M O N A R C H F U N D S
- --------------------------------------
- --------------------------------------
Treasury Cash Fund
Government Cash Fund
Cash Fund
SEMI-ANNUAL REPORT
February 29, 2000
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Dear Shareholders:
We are pleased to report that as of the end of the semi-annual period, combined
assets of the Monarch Funds were at the $3 billion mark, up from $1.5 billion
since February 1999. In addition to this growth, we are equally pleased to
report that Monarch's Government Cash Fund, our oldest fund and our performance
leader, continued to exhibit truly impressive performance. For the five years
ended March 31, 2000, Universal Shares of the Fund were ranked #1 for total
return out of 53 funds in the Government and Agencies Institutional category.(1)
As usual, we caution you to remember that investment return will fluctuate, and
past performance is not a guarantee of future results.
Since our report to you in August 1999, Universal Shares of Treasury Cash Fund
and Investor Shares of Government Cash Fund have commenced operations and are
attracting investors. Investor Shares' assets of the Funds combined now total
nearly $800 million - up from $500 million since August. Offered since late
1995, the Investor class has lower investment minimums and check writing
privileges, features designed to appeal to a broader range of investors.
Universal and Institutional Shares, which are designed and customized to meet
the needs of the business community, also continue to attract new investors.
As we approach our eighth year of operations, we assure you that we remain
committed to helping you meet your financial goals. We thank you for your past
and continuing confidence. Please feel free to call us with questions and
concerns at 800-754-8757.
Sincerely,
/s/ John Y. Keffer
John Y. Keffer
Chairman
(1)As tracked by IBC Financial Data, Inc.'s MONEY FUND REPORT AVERAGES-TM- for
that period. One other fund had the same total return for the five year period.
The Fund also ranked #9 out of 93 funds for the year ended March 31, 2000. Five
other funds had the same total return for the one year period.
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TABLE OF CONTENTS
FINANCIAL STATEMENTS OF MONARCH FUNDS
Statements of Assets and Liabilities...... 2
Statements of Operations.................. 3
Statements of Changes in Net Assets....... 4
Financial Highlights...................... 5
Notes to Financial Statements............. 6
FINANCIAL STATEMENTS OF CORE TRUST
(DELAWARE)............................... 9
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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
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STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000 (Unaudited)
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<TABLE>
<S> <C> <C> <C>
TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
---- ---- ----
ASSETS:
Investment in Portfolios at value (Notes 1 and
2).............................................. $316,017,724 $696,756,892 $1,793,448,938
LIABILITIES:
Dividends payable................................. 150,183 1,191,433 155,708
Payable to Administrator (Note 3)................. 12,389 33,779 65,793
Accrued expenses.................................. 161,436 230,323 711,826
------------ ------------ --------------
Total liabilities................................... 324,008 1,455,535 933,327
------------ ------------ --------------
NET ASSETS.......................................... $315,693,716 $695,301,357 $1,792,515,611
============ ============ ==============
COMPONENTS OF NET ASSETS:
Paid in capital................................... $315,679,859 $695,383,501 $1,792,534,754
Undistributed (distributions in excess of) net
investment income............................... 12,848 (34,950) --
Accumulated net realized gain (loss).............. 1,009 (47,194) (19,143)
------------ ------------ --------------
NET ASSETS.......................................... $315,693,716 $695,301,357 $1,792,515,611
============ ============ ==============
NET ASSETS BY CLASS OF SHARES:
Universal Shares.................................. $ 46,158 $253,102,795 $ 46,992,317
Institutional Shares.............................. 109,791,026 437,270,026 1,165,359,460
Investor Shares................................... 205,856,532 4,928,536 580,163,834
------------ ------------ --------------
NET ASSETS.......................................... $315,693,716 $695,301,357 $1,792,515,611
============ ============ ==============
SHARES OF BENEFICIAL INTEREST:
Universal Shares.................................. 46,158 253,154,792 46,992,708
Institutional Shares.............................. 109,784,282 437,300,174 1,165,372,508
Investor Shares................................... 205,849,420 4,928,536 580,169,535
NET ASSET VALUE PER SHARE (OFFERING
AND REDEMPTION PRICE PER SHARE)................... $ 1.00 $ 1.00 $ 1.00
See Notes to Financial Statements.
2
<PAGE>
MONARCH FUNDS
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STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000 (Unaudited)
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TREASURY GOVERNMENT
CASH CASH CASH
FUND FUND FUND
---- ---- ----
NET INVESTMENT INCOME ALLOCATED FROM
PORTFOLIOS:
Interest income..................................... $7,747,135 $21,914,915 $38,006,257
Net expenses........................................ (189,902) (464,910) (762,023)
---------- ----------- -----------
Net investment income allocated from Portfolios (Note
2)................................................... 7,557,233 21,450,005 37,244,234
---------- ----------- -----------
EXPENSES:
Administration (Note 3).............................
Universal Shares.................................. 827 63,120 21,131
Institutional Shares.............................. 11,291 133,030 202,571
Investor Shares................................... 59,969 295 105,840
Transfer Agent (Note 3).............................
Universal Shares.................................. 1,623 82,558 25,623
Institutional Shares.............................. 49,915 540,850 818,280
Investor Shares................................... 247,297 1,941 428,706
Shareholder Services (Note 3).......................
Institutional Shares.............................. 45,165 532,118 810,285
Investor Shares................................... 239,876 1,179 423,362
Distribution--Investor Shares (Note 3).............. 299,845 1,473 529,202
Legal............................................... 2,060 6,138 8,090
Audit............................................... 2,128 3,318 5,197
Trustees............................................ 2,829 7,564 11,007
Miscellaneous....................................... 6,230 10,868 49,283
---------- ----------- -----------
Total expenses........................................ 969,055 1,384,452 3,438,577
Fees waived (Note 4)................................ (37,320) (58,636) (13,515)
---------- ----------- -----------
Net expenses.......................................... 931,735 1,325,816 3,425,062
---------- ----------- -----------
NET INVESTMENT INCOME................................. 6,625,498 20,124,189 33,819,172
NET REALIZED GAIN ON INVESTMENTS ALLOCATED FROM
PORTFOLIOS (Note 2).................................. 7,024 685 --
---------- ----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS............ $6,632,522 $20,124,874 $33,819,172
========== =========== ===========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
MONARCH FUNDS
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STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31, 1999 AND
THE SIX MONTHS ENDED FEBRUARY 29, 2000 (Unaudited)
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<TABLE>
<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............................................... 6,625,498 20,124,189 33,819,172
NET REALIZED GAIN ON INVESTMENTS ALLOCATED FROM PORTFOLIOS.......... 7,024 685 --
--------------- --------------- ---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS............................ 6,632,522 20,124,874 33,819,172
--------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME--UNIVERSAL SHARES............................. (89,282) (6,782,270) (2,326,633)
NET INVESTMENT INCOME--INSTITUTIONAL SHARES......................... (1,116,345) (13,312,577) (21,025,590)
NET INVESTMENT INCOME--INVESTOR SHARES.............................. (5,419,871) (29,342) (10,466,949)
--------------- --------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS................................... (6,625,498) (20,124,189) (33,819,172)
--------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS (AT $1.00 PER SHARE):
SALE OF SHARES--UNIVERSAL SHARES.................................... 353,090,876 2,598,115,962 768,725,108
SALE OF SHARES--INSTITUTIONAL SHARES................................ 602,656,974 1,972,229,004 2,096,939,402
SALE OF SHARES--INVESTOR SHARES..................................... 822,775,339 7,386,735 1,058,761,788
REINVESTMENT OF DISTRIBUTIONS--UNIVERSAL SHARES..................... 89,282 4,162,921 1,698,414
REINVESTMENT OF DISTRIBUTIONS--INSTITUTIONAL SHARES................. 381,711 10,418,750 18,868,502
REINVESTMENT OF DISTRIBUTIONS--INVESTOR SHARES...................... 5,413,740 29,342 10,464,863
REDEMPTION OF SHARES--UNIVERSAL SHARES.............................. (353,134,000) (2,626,724,901) (822,136,619)
REDEMPTION OF SHARES--INSTITUTIONAL SHARES.......................... (548,383,650) (2,000,617,065) (1,519,857,148)
REDEMPTION OF SHARES--INVESTOR SHARES............................... (854,961,656) (2,487,541) (758,483,538)
--------------- --------------- ---------------
NET INCREASE (DECREASE) FROM CAPITAL TRANSACTIONS..................... 27,928,616 (37,486,793) 854,980,772
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS................................. 27,935,640 (37,486,108) 854,980,772
--------------- --------------- ---------------
NET ASSETS--FEBRUARY 29, 2000 (INCLUDING LINE (B)).................... $ 315,693,716 $ 695,301,357 $ 1,792,515,611
=============== =============== ===============
- --------------------------------------
(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,
FEBRUARY 29, 2000................................................. $ 12,848 $ (34,950) $ --
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
MONARCH FUNDS
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FINANCIAL HIGHLIGHTS (Unaudited)
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These financial highlights reflect selected data for a share of each class of
each Fund outstanding during the years or periods indicated.
<TABLE>
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE
NET ASSETS
BEGINNING DISTRIBUTIONS ------------------------------------
NET ASSET NET FROM NET ENDING NET NET
VALUE PER INVESTMENT INVESTMENT ASSET VALUE GROSS NET INVESTMENT
SHARE INCOME INCOME PER SHARE EXPENSES(A) EXPENSES INCOME
----- ------ ------ --------- ----------- -------- ------
TREASURY CASH FUND
Universal Shares
December 30, 1999 - February 29,
2000................................ $ 1.00 $ 0.01 $ (0.01) $ 1.00 0.29%(b) 0.20%(b) 5.40%(b)
Institutional Shares
Six Months ended February 29,
2000................................ 1.00 0.02 (0.02) 1.00 0.61%(b) 0.46%(b) 4.94%(b)
Year ended August 31, 1999.......... 1.00 0.04 (0.04) 1.00 0.62% 0.45% 4.43%
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.67% 0.45% 5.00%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.66% 0.45% 4.89%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.69% 0.45% 5.01%
Year ended August 31, 1995.......... 1.00 0.05 (0.05) 1.00 0.86% 0.42% 5.18%
Investor Shares
Six Months ended February 29,
2000................................ 1.00 0.02 (0.02) 1.00 0.85%(b) 0.85%(b) 4.52%(b)
Year ended August 31, 1999.......... 1.00 0.04 (0.04) 1.00 0.89% 0.83% 4.02%
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.91% 0.82% 4.62%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.97% 0.83% 4.55%
October 25, 1995 - August 31,
1996................................ 1.00 0.04 (0.04) 1.00 1.33%(b) 0.83%(b) 4.50%(b)
GOVERNMENT CASH FUND
Universal Shares
Six Months ended February 29,
2000................................ 1.00 0.03 (0.03) 1.00 0.24%(b) 0.20%(b) 5.37%(b)
Year ended August 31, 1999.......... 1.00 0.05 (0.05) 1.00 0.25% 0.18% 4.88%
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.26% 0.18% 5.48%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.26% 0.17% 5.35%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.28% 0.19% 5.43%
Year ended August 31, 1995.......... 1.00 0.06 (0.06) 1.00 0.52% 0.24% 5.46%
Institutional Shares
Six Months ended February 29,
2000................................ 1.00 0.02 (0.02) 1.00 0.58%(b) 0.58%(b) 5.00%(b)
Year ended August 31, 1999.......... 1.00 0.05 (0.05) 1.00 0.59% 0.57% 4.50%
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.58% 0.57% 5.09%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.57% 0.57% 4.95%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.57% 0.57% 5.06%
Year ended August 31, 1995.......... 1.00 0.05 (0.05) 1.00 0.66% 0.54% 5.39%
Investor Shares
December 30, 1999 - February 29,
2000................................ 1.00 0.01 (0.01) 1.00 0.95%(b) 0.84%(b) 4.98%(b)
CASH FUND
Universal Shares
Six Months ended February 29,
2000................................ 1.00 0.03 (0.03) 1.00 0.23%(b) 0.20%(b) 5.51%(b)
Year ended August 31, 1999.......... 1.00 0.05 (0.05) 1.00 0.25% 0.18% 4.99%
Year ended August 31, 1998.......... 1.00 0.06 (0.06) 1.00 0.29% 0.18% 5.48%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.47% 0.23% 5.32%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.43% 0.27% 5.48%
Year ended August 31, 1995.......... 1.00 0.06 (0.06) 1.00 0.56% 0.27% 5.59%
Institutional Shares
Six Months ended February 29,
2000................................ 1.00 0.03 (0.03) 1.00 0.58%(b) 0.58%(b) 5.19%(b)
Year ended August 31, 1999.......... 1.00 0.05 (0.05) 1.00 0.60% 0.57% 4.56%
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.61% 0.57% 5.11%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.60% 0.57% 4.97%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.60% 0.57% 5.10%
Year ended August 31, 1995.......... 1.00 0.05 (0.05) 1.00 0.69% 0.54% 5.33%
Investor Shares
Six Months ended February 29,
2000................................ 1.00 0.02 (0.02) 1.00 0.84%(b) 0.84%(b) 4.94%(b)
Year ended August 31, 1999.......... 1.00 0.04 (0.04) 1.00 0.85% 0.83% 4.30%
Year ended August 31, 1998.......... 1.00 0.05 (0.05) 1.00 0.86% 0.83% 4.86%
Year ended August 31, 1997.......... 1.00 0.05 (0.05) 1.00 0.85% 0.83% 4.72%
Year ended August 31, 1996.......... 1.00 0.05 (0.05) 1.00 0.96% 0.83% 4.68%
June 16, 1995 - August 31, 1995..... 1.00 0.01 (0.01) 1.00 3.76%(b) 0.84%(b) 5.32%(b)
</TABLE>
NET ASSETS
AT END OF
PERIOD
TOTAL (000'S
RETURN OMITTED)
------ --------
TREASURY CASH FUND
Universal Shares
December 30, 1999 - February 29,
2000................................ 0.93% $ 46
Institutional Shares
Six Months ended February 29,
2000................................ 2.46% 109,791
Year ended August 31, 1999.......... 4.50% 55,134
Year ended August 31, 1998.......... 5.11% 91,122
Year ended August 31, 1997.......... 4.98% 40,830
Year ended August 31, 1996.......... 5.15% 79,259
Year ended August 31, 1995.......... 5.28% 28,530
Investor Shares
Six Months ended February 29,
2000................................ 2.27% 205,857
Year ended August 31, 1999.......... 4.10% 232,624
Year ended August 31, 1998.......... 4.72% 57,957
Year ended August 31, 1997.......... 4.58% 30,118
October 25, 1995 - August 31,
1996................................ 4.00% 3,980
GOVERNMENT CASH FUND
Universal Shares
Six Months ended February 29,
2000................................ 2.70% 253,103
Year ended August 31, 1999.......... 5.00% 277,548
Year ended August 31, 1998.......... 5.63% 253,644
Year ended August 31, 1997.......... 5.49% 230,410
Year ended August 31, 1996.......... 5.59% 248,986
Year ended August 31, 1995.......... 5.78% 182,546
Institutional Shares
Six Months ended February 29,
2000................................ 2.51% 437,270
Year ended August 31, 1999.......... 4.59% 455,239
Year ended August 31, 1998.......... 5.22% 443,618
Year ended August 31, 1997.......... 5.06% 245,157
Year ended August 31, 1996.......... 5.18% 256,244
Year ended August 31, 1995.......... 5.46% 186,620
Investor Shares
December 30, 1999 - February 29,
2000................................ 0.84% 4,929
CASH FUND
Universal Shares
Six Months ended February 29,
2000................................ 2.78% 46,992
Year ended August 31, 1999.......... 5.09% 98,705
Year ended August 31, 1998.......... 5.65% 91,671
Year ended August 31, 1997.......... 5.43% 18,453
Year ended August 31, 1996.......... 5.53% 3,272
Year ended August 31, 1995.......... 5.75% 26,525
Institutional Shares
Six Months ended February 29,
2000................................ 2.59% 1,165,359
Year ended August 31, 1999.......... 4.68% 569,409
Year ended August 31, 1998.......... 5.24% 299,220
Year ended August 31, 1997.......... 5.07% 152,041
Year ended August 31, 1996.......... 5.22% 89,733
Year ended August 31, 1995.......... 5.23% 73,802
Investor Shares
Six Months ended February 29,
2000................................ 2.46% 580,164
Year ended August 31, 1999.......... 4.41% 269,421
Year ended August 31, 1998.......... 4.97% 181,754
Year ended August 31, 1997.......... 4.81% 76,480
Year ended August 31, 1996.......... 4.95% 32,731
June 16, 1995 - August 31, 1995..... 1.13% 4,665
(a) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding fee waivers and expense reimbursements, if any.
(b) Annualized.
See Notes to Financial Statements.
5
<PAGE>
MONARCH FUNDS
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NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF ORGANIZATION
Monarch Funds (the "Trust") was organized as a Delaware business trust on July
10, 1992. The Trust, which is registered as an open-end management investment
company under the Investment Company Act of 1940, (the "Act"), currently has
three diversified investment portfolios, Treasury Cash Fund, Government Cash
Fund and Cash Fund (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 and no other class of
shares currently is outstanding:
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
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
February 29, 2000, the percentage of Treasury Cash Portfolio owned by Treasury
Cash Fund was 75.4%; the percentage of Government Cash Portfolio owned by
Government Cash Fund was 92.0%; and the percentage of Cash Portfolio owned by
Cash Fund was 95.8%.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets during the fiscal
period. Actual results could differ from those estimates. The following
summarizes the significant accounting policies of the Funds:
SECURITY VALUATION-Each Fund determines its net asset value per share as of 1:00
p.m., Pacific time, on each business day. Each Fund records its investment in
its Portfolio at value. Valuation of securities held in the Portfolios is
discussed in the Notes to Financial Statements of Core Trust (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.
6
<PAGE>
MONARCH FUNDS
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NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
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 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 February 29, 2000, certain Funds had capital loss carryovers available to
offset future capital gains as follows: Cash Fund - $6,210 expiring in 2004 and
$10,851 expiring in 2005; and Government Cash Fund - $6,661 expiring in 2005 and
$40,840 expiring in 2006.
DISTRIBUTIONS TO SHAREHOLDERS-Distributions to shareholders of net investment
income are declared daily and paid monthly. Net capital gain, if any, is
distributed to shareholders at least annually. Distributions are based on
amounts calculated in accordance with applicable income tax regulations, which
may differ from generally accepted accounting principles. These differences are
due primarily to differing treatments of income and gain on various investment
securities, 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 fee at an annual rate of
0.20% of the average daily net assets of Institutional Shares and Investor
Shares of each Fund and 0.05% of the average daily net assets of Universal
Shares of each Fund, plus certain account and additional Fund and class charges.
SHAREHOLDER SERVICE AGENT-The Trust has adopted a shareholder servicing plan
with respect to Institutional Shares and Investor Shares under which the Trust
pays FAdS a shareholder servicing fee at an annual rate of 0.20% of the average
daily net assets 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.
7
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 4. WAIVER OF FEES
FAdS and FSS voluntarily waived a portion of their fees for the six months ended
February 29, 2000, as follows: Investor Shares shareholder servicing fee:
Government Cash Fund $626. Institutional Shares shareholder servicing fee:
Treasury Cash Fund $35,879, and Government Cash Fund $8,100. Universal Shares
transfer agent fees: Treasury Cash Fund $614, Government Cash Fund $49,910, and
Cash Fund $13,515. Universal Shares administration fees: Treasury Cash Fund
$827.
8
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS -- TREASURY CASH PORTFOLIO
FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ------------ ------------------------------ ------------
U.S. TREASURY BILLS (A) (73.3%)
$310,000,000 5.85%, 4/27/00................ $307,207,159
------------
CASH MANAGEMENT ACCOUNTS (9.7%)
20,364,000 Dreyfus Prime Treasury Cash
Management Fund............. 20,364,000
20,350,000 Dreyfus Treasury Cash
Management Fund............. 20,350,000
------------
40,714,000
------------
REPURCHASE AGREEMENTS (17.0%)
20,960,000 BA Securities, Inc., 5.66%,
3/1/00, to be repurchased at
$20,963,295; collateralized
by various U.S. Treasury
securities.................. 20,960,000
50,000,000 Donaldson, Lufkin & Jenrette
Securities Corp., 5.75%,
3/1/00, to be repurchased at
$50,007,986; collateralized
by various U.S. Treasury
securities.................. 50,000,000
------------
Total Repurchase Agreements 70,960,000
------------
Total Investments (100%) at Amortized Cost $418,881,159
============
(A) Annualized yields at time of purchase.
See Notes to Financial Statements.
9
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS -- GOVERNMENT CASH PORTFOLIO
FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
U. S. GOVERNMENT SECURITIES (84.1%)
FEDERAL HOME LOAN BANK (B) (2.0%)
$15,000,000 6.28%, 4/7/00................. $ 15,000,000
------------
FEDERAL HOME LOAN BANK--DISCOUNT
NOTES (A) (33.1%)
20,000,000 5.76%, 3/1/00................. 20,000,000
230,000,000 5.82%, 3/1/00................. 230,000,000
------------
Total Federal Home Loan Bank--Discount
Notes 250,000,000
------------
SMALL BUSINESS ADMINISTRATION (B) (9.4%)
215,188 Pool #500545, 8.38%,
3/25/03..................... 215,188
427,977 Pool #501077, 7.00%,
11/25/14.................... 427,977
1,866,701 Pool #501308, 7.00%,
10/25/15.................... 1,899,761
1,608,510 Pool #501543, 6.88%,
7/25/16..................... 1,609,833
326,369 Pool #501628, 8.38%,
9/25/04..................... 326,369
579,133 Pool #501690, 6.63%,
12/25/16.................... 581,035
886,401 Pool #501898, 6.75%,
7/25/17..................... 888,424
3,255,951 Pool #502150, 6.50%,
2/25/18..................... 3,301,295
224,760 Pool #502161, 6.50%,
2/25/18..................... 224,760
2,043,607 Pool #502208, 6.50%,
2/25/18..................... 2,068,142
264,504 Pool #502306, 6.50%,
2/25/18..................... 264,504
1,013,447 Pool #502613, 6.50%,
4/25/19..................... 1,013,447
618,500 Pool #503058, 6.38%,
7/25/15..................... 618,500
1,183,181 Pool #503082, 6.38%,
8/25/20..................... 1,183,181
778,392 Pool #503120, 6.38%,
10/25/20.................... 778,392
354,421 Pool #503121, 6.38%,
8/25/15..................... 354,421
1,193,358 Pool #503232, 6.13%,
2/25/15..................... 1,193,358
563,201 Pool #503278, 6.13%,
2/25/21..................... 563,221
2,019,563 Pool #503431, 6.25%,
7/25/21..................... 2,020,608
1,961,418 Pool #503461, 6.25%,
9/25/21..................... 1,962,387
1,171,496 Pool #503472, 6.25%,
8/25/21..................... 1,172,040
614,804 Pool #503553, 6.13%,
11/25/21.................... 613,374
4,157,763 Pool #503671, 6.13%,
3/25/22..................... 4,157,763
1,315,315 Pool #503754, 6.13%,
5/25/22..................... 1,315,315
771,634 Pool #503780, 6.13%,
3/25/22..................... 772,669
3,203,184 Pool #503882, 6.00%,
9/25/22..................... 3,199,678
2,052,842 Pool #503892, 6.13%,
7/25/22..................... 2,057,062
4,592,539 Pool #503909, 6.00%,
10/25/22.................... 4,589,851
2,186,218 Pool #504015, 6.00%,
1/25/23..................... 2,185,663
4,516,798 Pool #504062, 6.00%,
2/25/23..................... 4,516,798
3,777,576 Pool #504074, 6.00%,
2/25/23..................... 3,777,576
1,640,648 Pool #504203, 6.13%,
7/25/13..................... 1,645,620
1,534,754 Pool #504269, 6.13%,
5/25/15..................... 1,537,972
1,329,816 Pool #504345, 6.13%,
5/25/18..................... 1,329,816
5,393,413 Pool #504366, 5.88%,
2/25/24..................... 5,388,610
11,368,738 Pool #504719, 5.38%,
7/25/24..................... 11,368,738
------------
Total Small Business Administration 71,123,348
------------
STUDENT LOAN MARKETING ASSOCIATION (B) (6.6%)
$20,000,000 6.41%, 3/3/00................. $ 20,000,000
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------ ------------
15,000,000 6.27%, 2/21/01................ 15,000,000
15,000,000 6.33%, 8/14/01................ 15,000,000
------------
Total Student Loan Marketing Association 50,000,000
------------
STUDENT LOAN MARKETING ASSOCIATION -- DISCOUNT NOTES
(A) (19.9%)
150,000,000 5.82%, 3/1/00................. 150,000,000
------------
U.S. TREASURY BILLS (A) (13.1%)
100,000,000 5.71%, 4/27/00................ 99,095,917
------------
Total U.S. Government Securities 635,219,265
------------
REPURCHASE AGREEMENTS (15.9%)
120,000,000 Bear, Stearns & Co., Inc.,
5.80%, 3/6/00, to be
repurchased at $135,532,411;
collateralized by various
U.S. Government
securities.................. 120,000,000
------------
Total Investments (100%) at Amortized Cost $755,219,265
============
(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
February 29, 2000.
See Notes to Financial Statements.
10
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS -- CASH PORTFOLIO
FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ---------------------------------------- --------------
U. S. GOVERNMENT SECURITIES (2.1%)
SMALL BUSINESS ADMINISTRATION (B) (2.1%)
$ 152,643 Pool #500536, 7.50%, 5/25/13............ $ 153,374
287,379 Pool #500730, 8.38%, 2/25/04............ 287,379
489,668 Pool #501733, 6.50%, 2/25/17............ 494,047
687,626 Pool #501989, 6.63%, 10/25/12........... 689,090
93,426 Pool #502914, 6.50%, 3/25/15............ 93,426
1,417,684 Pool #503121, 6.38%, 8/25/15............ 1,417,684
2,736,817 Pool #503429, 6.25%, 6/25/16............ 2,736,817
490,354 Pool #503461, 6.25%, 9/25/21............ 490,605
2,265,034 Pool #503553, 6.13%, 11/25/21........... 2,259,189
1,972,972 Pool #503754, 6.13%, 5/25/22............ 1,972,972
3,061,087 Pool #503882, 6.00%, 9/25/22............ 3,057,761
3,821,758 Pool #503912, 6.00%, 10/25/22........... 3,819,569
4,176,585 Pool #504015, 6.00%, 1/25/23............ 4,175,417
16,993,254 Pool #504366, 5.88%, 2/26/24............ 16,978,062
--------------
Total Small Business Administration 38,625,392
--------------
Total U.S. Government Securities 38,625,392
--------------
COMMERCIAL PAPER (A) (60.5%)
55,000,000 American Express Credit Corp., 5.85%,
3/17/00............................... 54,859,689
80,000,000 Bellsouth Capital Corp., 5.92%,
4/3/00................................ 79,576,133
80,000,000 British Aerospace, 5.98%, 3/10/00....... 79,882,800
80,000,000 CIT Group Holdings, Inc., 5.92%,
3/20/00............................... 79,755,111
50,000,000 Coca Cola Co., 5.84%, 3/24/00........... 49,816,958
80,000,000 Deutsche Bank Securities, 5.90%,
3/20/00............................... 79,755,956
35,000,000 DuPont (E.I.) de Nemours, 5.87%,
3/22/00............................... 34,882,604
80,000,000 Ford Motor Credit Corp., 5.90%,
3/20/00............................... 79,755,956
15,000,000 General Electric Capital Corp., 5.94%,
3/6/00................................ 14,988,146
30,000,000 General Electric Capital Corp., 5.89%,
3/22/00............................... 29,894,217
60,000,000 Goldman Sachs, 5.99%, 2/25/00........... 59,678,250
75,000,000 Lucent Technologies, Inc., 5.83%,
3/15/00............................... 74,832,875
29,400,000 Merck & Co., Inc., 5.86%, 3/15/00....... 29,334,258
80,000,000 Merrill Lynch & Co., Inc., 5.87%,
3/14/00............................... 79,833,600
75,000,000 Prudential Funding Corp., 5.84%,
3/22/00............................... 74,749,313
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- ----------- ---------------------------------------- --------------
$70,000,000 Salomon Smith Barney, 5.88%, 3/16/00.... $ 69,832,000
50,000,000 UBS Finance, Inc., 5.91%, 3/1/00........ 50,000,000
80,000,000 Warner Lambert Co., 5.88%, 3/20/00...... 79,756,800
30,000,000 Washington Post Co., 5.89%, 3/24/00..... 29,889,408
--------------
Total Commercial Paper 1,131,074,074
--------------
CORPORATE NOTES (B) (7.5%)
50,000,000 BA Securities, Inc., 5.86%, 3/13/00..... 49,998,742
25,000,000 BA Securities, Inc., 6.00%, 3/23/00..... 25,000,000
15,000,000 Bear, Stearns & Co., Inc., 6.00%,
4/7/00................................ 15,000,000
50,000,000 Bear, Stearns & Co., Inc., 5.95%,
1/5/01................................ 50,000,000
--------------
Total Corporate Notes 139,998,742
--------------
REPURCHASE AGREEMENTS (29.9%)
200,000,000 Bear, Stearns & Co., Inc., 5.80%, 3/6/00
to be repurchased at $207,652,872;
collateralized by various U.S.
Government securities................. 200,000,000
159,000,000 Donaldson, Lufkin & Jenrette Securities
Corp., 5.82%, 3/1/00, to be
repurchased at $159,025,705;
collateralized by various U.S.
Government securities................. 159,000,000
200,000,000 Salomon Smith Barney, 5.87%, 3/1/00, to
be repurchased at $200,032,611;
collateralized by various U.S.
Government securities................. 200,000,000
--------------
Total Repurchase Agreements 559,000,000
--------------
Total Investments (100%) at Amortized Cost $1,868,698,208
==============
(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
February 29, 2000.
See Notes to Financial Statements.
11
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES -- PORTFOLIOS
FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- --------------
ASSETS:
Investments (Note 2):
Securities at amortized cost........ $347,921,159 $635,219,265 $1,309,698,208
Repurchase agreements at cost....... 70,960,000 120,000,000 559,000,000
------------ ------------ --------------
Total investments at amortized cost..... 418,881,159 755,219,265 1,868,698,208
Cash.................................. 18,152 11,286 193,274
Interest and other receivables........ 17,252 2,152,856 2,825,800
Organization costs, net of
amortization (Note 2)............... 120 2,195 594
------------ ------------ --------------
Total assets............................ 418,916,683 757,385,602 1,871,717,876
------------ ------------ --------------
LIABILITIES:
Payable to Adviser (Note 3)........... 10,974 24,083 45,595
Payable to Administrator (Note 3)..... 16,673 36,561 69,273
Accrued expenses...................... 32,461 43,277 63,292
------------ ------------ --------------
Total liabilities....................... 60,108 103,921 178,160
------------ ------------ --------------
NET ASSETS.............................. $418,856,575 $757,281,681 $1,871,539,716
============ ============ ==============
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS -- PORTFOLIOS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
TREASURY GOVERNMENT
CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ -----------
INVESTMENT INCOME:
Interest income.................................... $10,383,217 $23,538,038 $40,513,906
----------- ----------- -----------
EXPENSES:
Investment advisory (Note 3)....................... 64,766 141,288 235,022
Administration (Note 3)............................ 96,929 211,404 352,204
Custody............................................ 44,207 96,442 160,376
Accounting (Note 3)................................ 24,000 24,000 24,000
Legal.............................................. 1,494 3,696 4,477
Audit.............................................. 3,441 7,325 11,467
Trustees........................................... 1,606 3,795 5,491
Rating fees........................................ 14,800 -- --
Amortization of organization costs (Note 2)........ 120 2,195 594
Miscellaneous...................................... 3,429 9,027 19,244
----------- ----------- -----------
Total expenses....................................... 254,792 499,172 812,875
----------- ----------- -----------
NET INVESTMENT INCOME................................ 10,128,425 23,038,866 39,701,031
NET REALIZED GAIN ON INVESTMENTS SOLD................ 9,444 729 --
----------- ----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS........... $10,137,869 $23,039,595 $39,701,031
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS -- PORTFOLIOS
FOR THE YEAR ENDED AUGUST 31, 1999 AND
THE SIX MONTHS ENDED FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<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 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...................... 10,128,425 23,038,866 39,701,031
Net realized gain on investments sold...... 9,444 729 --
--------------- --------------- ---------------
Net increase in net assets from operations... 10,137,869 23,039,595 39,701,031
--------------- --------------- ---------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Contributions.............................. 1,061,469,622 1,535,870,549 1,562,031,934
Withdrawals................................ (1,045,892,244) (1,585,090,879) (767,095,497)
--------------- --------------- ---------------
Net transactions in investors' beneficial
interests................................... 15,577,378 (49,220,330) 794,936,437
--------------- --------------- ---------------
Net increase (decrease) in net assets........ 25,715,247 (26,180,735) 834,637,468
--------------- --------------- ---------------
NET ASSETS--FEBRUARY 29, 2000................ $ 418,856,575 $ 757,281,681 $ 1,871,539,716
- ------------------------------ =============== =============== ===============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- PORTFOLIOS
FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF ORGANIZATION
Core Trust (Delaware) ("Core Trust") was organized as a Delaware business trust
on September 1, 1994. Core Trust, which is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"Act"), currently has five separate 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
The financial statements are prepared in accordance with generally accepted
accounting principles, which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets from
operations during the fiscal period. Actual results could differ from those
estimates. The following summarizes the significant accounting policies of the
Portfolios:
SECURITY VALUATION-Each Portfolio determines its net asset value per share as of
1:00 p.m., Pacific time, on each business day, utilizing the amortized cost
method pursuant to Rule 2a-7 under the Act. Under this method, all investments
purchased at a discount or premium are valued by accreting or amortizing,
respectively, the difference between the original purchase price and the
maturity value of the investment over the period to the investment's maturity.
REPURCHASE AGREEMENTS-Each Portfolio may invest in repurchase agreements. Each
Portfolio, through its custodian, receives delivery of the underlying
collateral, whose market value 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 difficulty with the disposition of any such securities held
as collateral.
ORGANIZATION COSTS-The costs incurred by each Portfolio in connection with its
organization have been capitalized and are being amortized using the
straight-line method over a five-year period beginning on the commencement of
each Portfolio's operations.
FEDERAL TAXES-The Portfolios are not required to pay federal income taxes on
their net investment income and net capital gain as they are treated as
partnerships for federal income tax purposes. All interest, dividends, gain and
loss of the Portfolios are deemed to have been "passed through" to the
interestholders in proportion to their holdings 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 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.
15
<PAGE>
MONARCH FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- PORTFOLIOS
FEBRUARY 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
ADMINISTRATOR-The administrator of each Portfolio is Forum Administrative
Services, LLC ("FAdS"). For its administrative services and facilities, FAdS
receives from each Portfolio a fee at an annual rate of 0.05% of the Portfolio's
average daily net assets.
PLACEMENT AGENT-Forum Fund Services, LLC, 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
Income and expense ratios are presented below. During certain periods, various
fees were waived and expenses reimbursed. The ratio of Gross Expenses to Average
Net Assets reflects the expense ratio excluding fee waivers and expense
reimbursements, if any. All numbers for periods of less than a year are
annualized.
<TABLE>
<S> <C>
RATIOS TO AVERAGE NET ASSETS
--------------------------------
NET
INVESTMENT NET GROSS
INCOME EXPENSES EXPENSES
---------- -------- --------
Treasury Cash Portfolio
Six Months Ended February 29, 2000........................ 5.22% 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
Six Months Ended February 29, 2000........................ 5.45% 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
Six Months Ended February 29, 2000........................ 5.64% 0.12% 0.12%
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%
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