MONARCH FUNDS
MULTICLASS (RULE 18F-3) PLAN
February 11, 2003
This Plan is adopted by Monarch Funds (the "Trust") pursuant to Rule 18f-3
under the Investment Company Act of 1940 (the "Act") in order to document the
separate arrangements and expense allocations of each class of shares of
beneficial interest (the "Classes") of each of the series of the Trust
identified in Appendix A (individually a "Fund" and collectively the "Funds")
and the related exchange privileges.
SECTION 1. CLASS DESIGNATIONS
The types of Classes of the Funds are: "Preferred Shares," "Universal
Shares," "Institutional Shares," "Investor Shares," and "Service Shares." Each
Class has a different arrangement for shareholder services or distribution or
both, as follows:
(a) PREFERRED SHARES. Are offered with no sales charges or distribution
expenses. The investment minimum is $10,000,000, subject to reduction by Forum
Financial Services, Inc. ("Forum"), the Trust's manager.
(b) UNIVERSAL SHARES. Are offered with no sales charges or distribution
expenses. The investment minimum is $1,000,000, subject to reduction by Forum.
(c) INSTITUTIONAL SHARES. Are offered solely through banks, trust companies
and certain other financial institutions and their affiliates and correspondents
with no sales charges or distribution expenses but subject to a shareholder
services plan. The investment minimum for all purchases through a single
financial institution is $100,000, subject to reduction by Forum.
(d) INVESTOR SHARES. Are offered with no sales charges but subject to a
shareholder services plan and a distribution plan adopted in accordance with
Rule 12b-1 under the Act. The investment minimum is $5,000, subject to reduction
by Forum.
(e) INSTITUTIONAL SERVICE SHARES. Are offered with no sales charges or
distribution expenses. The investment minimum is $100,000, subject to reduction
by Forum.
SECTION 2. VOTING
Each Class shall have exclusive voting rights on any matter submitted to a
shareholder vote that relates solely to the Class' arrangement for shareholder
services or distribution and each Class shall have separate voting rights with
respect to any matter submitted to a shareholder vote in which the interests of
one Class differ from the interests of another Class.
SECTION 3. EXPENSES
(a) DISTRIBUTION EXPENSES. All expenses incurred under a Class's
distribution plan adopted in accordance with Rule 12b-1 under the Act shall be
allocated to that Class.
(b) SHAREHOLDER SERVICE EXPENSES. All expenses incurred under a Class's
shareholder service plan shall be allocated to that Class.
(c) OTHER CLASS EXPENSES. The following expenses, which are incurred by
Classes in different amounts or reflect differences in the amount or kind of
services that different Classes receive (collectively with expenses under
Sections 3(a) and 3(b) "Class Expenses"), shall be allocated to the Class that
incurred the expenses to the extent practicable:
(i) Administration and transfer agent fees and expenses;
(ii) Litigation, legal and audit fees;
(iii) State and foreign securities registration fees;
(iv) Shareholder report expenses;
(v) Trustee fees and expenses;
(vi) Preparation, printing and related fees and expenses for proxy
statements and, with respect to current shareholders, prospectuses
and statements of additional information;
(vii) Expenses incurred in connection with shareholder meetings; and
(viii) Subject to approval by the Trustees, such other fees and expenses as
Forum, pursuant to Rule 18f-3, deems to be allocable to specified
Classes.
(d) CLASS EXPENSE ALLOCATIONS. Class Expenses are to be borne solely by the
Class to which they relate. Item (i) of Section 3(c) in its entirety is incurred
by the Funds on a Class by Class basis and, accordingly, is wholly allocated to
specific Classes. All fees of a Fund's investment adviser and custodian [and
manager] and all portfolio based fees of a Fund's fund accountant are incurred
by a Fund and not the individual Classes of the Fund. All other items in Section
3(c) are allocated to a specific Class to the extent they are attributable to
the Classes in different amounts.
SECTION 4. OTHER ALLOCATIONS AND WAIVERS/REIMBURSEMENTS
(a) EXPENSES APPLICABLE TO MORE THAN ONE FUND. Expenses (other than Class
Expenses) incurred by the Trust on behalf of a Fund shall be allocated to that
Fund and expenses (other than Class Expenses) incurred by the Trust on behalf of
more than one Fund shall be allocated among the Funds that incurred the expenses
based on the net asset values of the Funds in relation to the net asset value of
all Funds to which the expense relates.
(b) OTHER ALLOCATIONS. Income, realized and unrealized capital gains and
losses and expenses other than Class Expenses related to a Fund shall be
allocated to each class of the Fund based on the net asset value of the Class
(excluding the value of subscriptions receivable) in relation to the net asset
value of the Fund.
-2-
(c) WAIVERS AND REIMBURSEMENTS. Nothing in this Plan shall be construed as
limiting the ability of any person to waive any fee paid by a Fund or Class to
that person or to reimburse any or all expenses of a Fund or Class; provided,
however, that no waiver or reimbursement shall be made such that the waiver or
reimbursement is, in effect, a DE FACTO modification of the fees provided for in
the Fund's various service agreements.
SECTION 5. EXCHANGES
Shareholders of a Class may exchange their shares for shares of the same
Class of any other Fund and for the shares of the other funds (whether series of
the Trust or otherwise) listed in Appendix A in accordance with Section 11(a) of
the Act, the rules thereunder and the requirements of the applicable
prospectuses without charge.
SECTION 6. AMENDMENTS AND BOARD REVIEW
(a) NON-MATERIAL AMENDMENTS. Non-material amendments to this Plan may be
made at any time by Forum.
(b) MATERIAL AMENDMENTS. Material amendments to this Plan may only be made
by a majority of the Trustees of the Trust, including a majority of the Trustees
who are not interested persons of the Trust as defined by the Act, upon a
finding that the amendment is in the best interests of the Classes affected by
the amendment and of the Fund and the Trust. Prior to any material amendment to
this Plan, the Board of Trustees (the "Board") shall request such information as
may be reasonably necessary to evaluate the Plan as proposed to be amended.
(c) BOARD REVIEW. The Board, including a majority of those trustees who are
not interested persons of the Trust as defined in the Act, shall review
periodically (i) this Plan for its continuing appropriateness and (ii) any fee
waivers and expense reimbursements to determine that the Funds are in compliance
with Section 4(c).
-3-
MONARCH FUNDS
MULTICLASS (RULE 18F-3) PLAN
APPENDIX A:
MONEY FUNDS(A) AND EXCHANGE PRIVILEGES
as of February 11, 2003
- ------------------------------------- --------------------------------------- ----------------------------------------
Class Fund Exchange Privileges(b)
- ------------------------------------- --------------------------------------- ----------------------------------------
Preferred Shares o Money Funds o Preferred Shares of Other
Money Funds
- ------------------------------------- --------------------------------------- ----------------------------------------
Universal Shares o Money Funds o Universal Shares of Other
Money Funds
- ------------------------------------- --------------------------------------- ----------------------------------------
Institutional Shares o Money Funds o Institutional Shares of Other
Money Funds
- ------------------------------------- --------------------------------------- ----------------------------------------
Institutional Service Shares o Money Funds o Institutional Service Shares
of Other Money Funds
- ------------------------------------- --------------------------------------- ----------------------------------------
Investor Shares o Daily Assets Government Cash o Each series/class of the
Fund Forum Funds (c)
o Each series of Sound Shore
Fund, Inc. (c)
o Each series of The Cutler
Trust (c)
o Investor Shares of Other
Money Funds
--------------------------------------- ----------------------------------------
o Other Money Funds o Investor Shares of Other
Money Funds
- ------------------------------------- --------------------------------------- ----------------------------------------
(a) Money Funds are (i) Daily Assets Treasury Cash Fund, (ii) Daily Assets
Government Cash Fund, (iii) Daily Assets Government Fund and (iv) Daily Assets
Cash Fund.
(b) Shareholders of a Class of a Money Fund also may exchange their shares for
shares of the same Class of any another Money Fund.
(c) While shareholders of the funds that are not series of the Trust may
exchange into the Money Fund indicated, shareholders of the Money Fund indicated
may only exchange into other funds that are not series of the Trust if the
shareholder originally exchanged from that other fund to the Money Fund.
-4-