash
Portfolio (each, a "Portfolio"), each of which is diversified. The Portfolios
commenced operations on September 1, 1995. Interests in the Portfolios are sold
in private placement transactions without any sales charge to institutional
clients, including open-end management investment companies.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with accounting principles
generally accepted in the United States, which require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of increase and decrease in net
assets from operations during the fiscal period. Actual results could differ
from those estimates. The following represent significant accounting policies of
the Portfolios:
SECURITY VALUATION Each Portfolio determines its net asset value per share as of
4:00 p.m., Eastern time, on each Portfolio business day, utilizing the amortized
cost method pursuant to Rule 2a-7 under the Act. Under this method, all
investments purchased at a discount or premium are valued by accreting or
amortizing, respectively, the difference between the original purchase price and
the maturity value of the investment over the period to the investment's
maturity.
REPURCHASE AGREEMENTS Each Portfolio may invest in repurchase agreements. Each
of the Portfolios, through its custodian, receives delivery of the underlying
collateral, whose market value always equals or exceeds the repurchase price
plus expected transaction costs. In the case of a tri-party agreement, the
collateral is held by an agent bank. The investment adviser is responsible for
determining the value of the underlying collateral. In the event of default, a
Portfolio may have difficulties with the disposition of any such securities held
as collateral.
ORGANIZATION COSTS The costs incurred by each Portfolio in connection with their
organization have been capitalized and are being amortized using the
straight-line method over a five year period beginning on the commencement of
each Portfolio's operations.
FEDERAL TAXES The Portfolios are not required to pay federal income taxes on
their net investment income and net capital gain as they are treated as
partnerships for federal income tax purposes. All interest, dividends, gain and
loss of the Portfolios are deemed to have been "passed-through" to the
interestholders in proportion to their holdings in the Portfolios regardless of
whether such interest, dividends or gain have been distributed by the
Portfolios.
SECURITIES TRANSACTIONS, INTEREST INCOME AND REALIZED GAIN AND LOSS Securities
transactions are recorded on the trade date. Interest income is accrued as
earned and realized gain and loss on investments sold are recorded on the basis
of identified cost.
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER The investment adviser of each Portfolio is Forum Investment
Advisors, LLC ("Forum Advisors"). Forum Advisors receives an advisory fee from
each Portfolio based upon the total average daily net assets of those Portfolios
("Total Portfolio Assets") that is calculated on a cumulative basis at the
following annual rates: 0.06% for the first $200 million of Total Portfolio
Assets, 0.04% of the next $300 million of Total Portfolio Assets and 0.03% of
the remaining Total Portfolio Assets.
ADMINISTRATOR The administrator of each Portfolio is Forum Administrative
Services, LLC ("FAdS"). For its administrative services and facilities, FAdS
receives from each Portfolio an administration fee at an annual rate of 0.05% of
the average daily net assets of each Portfolio.
16
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NOTES TO FINANCIAL STATEMENTS -- PORTFOLIOS
August 31, 2000
PLACEMENT AGENT Forum Fund Services, LLC ("FFS"), a registered broker-dealer and
a member of the National Association of Securities Dealers, Inc., acts as each
Portfolio's placement agent but receives no fee for this service.
OTHER SERVICE PROVIDER Forum Accounting Services, LLC ("FAcS") serves as the
Portfolios' fund accountant and interestholder recordkeeper. For these services,
FAcS receives a fee from each Portfolio based on the lesser of $4,000 per month
or 0.05% of the Portfolio's average annual daily net assets, plus certain
additional charges.
NOTE 4. INCOME AND EXPENSE RATIOS
The ratio of net investment income and expenses to average net assets are listed
below. The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding applicable fee waivers.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
--------------------------------
NET
INVESTMENT NET GROSS
INCOME EXPENSES EXPENSES
---------- -------- --------
Treasury Cash Portfolio
Year Ended August 31, 2000................................ 5.69% 0.13% 0.13%
Year Ended August 31, 1999................................ 4.69% 0.14% 0.14%
Year Ended August 31, 1998................................ 5.34% 0.15% 0.17%
Year Ended August 31, 1997................................ 5.20% 0.15% 0.18%
Year Ended August 31, 1996................................ 5.30% 0.15% 0.20%
Government Cash Portfolio
Year Ended August 31, 2000................................ 5.85% 0.12% 0.12%
Year Ended August 31, 1999................................ 4.94% 0.12% 0.12%
Year Ended August 31, 1998................................ 5.52% 0.13% 0.13%
Year Ended August 31, 1997................................ 5.38% 0.14% 0.14%
Year Ended August 31, 1996................................ 5.49% 0.14% 0.14%
Cash Portfolio
Year Ended August 31, 2000................................ 6.03% 0.11% 0.11%
Year Ended August 31, 1999................................ 5.00% 0.12% 0.12%
Year Ended August 31, 1998................................ 5.55% 0.13% 0.13%
Year Ended August 31, 1997................................ 5.45% 0.15% 0.15%
Year Ended August 31, 1996................................ 5.50% 0.15% 0.16%
</TABLE>
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