As filed with the Securities and Exchange Commission on November 30, 1998
File No. 811-8858
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 15
CORE TRUST (DELAWARE)
Two Portland Square
Portland, Maine
207-879-1900
David I. Goldstein, Esq.
Forum Financial Services, Inc.
Two Portland Square
Portland, Maine 04101
Copies to:
Robert J. Zutz, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., NW 2nd Floor
Washington, D.C. 20036-1800
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EXPLANATORY NOTE
This Registration Statement is being filed by Registrant pursuant to Section
8(b) of the Investment Company Act of 1940, as amended. Beneficial interests in
the series of Registrant are not being registered under the Securities Act of
1933, as amended, because such interests will be issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of that act. Investments in Registrant's series may only
be made by certain institutional investors, whether organized within or without
the United States. This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any beneficial interests in any
series of Registrant.
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PART A
CORE TRUST (DELAWARE)
Treasury Cash Portfolio, Government Portfolio, Government Cash Portfolio, Cash
Portfolio and Municipal Cash Portfolio.
PART B
CORE TRUST (DELAWARE)
Treasury Cash Portfolio, Government Portfolio, Government Cash Portfolio, Cash
Portfolio and Municipal Cash Portfolio.
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NUMBER______
PRIVATE PLACEMENT MEMORANDUM
PART A
TREASURY CASH PORTFOLIO
GOVERNMENT PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
MUNICIPAL CASH PORTFOLIO
JANUARY 1, 1998
This Private Placement Memorandum ("Memorandum") relates to beneficial interests
in each of Treasury Cash Portfolio, Government Portfolio, Government Cash
Portfolio, Cash Portfolio and Municipal Cash Portfolio (each a "Portfolio"),
separate diversified portfolios of Core Trust (Delaware) (the "Trust"), a
registered, open-end, management investment company.
Investments in a Portfolio may only be made by certain institutional investors,
whether organized within or without the United States (excluding individuals, S
corporations, partnerships, and grantor trusts beneficially owned by any
individuals, S corporations, or partnerships). An investor in a Portfolio must
also be an "accredited investor," as that term is defined under Rule 501(a) of
Regulation D under the United States Securities Act of 1933, as amended.
This Private Placement Memorandum does not constitute an offer to sell, or the
solicitation of an offer to buy, beneficial interests in a Portfolio. An
investor may subscribe for a beneficial interest in a Portfolio by contacting
Forum Fund Services, LLC, the Trust's placement agent, at Two Portland Square,
Portland, Maine 04101, (207) 879-1900, for a complete subscription package,
including a subscription agreement. The Trust and the placement agent reserve
the right to refuse to accept any subscription for any reason. The Trust has
filed with the United States Securities and Exchange Commission ("SEC") a second
half (Part B) to this Memorandum which contains more detailed information about
the Trust and the Portfolios. The Part B, which is incorporated into this
Memorandum by reference, also is available from the placement agent.
ALTHOUGH THE PORTFOLIOS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00
PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE PORTFOLIOS. AN
INVESTMENT IN THE PORTFOLIOS 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.
THE SECURITIES OF THE TRUST DESCRIBED IN THIS PRIVATE PLACEMENT MEMORANDUM HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER (1) THE TERMS OF THE TRUST
INSTRUMENT OF THE TRUST AND (2) THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM.
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TABLE OF CONTENTS
Page
Financial Information....................................... 2
General Description of the Trust and the Portfolios......... 2
Investment Objectives.............................. 2
Investment Policies................................ 3
Other Investment Policies and Limitations.......... 6
Management.................................................. 8
Trustees and Officers.............................. 8
Advisory and Administrative Services............... 8
Shares of Beneficial Interest and Other Securities.......... 9
Purchase of Securities...................................... 9
Redemptions or Repurchases.................................. 10
Pending Legal Proceedings................................... 11
FINANCIAL INFORMATION
The financial statements of each Portfolio for the year ended August 31, 1998
and delivered along with this Memorandum are incorporated herein by reference.
GENERAL DESCRIPTION OF THE TRUST AND THE PORTFOLIOS
Core Trust (Delaware) (the "Trust") is a no-load, open-end management investment
company which was organized as a business trust under the laws of the State of
Delaware, United States, pursuant to a Trust Instrument dated September 1, 1994,
as amended and restated November 1, 1994.
Beneficial interests in the Trust currently are divided into 21 separate
diversified subtrusts or "series," each having a distinct investment objective
and distinct investment policies. Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio, are five
of the subtrusts. The assets of each portfolio of the Trust belong only to that
portfolio, and the assets belonging to a portfolio of the Trust shall be charged
with the liabilities of that portfolio and all expenses, costs, charges and
reserves attributable to that portfolio. The Trust is empowered to establish,
without interestholder approval, additional portfolios which may have different
investment objectives and policies.
Beneficial interests in the Portfolios are offered solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the United States Securities Act of 1933, as amended (the "1933
Act"). Investments in each Portfolio may only be made by certain institutional
investors, whether organized within or without the United States (excluding
individuals, S corporations, partnerships, and grantor trusts beneficially owned
by any individuals, S corporations, or partnerships). This Memorandum does not
constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
The service providers of each Portfolio are: Forum Investment Advisors, LLC (the
"Adviser"), investment adviser, Forum Administrative Services, LLC ("Forum"),
administrator, Forum Financial Services, Inc. ("FFSI"), placement agent, and
Forum Accounting Services, LLC ("Forum Accounting"), interestholder recordkeeper
and fund accountant.
INVESTMENT OBJECTIVES
The investment objective of each Portfolio may not be changed without
interestholder approval. There can be no assurance that any Portfolio will
achieve its investment objective.
TREASURY CASH PORTFOLIO. The investment objective of Treasury Cash Portfolio is
to provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.
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GOVERNMENT PORTFOLIO. The investment objective of Government Portfolio is to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.
GOVERNMENT CASH PORTFOLIO. The investment objective Government Cash Portfolio is
to provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity.
CASH PORTFOLIO. The investment objective of Cash Portfolio is to provide high
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity.
MUNICIPAL CASH PORTFOLIO. The investment objective of Municipal Cash Portfolio
is to provide high current income which is exempt from federal income taxes to
the extent consistent with the preservation of capital and the maintenance of
liquidity. As part of its objective, during periods of normal market condition,
the Portfolio will have at least 80% of its net assets invested in federally
tax-exempt instruments.
INVESTMENT POLICIES
GENERAL. The Portfolios invest only in high quality, U.S. dollar-denominated,
short-term money market instruments that are determined by the Adviser, pursuant
to procedures adopted by the Trust's Board of Trustees (the "Board"), to be
eligible for purchase and to present minimal credit risks. High quality
instruments include those that (1) are rated (or, if unrated, are issued by an
issuer with comparable outstanding short-term debt that is rated) in the highest
rating category by two nationally recognized statistical rating organizations
("NRSROs") or, if only one NRSRO has issued a rating, by that NRSRO or (2) are
otherwise unrated and determined by the Adviser to be of comparable quality. A
description of the rating categories of certain NRSROs, such as Standard &
Poor's , A Division of The McGraw Companies, and Moody's Investors Service,
Inc., is contained in Part B.
Each Portfolio invests only in instruments that have a remaining maturity of 397
days or less (as calculated under Rule 2a-7 of the United States Investment
Company Act of 1940, as amended (the "1940 Act")) and maintains a
dollar-weighted average portfolio maturity of 90 days or less. Except to the
limited extent permitted by Rule 2a-7 and except for U.S. Government Securities,
each Portfolio will not invest more than 5% of its total assets in the
securities of any one issuer. As used herein "U.S. Government Securities" means
obligations issued or guaranteed as to principal and interest by the United
States Government, its agencies or instrumentalities and "Treasury Securities"
means U.S. Treasury bills and notes and other U.S. Government Securities which
are guaranteed as to principal and interest by the U.S. Treasury.
Although each Portfolio only invests in high quality money market instruments,
an investment in a Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value when
there is a change in interest rates, the issuer's actual or perceived
creditworthiness or the issuer's ability to meet its obligations.
TREASURY CASH PORTFOLIO. Treasury Cash Portfolio seeks to attain its investment
objective by investing substantially all of its assets in Treasury Securities
and in repurchase agreements backed by Treasury Securities.
GOVERNMENT PORTFOLIO. Government Portfolio seeks to attain its investment
objective by investing substantially all of its assets in U.S. Government
Securities. The Portfolio invests with a view toward providing income that is
generally considered exempt from state and local income taxes.
Among the U.S. Government Securities in which the Portfolio may invest are U.S.
Treasury Securities and obligations of the Farm Credit System, Farm Credit
System Financial Assistance Corporation, Federal Financing Bank, Federal Home
Loan Banks, General Services Administration, Student Loan Marketing Association,
and Tennessee Valley Authority. Income on these obligations and the obligations
of certain other agencies and instrumentalities is generally not subject to
state and local income taxes by United States law. Interestholders should
determine through consultation with their own tax advisers whether and to what
extent income from the Portfolio from interest received with respect to the
Portfolio's investments will subject the interestholder to state and local
income taxes. Interestholders similarly
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should determine whether the capital gain and other income from the Portfolio,
if any, Fund will subject the interestholder to state and local income taxes in
the shareholder's state.
The U.S. Government Securities in which the Portfolio may invest include
securities supported primarily or solely by the creditworthiness of the issuer.
There is no guarantee that the U.S. government will support securities not
backed by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than securities backed by the U.S. government's full faith
and credit.
GOVERNMENT CASH PORTFOLIO. Government Cash Portfolio seeks to attain its
investment objective by investing substantially all of its assets in U.S.
Government Securities and in repurchase agreements backed by U.S. Government
Securities. The U.S. Government Securities in which the Portfolio may invest
include Treasury Securities and securities supported primarily or solely by the
creditworthiness of the issuer, such as securities of the Federal National
Mortgage Association, Federal Home Loan Banks and Student Loan Marketing
Association. There is no guarantee that the U.S. Government will support
securities not backed by its full faith and credit. Accordingly, although these
securities have historically involved little risk of loss of principal if held
to maturity, they may involve more risk than securities backed by the U.S.
Government's full faith and credit.
CASH PORTFOLIO. Cash Portfolio seeks to attain its investment objective by
investing in a broad spectrum of money market instruments. The Portfolio may
invest in (i) obligations of United States financial institutions, (ii) U.S.
Government Securities and (iii) corporate debt obligations of domestic issuers.
Financial institution obligations include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of banks (including savings
banks and savings associations) and their foreign branches. The Portfolio limits
its investments in bank obligations to banks which at the time of investment
have total assets in excess of one billion dollars. Certificates of deposit
represent an institution's obligation to repay funds deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations
of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" without registration under
the Securities Act of 1933 (the "1933 Act"). These "restricted securities" are
restricted as to disposition under the Federal securities laws in that the sale
of these securities may not be made absent registration under the 1933 Act or an
appropriate exemption therefrom.
MUNICIPAL CASH PORTFOLIO. Municipal Cash Portfolio seeks to attain its
investment objective by investing substantially all of its assets in municipal
securities. The Portfolio attempts to maintain 100% of its assets invested in
federally tax-exempt municipal securities; during periods of normal market
conditions the Portfolio will have at least 80% of its net assets invested in
federally tax-exempt instruments the income from which may be subject to the
federal alternative minimum tax ("AMT").
The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.
When the assets and revenues of an issuer are separate from those of the
government creating the issuer and a security is backed only by the assets and
revenues of the issuer, the issuer and not the creating government is deemed to
be the sole issuer of the security. Similarly, in the case of a security issued
by or on behalf of public authorities to finance
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various privately operated facilities that is backed only by the assets and
revenues of the non-governmental user, the non-governmental user will be deemed
to be the sole issuer of the security.
THE SHORT-TERM MUNICIPAL SECURITIES MARKET. The Portfolio may invest a
substantial portion of its portfolio in municipal securities supported by credit
and liquidity enhancements (i.e., letters of credit not covered by federal
deposit insurance) or put or demand features of third party financial
institutions, generally domestic and foreign banks. The Portfolio's policy is to
purchase municipal securities with third party credit or liquidity support only
after the Adviser has considered the creditworthiness of the financial
institution providing the support and believes that the security presents
minimal credit risk. Such investments will expose the Portfolio to risks
pertaining to the banking industry, including the foreign banking industry such
as interest rate and credit risk.
The Portfolio may purchase variable rate demand notes ("VRDN") which are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer). They may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates
Tender option bonds (also referred to as certificates of participation) are
municipal securities with relatively long original maturities and fixed rates of
interest that are coupled with an agreement by a third party financial
institution to grant the security holders the option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. These bonds effectively
provide the holder with a demand obligation that bears interest at the
prevailing short-term municipal securities interest rate.
The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the Portfolio the right to sell the municipal security at a specified
price at any time before a specified date. The Portfolio will acquire puts only
to enhance liquidity, shorten the maturity of the related municipal security or
permit the Portfolio to invest its funds at more favorable rates. The Portfolio
may purchase municipal securities together with the right to resell them to the
seller or a third party at an agreed-upon price or yield within specified
periods prior to their maturity dates. Such a right to resell is commonly known
as a "stand-by commitment," and the aggregate price which the Portfolio pays for
securities with a stand-by commitment may be higher than the price which
otherwise would be paid. MUNICIPAL BOND AND NOTES. Municipal bonds are long term
fixed-income securities. "General obligation" bonds are secured by the issuer's
pledge of its full faith, credit and taxing power for the payment of principal
and interest. "Revenue" bonds are payable only from revenues derived from a
particular facility,class of facilities or the proceeds of a special excise or
other tax, but not from general tax revenues. "Moral obligation" bonds are
normally issued by special purpose public authorities. If the issuer is unable
to meet its obligations under the bonds from current revenues, it may draw on a
reserve fund that is backed by the moral commitment (but not the legal
obligation) of the state or municipality that created the issuer. The Portfolio
may invest in industrial development bonds, which in most cases are revenue
bonds. The payment of the principal and interest on these bonds is dependent
solely on the ability of an initial or subsequent user of the facilities
financed by the bonds to meet its financial obligations and the pledge, if any,
of real and personal property so financed as security for such payment.
Municipal notes, which may be either "general obligation" or "revenue"
securities, are short-term fixed income securities intended to fulfill
short-term capital needs of a municipality.
MUNICIPAL LEASES. Municipal leases are entered into by state and local
governments and authorities to acquire equipment and facilities such as fire and
sanitation vehicles, telecommunications equipment and other assets. Municipal
leases frequently have special risks not normally associated with other
municipal securities. Municipal leases (which normally provide for title to the
leased assets to pass eventually to the government issuer) have evolved as a
means for governmental issuers to acquire property and equipment without meeting
the constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis.
PARTICIPATION INTERESTS. The Portfolio may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.
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TAXABLE INVESTMENTS. The Portfolio may invest up to 20% of the value of its net
assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.
OTHER INVESTMENT POLICIES AND LIMITATIONS
All investment policies and limitations of a Portfolio that are designated as
fundamental, and each Portfolio's investment objective, may not be changed
without approval of the holders of a majority of the outstanding voting
interests (defined in the same manner as the phrase "vote of a majority of the
outstanding voting securities is defined in the 1940 Act) of the Portfolio. All
other investment policies and limitations of the Portfolios are not fundamental
and may be changed by the Board without interestholder approval. Except as
otherwise indicated herein or in Part B, investment policies of a Portfolio may
be changed by the Board without shareholder approval.
Each Portfolio is permitted to hold cash in any amount pending investment in
securities and may invest in other investment companies that intend to comply
with Rule 2a-7 and have substantially similar investment objectives and
policies. A further description of the Portfolios' investment policies is
contained in Part B.
BORROWING. As a fundamental policy, each Portfolio may borrow money for
temporary or emergency purposes (including the meeting of redemption requests),
but not in excess of 33 1/3% of the value of the Portfolio's total assets. As a
fundamental policy for Government Portfolio and as a nonfundamental policy for
each other Portfolio, borrowing for purposes other than meeting redemption
requests will not exceed 5% of the value of the Portfolio's total assets.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain credit risks not associated with direct investment in
securities. The Portfolios, however, intend to enter into repurchase agreements
only with sellers which the Adviser believes present minimal credit risks in
accordance with guidelines established by the Board. In the event that a seller
defaulted on its repurchase obligation, however, a Portfolio might suffer a
loss.
LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including repurchase agreements
not entitling the Portfolio to payment of principal within seven days. There may
not be an active secondary market for securities held by a Portfolio. The value
of securities that have a limited market tend to fluctuate more than those that
have an active market. The Adviser monitors the liquidity of the Portfolios'
investments, but there can be no guarantee that an active secondary market will
exist.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. In order to assure itself of being
able to obtain securities at prices which the Adviser believes might not be
available at a future time, the Adviser may purchase securities on a when-issued
or delayed delivery basis . Securities so purchased are subject to market price
fluctuation and no interest on the securities accrues to a Portfolio until
delivery and payment take place. Accordingly, the value of the securities on the
delivery date may be more or less than the purchase price. Commitments for
when-issued or delayed delivery transactions will be entered into only when a
Portfolio has the intention of actually acquiring the securities. Failure by the
other party to deliver a security purchased by a Portfolio may result in a loss
or missed opportunity to make an alternative investment.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Portfolios
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Securities
with
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ultimate maturities of greater than 397 days may be purchased only in accordance
with the provisions of Rule 2a-7. Under that Rule, only those long-term
instruments that have demand features which comply with certain requirements and
certain U.S. Government Securities may be purchased. Similar to fixed rate debt
instruments, variable and floating rate instruments are subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invest only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. In addition, these Portfolios limit their investments to those
permissible for Federally chartered credit unions under applicable provisions of
the Federal Credit Union Act and the applicable rules and regulations of the
National Credit Union Administration. Government Cash Portfolio limits its
investments to investments that are legally permissible for federally chartered
savings associations without limit as to percentage and to investments that
permit Portfolio interests to qualify as liquid assets and as short-term liquid
assets.
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MANAGEMENT
TRUSTEES AND OFFICERS
The business of the Trust is managed under the direction of the Board of
Trustees. Forum provides persons satisfactory to the Board to serve as officers
of the Trust. Part B contains general background information about each Trustee
and officer of the Trust.
ADVISORY AND ADMINISTRATIVE SERVICES
INVESTMENT ADVISER. The Adviser serves as investment adviser of each Portfolio
pursuant to investment advisory agreements between the Adviser and the Trust.
Subject to the general supervision of the Board, the Adviser makes investment
decisions for the Portfolios and monitors the Portfolios' investments. The
Adviser is required to furnish at its expense all services, facilities and
personnel necessary in connection with managing the Portfolios' investments and
effecting portfolio transactions for the Portfolios.
In addition to the Portfolios, the Adviser currently provides investment
advisory services to seven other mutual funds. Under supervision of the Adviser,
Mr. Anthony R. Fischer, Jr. acts as each Portfolio's portfolio manager pursuant
to a consulting agreement with the Adviser.
For its services to each of Treasury Cash Portfolio, Government Cash Portfolio
and Cash Portfolio, the Adviser receives an advisory fee based upon the total
average daily net assets of those Portfolios ("Total Portfolio Assets") that is
calculated at an annual rate on a cumulative basis as follows: 0.06% of the
first $200 million of Total Portfolio Assets, 0.04% of the next $300 million of
Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. For
its services to each of Government Portfolio and Municipal Cash Portfolio, the
Adviser receives an advisory fee at an annual rate of 0.05% of the average daily
net assets of each Portfolio.
ADMINISTRATION. Pursuant to an administrative agreement with the Trust, Forum
supervises the overall management of the Trust, including overseeing the Trust's
receipt of services, advising the Trust and the Trustees on matters concerning
the Trust and its affairs, and providing the Trust with general office
facilities and certain persons to serve as officers. For these services and
facilities, Forum receives a fee at an annual rate of 0.05% of the average daily
net assets of each Portfolio. Forum may, from time to time, from its own
resources pay a fee to broker-dealers or other persons for distribution or other
services related to the Portfolios.
Forum Accounting is the Trust's interestholder recordkeeper and fund accountant.
Forum Accounting is responsible for maintaining the accounts of interestholders
and calculating the Portfolios' net asset values and income, gain and other
allocations to interestholders. For these services, Forum Accounting receives a
fee at an annual rate of the lesser of 0.05% of the average daily net assets of
the Portfolio or $48,000 ($48,000 in the case of Government Portfolio and
Municipal Cash Portfolio) plus, for each interestholder in a Portfolio above one
(excluding Forum and its affiliates), $6,000 per year. In addition, Forum
Accounting may receive increased fees from a Portfolio depending on the number
and type of securities held by the Portfolio.
THE FORUM FINANCIAL GROUP OF COMPANIES. As of June 30, 1998 Forum acted as
administrator of registered investment companies with assets of approximately
$38 billion. The Adviser, Forum and Forum Accounting are indirect subsidiaries
of Forum Financial Group, LLC. Their principal business address is Two Portland
Square, Portland, Maine 04101. As of the date of this Memorandum, Forum
Financial Group, LLC was controlled by John Y. Keffer, an officer and Trustee of
the Trust.
CUSTODIANS. Imperial Trust Company serves as the custodian for each Portfolio .
The custodian may appoint certain subcustodians to custody the Portfolios'
securities and other assets.
EXPENSES. Each Portfolio is obligated to pay for all of its expenses. These
expenses include: governmental fees; interest charges; taxes; brokerage fees and
commissions; insurance premiums; investment advisory, custodial,
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administrative and accounting fees; compensation of the Trust's Trustees, costs
of membership in trade associations; and fees and expenses of independent
auditors and legal counsel to the Trust. Each Portfolio's expenses comprise
Trust expenses attributable to the Portfolio, which are allocated to the
Portfolio, and expenses not attributable to any portfolio of the Trust, which
are allocated among all portfolios in proportion to their average net assets or
as otherwise determined by the Trust's management.
All fees of the Adviser, Forum, Forum Accounting and the custodians are accrued
daily and paid monthly. Each service provider may elect to waive (or continue to
waive) all or a portion of its fees and may reimburse a Portfolio for certain
expenses. Any such waivers or reimbursements will have the effect of increasing
the Portfolio's performance for the period during which the waiver or
reimbursement is in effect. No fee waivers may be recouped at a later date.
SHARES OF BENEFICAL INTEREST AND OTHER SECURITIES
Under the Trust's Trust Instrument, the Trustees are authorized to issue
beneficial interests in separate subtrusts or "series" of the Trust. The Trust
currently has 21 series; the Trust reserves the right to create and issue
additional series.
Each interestholder in a Portfolio is entitled to participate equally in the
Portfolio's earnings and assets and to a vote in proportion to the amount of its
investment in the Portfolio or in the Trust as a whole. Investments in a
Portfolio may not be transferred, but an interestholder may withdraw all or any
portion of its investment at any time at net asset value ("NAV").
Investments in a Portfolio have no preemptive or conversion rights and are fully
paid and non assessable, except as set forth below. The Trust is not required
and has no current intention to hold annual meetings of interestholders, but the
Trust will hold special meetings of interestholders when in the Trustees'
judgment it is necessary or desirable to submit matters to an interestholder
vote. Generally, beneficial interests will be voted in the aggregate without
reference to a particular portfolio of the Trust, except if the matter affects
only one portfolio or if portfolio voting is required, in which case interests
will be voted separately by portfolio. Interestholders have certain rights to
remove one or more Trustees without a meeting by a declaration in writing. Upon
liquidation of a Portfolio, interestholders will be entitled to share pro rata
in the Portfolio's net assets available for distribution to investors.
A Portfolio's net income consists of (1) all dividends, accrued interest
(including original issue and market discount), net realized gains on the
Portfolio's assets and other income, less (2) all expenses, amortization of
premium, and net realized losses on the Portfolio's assets, all as determined in
accordance with generally accepted accounting principles in the United States.
All of a Portfolio's net income is allocated pro rata among the interestholders
in the Portfolio. Each Portfolio's net income generally is distributed to the
interestholders in the Portfolio on a daily basis.
The Portfolios are operated so that they will not be subject to any United
States federal income tax. Each interestholder in a Portfolio, however, may be
subject to tax on its proportionate share (as determined in accordance with the
Trust's Trust Instrument, the United States Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated thereunder) of the
Portfolio's ordinary income and capital gain. It is intended that each Portfolio
will be managed in such a way that an interestholder in the Portfolio will be
able to satisfy the requirements of Subchapter M of the Code (which pertains to
United States investment companies), assuming that the interestholder invested
all of its assets in the Portfolio.
PURCHASE OF SECURITIES
Beneficial interests in a Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. See "General Description of Registrant." All
investments in a Portfolio are made without a sales load, at the NAV next
determined after an order is received by the Portfolio.
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The NAV of each Portfolio is determined as of the close of the New York Stock
Exchange (usually 4:00, Eastern time) ("Valuation Time"), on all weekdays,
except New Year's Day, Martin Luther King, Jr. Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving, and Christmas(or the days on which they are observed)is closed
("Business Day").
Each investor in a Portfolio may add to or reduce its investment in a Portfolio
on any Business Day. Investments must be made by 2:00 p.m. Eastern time (12:00
p.m. in the case of Government Portfolio and Municipal Cash Portfolio) in order
to receive an allocation of the days' income.
At the Valuation Time on each Business Day, the value of each interestholder's
beneficial interest in a Portfolio is determined by multiplying the Portfolio's
NAV by the percentage, effective for that day, that represents that investor's
share of the aggregate beneficial interests in the Portfolio. Any additions to
or withdrawals of those interests which are to be effected on that day will then
be effected. Each investor's share of the aggregate beneficial interests in the
Portfolio then will be recomputed using the percentage equal to the fraction (i)
the numerator of which is the value of the investor's investment in the
Portfolio as of the Valuation Time on that day plus or minus, as the case may
be, the amount of any additions to or withdrawals from such investment effected
on that day and (ii) the denominator of which is the Portfolio's aggregate NAV
as of the Valuation Time on that day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate investments in
the Portfolio by all investors. The percentages so determined then will be
applied to determine the value of each investor's respective interest in the
Portfolio as of the Valuation Time on the following Business Day.
In order to more easily maintain a stable net asset value per share, each
Portfolio's portfolio securities are valued at their amortized cost (acquisition
cost adjusted for amortization of premium or accretion of discount) in
accordance with Rule 2a-7. The Portfolios will only value their portfolio
securities using this method if the Board believes that it fairly reflects the
market-based net asset value per share. The Portfolios' other assets, if any,
are valued at fair value by or under the direction of the Board.
There is no minimum initial or subsequent investment in a Portfolio. Because
each Portfolio intends to be as fully invested at all times as is reasonably
practicable in order to enhance the return on its assets, investments must be
made in federal funds (i.e., monies credited to the account of the Portfolios'
custodian by a Federal Reserve Bank) and in U.S. dollars.
The Trust reserves the right to cease accepting investments in a Portfolio at
any time or to reject any investment order.
The exclusive placement agent for the Portfolios is FFSI. FFSI receives no
compensation for serving as the exclusive placement agent for the Trust.
Investor inquiries may be directed to FFSI.
REDEMPTIONS OR REPURCHASES
An interestholder in a Portfolio may withdraw all or any portion of its
investment in a Portfolio at the NAV next determined after a withdrawal request
in proper form is furnished by the interestholder to the Trust. The proceeds of
a withdrawal will be paid by a Portfolio in federal funds normally on the
Business Day after the withdrawal is effected, but in any event within seven
days. Investments in a Portfolio may not be transferred. The right of redemption
may not be suspended nor the payment dates postponed for more than seven days
except when the New York Stock Exchange is closed (or when trading thereon is
restricted) for any reason other than its customary weekend or holiday closings
or under any emergency or other circumstances as determined by the SEC.
Redemptions from a Portfolio may be made wholly or partially in portfolio
securities if the Board determines that payment in cash would be detrimental to
the best interests of the Portfolio. The Trust has filed an election with the
Commission pursuant to which each Portfolio will only consider effecting a
redemption in portfolio securities if the
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particular holder of beneficial interest is redeeming more than $250,000 or 1%
of the Portfolio's NAV, whichever is less, during any 90-day period.
PENDING LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Trust or the
Adviser is a party.
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PRIVATE PLACEMENT MEMORANDUM
(PART B)
TREASURY CASH PORTFOLIO
GOVERNMENT PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
MUNICIPAL CASH PORTFOLIO
JANUARY 1, 1999
This Part B to the Private Placement Memorandum ("Memorandum") relates to
beneficial interests in Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio (each a
"Portfolio"), separate diversified portfolios of Core Trust (Delaware) (the
"Trust"), an open-end, management investment company registered with the United
States Securities and Exchange Commission.
Investments in the Portfolios may only be made by certain institutional
investors, whether organized within or without the United States (excluding
individuals, S corporations, partnerships, and grantor trusts beneficially owned
by any individuals, S corporations, or partnerships). An investor in the
Portfolio must also be an "accredited investor," as that term is defined under
Rule 501(a) of Regulation D under the United States Securities Act of 1933, as
amended.
This Part B does not constitute an offer to sell, or the solicitation of an
offer to buy, beneficial interests in a Portfolio. An investor may subscribe for
a beneficial interest in a Portfolio by contacting Forum Fund Services, LLC, the
Trust's placement agent, at Two Portland Square, Portland, Maine 04101, (207)
879-1900, for a complete subscription package, including a subscription
agreement. The Trust and the placement agent reserve the right to refuse to
accept any subscription for any reason.
THE SECURITIES OF THE TRUST DESCRIBED IN THIS PRIVATE PLACEMENT MEMORANDUM HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER (1) THE TERMS OF THE TRUST
INSTRUMENT OF THE TRUST AND (2) THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
<PAGE>
TABLE OF CONTENTS
Page
General Information and History......................... 2
Investment Objectives and Policies...................... 3
Management of the Trust................................. 14
Control Persons and Principal Holders of Securities..... 15
Investment Advisory and Other Services.................. 16
Brokerage Allocation and Other Practices................ 18
Shares of Beneficial Interest and Other Securities...... 19
Purchase, Redemption and Pricing of Securities.......... 20
Tax Status.............................................. 20
Placement Agent......................................... 20
Calculations of Performance Data........................ 21
Financial Statements.................................... 22
Appendix A - Description of Securities Ratings..........
Appendix B -- Miscellaneous Tables...................... 23
GENERAL INFORMATION AND HISTORY
Each Portfolio commenced operations upon the contribution of all of the assets
of the series of another investment company. Those series became the first
interestholders in the Portfolio to which they contributed their assets.
Accordingly, for performance and certain other purposes the Portfolios may
utilize the history of those investment companies.
As used in this Part B, the following terms shall have the meanings listed:
"Adviser" shall mean Forum Investment Advisors, LLC, the Portfolios'
investment adviser.
"Board" shall mean the Board of Trustees of Core Trust.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Core Trust" shall mean Core Trust (Delaware).
"FFSI" shall mean Forum Financial Services, Inc., the Portfolios'
placement agent.
"Forum Accounting" shall mean Forum Accounting Services, LLC, the
Portfolios' interestholder recordkeeper and fund accountant.
"Forum" shall mean Forum Administrative Services, LLC, the Portfolios'
administrator.
"NRSRO" shall mean a nationally recognized statistical rating
organization as defined by the SEC.
"Portfolio" shall mean each of Treasury Cash Portfolio, Government
Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal Cash
Portfolio.
"SEC" shall mean the United States Securities and Exchange Commission.
"U.S. Treasury Securities" shall have the meaning ascribed thereto in
Part A of the Memorandum.
"U.S. Government Securities" shall have the meaning ascribed thereto in
Part A of the Memorandum.
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"1940 Act" shall mean the United States Investment Company Act of 1940,
as amended.
INVESTMENT OBJECTIVES AND POLICIES
Part A of the Memorandum contains information about the investment objectives,
policies and restrictions of each Portfolio. The following discussion is
intended to supplement the disclosure in Part A concerning the Portfolios'
investments, investment techniques and strategies and the risks associated
therewith. This Part B should be read only in conjunction with Part A.
INVESTMENT POLICIES
FEDERAL HOME LOAN MORTGAGE CORPORATION SECURITIES.
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio currently
are prohibited from purchasing any security issued by the Federal Home Loan
Mortgage Corporation. This does not prohibit the Portfolios from entering into
repurchase agreements collateralized with securities issued by the Federal Home
Loan Mortgage Corporation.
RATINGS AS INVESTMENT CRITERIA.
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's, A Division of
The McGraw Hill Companies ("S&P") and other NRSROs are private services that
provide ratings of the credit quality of debt obligations. A description of the
higher quality ratings assigned to debt securities by several NRSROs is included
in Appendix A to Part B. The Portfolios use these ratings in determining whether
to purchase, sell or hold a security. It should be emphasized, however, that
ratings are general and are not absolute standards of quality. Consequently,
securities with the same maturity, interest rate and rating may have different
market prices. Subsequent to its purchase by a Portfolio, an issue of securities
may cease to be rated or its rating may be reduced. The Adviser, and in certain
cases the Core Trust Board, will consider such an event in determining whether
the Portfolio should continue to hold the obligation. Credit ratings attempt to
evaluate the safety of principal and interest payments and do not evaluate the
risks of fluctuations in market value. Also, rating agencies may fail to make
timely changes in credit ratings in response to developments and events, so that
an issuer's current financial condition may be better or worse than the rating
indicates.
SMALL BUSINESS ADMINISTRATION SECURITIES.
Government Cash Portfolio and Cash Portfolio may purchase securities issued by
the Small Business Administration ("SBA"). SBA securities are variable rate
securities that carry the full faith and credit of the United States government,
and generally have an interest rate that resets monthly or quarterly based on a
spread to the Prime rate. SBA securities generally have maturities at issue of
up to 25 years. No Portfolio may purchase an SBA Security if, immediately after
the purchase, (i) the Portfolio would have more than 15% of its net assets
invested in SBA securities, (ii) the total unamortized premium on SBA Securities
with a premium held by the Portfolio divided by the sum of the par amount of all
SBA securities with a premium held by the portfolio would exceed 0.25% of the
Portfolios' net assets or (iii) the total unamortized discount on SBA Securities
with a discount held by the Portfolio divided by the sum of the par amount of
all SBA securities with a discount held by the portfolio would exceed 0.25% of
the Portfolios' net assets. Premium is the amount above par for which a security
is purchased and discount is the amount below par for which a security is
purchased.
MORTGAGE BACKED SECURITIES.
The Portfolios may purchase adjustable rate mortgage backed or other asset
backed securities (such as SBA securities) that are U.S. Government Securities
or, in the case of Treasury Cash Portfolio, that are U.S. Treasury Securities.
These securities directly or indirectly represent a participation in, or are
secured by and payable from, adjustable rate mortgage or other loans which may
be secured by real estate or other assets. Unlike traditional debt
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instruments, payments on these securities include both interest and a partial
payment of principal. Prepayments of the principal of underlying loans may
shorten the effective maturities of these securities. Some adjustable rate U.S.
Government Securities (or the underlying loans) are subject to caps or floors
that limit the maximum change in interest rate during a specified period or over
the life of the security.
Adjustable rate mortgage backed securities ("MBSs") are securities that have
interest rates that are reset at periodic intervals, usually by reference to
some interest rate index or market interest rate. Government Cash Portfolio and
Cash Portfolio will only invest in adjustable rate MBSs that are U.S. Government
Securities. MBSs represent an interest in a pool of mortgages made by lenders
such as commercial banks, savings associations, mortgage bankers and mortgage
brokers and may be issued by governmental or government-related entities or by
non-governmental entities such as commercial banks, savings associations,
mortgage bankers and other secondary market issuers.
Interests in pools of MBSs differ from other forms of debt securities which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. In contrast, MBSs
provide periodic payments which consist of interest and, in most cases,
principal. In effect, these payments are a "pass-through" of the periodic
payments and optional prepayments made by the individual borrowers on their
mortgage loans, net of any fees paid to the issuer or guarantor of such
securities. Additional payments to holders of MBSs are caused by prepayments
resulting from the sale of the underlying property or the refinancing or
foreclosure of the underlying mortgage loans. Such prepayments may significantly
shorten the effective maturities of MBSs, and occur more often during periods of
declining interest rates.
Although the rate adjustment feature of MBSs may act as a buffer to reduce sharp
changes in the value of MBSs, these securities are still subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rate is reset only periodically, changes
in the interest rate on MBSs may lag behind changes prevailing market interest
rates. Also, some MBSs (or the underlying mortgages) are subject to caps or
floors that limit the maximum change in interest rate during a specified period
or over the life of the security.
During the periods of declining interest rates, income to the Portfolios derived
from mortgages which are not prepared will decrease as the coupon rate resets
along with the decline in interest rates in contrast to the income on fixed-rate
mortgages, which will remain constant. At times, some of the MBSs in which the
Portfolios will invest will have higher-than-market interest rates, and will
therefore be purchased at a premium above their par value. Unscheduled
prepayments, which are made at par, will cause the Portfolios to suffer a loss
equal to the unamortized premium, if any.
During periods of rising interest rates, changes in the coupon rates of the
mortgages underlying the Portfolios' investments may lag behind changes in
market interest rates. This may result in a slightly lower value until the
coupons reset to market rates. Many MBSs in the Portfolios' portfolios will have
"caps" that limit the maximum amount by which the interest rate paid by the
borrower may change at each reset date or over the life of the loan and
fluctuation in interest rates above these levels could cause these securities to
"cap out" and to behave more like fixed-rate debt securities.
The Portfolios may purchase collateralized mortgage obligations ("CMOs"), which
are collateralized by MBSs or by pools of conventional mortgages. (See
"Investment by Shareholders that are Credit Unions - Government Cash Portfolio
and Treasury Cash Portfolio.") CMOs are typically structured with a number of
classes or series that have different maturities and are generally retired in
sequence. Each class of bonds receives periodic interest payments according to
the coupon rate on the bonds. However, all monthly principal payments and any
prepayments from the collateral pool are paid first to the "Class I"
bondholders. The principal payments are such that the Class 1 bonds will be
completely repaid no later than, for example, five years after the offering
date. Thereafter, all payments of principal are allocated to the next most
senior class of bonds until that class of bonds has been fully repaid. Although
full payoff of each class of bonds is contractually required by a certain date,
any or all classes of bonds may be paid off sooner than expected because of an
acceleration in pre-payments of the obligations comprising the collateral pool.
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Since the inception of the mortgage-related pass-through security in 1970, the
market for these securities has expanded considerably. The size of the primary
issuance market and active participation in the secondary market by securities
dealers and many types of investors make government and government-related
pass-through pools highly liquid.
Government or private entities may create new types of MBSs in response to
changes in the market or changes in government regulation of such securities. As
new types of these securities are developed and offered to investors, the
Adviser may, consistent with the investment objective and policies of a
Portfolio, consider making investments in such new types of securities.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES.
Each Portfolio may purchase securities on a when-issued or delayed delivery
basis. In those cases, the purchase price and the interest rate payable on the
securities are fixed on the transaction date and delivery and payment may take
place a month or more after the date of the transaction. At the time a Portfolio
makes the commitment to purchase securities on a when-issued pr delayed delivery
basis, the Portfolio will record the transactions as a purchase and thereafter
reflect the value each day of such securities in determining its net asset
value. If a Portfolio chooses to dispose of the right to acquire a when-issued
security prior to its acquisition, it could, as with the disposition of any
other portfolio obligation, incur a gain or loss due to market fluctuation.
Failure of an issuer to deliver the security may result in the Portfolio
incurring a loss or missing an opportunity to make an alternative investment.
When a Portfolio agrees to purchase a security on a when-issued or delayed
delivery basis, its custodian will set aside and maintain in a segregated
account cash, U.S. Government Securities or other liquid assets with a market
value at all times at least equal to the amount of its commitment.
ILLIQUID SECURITIES.
Each Portfolio may invest up to 10% of its net assets in illiquid securities.
The term "illiquid securities" for this purpose means repurchase agreements not
entitling the holder to payment of principal within seven days and securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market.
The Board has ultimate responsibility for determining whether specific
securities are liquid or illiquid. The Board has delegated the function of
making day-to-day determinations of liquidity to the Adviser and, with respect
to certain types of restricted securities which may be deemed to be liquid, has
adopted guidelines to be followed by the Adviser. The Adviser takes into account
a number of factors in reaching liquidity decisions, including but not limited
to (1) the frequency of trades and quotations for the security; (2) the number
of dealers willing to purchase or sell the security and the number of other
potential buyers; (3) the willingness of dealers to undertake to make a market
in the security; (4) the nature of the marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer; (5) whether the security is registered; and (6) if
the security is not traded in the United States, whether it can be freely traded
in a liquid foreign securities market. The Adviser monitors the liquidity of the
securities in each Portfolio's portfolio and reports periodically to the Board.
Certificates of deposit and fixed time deposits that carry an early withdrawal
penalty or mature in greater than seven days are treated by the Portfolio as
illiquid securities if there is no readily available market for the instrument.
REPURCHASE AGREEMENTS AND LENDING OF PORTFOLIO SECURITIES.
In order to obtain additional income, a Portfolio may from time to time lend
securities from its portfolio to brokers, dealers and financial institutions.
Securities loans must be callable at any time and must be continuously secured
by collateral from the borrower in the form of cash or U.S. Government
Securities with a market value, determined daily, at least equal to the value of
the securities being loaned. A Portfolio receives fees in respect of securities
loans from the borrower or interest from investing the cash collateral. A
Portfolio may pay fees to arrange the loans. The Portfolio may not lend
portfolio securities in an amount greater than 33 1/3% of the value of their
total assets.
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In connection with entering into repurchase agreements and securities loans, the
Portfolios require continual maintenance by Core Trust's custodian of the market
value of the underlying collateral in amounts equal to, or in excess of, the
repurchase price plus the transaction costs (including loss of interest) that
the Portfolios could expect to incur upon liquidation of the collateral if the
counterparty defaults. A Portfolio might suffer a loss to the extent that the
proceeds from the sale of the collateral are less than the repurchase price. In
the event of a counterparty's bankruptcy, a Portfolio might suffer a loss due to
a delay in or prevention from selling the collateral for the Portfolios benefit.
Failure by the other party to deliver a security purchased by a Portfolio may
result in a missed opportunity to make an alternative investment. The Adviser
monitors the creditworthiness of counterparties to these transactions under the
Core Trust Board's general supervision and pursuant to specific Core Trust Board
adopted procedures.
VARIABLE AND FLOATING RATE SECURITIES.
The yield of variable and floating rate securities varies in relation to changes
in specific money market rates, such as the Prime Rate. A "variable" interest
rate adjusts at predetermined intervals (for example, daily, weekly or monthly),
while a "floating" interest rate adjusts whenever a specified benchmark rate
(such as the bank prime lending rate) changes. These changes are reflected in
adjustments to the yields of the variable and floating rate securities, and
different securities may have different adjustment rates. Accordingly, as
interest rates increase or decrease, the capital appreciation or depreciation
may be less on these obligations than for fixed rate obligations. To the extent
that the Portfolios invest in long-term variable or floating rate securities,
the Adviser believes that the Portfolios may be able to take advantage of the
higher yield that is usually paid on long-term securities.
Cash Portfolio also may purchase variable and floating rate master notes of
corporations, which are unsecured obligations redeemable upon notice that permit
investment of fluctuating amounts at varying rates of interest pursuant to
direct arrangements with the issuer of the instrument. These obligations include
master demand notes that permit investment of fluctuating amounts at varying
rates of interest pursuant to direct arrangement with the issuer of the
instrument. The issuer of these obligations often has the right, after a given
period, to prepay their outstanding principal amount of the obligations upon a
specified number of days' notice. These obligations generally are not traded,
nor generally is there an established secondary market for these obligations. To
the extent a demand note does not have a seven day or shorter demand feature and
there is no readily available market for the obligation, it is treated as an
illiquid security.
INVESTMENT COMPANY SECURITIES.
In connection with managing their cash positions, the Portfolios may invest in
the securities of other investment companies that are money market funds within
the limits proscribed by the 1940 Act. Under normal circumstances, each
Portfolio may invest up to 15% of its assets in money market funds. Each
Portfolio only invests in money market funds when it has excess cash and the
Adviser believes that the investment is in the best interest of the Portfolio.
In addition to a Portfolio's expenses (including the various fees), as a
shareholder in another investment company, a Portfolio bears its pro rata
portion of the other investment company's expenses (including fees). Those
expenses are not part of the Portfolio's expense ratio, but rather are reflected
in the yield of the investment in the money market fund.
ZERO-COUPON SECURITIES
Government Portfolio may invest in zero-coupon securities such as Treasury bills
and separately traded principal and interest components of Treasury Securities
issued or guaranteed under the U.S. Treasury's Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program. These securities are
sold at original issue discount and pay no interest to holders prior to
maturity. Because of this, zero-coupon securities may be subject to greater
fluctuation of market value than the other securities in which the Portfolio may
invest. All zero-coupon securities in which the Portfolio invests will have a
maturity of less than 13 months.
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The Portfolio must include a portion of the original issue discount of
zero-coupon securities, if any, as income even though these securities do not
pay any interest until maturity. Because the Portfolio distributes all of its
net investment income, the Portfolio may have to sell portfolio securities to
distribute imputed income, which may occur at a time when the Adviser would not
have chosen to sell such securities and which may result in a taxable gain or
loss.
MUNICIPAL SECURITIES
Municipal securities are issued by the states, territories and possessions of
the United States, their political subdivisions (such as cities, counties and
towns) and various authorities (such as public housing or redevelopment
authorities), instrumentalities, public corporations and special districts (such
as water, sewer or sanitary districts) of the states, territories and
possessions of the United States or their political subdivisions. In addition,
municipal securities include securities issued by or on behalf of public
authorities to finance various privately operated facilities, such as industrial
development bonds or other private activity bonds that are backed only by the
assets and revenues of the non-governmental user (such as manufacturing
enterprises, hospitals, colleges or other entities).
Municipal securities historically have not been subject to registration with the
SEC, although there have been proposals which would require registration in the
future.
MUNICIPAL NOTES. Municipal notes, which may be either "general obligation" or
"revenue" securities are intended to fulfill the short-term capital needs of the
issuer and generally have maturities not exceeding one year. They include the
following: tax anticipation notes, revenue anticipation notes, bond anticipation
notes, construction loan notes and tax-exempt commercial paper. Tax anticipation
notes are issued to finance working capital needs of municipalities, and are
payable from various anticipated future seasonal tax revenues, such as income,
sales, use and business taxes. Revenue anticipation notes are issued in
expectation of receipt of other types of revenues, such as federal revenues
available under various federal revenue sharing programs. Bond anticipation
notes are issued to provide interim financing until long-term financing can be
arranged and are typically payable from proceeds of the long-term bonds.
Construction loan notes are sold to provide construction financing. After
successful completion and acceptance, many such projects receive permanent
financing through the Federal Housing Administration under the Federal National
Mortgage Association or the Government National Mortgage Association. Tax-exempt
commercial paper is a short-term obligation with a stated maturity of 365 days
or less. It is issued by agencies of state and local governments to finance
seasonal working capital needs or as short-term financing in anticipation of
longer term financing. Municipal notes also include longer term issues that are
remarketed to investors periodically, usually at one year intervals or less.
MUNICIPAL BONDS. Municipal bonds meet longer term capital needs of a municipal
issuer and generally have maturities of more than one year when issued. General
obligation bonds are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. General obligation bonds are secured by the issuer's pledge of its full
faith and credit and taxing power for the payment of principal and interest. The
taxes that can be levied for the payment of debt service may be limited or
unlimited as to rate or amount. Revenue bonds in recent years have come to
include an increasingly wide variety of types of municipal obligations. As with
other kinds of municipal obligations, the issuers of revenue bonds may consist
of virtually any form of state or local governmental entity. Generally, revenue
bonds are secured by the revenues or net revenues derived from a particular
facility, class of facilities, or, in some cases, from the proceeds of a special
excise or other specific revenue source, but not from general tax revenues.
Revenue bonds are issued to finance a wide variety of capital projects including
electric, gas, water and sewer systems; highways, bridges, and tunnels; port and
airport facilities; colleges and universities; and hospitals. Many of these
bonds are additionally secured by a debt service reserve fund which can be used
to make a limited number of principal and interest payments should the pledged
revenues be insufficient. Various forms of credit enhancement, such as a bank
letter of credit or municipal bond insurance, may also be employed in revenue
bond issues. Revenue bonds issued by housing authorities may be secured in a
number of ways, including partially or fully insured mortgages, rent subsidized
and/or collateralized mortgages, and/or the net revenues from housing or other
public projects. Some authorities provide further security in the form of a
state's ability (without obligation) to make up deficiencies in the
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debt service reserve fund. In recent years, revenue bonds have been issued in
large volumes for projects that are privately owned and operated, as discussed
below.
Municipal bonds are considered private activity bonds if they are issued to
raise money for privately owned or operated facilities used for such purposes as
production or manufacturing, housing, health care and other nonprofit or
charitable purposes. These bonds are also used to finance public facilities such
as airports, mass transit systems and ports. The payment of the principal and
interest on such bonds is dependent solely on the ability of the facility's
owner or user to meet its financial obligations and the pledge, if any, of real
and personal property as security for such payment.
While at one time the pertinent provisions of the Code permitted private
activity bonds to bear tax-exempt interest in connection with virtually any type
of commercial or industrial project (subject to various restrictions as to
authorized costs, size limitations, state per capita volume restrictions, and
other matters), the types of qualifying projects under the Code have become
increasingly limited, particularly since the enactment of the Tax Reform Act of
1986. Under current provisions of the Code, tax-exempt financing remains
available, under prescribed conditions, for certain privately owned and operated
facilities of organizations described in Section 501(c)(3) of the Code,
multi-family rental housing facilities, airports, docks and wharves, mass
commuting facilities and solid waste disposal projects, among others, and for
the tax-exempt refinancing of various kinds of other private commercial projects
originally financed with tax-exempt bonds. In future years, the types of
projects qualifying under the Code for tax-exempt financing could become
increasingly limited.
OTHER MUNICIPAL OBLIGATIONS. Other municipal obligations, incurred for a variety
of financing purposes, include municipal leases, which may take the form of a
lease or an installment purchase or conditional sale contract. Municipal leases
are entered into by state and local governments and authorities to acquire a
wide variety of equipment and facilities such as fire and sanitation vehicles,
telecommunications equipment and other capital assets. Municipal leases
frequently have special risks not normally associated with general obligation or
revenue bonds. Leases and installment purchase or conditional sale contracts
(which normally provide for title to the leased asset to pass eventually to the
government issuer) have evolved as a means for governmental issuers to acquire
property and equipment without being required to meet the constitutional and
statutory requirements for the issuance of debt. The debt-issuance limitations
of many state constitutions and statutes are deemed to be inapplicable because
of the inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
ALTERNATIVE MINIMUM TAX. Municipal securities are also categorized according to
(i) whether the interest is or is not includable in the calculation of
alternative minimum taxes imposed on individuals and corporations, (ii) whether
the costs of acquiring or carrying the bonds are or are not deductible in part
by banks and other financial institutions, and (iii) other criteria relevant for
Federal income tax purposes. Due to the increasing complexity of the Code and
related requirements governing the issuance of tax-exempt bonds, industry
practice has uniformly required as a condition to the issuance of such bonds,
but particularly for revenue bonds, an opinion of nationally recognized bond
counsel as to the tax-exempt status of interest on the bonds.
PUTS AND STANDBY COMMITMENTS ON MUNICIPAL SECURITIES. Municipal Cash Portfolio
may acquire "puts" with respect to municipal securities. A put gives the
Portfolio the right to sell the municipal security at a specified price at any
time on or before a specified date. The Portfolio may sell, transfer or assign a
put only in conjunction with its sale, transfer or assignment of the underlying
security or securities. The amount payable to the Portfolio upon its exercise of
a "put" is normally: (1) the Portfolio's acquisition cost of the municipal
securities (excluding any accrued interest which the Portfolio paid on their
acquisition), less any amortized market premium or plus any amortized market or
original issue discount during the period the Portfolio owned the securities,
plus (2) all interest accrued on the securities since the last interest payment
date during that period.
Puts may be acquired by the Portfolio to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of the
Portfolio's assets at a rate of return more favorable than that of the
underlying security. The Portfolio generally acquires puts only where the puts
are available without the payment of any direct
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<PAGE>
or indirect consideration. However, if necessary or advisable, the Portfolio may
pay for a put either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to the puts (thus reducing the
yield to maturity otherwise available for the same securities). The Portfolio
intends to enter into puts only with dealers, banks and broker-dealers which, in
the Adviser's opinion, present minimal credit risks.
Puts may, under certain circumstances, also be used to shorten the maturity of
underlying variable rate or floating rate securities for purposes of calculating
the remaining maturity of those securities and the dollar-weighted average
portfolio maturity of the Portfolio's assets.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment. The Portfolio's policy
is to enter into stand-by commitment transactions only with municipal securities
dealers which are determined to present minimal credit risks.
The acquisition of a stand-by commitment does not affect the valuation or
maturity of the underlying municipal securities which continue to be valued in
accordance with the amortized cost method. Stand-by commitments acquired by the
Portfolio are valued at zero in determining net asset value. When the Portfolio
pays directly or indirectly for a stand-by commitment, its cost is reflected as
unrealized depreciation for the period during which the commitment is held.
Stand-by commitments do not affect the average weighted maturity of the
Portfolio's portfolio of securities.
INVESTMENT LIMITATIONS
A fundamental investment policy of a Portfolio may only be changed by the
affirmative vote of the lesser of (i) more than 50% of the outstanding interests
of the Portfolio or (ii) 67% of the interests of the Portfolio present or
represented at an interestholders meeting at which the holders of more than 50%
of the outstanding interests of the Portfolio are present or represented. A
nonfundamental investment policy of a Portfolio may be changed by the Board
without interestholder approval
In addition each Portfolio has adopted a fundamental policy which provides that,
notwithstanding any other investment policy or restriction (whether
fundamental), the Portfolio may invest all of its assets in the securities of a
single pooled investment fund having substantially the same investment
objectives, policies and restrictions as the Portfolio.
Except as required by the 1940 Act, if a percentage restriction on investment or
utilization of assets is adhered to at the time an investment is made, a later
change in percentage resulting from a change in the market values of a
Portfolio's assets, the change in status of a security or purchases and
redemptions of shares will not be considered a violation of the limitation.
TREASURY CASH PORTFOLIO, GOVERNMENT CASH PORTFOLIO, CASH PORTFOLIO AND MUNICIPAL
CASH PORTFOLIO.
The Portfolios have adopted the following fundamental investment limitations.
Each Portfolio may not:
(1) DIVERSIFICATION. With respect to 75% of its assets, purchase a security
other than a U.S. Government Security if, as a result, more than 5% of
the Portfolio's total assets would be invested in the securities of a
single issuer.
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<PAGE>
(2) CONCENTRATION. Purchase securities if, immediately after the purchase,
more than 25% of the value of the Portfolio's total assets would be
invested in the securities of issuers having their principal business
activities in the same industry; provided, however, that there is no
limit on investments in U.S. Government Securities.
(3) UNDERWRITING. Underwrite securities of other issuers, except to the
extent that the Portfolio may be considered to be acting as an
underwriter in connection with the disposition of portfolio securities.
(4) REAL ESTATE. Purchase or sell real estate or any interest therein,
except that the Portfolio may invest in debt obligations secured by
real estate or interests therein or issued by companies that invest in
real estate or interests therein.
(5) COMMODITIES. Purchase or sell physical commodities or contracts
relating to physical commodities, provided that currencies and
currency-related contracts will not be deemed to be physical
commodities.
(6) BORROWING. Borrow money, except for temporary or emergency purposes
(including the meeting of redemption requests) and except for entering
into reverse repurchase agreements, provided that borrowings do not
exceed 33 1/3% of the value of the Portfolio's total assets.
(7) SENIOR SECURITIES. Issue senior securities except as appropriate to
evidence indebtedness that the Portfolio is permitted to incur, and
provided that the Portfolio may issue shares of additional series or
classes that the Trustees may establish.
(8) LENDING. Make loans except for loans of portfolio securities, through
the use of repurchase agreements, and through the purchase of debt
securities that are otherwise permitted investments.
(9) THRIFT INVESTOR MATTERS. With respect to Government Cash Portfolio,
purchase or hold any security that (i) a Federally chartered savings
association may not invest in, sell, redeem, hold or otherwise deal
pursuant to law or regulation, without limit as to percentage of the
association's assets and (ii) pursuant to 12 C.F.R. Section 566.1 would
cause shares of the Portfolio not to be deemed to be short term liquid
assets when owned by Federally chartered savings associations.
The Portfolios have adopted the following nonfundamental investment limitations.
Each Portfolio may not:
(a) DIVERSIFICATION. With respect to 100% of its assets, purchase a
security other than a U.S. Government Security if, as a result, more
than 5% of the Portfolio's total assets would be invested in the
securities of a single issuer, unless the investment is permitted by
Rule 2a-7 under the 1940 Act.
(b) BORROWING. Purchase securities for investment while any borrowing
equaling 5% or more of the Portfolio's total assets is outstanding; and
if at any time the Portfolio's borrowings exceed the Portfolio's
investment limitations due to a decline in net assets, such borrowings
will be promptly (within three days) reduced to the extent necessary to
comply with the limitations. Borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's
total assets.
(c) SECURITIES WITH VOTING RIGHTS. Purchase securities that have voting
rights, except the Portfolio may invest in securities of other
investment companies to the extent permitted by the 1940 Act.
(d) MARGIN; SHORT SALES. Purchase securities on margin, or make short sales
of securities, except for the use of short-term credit necessary for
the clearance of purchases and sales of portfolio securities.
(e) LIQUIDITY. Acquire securities or invest in repurchase agreements with
respect to any securities if, as a result, more than 10% of the
Portfolio's net assets (taken at current value) would be invested in
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<PAGE>
repurchase agreements not entitling the holder to payment of principal
within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.
For purposes of limitation (2): (i) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (ii)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.
GOVERNMENT PORTFOLIO.
The Portfolio has adopted the following fundamental investment limitations. The
Portfolio may not:
(1) DIVERSIFICATION. With respect to 75% of its assets, purchase
securities, other than U.S. Government Securities, of any one issuer if
more than 5% of the value of the Portfolio's total assets would at the
time of purchase be invested in any one issuer.
(2) CONCENTRATION. Purchase securities, other than U.S. Government
Securities, if more than 25% of the value of the Portfolio's total
assets would be invested in securities of issuers conducting their
principal business activity in the same industry, provided that
consumer finance companies and industrial finance companies are
considered to be separate industries and that there is no limit on the
purchase of the securities of domestic commercial banks.
(3) UNDERWRITING. Act as an underwriter of securities of other issuers,
except to the extent that, in connection with the disposition of
portfolio securities, the Portfolio may be deemed to be an underwriter
for purposes of the Securities Act of 1933.
(4) REAL ESTATE. Purchase or sell real estate or any interest therein
(including limited partnership interests), except that the Portfolio
may invest in debt obligations secured by real estate or interests
therein or issued by companies that invest in real estate or interests
therein.
(5) COMMODITIES. Purchase or sell physical commodities or contracts
relating to physical commodities, provided that currencies and
currency-related contracts will not be deemed to be physical
commodities.
(6) BORROWING. Borrow money, except for temporary or emergency purposes
(including the meeting of redemption requests). Total borrowings may
not exceed 33 1/3% of the Portfolio's total assets and borrowing for
purposes other than meeting redemptions may not exceed 5% of the value
of each the Portfolio's total assets. Outstanding borrowings in excess
of 5% of the value of the Portfolio's total assets must be repaid
before any subsequent investments are made by the Portfolio.
(7) SENIOR SECURITIES. Issue senior securities except pursuant to Section
18 of the 1940 Act and except that the Portfolio may borrow money
subject to investment limitations specified in the Portfolio's
Prospectus.
(8) LENDING. Make loans, except that the Portfolio may (i) purchase debt
securities which are otherwise permissible investments, (ii) enter into
repurchase agreements and (iii) lend portfolio securities, but not in
an amount greater than 33 1/3% of the value of the Portfolio's total
assets.
.
(9) PLEDGING. Pledge, mortgage or hypothecate its assets, except to secure
permitted indebtedness. Collateralized loans of securities are not
deemed to be pledges or hypothecations for this purpose.
(10) OPTIONS. Write put and call options.
(11) INVESTING FOR CONTROL. Invest for the purpose of exercising control
over any person.
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<PAGE>
(12) RESTRICTED SECURITIES. Purchase restricted securities.
The Portfolio has adopted the following nonfundamental investment limitations.
The Portfolio may not:
(a) DIVERSIFICATION. With respect to 100% of its assets, purchase a
security other than a U.S. Government Security if, as a result, more
than 5% of the Portfolio's total assets would be invested in the
securities of a single issuer, unless the investment is permitted by
Rule 2a-7 under the 1940 Act.
(b) SECURITIES WITH VOTING RIGHTS. Purchase securities having voting
rights, except the Portfolio may invest in securities of other
investment companies to the extent permitted by the 1940 Act.
(c) MARGIN; SHORT SALES. Purchase securities on margin, or make short sales
of securities, except for the use of short-term credit necessary for
the clearance of purchases and sales of portfolio securities.
(d) LIQUIDITY. Acquire securities or invest in repurchase agreements with
respect to any securities if, as a result, more than 10% of the
Portfolio's net assets (taken at current value) would be invested in
repurchase agreements not entitling the holder to payment of principal
within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.
For purposes of limitation (2): (i) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (ii)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.
FINANCIAL INSTITUTION GUIDELINES
INVESTMENT BY SHAREHOLDERS THAT ARE BANKS - GOVERNMENT CASH PORTFOLIO.
Government Cash Portfolio invests only in instruments which, if held directly by
a bank or bank holding company organized under the laws of the United States or
any state thereof, would be assigned to a risk-weight category of no more than
20% under the current risk based capital guidelines adopted by the Federal bank
regulators (the "Guidelines"). In the event that the Guidelines are revised, the
Portfolio's portfolio will be modified accordingly, including by disposing of
portfolio securities or other instruments that no longer qualify under the
Guidelines. In addition, the Portfolio does not intend to hold in its portfolio
any securities or instruments that would be subject to restriction as to amount
held by a National bank under Title 12, Section 24 (Seventh) of the United
States Code. If the Portfolio's portfolio includes any instruments that would be
subject to a restriction as to amount held by a National bank, investment in the
Portfolio may be limited.
The Guidelines provide that shares of an investment fund are generally assigned
to the risk-weight category applicable to the highest risk-weighted security or
instrument that the fund is permitted to hold. Accordingly, Portfolio shares
should qualify for a 20% risk weighting under the Guidelines. The Guidelines
also provide that, in the case of an investment fund whose shares should qualify
for a risk weighting below 100% due to limitations on the assets which it is
permitted to hold, bank examiners may review the treatment of the shares to
ensure that they have been assigned an appropriate risk-weight. In this
connection, the Guidelines provide that, regardless of the composition of an
investment fund's assets, shares of a fund may be assigned to the 100%
risk-weight category if it is determined that the fund engages in activities
that appear to be speculative in nature or has any other characteristics that
are inconsistent with a lower risk weighting. The Adviser has no reason to
believe that such a determination would be made with respect to the Portfolio.
There are various subjective criteria for making this determination and,
therefore, it is not possible to provide any assurance as to how Portfolio
shares will be evaluated by bank examiners.
Before acquiring an interest (directly or indirectly), prospective investors
that are banks or bank holding companies, particularly those that are organized
under the laws of any country other than the United States or of any state,
territory or other political subdivision of the United States, and prospective
investors that are U.S. branches and
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<PAGE>
agencies of foreign banks or Edge Corporations, should consult all applicable
laws, regulations and policies, as well as appropriate regulatory bodies, to
confirm that an investment in Portfolio interests is permissible and in
compliance with any applicable investment or other limits.
Interests held by National banks are generally required to be revalued
periodically and reported at the lower of cost or market value. Such shares may
also be subject to special regulatory reporting, accounting and tax treatment.
In addition, a bank may be required to obtain specific approval from its board
of directors before acquiring an interest (either directly or indirectly) , and
thereafter may be required to review its investment for the purpose of verifying
compliance with applicable Federal banking laws, regulations and policies.
National banks generally must review their investment holding at least quarterly
to ensure compliance with established bank policies and legal requirements. Upon
request, the Portfolio will make available to its interestholders information
relating to the size and composition of its portfolio for the purpose of
providing interestholders with this information.
INVESTMENT BY SHAREHOLDERS THAT ARE CREDIT UNIONS - GOVERNMENT CASH PORTFOLIO
AND TREASURY CASH PORTFOLIO. Government Cash Portfolio and Treasury Cash
Portfolio limit their investments to investments that are legally permissible
for Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act (including 12 U.S.C. Section 1757(7), (8) and (15)) and the
applicable rules and regulations of the National Credit Union Administration
(including 12 C.F.R. Part 703, Investment and Deposit Activities), as such
statutes and rules and regulations may be amended. The Portfolios limit their
investments to U.S. Government Securities (including Treasury STRIPS) and
repurchase agreements fully collateralized by U.S. Government Securities.
Certain U.S. Government Securities owned by Government Cash Portfolio may be
mortgage or asset backed, but, except to reduce interest rate risk, no such
security will be (i) a stripped mortgage backed security ("SMBS"), (ii) a
collateralized mortgaged obligation ("CMO") or real estate mortgage investment
conduit ("REMIC") that meets any of the tests outlined in 12 C.F.R. Section
703.5(g) or (iii) a residual interest in a CMO or REMIC. In order to reduce
interest rate risk, Government Cash Portfolio may purchase a SMBS, CMO, REMIC or
residual interest in a CMO or REMIC but only in accordance with 12 C.F.R.
Section 703.5(i). Government Cash Portfolio has no current intention to make any
such investment. Each Portfolio also may invest in reverse repurchase agreements
in accordance with 12 C.F.R 703.4(e) to the extent otherwise permitted hereunder
and in the Prospectus.
INVESTMENTS BY SHAREHOLDERS THAT ARE SAVINGS ASSOCIATIONS - GOVERNMENT CASH
PORTFOLIO AND TREASURY CASH PORTFOLIO. Government Cash Portfolio limits its
investments to investments that are legally permissible for Federally chartered
savings associations without limit as to percentage under applicable provisions
of the Home Owners' Loan Act (including 12 U.S.C. Section 1464) and the
applicable rules and regulations of the Office of Thrift Supervision, as such
statutes and rules and regulations may be amended. In addition, the Portfolio
limits its investments to investments that are permissible for an open-end,
investment company to hold and would permit shares of the investment company to
qualify as liquid assets under 12 C.F.R. Section 566.1(g) and as short-term
liquid assets under 12 C.F.R. Section 566.1(h). These policies may be amended
only by approval of the Portfolio's interestholders.
MANAGEMENT OF THE TRUST
The Trustees and officers of the Trust and their principal occupations during
the past five years are set forth below. Each Trustee who is an "interested
person" (as defined by the 1940 Act) of the Trust is indicated by an asterisk.
John Y. Keffer,* Trustee, Chairman and President (age 55)
President, Forum Financial Group, LLC (mutual fund services company
holding company). Mr. Keffer is also a director and/or officer of
various registered investment companies for which the various Forum
Financial Group of Companies provides services. His address is Two
Portland Square, Portland, Maine 04101.
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Costas Azariadis, Trustee (age 55)
Professor of Economics, University of California, Los Angeles, since
July 1992. His address is Department of Economics, University of
California, Los Angeles, 405 Hilgard Avenue, Los Angeles, California
90024.
James C. Cheng, Trustee (age 55)
President of Technology Marketing Associates (a marketing consulting
company) since September 1991. His address is 27 Temple Street,
Belmont, Massachusetts02178.
J. Michael Parish, Trustee (age 54)
Partner at the law firm of Reid & Priest. Prior to 1995, Mr. Parish
was a partner at Winthrop Stimson Putnam & Roberts since 1989. His
address is 40 West 57th Street, New York, New York 10019.
Stacey Hong, Treasurer (age 32)
Director, Fund Accounting, Forum Financial Group, LLC, with which he
has been associated since April 1992. Mr. Hong also serves as an
officer of various registered investment companies for which the
various Forum Financial Group of Companies provides services. His
address is Two Portland Square, Portland, Maine 04101.
David I. Goldstein, Vice President and Secretary (age 36)
General Counsel, Forum Financial Group, LLC, with which he has been
associated since 1991. Mr. Goldstein also serves as an officer of
various registered investment companies for which the various Forum
Financial Group of Companies provides services. His address is Two
Portland Square, Portland, Maine 04101.
Thomas G. Sheehan, Vice President and Assistant Secretary (age 43)
Director, Relationship Management, Forum Financial Group, LLC, with
which he has been associated since October, 1993. Prior thereto, Mr.
Sheehan was a Special Counsel in the Division of Investment Management
of the U.S. Securities and Exchange Commission in Washington, D.C. His
address is Two Portland Square, Portland, Maine 04101.
Pamela J. Wheaton, Assistant Treasurer (age 38)
Senior Manager, Fund Accounting, Forum Financial Group, LLC, with which
she has been associated since 1989. Ms. Wheaton is also an officer of
other registered investment companies for which the Forum Financial
Group of Companies provides services. Her address is Two Portland
Square, Portland, Maine 04101.
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Leslie K. Klenk, Assistant Secretary (age 34)
Assistant Counsel, Forum Financial Group, LLC, with which she has been
associated since April 1998. Prior thereto, Ms. Klenk was Vice
President and Associate General Counsel at Smith Barney Inc. Ms. Klenk
is also an officer of other registered investment companies for which
the Forum Financial Group of Companies provides services. Her address
is Two Portland Square, Portland, Maine 04101.
Pamela Stutch, Assistant Secretary (age 31)
Fund Administrator, Forum Financial Group, LLC, with which she has been
associated since May 1998. Prior thereto, Ms. Stutch attended Temple
University School of Law and graduated in 1997. Ms. Stutch was as a
legal intern for the Maine Department of the Attorney General. Ms.
Stutch is also an officer of other registered investment companies for
which the Forum Financial Group of Companies provides services Her
address is Two Portland Square, Portland, Maine 04101.
Each Trustee of the Trust is paid $1,000 for each meeting of the Board attended
(whether in person or by electronic communication) plus $100 for each active
portfolio of the Trust and is paid $1000 for each committee meeting attended on
a date when a Board meeting is not held. As of August 31, 1998, there were
twenty-one active portfolios of Core Trust. Trustees are also reimbursed for
travel and related expenses incurred in attending meetings of the Board. No
officer of the Trust is compensated or reimbursed for expenses by the Trust.
Since commencement of the Trust's operations, Mr. Keffer has not accepted any
fees for his services as Trustee. Trustee expenses were less than $5,000 for the
twelve months ended August 31, 1998.
The following table provides the aggregate compensation paid to each trustee of
the Trust for the twelve months ended August 31, 1998. The Trust has not adopted
any form of retirement plan covering trustees or officers of the Trust.
<TABLE>
<S> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Azariadis $1,264 None None $1,264
Mr. Parish $1,264 None None $1,264
Mr. Cheng $1,264 None None $1,264
Mr. Keffer None None None None
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Treasury Cash Fund, Government Cash Fund and Cash Fund, separate series of
Monarch Funds, a Delaware business trust registered with the SEC as an open-end,
management investment company, invest all of their investable assets in Treasury
Cash Portfolio, Government Cash Portfolio and Cash Portfolio, respectively, and,
as of November 1, 1998, may be deemed to control those Portfolios.
Daily Assets Government Fund, Daily Assets Treasury Obligations Fund, and Daily
Assets Municipal Fund, separate series of Forum Funds, a Delaware business trust
registered with the SEC as an open-end, management investment company, invest
all of their investable assets in Government Portfolio, Treasury Cash Portfolio,
and Municipal Cash Portfolio and, as of November 1, 1998, may be deemed to
control those Portfolio.
Each investment company that is registered under the 1940 Act and that invests
in a Portfolio has informed the Trust that whenever it or its separate series is
requested to vote on matters pertaining to a Portfolio, it will hold a meeting
of its shareholders and will cast its vote as instructed by its shareholders in
accordance with applicable law. This only applies to matters for which the
investment company would be required to have a shareholder meeting if it
directly held investment securities rather than invested in a Portfolio. It is
anticipated that any other similarly
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registered investment company (or series thereof) that may in the future invest
in a Portfolio will follow the same or a similar practice.
As of November 1, 1998, the officers and trustees of the Trust as a group owned
less than 1% of the outstanding interests of each Portfolio.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY SERVICES
Forum Investment Advisors, LLC acts as investment adviser to each Portfolio
pursuant to an investment advisory agreement with the Trust. The Adviser is
required to furnish at its expense all services, facilities and personnel
necessary in connection with managing the investments of, and effecting
portfolio transactions for, the Portfolios.
The investment advisory agreement for each Portfolio will continue in effect
only if such continuance is specifically approved at least annually by the Board
or by vote of the interestholders of the Portfolio, and, in either case, by a
majority of the Trustees who are not parties to the agreement or interested
persons of any such party, at a meeting called for the purpose of voting on the
agreement.
The investment advisory agreement provides that the Adviser shall not be liable
for any error of judgment or mistake of law in connection with its services,
except for willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties or by reason of reckless disregard of the Adviser's
obligations and duties under the agreement.
The investment advisory agreement with respect to a Portfolio is terminable
without the payment of penalty, (i) by the Board or by a vote of a majority of
the Portfolio's outstanding voting securities (as defined in the 1940 Act) on 60
days' written notice to the Adviser, or (ii) by the Adviser on 60 days' written
notice to the Trust. With respect to each Portfolio, the investment advisory
agreement terminates automatically upon its assignment.
The investment advisory agreement provides that the Adviser may render service
to others.
The Adviser was established in 1987 and is indirectly wholly-owned and
controlled by John Y. Keffer. In connection with the January 2, 1998 acquisition
of Linden Asset Management, Inc. ("Linden"), the former investment adviser of
each Portfolio, the Adviser has entered into a consulting agreement with a new
company solely owned by Anthony R. Fischer, Jr., former owner, president and
sole director of Linden, under which Mr. Fischer continues to provide portfolio
management services to the Portfolios under the supervision of the Adviser. Mr.
Fischer has over 20 years experience in managing pools of assets. He has managed
the Portfolios' (and prior to September 1995, the Portfolios' predecessor mutual
funds') assets since October 1992. Prior thereto, he was a Senior Vice President
and Treasurer of United California Savings Bank, Santa Ana, California from 1984
to 1989 and, immediately prior thereto, a Manager for five years at PaineWebber
Jackson & Curtis, New York, New York.
Table 1 in Appendix A shows the dollar amount of investment advisory fees paid
by the Portfolios.
ADMINISTRATIVE SERVICES
ADMINISTRATOR. Pursuant to an administration agreement with the Trust, Forum
supervises the overall administration of the Trust which includes, among other
responsibilities, overseeing the performance of administrative and professional
services rendered to the Trust by others, including its custodian, transfer
agent and fund accountant as well as legal and auditing services; preparing and
printing the periodic updating of the Trust's registration statement, tax
returns, and reports to interestholders and the SEC; preparing, filing and
maintaining the Trust's governing documents; preparing and disseminating
materials for meetings of the Board; and providing the Trust with general office
facilities.
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The administration agreement between Forum and the Trust will continue in effect
with respect to a Portfolio only if such continuance is specifically approved at
least annually by the Board or by a majority of voting securities of that
portfolio and, in either case, by a majority of the Trustees who are not parties
to the agreement or interested persons of any such party.
The administration agreement with respect to each Portfolio may be terminated
without the payment of any penalty, (i) by the Board or by vote of a majority of
the Portfolio's outstanding voting securities (as defined in the 1940) Act on 60
days' written notice to Forum or (ii) by Forum on 60 days' written notice to the
Trust. The administration agreement is not assignable by either party without
the written consent of the other party.
The administration agreement provides that Forum shall not be liable for any
action or inaction in the administration of the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of Forum's duties
or by reason of reckless disregard of Forum's obligations and duties under the
agreement.
At the request of the Board, Forum provides persons satisfactory to the Board to
serve as officers of the Trust. Those officers, as well as certain other
employees and Trustees of the Trust, may be directors, officers or employees of
Forum, the Adviser, FFSI or their affiliates.
Table 2 in Appendix A shows the dollar amount of administration fees paid by the
Portfolios. Prior to December 1, 1997, FFSI acted as administrator of the Trust
under an agreement substantially identical to the current administration
agreement between Forum and the Trust.
FUND ACCOUNTANT AND INTERESTHOLDER RECORDKEEPER
Pursuant to an Fund Accounting and Interestholder Recordkeeper Agreement, Forum
Accounting acts as interestholder recordkeeper and fund accountant for the
Portfolios. This agreement will continue in effect with respect to a Portfolio
until terminated; provided, that the continuance is specifically approved at
least annual by the Board. The agreement may be terminated with respect to a
Portfolio at any time, without the payment of any penalty by the Board or Forum
Accounting on 60 days' written notice The agreement may not be assigned by
either party except with the written consent of the other party.
Under its agreement, Forum Accounting prepares and maintains books and records
of each Portfolio on behalf of the Trust that are required to be maintained
under the 1940 Act, calculates the net asset value per share of each Portfolio
(and each investor therein) and prepares periodic reports to interestholders of
the Portfolios and the SEC. For services rendered to Treasury Cash Portfolio,
Government Cash Portfolio, and Cash Portfolio, Forum Accounting receives a fee
at an annual rate of the lesser of 0.05% of the average daily net assets of each
Portfolio or $48,000. For services rendered to Government Portfolio and
Municipal Cash Portfolio, Forum Accounting receives a fee of $48,000 per
portfolio. Should a Portfolio have greater than five interestholders, Forum
Accounting will receive an annual fee of $6,000 per every five additional
interestholders. . In addition, Forum Accounting is paid an additional $1,000
per month with respect to tax-free money market portfolios such as Municipal
Cash Portfolio, Portfolios with more than 25% of their total assets invested in
asset backed securities, Portfolios that have more than 100 security positions
and Portfolios that have a monthly portfolio turnover rate of 10% or greater.
Forum Accounting is required to use its best judgment and efforts in rendering
its services and is not liable to the Trust for any action or inaction in the
absence of bad faith, willful misconduct, gross negligence or reckless disregard
of its duties and obligations under the agreement. Forum Accounting is not
responsible or liable for any failure or delay in performance of its fund
accounting obligations arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control and the Trust has agreed to
indemnify and hold harmless Forum Accounting, its employees, agents, officers
and directors against and from any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, counsel fees and other
expenses of every nature and character arising out of or in any way related to
Forum Accounting's actions taken or failures to act with respect to a Portfolio
or based, if applicable, upon information, instructions or requests with respect
to a Portfolio given or made to Forum Accounting by an officer of the Trust duly
authorized. This indemnification does not apply to Forum
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Accounting's actions taken or failures to act in cases of Forum Accounting's own
bad faith, willful misconduct or gross negligence.
Table 3 in Appendix A shows the dollar amount of fees paid under the Fund
Accounting and Interestholder Recordkeeper Agreement with respect to each
Portfolio.
CUSTODIAN
Pursuant to a custodian contract with the Trust, Imperial Trust Company, 201 N.
Figueroa Street, Suite 610, Los Angeles, California 90012 acts as the custodian
of each Portfolio's assets. The custodians' responsibilities include
safeguarding and controlling the applicable Portfolios cash and securities and
determining income payable on and collecting interest on Portfolio investments.
The Trust pays a Imperial Trust Company a fee at an annual rate of 0.025% of the
average daily net assets of Municipal Cash Portfolio. The Trust also pays a fee
at an annual rate of 0.025% of the first $1.5 billion, 0.020% of the next $1.0
billion and 0.015% of the balance of the average daily net assets of all other
Portfolios. The custodian is in no way responsible for the investment of the
Portfolios' assets.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP serves as independent auditor for the Portfolios and has
so served since the Portfolios commenced operations.
EXPENSES
The Trust pays all of its expenses, including: interest charges, taxes,
brokerage fees and commissions; expenses of issue, repurchase and redemption of
shares; premiums of insurance for the Trust, its Trustees and officers and
fidelity bond premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's administrators, investment advisers, custodians,
interestholder recordkeepers and fund accountant; fees of pricing, interest,
distribution, credit and other reporting services; costs of membership in trade
associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and
maintaining its existence; costs of preparing and printing the Trust's offering
memoranda and interestholder reports and delivering them to interestholders;
expenses of meetings of interestholders and any proxy solicitations therefore;
costs of maintaining books and accounts and preparing tax returns; costs of
reproduction, stationery and supplies; fees and expenses of the Trust's
Trustees; compensation of the Trust's officers and employees and costs of other
personnel (who may be employees of the Adviser, Forum or their respective
affiliates) performing services for the Trust; costs of Trustee meetings; SEC
registration fees and related expenses (if any); and state or foreign securities
laws registration fees and related expenses (if any).
BROKERAGE ALLOCATION AND OTHER PRACTICES
Purchases and sales of portfolio securities for each Portfolio usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
Purchases from underwriters of portfolio securities include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
serving as market makers include the spread between the bid and asked price.
There usually are no brokerage commissions paid for any purchases. While the
Trust does not anticipate that the Portfolios will pay any amounts of brokerage
commissions, in the event a Portfolio pays brokerage commissions or other
transaction-related compensation, the payments may be made to broker-dealers who
pay expenses of the Portfolio that it would otherwise be obligated to pay
itself. Any transaction for which a Portfolio pays transaction-related
compensation will be effected at the best price and execution available, taking
into account the amount of any payments made on behalf of the Portfolio by the
broker-dealer effecting the transaction.
Allocations of transactions to dealers and the frequency of transactions are
determined for each Portfolio by the Adviser in its best judgment and in a
manner deemed to be in the best interest of shareholders of that Portfolio
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rather than by any formula. The primary consideration is prompt execution of
orders in an effective manner and at the most favorable price available to the
Portfolio.
As of August 31, 1998, several Portfolios maintained equity investments in
brokers/dealers (or their parent companies) used to effect portfolio
transactions. Table 4 of Appendix A provides details of these investments.
Investment decisions for the Portfolios will be made independently from those
for any other account or investment company that is or may in the future become
managed by the Adviser. If, however, a Portfolio and other investment companies
or accounts managed by the Adviser are contemporaneously engaged in the purchase
or sale of the same security, the transactions may be averaged as to price and
allocated equitably to each account. In some cases, this policy might adversely
affect the price paid or received by a Portfolio or the size of the position
obtainable for the Portfolio. In addition, when purchases or sales of the same
security for a Portfolio and for other investment companies managed by the
Adviser occur contemporaneously, the purchase or sale orders may be aggregated
in order to obtain any price advantages available to large denomination
purchases or sales.
For the Portfolios' fiscal years ended August 31, 1996,1997, and 1998 no
Portfolio paid any brokerage commission.
No portfolio transactions are executed with the Adviser, Forum or any of their
affiliates.
SHARES OF BENEFICIAL INTEREST AND OTHER SECURITIES
Under the Trust Instrument, the Trustees are authorized to issue beneficial
interest in one or more separate and distinct series. Investments in each
Portfolio have no preference, preemptive, conversion or similar rights and are
fully paid and nonassessable, except as set forth below. Each investor in a
Portfolio is entitled to a vote in proportion to the amount of its investment
therein. Investors in the Portfolios will all vote together in certain
circumstances (e.g., election of the Trustees and ratification of auditors, as
required by the 1940 Act and the rules thereunder). One or more Portfolios could
control the outcome of these votes. Investors do not have cumulative voting
rights, and investors holding more than 50 percent of the aggregate interests in
the Trust or in a Portfolio, as the case may be, may control the outcome of
votes. The Trust is not required and has no current intention to hold annual
meetings of investors, but the Trust will hold special meetings of investors
when (1) a majority of the Trustees determines to do so or (2) investors holding
at least 10 percent of the interests in the Trust (or a Portfolio) request in
writing a meeting of investors in the Trust (or Portfolio). Except for certain
matters specifically described in the Trust Instrument, the Trustees may amend
the Trust's Trust Instrument without the vote of investors.
The Trust, with respect to a Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved by
the Trust's Board. A Portfolio may be terminated (1) upon liquidation and
distribution of its assets, if approved by the vote of a majority of the
Portfolio's outstanding voting securities (as defined in the 1940 Act) or (2) by
the Trustees on written notice to the Portfolio's investors. Upon liquidation or
dissolution of any Portfolio, the investors therein would be entitled to share
pro rate in its net assets available for distribution to investors.
The Trust is organized as a business trust under the laws of the State of
Delaware. The Trust's interestholders are not personally liable for the
obligations of the Trust under Delaware law. The Delaware Business Trust Act
provides that an interestholder of a Delaware business trust shall be entitled
to the same limitation of liability extended to shareholders of private
corporations for profit. However, no similar statutory or other authority
limiting business trust interestholder liability exists in many other states,
including Texas. As a result, to the extent that the Trust or an interestholder
is subject to the jurisdiction of courts in those states, the courts may not
apply Delaware law, and may thereby subject the Trust to liability. To guard
against this risk, the Trust Instrument of the Trust disclaims liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation and instrument entered into by the Trust or
its Trustees, and provides for indemnification out of Trust property of any
interestholder held personally liable for the obligations of the Trust. Thus,
the risk of an interestholder incurring financial loss beyond his investment
because of shareholder liability is limited to circumstances in which (1) a
court refuses to apply Delaware law, (2) no contractual limitation of liability
is in
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effect, and (3) the Trust itself is unable to meet its obligations. In light of
Delaware law, the nature of the Trust's business, and the nature of its assets,
the Adviser believes that the risk of personal liability to a Trust
interestholder is remote.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES
Each Portfolio does not determine net asset value on the following holidays in
the United States: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving and Christmas.
Pursuant to Rule 2a-7 under the 1940 Act, the Board has established procedures
to stabilize each Portfolio's net asset value at $1.00 per unit. These
procedures include a review of the extent of any deviation of net asset value
per share as a result of fluctuating interest rates, based on available market
rates, from each Portfolio's $1.00 amortized cost price per unit. Should that
deviation exceed 1/2 of 1%, the Board will consider whether any action should be
initiated to eliminate or reduce material dilution or other unfair results to
interestholders. Such action may include redemption of units in kind, selling
portfolio securities prior to maturity, reducing or withholding distributions
and utilizing a net asset value per unit as determined by using available market
quotations.
In determining the appropriate market value of portfolio investments, the
Portfolios may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried at their face value.
TAX STATUS
Each Portfolio is classified for federal income tax purposes as a separate
partnership that will not be a "publicly traded partnership." As a result, no
Portfolio will be subject to federal income tax; instead, each investor in a
Portfolio will be required to take into account in determining its federal
income tax liability its share of the Portfolio's income, gains, losses,
deductions, and credits, without regard to whether it has received any cash
distributions from the Portfolio. Each Portfolio also will not be subject to
Delaware income or franchise tax.
Each investor in a Portfolio will be deemed to own a proportionate share of the
Portfolio's assets, and to earn a proportionate share of the Portfolio's income.
Each Portfolio intends to conduct its operations so that interestholders that
intend to qualify as regulated investment companies under the Code will be able
to satisfy all those requirements (assuming that the interestholder invests all
of its assets in a Portfolio).
Distributions to an investor from a Portfolio (whether pursuant to a partial or
complete withdrawal or otherwise) will not result in the investor's recognition
of any gain or loss for federal income tax purposes, except that (1) gain will
be recognized to the extent any cash that is distributed exceeds the investor's
basis for its interest in the Portfolio before the distribution, (2) income or
gain will be recognized if the distribution is in liquidation of the investor's
entire interest in the Portfolio and includes a disproportionate share of any
unrealized receivables held by the Portfolio, (3) loss will be recognized if a
liquidation distribution consists solely of cash and/or unrealized receivables,
and (4) gain or loss may be recognized on a distribution to an investor that
contributed property to the Portfolio. An investor's basis for its interest in a
Portfolio generally will equal the amount of cash and the basis of any property
it invests in the Portfolio, increased by the investor's share of the
Portfolio's net income and gains and decreased by (a) the amount of cash and the
basis of any property the Portfolio distributes to the investor and (b) the
investor's share of the Portfolio's losses.
PLACEMENT AGENT
Forum Financial Services, Inc., Two Portland Square, Portland, Maine 04101
serves as the Trust's placement agent. Forum receives no compensation for such
placement agent services.
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CALCULATIONS OF PERFORMANCE DATA
YIELD INFORMATION
Each Portfolio may provide current annualized and effective annualized yield
quotations. These quotations may from time to time be used in interestholder
reports or other communications to interestholders or investors. All performance
information supplied by a Portfolio is historical and is not intended to
indicate future returns.
In performance advertising, the Portfolios may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC Financial Data, Inc. or CDA/Wiesenberger
or other companies which track the investment performance of investment
companies ("Portfolio Tracking Companies"). The Portfolios may also compare any
of their performance information with the performance of recognized stock, bond
and other indexes. The Portfolios may also refer in such materials to mutual
Portfolio performance rankings and other data published by Portfolio Tracking
Companies. Performance advertising may also refer to discussion of a Portfolio
and comparative mutual Portfolio data and ratings reported in independent
periodicals, such as newspapers and financial magazines.
Although published yield information is useful to investors in reviewing
performance, interestholders should be aware that each Portfolio's yield
fluctuates from day to day and that the class' yield for any given period is not
an indication or representation by the Portfolio of future yields or rates of
return. Yields are not fixed or guaranteed, and an investment in a Portfolio is
not insured or guaranteed. Accordingly, yield information may not necessarily be
used to compare the Portfolio with investment alternatives which, like money
market instruments or bank accounts, may provide a fixed rate of interest. Also,
it may not be appropriate directly to compare a Portfolio's yield information to
similar information of investment alternatives which are insured or guaranteed.
Income calculated for the purpose of determining yield differs from income as
determined for other accounting purposes. Because of the different accounting
methods used, and because of the compounding assumed in yield calculations, the
quoted yield may differ from the rate of income reported in the Portfolio's
financial statements.
OTHER PERFORMANCE AND SALES LITERATURE MATTERS
Total returns quoted reflect all aspects of a Portfolio's return. Average annual
returns generally are calculated by determining the growth or decline in value
of a hypothetical historical investment in a Portfolio over a stated period, and
then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. While average annual returns are a convenient means of
comparing investment alternatives, investors should realize that the performance
is not constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Portfolios.
Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment, over such periods
according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return n = number of years
ERV = ending redeemable value: ERV is the value, at the end
of the applicable period, of a hypothetical $1,000 payment
made at the beginning of the applicable period.
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FINANCIAL STATEMENTS
The Schedules of Investments, Statements of Assets and Liabilities, Statements
of Operations, Statements of Changes in Net Assets, and notes thereto, of the
Portfolios for the fiscal year ended August 31, 1998 and the Independent
Auditors' Report thereon, attached hereto, are incorporated herein by reference.
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PRIVATE PLACEMENT MEMORANDUM
(PART B)
TREASURY CASH PORTFOLIO
GOVERNMENT PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
MUNICIPAL CASH PORTFOLIO
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
CORPORATE BONDS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S"). Bonds which are rated Aaa are
judged by Moody's to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Note: Those bonds in the Aa and A groups which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa1 and A1.
STANDARD AND POOR'S CORPORATION ("S&P"). Bonds rated AAA have the highest rating
assigned by S&P. Capacity to pay interest and repay principal is extremely
strong.
Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.
Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt rated in higher rated
categories.
Note: The ratings for AA and A may be modified by the addition of a plus (+) or
minus (-) sign to show the relative standing within the rating category.
FITCH IBCA, INC. ("FITCH"). AAA Bonds are considered to be investment grade and
of the highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA Bonds are considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in
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the AAA and AA categories are not significantly vulnerable to foreseeable future
developments, shorter-term debt of these issuers is generally rate F-1+.
A Bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA categories.
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COMMERCIAL PAPER
MOODY'S INVESTORS SERVICE, INC. Moody's two highest ratings for short-term debt,
including commercial paper, are Prime-1 and Prime-2. Both are judged investment
grade, to indicate the relative repayment ability of rated issuers.
Issuers rated Prime-1 have a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
o Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 by Moody's have a strong ability for repayment of senior
short-term debt obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
STANDARD AND POOR'S CORPORATION. S&P's two highest commercial paper ratings are
A and B. Issues assigned an A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety. An A-1 designation
indicates that the degree of safety regarding timely payment is either
overwhelming or very strong. Those issues determined to possess overwhelming
safety characteristics are denoted with a plus (+) sign designation. The
capacity for timely payment on issues with an A-2 designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1. A-3 issues have a satisfactory capacity for timely payment. They are,
however, somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations. Issues rated B
are regarded as having only an adequate capacity for timely payment. However,
such capacity may be damaged by changing conditions or short-term adversities.
FITCH IBCA, INC. Fitch's short-term ratings apply to debt obligations that are
payable on demand or have original maturities of generally up to three years,
including commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.
F-1+. Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
F-2. Issues assigned this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1 ratings.
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PRIVATE PLACEMENT MEMORANDUM
(PART B)
TREASURY CASH PORTFOLIO
GOVERNMENT PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
MUNICIPAL CASH PORTFOLIO
APPENDIX B - MISCELLANEOUS TABLES
TABLE 1 - INVESTMENT ADVISORY FEES
For fiscal year ended August 31, 1998 (June 25, 1998 to August 31, 1998 for
Municipal Cash Portfolio), the fees paid under the Investment Advisory Contract
with respect to the Portfolios were:
Treasury Cash Portfolio $55,735
Government Cash Portfolio $238,860
Cash Portfolio $158,716
Municipal Cash Portfolio $1,937
Government Portfolio $23,813
For the fiscal year ended August 31, 1997 (April 1, 1997 to August 31, 1997 for
Government Portfolio), the fees paid under the Investment Advisory Agreement
with respect to the Portfolios were:
Treasury Cash Portfolio $19,083
Government Portfolio $9,064
Government Cash Portfolio $196,857
Cash Portfolio $79,965
For the fiscal year ended August 31, 1996, the fees paid under the Investment
Advisory Agreement with respect to the Portfolios were:
Treasury Cash Portfolio $12,930
Government Cash Portfolio $156,552
Cash Portfolio $38,083
For the fiscal years ended March 31, 1997 and 1996, the fees paid under the
Investment Advisory Agreement with respect to Government Portfolio were: $20,637
and $69,466, respectively.
Prior to January 2, 1998, the Portfolios paid advisory fees to Linden Asset
Management, Inc., the Portfolios' investment adviser at that time.
TABLE 2 - ADMINISTRATION FEES
For the fiscal year ended August 31, 1998 (June 25, 1998 to August 31, 1998 for
Municipal Cash Portfolio), the fees payable by the Portfolios for administrative
services were:
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<TABLE>
<S> <C> <C> <C>
Accrued Fee Fee Waived Fee Paid
Treasury Cash Portfolio $74,964 $29,678 $45,286
Government Portfolio $28,796 $28,796 $0
Government Cash Portfolio $317,754 $0 $317,754
Cash Portfolio $212,800 $0 $212,800
Municipal Cash Portfolio $1,937 $1,937 $0
For the fiscal year ended August 31, 1997 (April 1, 1997 to August 31, 1997 for
Government Portfolio), the fees payable by the Portfolios for administrative
services were:
Accrued Fee Fee Waived Fee Paid
Treasury Cash Portfolio $24,287 $14,346 $9.941
Government Portfolio $18,128 $18,128 $0
Government Cash Portfolio $252,821 $0 $252,821
Cash Portfolio $92,652 $7,621 $85,031
For the fiscal year ended August 31, 1996, the fees payable by the Portfolios
for administrative services were:
Accrued Fee Fee Waived Fee Paid
Treasury Cash Portfolio $19,902 $17,696 $1,506
Government Cash Portfolio $230,634 $0 $230,634
Cash Portfolio $56,113 $12,698 $43,415
For the fiscal year ended March 31, 1997, the fees payable by Government
Portfolio for administrative services were:
Accrued Fee Fee Waived Fee Paid
Government Portfolio $41,274 $41,274 $0
TABLE 3 - FUND ACCOUNTING AND INTERESTHOLDER RECORDKEEPING FEES
For the fiscal year ended August 31, 1998 (June 25, 1998 to August 31, 1998 for
Municipal Cash Portfolio), the fees payable by the Portfolios under the Fund
Accounting and Interestholder Recordkeeping Agreement were:
Accrued Fee Fee Waived Fee Paid
Treasury Cash Portfolio $48,000 $0 $48,000
Government Portfolio $48,000 $37,946 $10,054
Government Cash Portfolio $48,000 $0 $48,000
Cash Portfolio $48,000 $0 $48,000
Municipal Cash Portfolio $8,800 $8,800 $0
For the fiscal year ended August 31, 1997 (April 1, 1997 to August 31, 1997 for
Government Portfolio), the fees payable by the Portfolios under the Fund
Accounting and Interestholder Recordkeeping Agreement were:
Accrued Fee Fee Waived Fee Paid
Treasury Cash Portfolio $24,279 $0 $24,279
Government Portfolio $20,000 $0 $20,000
Government Cash Portfolio $48,000 $0 $48,000
Cash Portfolio $48,000 $0 $48,000
For the fiscal year ended March 31, 1997, the fees payable by Government
Portfolio under the Fund Accounting and Interestholder Record Keeping Agreement
were:
Accrued Fee Fee Waived Fee Paid
Government Portfolio $48,000 $0 $48,000
For the fiscal year ended August 31, 1996, the fees payable by the Portfolios
under the Fund Accounting and Interestholder Recordkeeping Agreement were:
Accrued Fee Fee Waived Fee Paid
Treasury Cash Portfolio $28,518 $2,259 $26,259
Government Cash Portfolio $42,000 $0 $42,000
Cash Portfolio $42,000 $2,259 $39,741
</TABLE>
27
<PAGE>
TABLE 4 - PORTFOLIO HOLDINGS IN BROKER/DEALERS ($)
<TABLE>
<S> <C> <C>
VALUE
- --------------------------------------------------------------------------------------------- ------------------------
TREASURY CASH PORTFOLIO
- --------------------------------------------------------------------------------------------- ------------------------
Bank America Corp. 40,570
- --------------------------------------------------------------------------------------------- ------------------------
Donaldson, Lufkin & Jenrette Securities Corp. 40,000
- --------------------------------------------------------------------------------------------- ------------------------
GOVERNMENT CASH PORTFOLIO
- --------------------------------------------------------------------------------------------- ------------------------
Bear Stearns & Co., Inc. 60,000
- --------------------------------------------------------------------------------------------- ------------------------
Bankers Trust Co. 59,500
- --------------------------------------------------------------------------------------------- ------------------------
CASH PORTFOLIO
- --------------------------------------------------------------------------------------------- ------------------------
Bear Stearns & Co., Inc. 110,000
- --------------------------------------------------------------------------------------------- ------------------------
Bankers Trust New York Corp. 89,650
- --------------------------------------------------------------------------------------------- ------------------------
Salomon Smith Barney Holdings 24,832
- --------------------------------------------------------------------------------------------- ------------------------
Merrill Lynch & Co., Inc. 24,823
- --------------------------------------------------------------------------------------------- ------------------------
Bank of America 17,547
- --------------------------------------------------------------------------------------------- ------------------------
Prudential Mutual Fund Distributors, Inc. 24,461
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Part A: None
Part B: Audited Financial Statements for the fiscal year ended
August 31, 1998 including Schedule of Investments, Notes to
Schedules of Investments, Statements of Operations, Statement
of Changes in Net Assets, Notes to Financial Statements and
Independent Auditor's Report for Treasury Cash Portfolio,
Government Portfolio, Government Cash Portfolio, Cash
Portfolio and Municipal Cash Portfolio are filed herewith as
Exhibit (12) under Item 24(b).
(b) Exhibits:
(1) Trust Instrument of Registrant dated November 1, 1994 as
amended April 4, 1995 and August 30, 1995 (see Note 1).
(2) Not Applicable.
(3) Not Applicable.
(4) Not Applicable.
(5)(a) Investment Advisory Agreement between Registrant and Norwest
Investment Management, Inc. relating to Money Market
Portfolio, Prime Money Market Portfolio, Index Portfolio,
Small Company Stock Portfolio, Small Company Growth Portfolio,
Small Company Value Portfolio, Large Company Portfolio, Income
Equity Portfolio, Managed Fixed Income Portfolio, , Positive
Return Bond Portfolio, Stable Income Portfolio, Disciplined
Growth Portfolio, Small Cap Value Portfolio, Strategic Value
Bond Portfolio and Small Cap Index Portfolio dated October 1,
1997 (see Note 1).
(b) Investment Advisory Agreement between Registrant and Schroder
Capital Management International Inc. relating to
International Portfolio dated November 9, 1994 (see Note 2).
(c) Investment Advisory Agreement between Registrant and Forum
Investment Advisors, LLC relating to Treasury Cash Portfolio,
Government Portfolio, Government Cash Portfolio, Cash
Portfolio and Municipal Cash Portfolio dated December 30, 1997
(see Note 3).
(d) Investment Subadvisory Agreement between Norwest Investment
Management, Inc. and Crestone Capital Management, Inc.
relating to Small Company Stock Portfolio dated June 1, 1997
(see Note 3).
(e) Investment Subadvisory Agreement between Norwest Investment
Management, Inc. and Peregrine Capital Management, Inc.
relating to Small Company Growth Portfolio, Large Company
Growth Portfolio, Small Company Value Portfolio and Positive
Return Portfolio dated June 1, 1997 (see Note 3).
(f) Investment Subadvisory Agreement between Norwest Investment
Management, Inc. and Galliard Capital Management, Inc.
relating to Strategic Value Bond Portfolio dated October 1,
1997 (see Note 3).
<PAGE>
(g) Investment Subadvisory Agreement between Norwest Investment
Management, Inc. and Smith Asset Management Group relating to
Disciplined Growth Portfolio and Small Cap Value Portfolio
dated October 1, 1997 (see Note 3).
(6) Not required.
(7) Not Applicable.
(8) (a) Custodian Agreement between Registrant and Norwest Bank
Minnesota, N.A. dated as of November 9, 1994, as amended
June 1, 1997 (see Note 1).
(b) Custodian Agreement between Registrant and Imperial Trust
Company dated September 1, 1995, as amended August 31, 1998
(see Note 4).
(c) Custody Agreement between Morgan Stanley Trust Company and
Norwest Bank Minnesota, N.A. dated June 18, 1998, as amended
April 1, 1996 (see Note 1).
(9)(a) Administration Agreement between Registrant and Forum
Administrative Services, LLC relating to Prime Money Market
Portfolio, Money Market Portfolio, Positive Return Bond
Portfolio, Stable Income Portfolio, Strategic Value Bond
Portfolio, Managed Fixed Income Portfolio, Index Portfolio,
Income Equity Portfolio, Large Company Growth Portfolio,
Disciplined Growth Portfolio, Small Cap Index Portfolio, Small
Company Stock Portfolio, Small Company Growth Portfolio, Small
Company Value Portfolio, Small Cap Value Portfolio,
International Portfolio, Cash Portfolio, Government Cash
Portfolio, Treasury Cash Portfolio, Government Portfolio and
Municipal Cash Portfolio dated December 1, 1997 (see Note 3).
(b) Fund Portfolio and Unitholder Accounting Agreement between
Registrant and Forum Accounting Services, LLC relating to
Prime Money Market Portfolio, Money Market Portfolio, Positive
Return Bond Portfolio, Stable Income Portfolio, Strategic
Value Bond Portfolio, Managed Fixed Income Portfolio, Index
Portfolio, Income Equity Portfolio, Large Company Growth
Portfolio, Disciplined Growth Portfolio, Small Cap Index
Portfolio, Small Company Stock Portfolio, Small Company Growth
Portfolio, Small Company Value Portfolio, Small Cap Value
Portfolio, International Portfolio, Cash Portfolio, Government
Cash Portfolio, Treasury Cash Portfolio, Government Portfolio
and Municipal Cash Portfolio dated as of June 1, 1997 and
amended December 5, 1997 (see Note 3).
(c) Placement Agent Agreement between Registrant and Forum
Financial Services, Inc relating to Prime Money Market
Portfolio, Money Market Portfolio, Positive Return Bond
Portfolio, Stable Income Portfolio, Strategic Value Bond
Portfolio, Managed Fixed Income Portfolio, Index Portfolio,
Income Equity Portfolio, Large Company Growth Portfolio,
Disciplined Growth Portfolio, Small Cap Index Portfolio, Small
Company Stock Portfolio, Small Company Growth Portfolio, Small
Company Value Portfolio, Small Cap Value Portfolio, and
International Portfolio dated November 9, 1994 (Note 2).
(d) Form of Placement Agent Agreement between Registrant and Forum
Fund Services, LLC relating to Treasury Cash Portfolio,
Government Cash Portfolio, Cash Portfolio, Government
Portfolio, and Municipal Cash Portfolio dated September 1,
1995 (see Note 1).
(10) Not required.
(11) Not required.
(12)(a) Independent Auditors' Report of KPMG Peat Marwick LLP, Report
of Independent Accountants of PricewaterhouseCoopers LLP,
Statements of Assets and Liabilities, Statements of
<PAGE>
Operations, Statements of Changes in Net Assets, Financial
Highlights, Notes to Financial Statements, Schedules of
Investments and Notes to Schedules of Investments for Stable
Income Portfolio, Managed Fixed Income Portfolio, Positive
Return Bond Portfolio, Strategic Value Bond Portfolio, Index
Portfolio, Income Equity Portfolio, Disciplined Growth
Portfolio, Large Company Growth Portfolio, Small Cap Index
Portfolio, Small Company Stock Portfolio, Small Cap Value
Portfolio, Small Company Value Portfolio, Small Company Growth
Portfolio and International Portfolio dated May 31, 1998 (see
Note 1).
(b) Independent Auditors' Report of KPMG Peat Marwick LLP,
Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, Financial
Highlights, Notes to Financial Statements and Schedules of
Investments for Prime Money Market Portfolio and Money Market
Portfolio dated May 31, 1998 (see Note 1).
(c) Independent Auditors' Report of KPMG Peat Marwick LLP,
Schedule of Investments, Notes to Schedule of Investments,
Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, and Notes to
Financial Statements for Treasury Cash Portfolio, Government
Cash Portfolio, Government Portfolio, Cash Portfolio, and
Municipal Cash Portfolio (filed herewith).
(13) Not Applicable.
(14) Not Applicable.
(15) Not Applicable.
(16) Not Applicable.
(17) Financial Data Schedules (filed herewith).
(18) Not Applicable.
- -----------
Note 1 Exhibit incorporated by reference as filed in Amendment No. 13 via
EDGAR on September 28, 1998, accession number 0001004402-98-000524.
Note 2 Exhibit incorporated by reference as filed in Amendment No. 5 via EDGAR
on September 30, 1996, accession number 000912057-96-021568.
Note 3 Exhibit incorporated by reference as filed in Amendment No. 12 via
EDGAR on January 2, 1998, accession number 0001004402-98-000003.
Note 4 Exhibit incorporated by referenced as filed in Amendment No. 14 via
Edgar on November 30, 1998 accession number ____________________.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF NOVEMBER 19, 1998.
Title of Class of Shares
of Beneficial Interest Number of Holders
------------------------ -----------------
Treasury Cash Portfolio 2
Government Cash Portfolio 2
Cash Portfolio 2
<PAGE>
Government Portfolio 1
Municipal Cash Portfolio 1
Prime Money Market Portfolio 2
Money Market Portfolio 2
Positive Return Bond Portfolio 5
Stable Income Portfolio 3
Strategic Value Bond Portfolio 7
Managed Fixed Income Portfolio 5
Index Portfolio 7
Income Equity Portfolio 9
Large Company Growth Portfolio 8
Disciplined Growth Portfolio 6
Small Cap Index Portfolio 2
Small Company Stock Portfolio 8
Small Company Growth Portfolio 8
Small Company Value Portfolio 7
Small Cap Value Portfolio 9
International Portfolio 10
ITEM 27. INDEMNIFICATION.
The Trust currently holds a directors' and officers' errors and
omissions insurance policy jointly with Forum Funds, the terms of which are
consistent with industry standards. The policy provides generally for the
indemnification against loss by the insured in connection with a judgment of
liability in certain litigation arising from the insured's wrongful act or an
error, act or omission by a person for whom the insured becomes legally
responsible. The policy provides coverage in the amount of $6,000,000. The
policy premiums are allocated between the Trust and Forum Funds based upon the
pro rata share of assets of each insured. The Trust's trustees and officers also
are insured under the Trust's fidelity bond purchased pursuant to Rule 17j-1
under the Investment Company Act of 1940, as amended (the "Act").
The general effect of Article 5 of Registrant's Trust Instrument is to
indemnify existing or former trustees and officers of the Trust to the fullest
extent permitted by law against liability and expenses. There is no
indemnification if, among other things, any such person is adjudicated liable to
the Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. This description is modified in its entirety by the provisions of
Article 5 of Registrant's Trust Instrument contained in this Registration
Statement as Exhibit 1 and incorporated herein by reference.
Provisions of each of Registrant's investment advisory agreements
provide that the respective investment adviser shall not be liable for any
mistake of judgment or in any event whatsoever, except for lack of good faith,
provided that nothing shall be deemed to protect, or purport to protect, the
investment adviser against any liability to Registrant or to Registrant's
interestholders to which the investment adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the investment adviser's duties, or by reason of the investment adviser's
reckless disregard of its obligations and duties hereunder. This description is
modified in its entirety by the provisions of Registrant's Investment Advisory
Agreements contained in this Registration Statement as Exhibit 5 and
incorporated herein by reference.
As custodian to certain portfolios of the Trust, under Section 18 of
its custodian agreement Norwest is not liable for any action taken in good faith
reliance upon the advice or statements of certain experts. Under that agreement,
the Trust has agreed to indemnify and hold Norwest harmless for any loss, claim,
damage or expense arising out of the custodian relationship; provided such loss,
claim, damage or expense is not the direct result of the Custodian's negligence
or willful misconduct. This description is modified in its entirety by the
provisions of Registrant's Custodian Agreement contained in this Registration
Statement as Exhibit 8(a) and incorporated herein by reference.
<PAGE>
The indemnification provisions set forth under Section 1 paragraphs (f)
and (g) of the Placement Agent Agreement between FFSI (defined as "Forum" under
the agreement) and the Trust, specifically provide as follows:
(f) The Trust agrees to indemnify, defend and hold Forum, its several
officers and directors, and any person who controls Forum within the
meaning of Section 15 of the Securities Act of 1933 ("1933 Act") or
Section 20 of the Securities Exchange Act of 1934 (the "1934 Act") (for
purposes of this Section 1(f), collectively, "Covered Persons") free
and harmless from and against any and all claims, demands, liabilities
and any counsel fees incurred in connection therewith) which any
Covered Person may incur under the 1933 Act, the 1934 Act, common law
or otherwise, arising out of or based on any untrue statement of a
material fact contained in any registration statement, private
placement memorandum or other offering material ("Offering Material")
or arising out of or based on any omission to state a material fact
required to be stated in any Offering Material or necessary to make the
statements in any Offering Material not misleading, provided, however,
that the Trust's agreement to indemnify Covered Persons shall not be
deemed to cover any claims, demands, liabilities or expenses arising
out of any financial and other statements as are furnished in writing
to the Trust by Forum in its capacity as Placement Agent for use in the
answers to any items of any registration statement or in any statements
made in any Offering Material, or arising out of or based on any
omission or alleged omission to state a material fact in connection
with the giving of such information required to be stated in such
answers or necessary to make the answers not misleading; and further
provided that the Trust's agreement to Section 1(e) shall not be deemed
to cover any liability to the Trust or its investors to which a Covered
Person would otherwise be subject by reason or willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by
reason of a Covered Person's reckless disregard of its obligations and
duties under this Agreement. The Trust shall be notified of any action
brought against a Covered Person, such notification to be given by
letter or by telegram addressed to the Secretary of the Trust, promptly
after the summons or other first legal process shall have been duly and
completely served upon such Covered Person. The failure to notify the
Trust of any such action shall not relieve the Trust from any liability
except to the extent that the Trust shall have been prejudiced by such
failure, or from any liability that the Trust may have to the Covered
Person against whom such action is brought by reason of any such untrue
statement or omission, otherwise than on account of the Trust's
indemnity agreement contained in this Section 1(f). The Trust will be
entitled to assume the defense of any suit brought to enforce any such
claim, demand or liability, but in such case such defense shall be
conducted by counsel chosen by the Trust and approved by Forum, the
defendant or defendants in such suit shall bear the fees and expenses
of any additional counsel retained by any of them; but in case the
Trust does not elect to assume the defense of any such suit, or in case
Forum reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse the Covered Person named as defendant in such
suit, for the fees and expenses of any counsel retained by Forum or
such Covered Person. The Trust's indemnification agreement contained in
this Section (f) and the Trust's representations and warranties in this
Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of Covered
Persons, and shall survive the delivery of any Interests. This
agreement of indemnity will inure exclusively to Covered Persons and
their successors. The Trust agrees to notify Forum promptly of the
commencement of any litigation or proceedings against the Trust or any
of its officers or Trustees in connection with the issue and sale of
any Interests.
(g) Forum agrees to indemnify, defend and hold the Trust, its several
officers and trustees, and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
(for purposes of this Section 1(g) collectively, "Covered Persons")
free and harmless from and against any and all claims, demands,
liabilities and expenses (including the costs of investigating or
defending such claims, demands, liabilities and any counsel fees
incurred in connection therewith) that Covered Persons may incur under
the 1933 Act, the 1934 Act, or common law or otherwise, but only to the
extent that such liability or expense incurred by a Covered Person
resulting from such claims or demands shall arise out of or be based on
any untrue statement of a material fact contained in information
furnished in writing by Forum in its capacity as Placement Agent to the
Trust for use in the answers to any of the items of any registration
statement or in any statements in any Offering Material or shall arise
out of or be based on any omission to state a material fact in
connection with such information furnished in writing by Forum to the
Trust required to be stated in such answers or necessary to make such
information not misleading. Forum shall be notified of any action
brought against a Covered Person, such notification to be given by
letter or telegram addressed to Forum, Attention: Legal Department,
<PAGE>
promptly after the summons or other first legal process shall have been
duly and completely served upon such Covered Person. Forum shall have
the right of first control of the defense of the action with counsel of
its own choosing satisfactory to the Trust if such action is based
solely on such alleged misstatement or omission on Forum's part, and in
any other event each Covered Person shall have the right to participate
in the defense or preparation of the defense of any such action. The
failure to so notify Forum of any such action shall not relieve Forum
from any liability except to the extent that Forum shall have been
prejudiced by such failure, or from any liability that Forum may have
to Covered Persons by reason of any such untrue or alleged untrue
statement, or omission or alleged omission, otherwise than on account
of Forum's indemnity agreement contained in this Section 1(g).
Insofar as indemnification for liability arising under the 1933 Act may
be permitted to trustees, officers and controlling persons of the Trust pursuant
to the foregoing provisions, or otherwise, the Trust has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Trust of expenses incurred or paid by a trustee, officer
or controlling person of the Trust in the successful defense of any action, suit
or proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Trust will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.
(a) Norwest Investment Management, Inc.
The description of Norwest Investment Management, Inc. ("NIM") in Parts
A and B of the Registration Statement is incorporated by reference
herein.
The following are the directors and principal executive officers of
NIM, including their business connections, which are of a substantial
nature. The address of Norwest Corporation, the parent of Norwest Bank
Minnesota, N.A. ("Norwest Bank"), which is the parent of NIM, is
Norwest Center, Sixth Street and Marquette Avenue, Minneapolis, MN
55479. Unless otherwise indicated below, the principal business address
of any company with which the directors and principal executive
officers are connected is also Sixth Street and Marquette Avenue,
Minneapolis, MN 55479.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
P. Jay Kiedrowski Chairman, Chief Executive Officer, Norwest Investment Management,
President Inc.
------------------------------------ ----------------------------------
Executive Vice President, Employee Norwest Bank Minnesota, N.A.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
James W. Paulsen Senior Vice President, Chief Norwest Investment Management,
Investment Officer Inc.
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Stephen P. Gianoli Senior Vice President, Chief Norwest Investment Management,
Executive Officer Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David S. Lunt Vice President, Senior Portfolio Norwest Investment Management,
Manager Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Richard C. Villars Vice President, Senior Portfolio Norwest Investment Management,
Manager Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Lee K. Chase Senior Vice President Norwest Investment Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Andrew Owen Vice President Norwest Investment Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Eileen A. Kuhry Investment Compliance Specialist Norwest Investment Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
(b) Schroder Capital Management International Inc.
The description of Schroder Capital Management International Inc.
("SCMI") in Parts A and B of the Registration Statement is incorporated
by reference herein.
The following are the directors and principal officers of SCMI,
including their business connections of a substantial nature. The
address of each company listed, unless otherwise noted, is 787 Seventh
Avenue, 34th Floor, New York, NY 10019. Schroder Capital Management
International Limited ("Schroder Ltd.") is a United Kingdom affiliate
of Schroder which provides investment management services to
international clients located principally in the United States.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David M. Salisbury Chairman, Director SCMI
------------------------------------ ----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
Director Schroders plc.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Richard R. Foulkes Deputy Chairman, Director SCMI
------------------------------------ ----------------------------------
Deputy Chairman Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
John A. Troiano Chief Executive, Director SCMI
------------------------------------
----------------------------------
Chief Executive, Director Schroder Ltd.*
------------------------------------ ----------------------------------
----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Sharon L. Haugh Executive Vice President, Director SCMI
----------------------------------
------------------------------------ ----------------------------------
Director, Chairman Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman, Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Gavin D. L. Ralston Senior Vice President, Managing SCMI
Director
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Mark J. Smith Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Senior Vice President, Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Robert G. Davy Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jane P. Lucas Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
David R. Robertson Group Vice President SCMI
------------------------------------ ----------------------------------
Senior Vice President Schroder Fund Advisors Inc..
----------------------------------
------------------------------------
Director of Institutional Business Oppenheimer Funds, Inc.
resigned 2/98
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Michael M. Perelstein Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Senior Vice President, Director Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Managing Director MacKay Shields Financial
Corporation
resigned 11/96
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Louise Croset First Vice President, Director SCMI
------------------------------------ ----------------------------------
First Vice President Schroder Ltd.*
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Schroder Series Trust II
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Ellen B. Sullivan Group Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Catherine A. Mazza Group Vice President SCMI
------------------------------------ ----------------------------------
President, Director Schroder Fund Advisors Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Trustee and Officer Certain open-end management
investment companies for
which SCMI and/or its
affiliates provide investment
services.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Heather F. Crighton First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Ira Unschuld Group Vice President SCMI
------------------------------------ ----------------------------------
Officer Certain open-end management
investment companies
for which SCMI and/or
its affiliates provide
investment services.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Paul M. Morris Senior Vice President SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Schroder Capital Management Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Principal, Senior Portfolio Manager Weiss, Peck & Greer LLC
resigned 12/96
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Susan B. Kenneally First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jennifer A. Bonathan First Vice President, Director SCMI
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
First Vice President, Director Schroder Ltd.*
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
*Schroder Ltd and Schroders plc. are located at 31 Gresham St., London EC2V 7QA,
United Kingdom.
<PAGE>
(c) Crestone Capital Management, Inc.
The description of Crestone Capital Management, Inc. ("Crestone") in
Parts A and B of the Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
Crestone, including their business connections, which are of a
substantial nature. The address of Crestone is 7720 East Belleview
Avenue, Suite 220, Englewood Colorado 80111-2614 and, unless otherwise
indicated below, that address is the principal business address of any
company with which the directors and principal executive officers are
connected.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Kirk McCown President, Director Crestone Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
P. Jay Kiedrowski Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
Sixth and Marquette Ave., Chairman, Chief Executive Officer, Norwest Investment Management,
Minneapolis, MN 55479 President Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Executive Vice President, Employee Norwest Bank Minnesota, N.A.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Stephen P. Gianoli Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Sixth and Marquette Ave., Senior Vice President, Chief Norwest Investment Management,
Minneapolis, MN 55479 Executive Officer Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Susan Koonsman Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
1740 Broadway President Norwest Investments & Trust
Denver, CO 80274
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
(d) Peregrine Capital Management, Inc.
The description of Peregrine Capital Management, Inc. ("Peregrine") in
Parts A and B of the Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
Peregrine, including their business connections, which are of a
substantial nature. The address of Peregrine is LaSalle Plaza, 800
LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402 and, unless
otherwise indicated below, that address is the principal business
address of any company with which the directors and principal executive
officers are connected.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
James R. Campbell Director Peregrine Capital Management,
Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Sixth and Marquette Ave., President, Chief Executive Norwest Bank
Minneapolis, MN 55479-0116 Officer, Director
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Patricia D. Burns Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Tasso H. Coin Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
John S. Dale Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Julie M. Gerend Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
William D. Giese Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Daniel J. Hagen Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Ronald G. Hoffman Senior Vice President, Secretary Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Frank T. Matthews Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jeannine McCormick Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Barbara K. McFadden Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Robert B. Mersky Chairman, President, Chief Peregrine Capital Management,
Executive Officer Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Gary E. Nussbaum Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
James P. Ross Vice President Peregrine Capital Management,
Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President Norwest Bank (prior to November,
1996)
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jonathan L. Scharlau Assistant Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Jay H. Strohmaier Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Paul E. von Kuster Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
Name (Address if Different) Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Janelle M. Walter Assistant Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Paul R. Wurm Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
J. Daniel Vendermark Vice President Peregrine Capital Management,
Sixth and Marquette Avenue Inc.
Minneapolis, MN 55479-1013
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Albert J. Edwards Senior Vice President Peregrine Capital Management,
Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Vice President/Marketing U.S. Trust Company of California
(prior to June 9, 1997)
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
(e) Galliard Capital Management, Inc.
The description of Galliard Capital Management, Inc. ("Galliard") of
Parts A and B of the Registration Statement is incorporated by
reference herein.
The following are the directors and principal executive officers of
Galliard, including their business connections, which are of a
substantial nature. The address of Galliard is LaSalle Plaza, Suite
2060, 800 LaSalle Avenue, Minneapolis, Minnesota 55479 and, unless
otherwise indicated below, that address is the principal business
address of any company with which the directors and principal executive
officers are connected.
<TABLE>
q <S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name (Address if Different) Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
P. Jay Kiedrowski Chairman Galliard Capital Management, Inc.
------------------------------------ ----------------------------------
Sixth and Marquette Ave., Chairman, Chief Executive Officer, Norwest Investment Management,
Minneapolis, MN 55479 President Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Executive Vice President, Employee Norwest Bank Minnesota, N.A.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Richard Merriam Principal, Senior Portfolio Manager Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
John Caswell Principal, Senior Portfolio Manager Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Karl Tourville Principal, Senior Portfolio Manager Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Laura Gideon Senior Vice President of Marketing Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
<PAGE>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Leela Scattum Vice President of Operations Galliard Capital Management, Inc.
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
(f) Forum Investment Advisors, LLC
The description of Forum Investment Advisors, LLC of Parts A and B of
this Registration Statement are incorporated by reference herein.
The following are the members of Forum Investment Advisors, LLC, Two
Portland Square, Portland, Maine 04101, including their business
connections, which are of a substantial nature.
Forum Holdings Corp. I., Member.
Forum Trust, LLC., Member.
Both Forum Holdings Corp. I. and Forum Trust are controlled indirectly
by John Y. Keffer, Chairman and President of the Registrant. Mr.
Keffer is President of Forum Trust and Forum Financial Group, LLC.
Mr. Keffer is also a director and/or officer of various registered
investment companies for which the various Forum Financial Group's
operating subsidiaries provide services.
The following are the officers of Forum Investment Advisors, LLC,
including their business connections that are of a substantial nature.
Each officer may serve as an officer of various registered investment
companies for which the Forum Financial Group provides services.
<TABLE>
<S> <C> <C>
------------------------------------ ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------ ------------------------------------ ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Sara M. Morris Treasurer Forum Investment Advisors, LLC.
------------------------------------ ----------------------------------
Chief Financial Officer Forum Financial Group, LLC.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Other Forum affiliated companies
------------------------------------ ------------------------------------ ----------------------------------
----------------------------------- ------------------------------------- ----------------------------------
David I. Goldstein Secretary Forum Investment Advisors, LLC.
------------------------------------- ----------------------------------
General Counsel Forum Financial Group, LLC.
------------------------------------- ----------------------------------
------------------------------------- ----------------------------------
Officer Other Forum affiliated companies
----------------------------------- ------------------------------------- ----------------------------------
------------------------------------ ------------------------------------ ----------------------------------
Mark D. Kaplan Director Forum Investment Advisors, LLC.
------------------------------------ ------------------------------------ ----------------------------------
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Forum Financial Services, Inc. is the Registrant's placement
agent. Registrant has no underwriters
(b) Not Applicable.
(c) Not Applicable.
<PAGE>
ITEM 30. LOCATION OF BOOKS AND RECORDS.
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Act and the Rules thereunder are maintained
at the offices of Forum Financial Services, Inc., Forum Financial Corp. and
Forum Accounting Services, LLC, Two Portland Square, Portland, Maine 04101. The
records required to be maintained under Rule 31a-1(b)(1) with respect to
journals of receipts and deliveries of securities and receipts and disbursements
of cash are maintained at the offices of the Registrant's custodians, as listed
under "Custodian" in Part B to this Registration Statement. The records required
to be maintained under Rule 31a-1(b)(5), (6) and (9) are maintained at the
offices of Registrant's investment advisers, as listed in Item 28 hereof.
ITEM 31. MANAGEMENT SERVICES.
Not Applicable.
ITEM 32. UNDERTAKINGS.
Registrant undertakes to contain in its Trust Instrument provisions for
assisting shareholder communications and for the removal of trustees
substantially similar to those provided for in Section 16(c) of the Act, except
to the extent such provisions are mandatory or prohibited under applicable
Delaware law.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, as amended,
the Registrant has duly caused this amendment to its registration statement to
be signed on its behalf by the undersigned, duly authorized, in the City of
Portland and the State of Maine on the 30th day of November, 1998.
CORE TRUST (DELAWARE)
By: /s/ John Y. Keffer
---------------------------
John Y. Keffer
President
<PAGE>
INDEX TO EXHIBITS
12(c) Independent Auditors' Report of KPMG Peat Marwick LLP, Schedule
of Investments, Notes to Schedule of Investments, Statements of Assets
and Liabilities, Statements of Operations, Statements of Changes in Net
Assets, and Notes to Financial Statements.
17 Financial Data Schedules.
EXHIBIT 12(C)
TREASURY CASH PORTFOLIO
GOVERNMENT PORTFOLIO
GOVERNMENT CASH PORTFOLIO
CASH PORTFOLIO
MUNICIPAL CASH PORTFOLIO
ANNUAL REPORT
AUGUST 31, 1998
<PAGE>
- - ------------------------------------------------------------------------------
TREASURY CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- - ------------------------------------------------------------------------------
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- - -------------- ------------------------------- -------------
U.S. TREASURY BILLS (A) (69.6%)
$ 20,000,000 5.04%, 10/22/98 $ 19,857,342
15,000,000 5.09%, 12/24/98 14,758,462
150,000,000 5.43%, 9/15/98 149,683,250
-------------
Total U.S Treasury Bills 184,299,054
-------------
REPURCHASE AGREEMENTS (30.4%)
40,570,000 Bank of America, 5.78%, 9/1/98,
to be repurchased at $40,576,514;
Collateralized by $40,200,000 U.S.
Treasury Notes, 6.25%, 3/31/99 40,570,000
40,000,000 Donaldson, Lufkin & Jenrette
Securities Corp., 5.80%, 9/1/98
to be repurchased at $40,006,444;
Collateralized by $49,737,000 U.S.
Treasury Strips I/O, 4.87%,
11/15/09; $36,950,000 U.S. Treasury
Strips, I/O 5.37%, 2/15/17
40,000,000
-------------
Total Repurchase Agreements 80,570,000
-------------
Total Investments (B) (100.0%) $264,869,054
=============
(A) Annualized yields at time of purchase.
(B) Tax cost of investments is $264,869,054.
See Notes to Financial Statements and
Notes to Schedules of Investments. 15 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
GOVERNMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- - ------------------------------------------------------------------------------
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- - -------------- ------------------------------- ------------
U.S. GOVERNMENT SECURITIES (96.8%)
FEDERAL HOME LOAN BANK-
DISCOUNT NOTES (A) (30.1%)
$ 1,000,000 5.48%, 9/2/98 $ 999,851
3,500,000 5.49%, 9/8/98 3,496,325
2,000,000 5.48%, 9/10/98 1,997,310
7,500,000 5.49%, 10/1/98 7,466,376
------------
Total Federal Home Loan Bank-Discount Notes 13,959,862
------------
FEDERAL FARM CREDIT BUREAU-
DISCOUNT NOTES (A) (32.2%)
2,500,000 5.51%, 9/16/98 2,494,365
9,000,000 5.51%, 9/18/98 8,977,008
3,500,000 5.50%, 9/21/98 3,489,500
------------
------------
Total Federal Farm Credit Bureau-Discount Notes 14,960,873
------------
STUDENT LOAN MARKETING ASSOCIATION (B) (34.5%)
16,000,000 5.45%, 10/15/98 16,000,000
------------
Total U.S. Government Securities 44,920,735
------------
OTHER HOLDINGS (3.2%)
1,507,597 Federated U.S. Treasury Cash
Reserve, 5.11% 1,507,597
------------
Total Investments (C) (100.0%) $ 46,428,332
============
(A) Annualized yields at time of purchase.
(B) Certain securities are deemed to have a maturity remaining until the next
readjustment of the interest rate, the demand period or a combination of
the longer of the demand period or readjustment. The interest rates shown
reflect the rate in effect on August 31, 1998.
(C) Tax cost of investments is $46,428,348.
See Notes to Financial Statements and
Notes to Schedules of Investments. 16 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
GOVERNMENT CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FACE SECURITY FACE SECURITY
AMOUNT DESCRIPTION VALUE AMOUNT DESCRIPTION
- - -------------- ------------------------------- ------------- ------------- -------------------------------
U.S. GOVERNMENT SECURITIES (83.3%) SMALL BUSINESS ADMINISTRATION (CONCLUDED)
FEDERAL FARM CREDIT BANK (B) (2.5%) $ 1,739,665 Pool #503472, 6.25%, 8/25/21
$18,000,000 5.30%, 4/1/99 $ 18,000,000 1,067,337 Pool #503553, 6.13%, 11/25/21
-------------
5,037,804 Pool #503671, 6.13%, 3/25/22
FEDERAL HOME LOAN BANK- 1,873,064 POOL #503754, 6.13%, 5/25/22
DISCOUNT NOTES (A) (14.4%) 1,194,471 Pool #503780, 6.13%, 3/25/22
35,000,000 5.40%, 11/4/98 34,664,000 5,153,881 Pool #503882, 6.00%, 9/25/22
20,000,000 5.33%, 2/1/99 19,546,950 4,359,648 Pool #503892, 6.13%, 7/25/22
20,000,000 5.32%, 2/3/99 19,542,321 5,794,480 Pool #503909, 6.00%, 10/25/22
30,000,000 5.33%, 2/12/99 29,272,250 2,973,358 Pool #504015, 6.00%, 1/25/23
-------------
-------------
Total Federal Home Loan Bank-Discount Notes 103,025,521 5,254,135 Pool #504062, 6.00%, 2/25/23
-------------
5,327,203 Pool #504074, 6.00%, 2/25/23
FEDERAL NATIONAL MORTGAGE ASSOCIATION- 3,538,056 POOL #504203, 6.13%, 7/25/13
DISCOUNT NOTES (A) (50.9%) Total Small Business Administration
50,000,000 5.42%, 9/10/98 49,932,250
35,318,000 5.41%, 10/1/98 35,158,775 STUDENT LOAN MARKETING ASSOCIATION (0.7%)
35,000,000 5.58%, 10/16/98 34,763,750 5,000,000 5.26%, 1/13/99
50,000,000 5.44%, 10/20/98 49,629,777
50,000,000 5.36%, 11/23/98 49,382,111 Total U.S. Government Securities
28,058,000 5.36%, 1/4/99 27,535,810
50,000,000 5.35%, 2/8/99 48,811,112 REPURCHASE AGREEMENTS (16.7%)
40,000,000 5.54%, 2/22/99 38,971,467 59,500,000 Bankers Trust Co., 5.80%, 9/1/98,
30,000,000 5.55%, 2/22/99 29,227,875 to be repurchased at $59,509,586;
-------------
Total Federal National Mortgage Association- Collateralized by $52,102,000 U.S.
Discount Notes 363,412,927 Treasury Bonds, 6.50%, 11/15/26
-------------
60,000,000 Bear, Stearns & Co., Inc., 5.78%,
FEDERAL NATIONAL MORTGAGE ASSOCIATION (3.5%) 9/1/98, to be repurchased at
25,000,000 5.45%, 3/16/99 25,000,000 $60,009,633; Collateralized by
-------------
$19,380,000 U.S. Treasury Notes,
SMALL BUSINESS ADMINISTRATION (B) (11.3%) 6.13%, 12/31/01; $25,300,000 U.S.
308,114 Pool #500545, 8.38%, 3/25/03 308,114 Treasury Bonds, 10.63%, 8/15/15
315,984 Pool #500746, 7.75%, 11/25/01 315,984
916,751 Pool #501077, 7.00%, 11/25/14 923,821 Total Repurchase Agreements
2,465,304 Pool #501308, 7.00%, 10/25/15 2,518,496
2,811,122 Pool #501543, 6.88%, 7/25/16 2,822,268 Total Investments (C) (100.0%)
424,567 Pool #501628, 8.38%, 9/25/04 424,567
1,187,786 Pool #501690, 6.63%, 12/25/16 1,197,107 (A) Annualized yields at time of purchase.
1,927,861 Pool #501898, 6.75%, 7/25/17 1,936,198 (B) Certain securities are deemed to have a maturity remaining
5,581,658 Pool #502150, 6.50%, 2/25/18 5,664,269 until the next readjustment of the interest rate, the demand
305,607 Pool #502161, 6.50%, 2/25/18 306,264 period or a combination of the longer of the demand period or
2,752,875 Pool #502208, 6.50%, 2/25/18 2,797,075 readjustment. The interest rates shown reflect the rate in
1,620,060 Pool #502306, 6.50%, 2/25/18 1,644,270 effect on August 31, 1998.
1,977,575 Pool #502613, 6.50%, 4/25/19 1,977,575 (C) Tax cost of investments is $714,527,744.
1,092,686 Pool #503058, 6.38%, 7/25/15 1,092,686
1,706,555 Pool #503082, 6.38%, 8/25/20 1,706,555
1,580,958 Pool #503120, 6.38%, 11/25/20 1,580,958
461,643 Pool #503121, 6.38%, 8/25/15 461,643
2,696,003 Pool #503232, 6.13%, 12/25/15 2,696,003
950,552 Pool #503278, 6.13%, 2/25/21 950,518
2,900,520 Pool #503431, 6.25%, 7/25/21 2,902,187
3,035,608 Pool #503461, 6.25%, 9/25/21 3,037,480
</TABLE>
See Notes to Financial Statements
and Notes to Schedules of Investment. 17 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
FACE SECURITY FACE SECURITY
AMOUNT DESCRIPTION VALUE AMOUNT DESCRIPTION VALUE
- - -------------- ------------------------------- ------------ ------------ ------------------------------- --------------
U.S. GOVERNMENT SECURITIES (8.7%) COMMERCIAL PAPER (CONCLUDED)
FEDERAL HOME LOAN BANK- $ 10,000,000 International Lease Finance Corp.,
DISCOUNT NOTES (A) (3.2%) 5.56%, 10/14/98 $ 9,934,545
$ 20,000,000 5.32%, 2/3/99 $ 19,542,321 15,000,000 Merrill Lynch & Co., Inc.,
------------ 5.51%, 10/9/98 14,912,758
10,000,000 Merrill Lynch & Co., Inc., 5.50%,
SMALL BUSINESS ADMINISTRATION (B) (5.5%) 10/30/98 9,909,862
267,344 Pool #500536, 7.50%, 5/25/13 271,172 14,000,000 Monsanto Co., 5.49%, 10/8/98 13,921,005
510,939 Pool #500730, 8.38%, 2/25/04 518,751 11,000,000 Monsanto Co., 5.48%, 12/8/98 10,835,905
1,039,579 Pool #501733, 6.50%, 2/25/17 1,059,150 5,000,000 Monsanto Co., 5.47%, 1/28/99 4,886,802
1,075,499 Pool #501989, 6.63%, 10/25/12 1,081,013 25,000,000 Prudential Funding Corp., 5.47%,
289,483 Pool #502914, 6.50%, 3/25/15 289,765 1/21/99 24,460,597
1,846,572 Pool #503121, 6.38%, 9/25/15 1,846,572 25,000,000 Salomon Smith Barney Holdings,
4,645,734 Pool #503429, 6.25%, 6/25/16 4,645,734 5.51%, 10/15/98 24,831,638
758,902 Pool #503461, 6.25%, 9/25/21 759,377 28,000,000 Transamerica Financial Corp., 5.47%,
3,932,381 Pool #503553, 6.13%, 11/25/21 3,921,933 12/15/98 27,553,283
2,809,596 Pool #503754, 6.13%, 5/25/22 2,809,596 2,000,000 Transamerica Financial Corp., 5.47%,
4,925,248 Pool #503882, 6.00%, 9/25/22 4,919,307 1/26/99 1,955,330
--------------
--------------
5,454,681 Pool #503912, 6.00%, 10/25/22 5,451,390 Total Commercial Paper 335,991,351
--------------
5,680,350 Pool #504015, 6.00%, 1/25/23 5,678,613
------------
------------
Total Small Business Administration 33,252,373 CORPORATE NOTES (B) (4.1%)
------------
15,000,000 Bear, Stearns & Co., Inc., 5.64% V/R,
Total U.S. Government Securities 52,794,694 1/6/99 15,000,000
------------
10,000,000 Bear, Stearns & Co., Inc., 5.63% V/R,
BANKERS ACCEPTANCES (A) (2.9%) 4/6/99 10,000,000
--------------
--------------
11,000,000 Bank of America, 5.53%, 2/16/99 10,723,828 Total Corporate Notes 25,000,000
--------------
7,000,000 Bank of America, 5.53%, 2/17/99 6,823,207
------------
------------
Total Bankers Acceptances 17,547,035 REPURCHASE AGREEMENTS (28.2%)
------------
85,650,000 Bankers Trust New York Corp.,
CERTIFICATES OF DEPOSITS (B) (0.7%) 5.80%, 9/1/98, to be repurchased at
4,000,000 Bankers Trust New York Co., $85,663,799; Collateralized by U.S.
5.64%, 9/11/98 3,999,988 Treasury Bonds, 11.75%, 11/15/14;
------------ $75,000,000 U.S. Treasury Bonds,
6.50%, 11/15/26 85,650,000
COMMERCIAL PAPER (A) (55.4%)
25,000,000 American Express Credit Corp., 85,000,000 Bear, Stearns & Co., Inc., 5.78%, 9/1/98,
5.48%, 9/16/98 24,942,917 to be repurchased at $85,013,647;
25,000,000 Associates Corp. of North America, Collateralized by $6,035,000 U.S.
5.48%, 9/16/98 24,942,917 Treasury Notes, 6.13%, 12/31/01;
25,000,000 CIT Group Holdings, Inc., 5.49%, $50,000,000 U.S. Treasury Bonds,
9/30/98 24,889,438 10.63%, 8/15/15 85,000,000
--------------
25,000,000 Caterpillar Financial Services Corp.,
5.57%, 2/22/99 24,345,085 Total Repurchase Agreements 170,650,000
--------------
28,000,000 Ford Motor Credit Co., 5.47%,
2/8/99 27,319,290 Total Investments (C) (100.0%) $605,983,068
7,000,000 General Electric Capital Corp., 5.50%, ==============
9/14/98 6,986,097
20,000,000 General Electric Capital Corp., 5.47%, (A) Annualized yields at time of purchase.
1/20/99 19,571,518 (B) Certain securities are deemed to have a maturity remaining
25,000,000 General Motors Acceptance Corp., until the next readjustment of the interest rate, the demand
5.50%, 10/5/98 24,870,139 period or a combination of the longer of the demand period or
15,000,000 International Lease Finance Corp., readjustment. The interest rates shown reflect the rate in
5.49%, 10/5/98 14,922,225 effect on August 31, 1998.
(C) Tax cost of investments is $605,984,702.
</TABLE>
See Notes to Financial Statements and
Notes to Schedules of Investments. 18 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
MUNICIPAL CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
FACE SECURITY FACE SECURITY
AMOUNT DESCRIPTION VALUE AMOUNT DESCRIPTION VALUE
- - -------------- ------------------------------- ------------ ------------- ------------------------------ -------------
MUNICIPAL SECURITIES (98.0%) (A) MUNICIPAL SECURITIES (CONTINUED)
ALABAMA (4.8%) NEVADA (4.8%)
$ 1,000,000 Columbia, AL, IDA, Alabama $ 1,000,000 Clark County, NV, Airport RV, MBIA
Power Company, PCR RV insured, 3.15% V/R, 7/1/12 $ 1,000,000
-------------
Series D, 3.30% V/R, 10/1/22 $ 1,000,000
------------
NEW JERSEY (14.7%)
ARIZONA (4.8%) 1,000,000 New Jersey EDA, Water Facilities RV,
1,000,000 Arizona Health Facilities Authority Elizabethtown Water Co. Project,
RV, Pooled Loan Programs, Series B, AMBAC insured, 3.05%
FGIC insured, 3.30% V/R, 10/1/15 1,000,000 V/R, 6/1/27 1,000,000
------------
1,000,000 New Jersey State Highway Authority
CALIFORNIA (4.8%) Garden State Parkway, GO, Series
1,000,000 Los Angeles, CA, Tax & Revenue Parkway, 7.25%, 1/1/16 1,031,782
Anticipation Notes, 4,00%, 6/30/99 1,003,826 1,000,000 New Jersey State Turnpike Authority,
------------
Turnpike RV, Series D, FGIC
CONNECTICUT (4.8%) insured, 2.90% V/R, 1/1/18 1,000,000
-------------
1,000,000 Connecticut Health & Education 3,031,782
-------------
Facilities Authority, Yale University,
Series T, 3.20% V/R, 7/1/29 1,000,000 NEW YORK (9.6%)
------------
1,000,000 Long Island Power Authority, NY,
FLORIDA (9.6%) Electric System RV, Series 6, 3.30%
1,000,000 Alachua County, FL, Health Facilities V/R, 5/1/33 1,000,000
Authority, Health Facilities RV, 1,000,000 New York, NY, IDA RV, Field Hotel
Shands Teaching Hospital, Series Association, JFK Project, 2.90%
B, 3.22% V/R, 12/1/26 1,000,000 V/R, 12/1/15 1,000,000
-------------
1,000,000 Tampa, FL, Occupational License 2,000,000
-------------
Tax RV, Series A, FGIC-SPI
insured, 3.22%, 10/1/18 1,000,000 NORTH CAROLINA (8.8%)
------------
2,000,000 1,000,000 Charlotte, NC, Airport RV, Series A,
------------
MBIA insured, 3.25% V/R, 7/1/17 1,000,000
GEORGIA (4.8%) 800,000 Winston-Salem, NC, Water & Sewer
1,000,000 Burke County, GA, Development Systems RV, 3.20% V/R, 6/1/14 800,000
-------------
Authority, Pollution Control RV, 1,800,000
-------------
Ogelthorpe Power Corporation,
3.15% V/R, 1/1/16 1,000,000 PENNSYLVANIA (4.8%)
------------
1,000,000 Pennsylvania State HEHFA, Health
ILLINOIS (4.8%) Services RV, University of
1,000,000 Illinois HFA RV, Advocate Health Pennsylvania, 3.40% V/R, 1/1/24 1,000,000
-------------
Care, 3.25% V/R, 8/15/22 1,000,000
------------
Texas (7.3%)
KENTUCKY (4.8%) 500,000 State of Texas, HEFA RV, Higher
1,000,000 Kentucky EDA, Hospital Facilities Education Authority, 3.30% V/R,
RV, Health Alliance Project, Series 12/1/27 500,000
C, MBIA insured, 3.30% V/R, 1/1/22 1,000,000 1,000,000 State of Texas, GO Bonds, Veterans
------------
Housing Assistance Fund, Series
I, 3.15% V/R, 12/1/16 1,000,000
-------------
1,500,000
-------------
</TABLE>
See Notes to Financial Statements and
Notes to Schedules of Investments. 19 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
MUNICIPAL CASH PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1998 (Concluded)
- - ------------------------------------------------------------------------------
FACE SECURITY
AMOUNT DESCRIPTION VALUE
- - -------------- ------------------------------- ------------
MUNICIPAL SECURITIES (CONCLUDED)
WASHINGTON (4.8%)
1,000,000 Washington State, GO Bonds, Series
VR 96B, 3.40% V/R, 6/1/20 1,000,000
------------
Total Municipal Securities 20,335,608
------------
OTHER HOLDINGS (2.0%)
404,000 Federated Municipal Obligations
Fund - Institutional Shares, 3.40%404,000
------------
Total Investments (B) (100.0%) $ 20,739,608
============
(A) Certain securities are deemed to have a maturity remaining until the next
readjustment of the interest rate, the demand period or a combination of
the longer of the demand period or readjustment. The interest rates shown
reflect the rate in effect on August 31, 1998.
(B) Tax cost of investments is $20,739,608.
See Notes to Financial Statements and
Notes to Schedules of Investments. 20 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
NOTES TO SCHEDULES OF INVESTMENTS
- - ------------------------------------------------------------------------------
AMBAC American Municipal Bond Assurance Corporation
EDA Economic Development Authority
FFCB Federal Farm Credit Bureau
FGIC Financial Guaranty Insurance Company
FGIC-SPI Financial Guaranty Insurance Company-Securities Purchase, Inc.
FHLB Federal Home Loan Bank
GO General Obligation
HEFA Higher Education Facilities Authority
HEHFA Higher Education & Health Facilities Authority
HFA Housing Finance Authority
IDA Industrial Development Authority
MBIA Municipal Bond Insurance Association
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
RV Revenue Bonds
SLMA Student Loan Marketing Association
V/R Variable Rate
See Notes to Financial Statements. 21 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
TREASURY GOVERNMENT MUNICIPAL
CASH GOVERNMENT CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ----------------- ---------------- ---------------- -----------------
ASSETS:
Investments: (Note 2)
Securities $ 184,299,054 $ 46,428,332 $ 595,026,188 $ 435,333,068 $ 20,739,608
Repurchase agreements at cost 80,570,000 - 119,500,000 170,650,000 -
---------------- ----------------- ---------------- ---------------- -----------------
Total investments at value 264,869,054 46,428,332 714,526,188 605,983,068 20,739,608
Cash 18,156 - 12,272 17,591 1,659
Interest and other receivables 12,958 340,000 2,688,859 1,413,946 95,284
Organization costs, net of
amortization (Note 2) 479 - 8,779 2,374 -
---------------- ----------------- ---------------- ---------------- -----------------
Total assets 264,900,647 46,768,332 717,236,098 607,416,979 20,836,551
---------------- ----------------- ---------------- ---------------- -----------------
LIABILITIES:
Payable to adviser (Note 3) 7,678 1,844 24,524 18,592 881
Payable to administrator (Note 3) 30,255 - 34,722 26,323 -
Accrued expenses and other liabilities 17,767 3,502 52,495 31,220 1,196
---------------- ----------------- ---------------- ---------------- -----------------
Total liabilities 55,700 5,346 111,741 76,135 2,077
---------------- ----------------- ---------------- ---------------- -----------------
NET ASSETS $ 264,844,947 $ 46,762,986 $ 717,124,357 $ 607,340,844 $ 20,834,474
================ ================= ================ ================ =================
COMPONENTS OF NET ASSETS:
Interestholders capital 264,844,947 46,762,986 717,124,357 607,340,844 20,834,474
---------------- ----------------- ---------------- ---------------- -----------------
NET ASSETS $ 264,844,947 $ 46,762,986 $ 717,124,357 $ 607,340,844 $ 20,834,474
================ ================= ================ ================ =================
</TABLE>
See Notes to Financial Statements. 22 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR OR PERIOD ENDED AUGUST 31, 1998 (Note 1)
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
TREASURY GOVERNMENT MUNICIPAL
CASH GOVERNMENT CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ---------------- ----------------- ---------------- ---------------
INVESTMENT INCOME:
Interest income $ 8,226,210 $ 2,577,969 $ 35,902,478 $ 24,178,266 $ 126,858
----------------- ---------------- ----------------- ---------------- ---------------
EXPENSES:
Investment advisory (Note 3) 55,735 23,813 238,860 158,716 1,937
Administration (Note 3) 74,964 28,796 317,754 212,800 1,937
Custody 37,482 14,176 158,877 106,400 969
Accounting (Note 3) 48,000 48,000 48,000 48,000 8,800
Legal (Note 3) 3,826 2,943 4,848 4,551 5
Audit 9,522 15,000 22,255 17,758 9,500
Trustees 565 1,290 2,723 1,615 318
Rating fees 22,000 - - - -
Amortization of organization costs 239 - 4,390 1,187 -
Miscellaneous 2,259 4,169 6,661 5,331 23
----------------- ---------------- ----------------- ---------------- ---------------
Total expenses 254,592 138,187 804,368 556,358 23,489
Expenses reimbursed and fees
waived (Note 4) (29,678) (66,742) - - (19,842)
----------------- ---------------- ----------------- ---------------- ---------------
Net expenses 224,914 71,445 804,368 556,358 3,647
----------------- ---------------- ----------------- ---------------- ---------------
NET INVESTMENT INCOME 8,001,296 2,506,524 35,098,110 23,621,908 123,211
----------------- ---------------- ----------------- ---------------- ---------------
NET REALIZED GAIN (LOSS) ON
INVESTMENTS 9,432 (21,088) (43,555) 853 -
----------------- ---------------- ----------------- ---------------- ---------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 8,010,728 $ 2,485,436 $ 35,054,555 $ 23,622,761 $ 123,211
================= ================ ================= ================ ===============
</TABLE>
See Notes to Financial Statements. 23 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED MARCH 31, 1997, THE PERIOD ENDED AUGUST 31, 1997 AND THE YEAR
ENDED AUGUST 31, 1998
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C>
GOVERNMENT
PORTFOLIO
-----------------
NET ASSETS - March 31, 1996 $ 43,296,823
- - -------------------------------------------------------------- -----------------
OPERATIONS:
Net investment income 2,081,727
Net realized loss on investments sold (1,082)
-----------------
Net increase in net assets resulting from operations 2,080,645
-----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 54,385,867
Withdrawals (55,579,050)
-----------------
Net transactions in investors' beneficial interests (1,193,183)
-----------------
Net increase in net assets 887,462
-----------------
NET ASSETS - March 31, 1997 $ 44,184,285
- - -------------------------------------------------------------- -----------------
OPERATIONS:
Net investment income 925,794
Net realized gain on investments sold 15,133
-----------------
Net increase in net assets resulting from operations 940,927
-----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 22,743,917
Withdrawals (23,547,717)
-----------------
Net transactions in investors' beneficial interests (803,800)
-----------------
Net increase in net assets 137,127
-----------------
NET ASSETS - August 31, 1997 (Note 1) $ 44,321,412
- - -------------------------------------------------------------- -----------------
OPERATIONS:
Net investment income 2,506,524
Net realized loss on investments sold (21,088)
-----------------
Net increase in net assets resulting from operations 2,485,436
-----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 145,773,098
Withdrawals (145,816,960)
-----------------
Net transactions in investors' beneficial interests (43,862)
-----------------
Net increase in net assets 2,441,574
-----------------
NET ASSETS - August 31, 1998 $ 46,762,986
- - -------------------------------------------------------------- =================
</TABLE>
See Notes to Financial Statements. 24 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 1997 AND 1998 (Concluded) (Note 1)
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
TREASURY GOVERNMENT MUNICIPAL
CASH CASH CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ---------------- ----------------- -----------------
NET ASSETS - August 31, 1996 $ 83,471,666 $ 508,099,794 $ 126,282,923 $ -
- - ----------------------------------------------------- ----------------- ---------------- ----------------- -----------------
OPERATIONS:
Net investment income 2,525,129 27,216,340 10,105,993 -
Net realized gain (loss) on investments sold 2,441 (27,824) (8,648) -
----------------- ---------------- ----------------- -----------------
Net increase in net assets resulting from operations 2,527,570 27,188,516 10,097,345 -
----------------- ---------------- ----------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 292,088,302 1,552,918,166 633,698,622 -
Withdrawals (306,985,018) (1,611,437,731) (510,587,879) -
----------------- ---------------- ----------------- -----------------
Net transactions in investors' beneficial interests (14,896,716) (58,519,565) 123,110,743 -
----------------- ---------------- ----------------- -----------------
Net increase (decrease) in net assets (12,369,146) (31,331,049) 133,208,088 -
----------------- ---------------- ----------------- -----------------
NET ASSETS - August 31, 1997 $ 71,102,520 $ 476,768,745 $ 259,491,011 $ -
- - ----------------------------------------------------- ----------------- ---------------- ----------------- -----------------
OPERATIONS:
Net investment income 8,001,296 35,098,110 23,621,908 123,211
Net realized gain (loss) on investments sold 9,432 (43,555) 853 -
----------------- ---------------- ----------------- -----------------
Net increase in net assets resulting from operations 8,010,728 35,054,555 23,622,761 123,211
----------------- ---------------- ----------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 630,794,381 1,930,394,761 1,309,647,918 22,849,987
Withdrawals (445,062,682) (1,725,093,704) (985,420,846) (2,138,724)
----------------- ---------------- ----------------- -----------------
Net transactions in investors' beneficial interests 185,731,699 205,301,057 324,227,072 20,711,263
----------------- ---------------- ----------------- -----------------
Net increase in net assets 193,742,427 240,355,612 347,849,833 20,834,474
----------------- ---------------- ----------------- -----------------
NET ASSETS - August 31, 1998 $ 264,844,947 $ 717,124,357 $ 607,340,844 $ 20,834,474
- - ----------------------------------------------------- ================= ================ ================= =================
</TABLE>
See Notes to Financial Statements. 25 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998
- - ------------------------------------------------------------------------------
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 twenty-one separate investment portfolios. These financial
statements relate to Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio (each a "Portfolio"
and collectively the "Portfolios"), each of which is diversified. Government
Portfolio commenced operations on February 21, 1996, Municipal Cash Portfolio
commenced operations on June 25, 1998 and the other 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. On May 25, 1998, Treasury
Portfolio was renamed Government Portfolio.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These 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, the 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 - Core Trust determines the net asset value per share of each
Portfolio as of 4:00 p.m., Eastern 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 - The Portfolios may invest in repurchase agreements. Each
Portfolio, through its custodian, receives delivery of the underlying
collateral, whose market value must always equal or exceed the repurchase price.
The investment adviser is responsible for determining the value of the
underlying collateral. In the event of default, a Portfolio may have
difficulties with the disposition of such securities held as collateral.
ORGANIZATIONAL COSTS - The costs incurred by Treasury Cash Portfolio, Government
Cash Portfolio and Cash Portfolio 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 a Portfolio are deemed to have been "passed through" to the partners in
proportion to their interest in the Portfolio regardless of whether such
interest, dividends or gain have been distributed by the Portfolio.
SECURITIES TRANSACTIONS, INTEREST INCOME AND REALIZED GAIN AND LOSS - Investment
securities transactions are recorded on a trade date basis, interest income is
accrued as earned and realized gain and loss on investments sold are recorded on
the basis of identified cost. The cost basis of investments for federal income
tax purposes at August 31, 1998 is the same as for financial reporting purposes.
26 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
AUGUST 31, 1998
- - ------------------------------------------------------------------------------
NOTE 3. INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER - The investment adviser of each Portfolio is Forum
Investment Advisors, LLC ("Forum Advisors"). Prior to January 2, 1998, Linden
Asset Management ("Linden") served as investment adviser to Treasury Cash
Portfolio, Government Cash Portfolio and Cash Portfolio. On January 2, 1998,
Forum Advisors, Inc. acquired Linden and reorganized as Fourm Advisors.
Forum Advisors receives an advisory fee from Treasury Cash Portfolio, Government
Cash Portfolio and Cash 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. Forum Advisors
receives an advisory fee from Government Portfolio and Municipal Cash Portfolio
at an annual rate of 0.05% of the average daily net assets of each Portfolio.
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. In addition, certain legal
expenses are charged to the Portfolios by FAdS. For the year ended August 31,
1998, the respective amounts charged to, Treasury Cash Portfolio, Government
Portfolio, Government Cash Portfolio and Cash Portfolio were $48, $369, $319 and
$162.
PLACEMENT AGENT - Forum Financial Services, Inc. ("FFSI"), a registered
broker-dealer and a member of the National Association of Securities Dealers,
Inc., acts as each Portfolio's placement agent.
OTHER SERVICE PROVIDERS - Forum Accounting Services, LLC ("FAcS") serves as the
Portfolios' fund accountant and interestholder recordkeeper. For these services,
FAcS receives a fee from each Portfolio of $48,000 per year, plus additional
amounts depending on the number and type of portfolio transactions and number of
interest holders.
NOTE 4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
FAdS and FAcS have voluntarily waived a portion of their fees and have assumed
certain expenses of the Portfolios. For the year ended August 31, 1998, fees
waived and expenses reimbursed were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Administration Accounting Expense
Fee Fee Reimbursed Total
-------------- ---------- ---------- -----
Treasury Cash Portfolio $ 29,678 $ - $ - $29,678
Government Portfolio 28,796 37,946 - 66,742
Municipal Cash Portfolio 1,937 8,800 9,105 19,842
</TABLE>
27 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Concluded)
AUGUST 31, 1998
- - ------------------------------------------------------------------------------
NOTE 5. 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 waivers and reimbursements, if
any. All ratios for a period of less than a year are annualized.
<TABLE>
<S> <C> <C> <C>
Ratios to Average Net Assets
----------------------------
Net
Investment Gross
Expenses Income Expenses
-------- ------ --------
Treasury Cash Portfolio
Year Ended August 31, 1998....................................................... 0.15% 5.34% 0.17%
Year Ended August 31, 1997....................................................... 0.15% 5.20% 0.18%
Year Ended August 31, 1996....................................................... 0.15% 5.30% 0.20%
Government Portfolio
Year Ended August 31, 1998....................................................... 0.15% 5.26% 0.29%
Period Ended August 31, 1997 (annualized)........................................ 0.15% 5.11% 0.36%
Year Ended March 31, 1997........................................................ 0.15% 5.04% 0.33%
Period Ended March 31, 1996.(annualized) ....................................... 0.15% 4.99% 0.60%
Government Cash Portfolio
Year Ended August 31, 1998....................................................... 0.13% 5.52% 0.13%
Year Ended August 31, 1997....................................................... 0.14% 5.38% 0.14%
Year Ended August 31, 1996....................................................... 0.14% 5.49% 0.14%
Cash Portfolio
Year Ended August 31, 1998....................................................... 0.13% 5.55% 0.13%
Year Ended August 31, 1997....................................................... 0.15% 5.45% 0.15%
Year Ended August 31, 1996....................................................... 0.15% 5.50% 0.16%
Municipal Cash Portfolio
Period Ended August 31, 1998 (annualized)........................................ 0.09% 3.18% 0.61%
</TABLE>
NOTE 6. SPECIAL MEETING OF INTERESTHOLDERS (Unaudited)
The following matter was submitted to a vote of interestholders of each of
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio at a
special meeting held December 12, 1997 and then continued on December 18, 1997:
to approve a new Investment Advisory Agreement between Core Trust and Forum
Advisors. Interests in each of the portfolios were voted as follows: Treasury
Cash Portfolio - 99.63% For; 0.37% Against; Government Cash Portfolio - 99.00%
For; 1.00% Against; Cash Portfolio - 96.45% For; 3.55% Against.
28 CORE TRUST (DELAWARE)
<PAGE>
- - ------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- - ------------------------------------------------------------------------------
The Trustees and Interestholders
Core Trust (Delaware)
We have audited the accompanying statements of assets and liabilities of
Treasury Cash Portfolio, Government Portfolio (formerly Treasury Portfolio),
Government Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio, five
series of Core Trust (Delaware) (the Portfolios), including the schedules of
investments, as of August 31, 1998, and the related statements of operations for
the year then ended for Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio, and Cash Portfolio, and for the period from June 25,
1998 (commencement of operations) to August 31, 1998 for Municipal Cash
Portfolio, and the statements of changes in net assets for each of the years in
the two-year period then ended for Treasury Cash Portfolio, Government Cash
Portfolio, Cash Portfolio, the year then ended and the period from April 1, 1997
to August 31, 1997 for Government Portfolio, and the period from June 25, 1998
to August 31, 1998 for Municipal Cash Portfolio. 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. The
statement of changes in net assets for the year ended March 31, 1997 and the
income and expense ratios for the periods indicated in Note 5 ending prior to
April 1, 1997 for Government Portfolio, were audited by other auditors whose
report dated May 9, 1997 expressed an unqualified opinion on that financial
statement and those income and expense ratios.
We conducted our audits in accordance with generally accepted auditing
standards. 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, 1998 by correspondence with
the custodians. 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 Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal
Cash Portfolio of Core Trust as of August 31, 1998, the results of their
operations and changes in their net assets for the periods indicated above, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 6, 1998
29 CORE TRUST (DELAWARE)
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CORE
TRUST (DELAWARE) ANNUAL REPORT DATED AUGUST 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>006
<NAME> CASH PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-1-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 605,983,068
<INVESTMENTS-AT-VALUE> 605,983,068
<RECEIVABLES> 1,413,946
<ASSETS-OTHER> 17,591
<OTHER-ITEMS-ASSETS> 2,374
<TOTAL-ASSETS> 607,416,979
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 76,135
<TOTAL-LIABILITIES> 76,135
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 607,340,844
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 607,340,844
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 24,178,266
<OTHER-INCOME> 0
<EXPENSES-NET> 556,358
<NET-INVESTMENT-INCOME> 23,621,908
<REALIZED-GAINS-CURRENT> 853
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 23,622,761
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,309,647,918
<NUMBER-OF-SHARES-REDEEMED> 985,420,846
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 347,849,833
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 158,716
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 556,358
<AVERAGE-NET-ASSETS> 425,485,159
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CORE
TRUST (DELAWARE) ANNUAL REPORT DATED AUGUST 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>005
<NAME>GOVERNMENT CASH PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-1-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 714,526,188
<INVESTMENTS-AT-VALUE> 714,526,188
<RECEIVABLES> 2,688,859
<ASSETS-OTHER> 12,272
<OTHER-ITEMS-ASSETS> 8,779
<TOTAL-ASSETS> 717,236,098
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 111,741
<TOTAL-LIABILITIES> 111,741
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 717,124,357
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 717,124,357
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 35,902,478
<OTHER-INCOME> 0
<EXPENSES-NET> 804,368
<NET-INVESTMENT-INCOME> 35,098,110
<REALIZED-GAINS-CURRENT> (43,555)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 35,054,555
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 1,930,394,761
<NUMBER-OF-SHARES-REDEEMED> 1,725,093,704
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 240,355,612
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<GROSS-EXPENSE> 804,368
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CORE
TRUST (DELAWARE)ANNUAL REPORT DATED AUGUST 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>008
<NAME>GOVERNMENT PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-1-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 46,428,332
<INVESTMENTS-AT-VALUE> 46,428,332
<RECEIVABLES> 340,000
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<EXPENSES-NET> 71,445
<NET-INVESTMENT-INCOME> 2,506,524
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<NUMBER-OF-SHARES-SOLD> 145,773,098
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<EXPENSE-RATIO> .15
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CORE
TRUST (DELAWARE) ANNUAL REPORT DATED AUGUST 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>024
<NAME>MUNICIPAL CASH PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> JUN-25-1998
<PERIOD-END> AUG-31-1998
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CORE
TRUST (DELAWARE) ANNUAL REPORT DATED AUGUST 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000929958
<NAME> CORE TRUST (DELAWARE)
<SERIES>
<NUMBER>007
<NAME>TREASURY CASH PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
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<PER-SHARE-NAV-END> 0
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</TABLE>
