As filed with the Securities and Exchange Commission
on April 24, 2003
Securities Act File No. 333-103991
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. /_1____/
Post-Effective Amendment No. /_____/
MONARCH FUNDS
(Exact Name of Registrant as Specified in Charter)
Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Offices) (Zip Code)
(207) 879-1900
(Registrant's Area Code and Telephone Number)
Leslie K. Klenk
Forum Administrative Services, LLC
Two Portland Square
Portland, ME 04101
Copies of Communications to:
Robert J. Zutz, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue NW 2nd Floor
Washington, DC 20036-1800
Approximate Date of Proposed Public Offering:
As soon as practicable after this
Registration Statement becomes effective.
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Title of securities being registered: Universal Shares, Institutional Service
Shares and Investor Shares of Daily Assets Government Fund and Daily Assets Cash
Fund and Universal Shares and Institutional Service Shares of Daily Assets
Treasury Fund.
Pursuant to Rule 429, a filing fee is not required because the Registrant has
previously registered an indefinite number of its Shares under the Securities
Act of 1933, as amended, pursuant to Rule 24f-2 under the Investment Company Act
of 1940, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
IMPORTANT NOTICE: PLEASE COMPLETE THE
ENCLOSED PROXY BALLOT AND RETURN IT AS SOON AS POSSIBLE.
- --------------------------------------------------------------------------------
FORUM FUNDS
Two Portland Square
Portland, Maine 04101
April 25, 2003
Dear Valued Shareholder:
Enclosed is a Notice of Special Meeting of Shareholders of Daily Assets
Treasury Obligations Fund ("Forum Treasury Fund"), Daily Assets Government
Obligations Fund ("Forum Government Fund"), and Daily Assets Cash Fund ("Forum
Cash Fund") (each a "Forum Series"), each a series of Forum Funds ("Forum"), to
be held on May 28, 2003 at the offices of Forum Financial Group, LLC, Two
Portland Square, Second Floor Conference Room, Portland, Maine 04101.
At the meeting, you will be asked to approve an Agreement and Plan of
Reorganization between Forum, on behalf of each Forum Series, and Monarch Funds
("Monarch"), another registered investment company, on behalf of its series
Daily Assets Treasury Fund ("Monarch Treasury Fund"), Daily Assets Government
Fund ("Monarch Government Fund"), and Daily Assets Cash Fund ("Monarch Cash
Fund") (the "Plan"). Under the Plan, each of Forum Treasury Fund, Forum
Government Fund, and Forum Cash Fund will transfer its assets to Monarch
Treasury Fund, Monarch Government Fund, and Monarch Cash Fund, respectively
(each a "Monarch Series"), in exchange solely for shares of that corresponding
Monarch Series and the corresponding Monarch Series' assumption of the
applicable Forum Series' liabilities. The Plan further provides that each Forum
Series will then distribute the shares received from the Monarch Series
proportionately to its shareholders and then terminate. Each Forum Series'
shareholder holding Institutional, Institutional Service, and Investor Shares
will receive Universal, Institutional Service, and Investor Shares,
respectively, of the corresponding Monarch Series.
Each Forum Series and the corresponding Monarch Series invest substantially
all of their assets in the same portfolio of Core Trust (Delaware) ("Core
Trust"), another registered investment company. After the Plan is consummated,
each Monarch Series will redeem its investment in Core Trust and invest directly
in portfolio securities.
The Board of Trustees of Forum (the "Board") unanimously approved the Plan
and believes that it is in the best interests of the shareholders of each Forum
Series. In evaluating the Plan with respect to the Forum Series in which you
invest, please note that:
o Each Forum Series and its corresponding Monarch Series invest
substantially all of their assets in the same portfolio of Core Trust.
o Each Forum Series and its corresponding Monarch Series pursue the same
investment objective and have the same investment strategies and
policies.
o Although certain service provider fees of each Monarch Series are
higher than those currently charged to its corresponding Forum Series,
the economies of scale that will result from the combination of the
assets of each Forum Series with the
corresponding Monarch Series will result in lower gross expenses for
the shareholders of each Forum Series after its reorganization.
o As a result of the transactions contemplated under the Plan, the
performance of each Forum Series will reflect the performance of the
corresponding Monarch Series.
Shareholders are being asked to approve the Plan only with respect to the
Forum Series in which they own shares. The approval of the Plan by the
shareholders of one Forum Series is not contingent on the approval of the Plan
by the shareholders of any other Forum Series. If shareholders of a Forum Series
approve the Plan, that Forum Series will reorganize into the corresponding
Monarch Series regardless of whether shareholders of any other Forum Series vote
to approve the Plan.
The Board believes that the Plan is important and recommends that you read
the enclosed materials carefully and then vote FOR the proposal. Please choose
one of the following options to vote:
o BY MAIL: Complete the enclosed proxy card and return it in the
postage-paid envelope provided.
o BY TELEPHONE: Call the Toll-Free number on your proxy card.
o IN PERSON: Attend the Special Meeting (details enclosed).
Forum Financial Group, LLC and/or its affiliates (collectively, "FFG") have
agreed to pay the audit, legal, and proxy solicitation costs of the transactions
contemplated under the Plan. FFG currently provides administrative, transfer
agency, fund accounting, and custody services to each Forum Series and each
Monarch Series.
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WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE
IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES (UNLESS YOU ARE VOTING BY
TELEPHONE). NO POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED
STATES. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
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IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT/ PROSPECTUS OR THE
PROCEDURES TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT FORUM
SHAREHOLDER SERVICES, LLC AT (800) 943-6786.
Very truly yours,
/s/ JOHN Y. KEFFER
--------------------------------
John Y. Keffer
President and Chairman of
the Board of Trustees
2
FORUM FUNDS
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS CASH FUND
Two Portland Square
Portland, Maine 04101
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
APRIL 25, 2003
To the Shareholders:
A special meeting of shareholders of Daily Assets Treasury Obligations Fund
("Forum Treasury Fund"), Daily Assets Government Obligations Fund ("Forum
Government Fund"), and Daily Assets Cash Fund ("Forum Cash Fund"), each a series
of Forum Funds ("Forum"), will be held at the offices of Forum Financial Group,
LLC, Two Portland Square, Second Floor Conference Room, Portland, Maine 04101,
on May 28, 2003 at 10:00 a.m. (Eastern time) to consider the following:
1. A proposal to approve an Agreement and Plan of Reorganization between
Forum, on behalf of Forum Treasury Fund, Forum Government Fund, and
Forum Cash Fund (each a "Forum Series"), and Monarch Funds
("Monarch"), another registered investment company, on behalf of its
series, Daily Assets Treasury Fund, Daily Assets Government Fund, and
Daily Assets Cash Fund (the "Plan"). Under the Plan, each of Forum
Treasury Fund, Forum Government Fund, and Forum Cash Fund will
transfer its assets to Daily Assets Treasury Fund ("Monarch Treasury
Fund"), Daily Assets Government Fund ("Monarch Government Fund"), and
Daily Assets Cash Fund ("Monarch Cash Fund") (each a "Monarch
Series"), respectively, in exchange solely for shares of that
corresponding Monarch Series and the corresponding Monarch Series'
assumption of the applicable Forum Series' liabilities. The Plan
further provides that each Forum Series will then distribute the
shares received from the Monarch Series proportionately to its
shareholders and terminate. Each Forum Series' shareholder holding
Institutional, Institutional Service, and Investor Shares will receive
Universal, Institutional Service, and Investor Shares, respectively,
of the corresponding Monarch Series; and
2. Any other business that properly comes before the meeting.
Each Forum Series and the corresponding Monarch Series invest substantially
all of their assets in the same portfolio of Core Trust (Delaware) ("Core
Trust"), another registered investment company. After the Plan is consummated,
each Monarch Series will redeem its investment in Core Trust and invest directly
in portfolio securities.
The approval of the Plan by shareholders of one Forum Series is not
contingent on the approval of the Plan by the shareholders of any other Forum
Series. If shareholders of a Forum Series approve the Plan, that Forum Series
will reorganize into the corresponding Monarch Series regardless of whether
shareholders of any other Forum Series vote to approve the Plan.
Enclosed with this notice is a Proxy Statement/Prospectus, which includes
information relevant to the proposed transactions. A form of the Plan is
attached as Exhibit A to the Proxy Statement/Prospectus.
Shareholders of record of each Forum Series as of the close of business on
April 16, 2003 are entitled to vote at the meeting and at any postponement or
adjournment thereof. This notice and related Proxy Statement/Prospectus are
first being mailed to shareholders of each Forum Series on or about April 28,
2003. This Proxy is being solicited by Forum's Board of Trustees.
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WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE,
AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE
IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES (UNLESS YOU ARE VOTING BY
TELEPHONE). NO POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED
STATES. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
- --------------------------------------------------------------------------------
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT/ PROSPECTUS OR THE
PROCEDURES TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT FORUM
SHAREHOLDER SERVICES, LLC AT (800) 943-6786.
By Order of the Board of Trustees,
/s/ LESLIE K. KLENK
----------------------------------------
Leslie K. Klenk
Secretary
Forum Funds
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE
NUMBER OF SHARES THAT YOU OWNED ON THE RECORD DATE.
2
PROXY STATEMENT/PROSPECTUS
APRIL 25, 2003
Acquisition of the Assets of
DAILY ASSETS TREASURY OBLIGATIONS FUND ("FORUM TREASURY FUND")
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND ("FORUM GOVERNMENT FUND")
DAILY ASSETS CASH FUND ("FORUM CASH FUND")
each a series of
FORUM FUNDS
Two Portland Square
Portland, Maine 04101
(800) 943-6786
By and In Exchange for Shares of Beneficial
Interest of
DAILY ASSETS TREASURY FUND ("MONARCH TREASURY FUND")
DAILY ASSETS GOVERNMENT FUND ("MONARCH GOVERNMENT FUND")
DAILY ASSETS CASH FUND ("MONARCH CASH FUND"),
respectively
each a series of
MONARCH FUNDS
Two Portland Square
Portland, Maine 04101
(800) 754-8757
On February 11, 2003, the Board of Trustees of Forum Funds ("Forum"), a
registered open-end investment company, unanimously approved the Agreement and
Plan of Reorganization between Forum Funds, on behalf of its money market
series, Forum Treasury Fund, Forum Government Fund, and Forum Cash Fund, and
Monarch Funds ("Monarch"), another registered open-end investment company, on
behalf of its money market series, Monarch Treasury Fund, Monarch Government
Fund, and Monarch Cash Fund (the "Plan").
Under the Plan, each of Forum Treasury Fund, Forum Government Fund, and
Forum Cash Fund (each a "Forum Series") will transfer its assets to Monarch
Treasury Fund, Monarch Government Fund, and Monarch Cash Fund, respectively
(each a "Monarch Series"), in exchange solely for shares of that corresponding
Monarch Series and the corresponding Monarch Series' assumption of the
applicable Forum Series' liabilities. The Plan further provides that each Forum
Series will then distribute the shares received from the Monarch Series
proportionately to its shareholders and terminate. Each Forum Series'
shareholder holding Institutional, Institutional Service, and Investor Shares
will receive Universal, Institutional Service, and Investor Shares,
respectively, of the corresponding Monarch Series.
i
Each Forum Series and the corresponding Monarch Series invest substantially
all of their assets in the same portfolio of Core Trust (Delaware) ("Core
Trust"), another registered investment company. After the Plan is consummated,
each Monarch Series will redeem its investment in Core Trust and invest directly
in portfolio securities.
Please read the Proxy Statement/Prospectus carefully and retain it for
future reference. The Proxy Statement/Prospectus sets forth concisely the
information that you should know before investing in a Monarch Series. A
Statement of Additional Information dated April 25, 2003 containing additional
information about the Plan and the transactions contemplated thereunder has been
filed with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into, and is legally part of, this Proxy Statement/Prospectus. The
Statement of Additional Information to this Proxy Statement/Prospectus is
available upon request, without charge, by writing or calling:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
(800) 943-6786
Copies of the Prospectuses for Universal, Institutional Service, and
Investor Shares of each Monarch Series, dated April 23, 2003, accompany this
Proxy Statement/Prospectus and are incorporated by reference into, and are
legally part of, this Proxy Statement/Prospectus. Copies of the related
Statement of Additional Information dated April 23, 2003 as well as the Annual
Report dated August 31, 2002 for each Monarch Series are available upon request
without charge by writing or calling:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
(800) 754-8757
Copies of the Prospectuses for Institutional, Institutional Service, and
Investor Shares for each Forum Series, dated December 31, 2002 are incorporated
by reference into, and are legally part of, this Proxy Statement/Prospectus.
Copies of the related Statement of Additional Information dated December 31,
2002 as well as the Annual Report dated August 31, 2002 for each Forum Series
are available upon request without charge by writing or calling:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
(800) 943-6786
ii
Shareholders may also view or obtain copies of this Proxy
Statement/Prospectus, the materials incorporated by reference herein or
additional information regarding a Forum Series or a Monarch Series from the
SEC's Website, HTTP://WWW.SEC.GOV.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
AN INVESTMENT IN A FORUM SERIES OR A MONARCH SERIES IS NOT A DEPOSIT OR
OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND IS NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
U.S. GOVERNMENT AGENCY. AN INVESTMENT IN A FORUM SERIES AND A MONARCH SERIES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
iii
TABLE OF CONTENTS
SUMMARY......................................................................1
The Proposed Agreement and Plan of Reorganization..........................1
Comparison of Fees.........................................................2
Comparison of Investment Objectives and Principal Investment Strategies....5
Comparison of Investment Advisory Services and Fees........................7
Comparison of Other Service Providers......................................8
Comparison of Multiple Class Structure.....................................8
Comparison of Purchase, Redemption, and Exchange Privileges................9
Comparison of Distribution Policies........................................11
Comparison of Distribution and Shareholder Servicing Fees..................11
Comparison of Net Asset Value Calculation Procedures.......................12
Tax Matters Relating to the Reorganizations................................13
INVESTMENT RISKS.............................................................13
INFORMATION ABOUT THE PLAN...................................................14
General Description of the Plan............................................14
Securities to be Issued....................................................15
Reasons for the Reorganizations............................................16
TAXATION.....................................................................17
Tax Consequences of Distributions..........................................18
Tax Consequences of the Reorganizations....................................18
CAPITALIZATION...............................................................19
VOTING INFORMATION...........................................................20
Instructions for Signing Proxy Cards.......................................22
Information Regarding Shares of each Forum Series Outstanding..............22
Information Regarding Shares of each Monarch Series Outstanding............23
ADDITIONAL INFORMATION.......................................................24
Legal Matters..............................................................24
Experts....................................................................24
Information Filed with the Securities and Exchange Commission..............24
EXHIBIT A: Form of Agreement and Plan of Reorganization.....................A-1
EXHIBIT B: Financial Highlights - Forum Treasury Fund,
Forum Government Fund and Forum Cash Fund........................B-1
EXHIBIT C: Financial Highlights - Monarch Treasury Fund,
Monarch Government Fund and Monarch Cash Fund....................C-1
iv
SUMMARY
This section summarizes the important terms of the proposed Plan between
Forum, on behalf of each Forum Series, and Monarch, on behalf of each Monarch
Series (the "Plan"). This section also summarizes certain information regarding
each Forum Series as well as each Monarch Series. As discussed below, Forum's
Board of Trustees (the "Board") believes that the Plan is in the best interests
of the shareholders of each Forum Series.
The information set forth in this section is only a summary of, and is
qualified in its entirety by the information contained elsewhere in this Proxy
Statement/Prospectus or in the documents incorporated by reference herein.
For a detailed discussion of the topics discussed in this Summary regarding
the Monarch Series, see the Prospectuses for Universal, Institutional Service
and Investor Shares of each Monarch Series, each dated April 23, 2003, and the
Statement of Additional Information to this Proxy Statement/Prospectus dated
April 25, 2003, each of which is incorporated by reference into, and is legally
part of, this Proxy Statement/Prospectus. For a detailed discussion of the
topics discussed in this Summary regarding each Forum Series, see the
Prospectuses for Institutional, Institutional Service and Investor Shares of
each Forum Series, each dated December 31, 2002, and the Statement of Additional
Information to this Proxy Statement/Prospectus dated April 25, 2003, each of
which is incorporated by reference into, and is legally part of, this Proxy
Statement/Prospectus.
THE PROPOSED AGREEMENT AND PLAN OF REORGANIZATION
On February 11, 2003, the Board unanimously voted to approve the Plan with
respect to each Forum Series.
Under the Plan, each of Forum Treasury Fund, Forum Government Fund, and
Forum Cash Fund will: (1) transfer its assets to Monarch Treasury Fund, Monarch
Government Fund, and Monarch Cash Fund, respectively, in exchange solely for
shares of that corresponding Monarch Series and the corresponding Monarch
Series' assumption of the applicable Forum Series' liabilities; and (2) each
Forum Series will then distribute the shares received from the Monarch Series
proportionately to its shareholders and terminate (each a "Reorganization,"
collectively, the "Reorganizations"). The Plan further provides that each Forum
Series' shareholder holding Institutional, Institutional Service, and Investor
Shares will receive Universal, Institutional Services, and Investor Shares,
respectively, of the corresponding Monarch Series. The Reorganization of a Forum
Series will occur as of the effective date designated in the Plan or at a later
date as agreed upon by the Board and the Monarch Board of Trustees ("Monarch
Board") and only after the Plan is approved by the shareholders of that Forum
Series and all contingencies under the Plan are satisfied.
The Plan is the second stage of a larger transaction to consolidate the
money market fund series of Forum, Core Trust, and Monarch (collectively, the
"Money Fund Assets") in order to take advantage of economies of scale and
operational efficiencies that would result from the combination of the Money
Fund Assets into one registrant. The first stage involved the reorganization of
Monarch from a Delaware business trust into a Massachusetts business trust on
April 23, 2003. The final stage involves the redemption of each Monarch Series'
investment in Core Trust after consummation of the Reorganizations.
For the reasons set forth in the section entitled "Information about the
Plan - Reasons for the Reorganizations," the Board, including the Trustees who
are not "interested persons," as that term is defined in the Section 2(a)(19) of
Investment Company Act of 1940, as amended (the "Independent Trustees"),
unanimously approved the Plan, concluded that the transactions contemplated by
the Plan with respect to each Forum Series were in the best interests of the
shareholders of the Forum Series, and recommended that you approve the Plan with
respect to the Forum Series in which you own shares. The Board, including the
Independent Trustees, also unanimously concluded that the interests of a Forum
Series' shareholders will not be diluted as a result of its Reorganization. The
Board considered a variety of different factors prior to forming these
conclusions including: (1) the similarities of the investment objective and
investment policies of each Forum Series and the corresponding Monarch Series;
(2) the expenses of each Forum Series and the corresponding Monarch Series; (3)
the tax-free nature of each Reorganization; and (4) the fact that Forum
Financial Group, LLC and/or its affiliates (collectively, "FFG") have agreed to
pay all audit, legal, and proxy solicitation costs associated with the
Reorganizations.
COMPARISON OF FEES
Like all mutual funds, each Forum Series and Monarch Series incur certain
expenses in their operations and, as a shareholder, you pay these expenses
indirectly. The following tables compare the various fees and expenses that a
shareholder incurred from an investment in each Forum Series and each
corresponding Monarch Series as of the fiscal year ended August 31, 2002 and the
Pro Forma expenses of the Monarch Series, as of August 31, 2002, assuming the
Reorganizations are approved. For the Reorganizations of Forum Government Fund
and Forum Cash Fund, only Pro-Forma expense information is provided for
Institutional Service Shares of each Monarch Series as that class will not have
any assets prior to the applicable Reorganization.
FORUM TREASURY FUND/MONARCH TREASURY FUND
- --------------------------------------- --------------------- ---------------------- ----------------------
PRO FORMA MONARCH
FORUM TREASURY MONARCH TREASURY FUND
FUND(1) TREASURY FUND(2) (COMBINED)(3)
--------------------- ---------------------- ----------------------
INSTITUTIONAL UNIVERSAL UNIVERSAL
SHARES SHARES SHARES
- --------------------------------------- --------------------- ---------------------- ----------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
- --------------------------------------- --------------------- ---------------------- ----------------------
Management Fees 0.13% 0.14% 0.14%
- --------------------------------------- --------------------- ---------------------- ----------------------
Distribution (12b-1) Fees None None None
- --------------------------------------- --------------------- ---------------------- ----------------------
Other Expenses 0.16% 8.63% 0.11%
- --------------------------------------- --------------------- ---------------------- ----------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.29% (4) 8.77% (5)(6) 0.25%(5)
- --------------------------------------- --------------------- ---------------------- ----------------------
2
- ----------------------------------------- ---------------------- ----------------------- -----------------------
PRO FORMA MONARCH
FORUM TREASURY MONARCH TREASURY TREASURY FUND
FUND (1) FUND(2) (COMBINED)(3)
- ----------------------------------------- ---------------------- ----------------------- -----------------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL SERVICE
SERVICE SHARES SERVICE SHARES SHARES
- ----------------------------------------- ---------------------- ----------------------- -----------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
- ----------------------------------------- ---------------------- ----------------------- -----------------------
Management Fees 0.13% 0.14% 0.14%
- ----------------------------------------- ---------------------- ----------------------- -----------------------
Distribution (12b-1) Fees None None None
- ----------------------------------------- ---------------------- ----------------------- -----------------------
Other Expenses 0.58% 0.48% 0.37%
- ----------------------------------------- ---------------------- ----------------------- -----------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.71%(4) 0.62% (5) 0.51%(5)
- ----------------------------------------- ---------------------- ----------------------- -----------------------
(1) Based on amounts incurred during Forum Treasury Fund's fiscal year ended
August 31, 2002 stated as a percentage of the average daily net assets.
(2) Based on amounts incurred during Monarch Treasury Fund's fiscal year ended
August 31, 2002 stated as a percentage of the average daily net assets.
(3) Pro Forma amounts based on combined net assets of Forum Treasury Fund and
Monarch Treasury Fund as if the Reorganization had occurred on August 31,
2002.
(4) Certain service providers of Forum Treasury Fund have voluntarily agreed to
waive a portion of their fees and reimburse fund expenses in order to limit
Total Annual Fund Operating Expenses of Institutional Shares and
Institutional Service Shares to 0.20% and 0.45%, respectively, of that
class' average daily net assets. Fee waivers and expense reimbursements may
be reduced or eliminated at any time.
(5) Certain service providers of Monarch Treasury Fund have voluntarily agreed
to waive a portion of their fees and reimburse fund expenses in order to
limit Total Annual Fund Operating Expenses of Universal Shares and
Institutional Service Shares to 0.20% and 0.45%, respectively, of that
class' average daily net assets. Fee waivers and expense reimbursements may
be reduced or eliminated at any time.
(6) Total expenses are high due to minimal assets of the class.
FORUM GOVERNMENT FUND/MONARCH GOVERNMENT FUND
- --------------------------------------------- -------------------------- ------------------------- -------------------------
PRO FORMA
FORUM MONARCH MONARCH GOVERNMENT FUND
GOVERNMENT FUND(1) GOVERNMENT FUND(2) (COMBINED)(3)
- --------------------------------------------- -------------------------- ------------------------- -------------------------
INSTITUTIONAL UNIVERSAL UNIVERSAL
SHARES SHARES SHARES
- --------------------------------------------- -------------------------- ------------------------- -------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES
DEDUCTED FROM FUND ASSETS)
- --------------------------------------------- -------------------------- ------------------------- -------------------------
Management Fees 0.13% 0.14% 0.14%
- --------------------------------------------- -------------------------- ------------------------- -------------------------
Distribution (12b-1) Fees None None None
- --------------------------------------------- -------------------------- ------------------------- -------------------------
Other Expenses 0.19% 0.11% 0.11%
- --------------------------------------------- -------------------------- ------------------------- -------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.32%(4) 0.25%(5) 0.25%(6)
- --------------------------------------------- -------------------------- ------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
PRO FORMA MONARCH
FORUM GOVERNMENT GOVERNMENT FUND
FUND(1) (COMBINED) (3
- --------------------------------------------- -------------------------- -------------------------
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
SHARES SHARES
- --------------------------------------------- -------------------------- -------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES
DEDUCTED FROM FUND ASSETS)
- --------------------------------------------- -------------------------- -------------------------
Management Fees 0.13% 0.14%
- --------------------------------------------- -------------------------- -------------------------
Distribution (12b-1) Fees None None
- --------------------------------------------- -------------------------- -------------------------
Other Expenses 0.49% 0.36%
- --------------------------------------------- -------------------------- -------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.62%(4) 0.50%(6)
- --------------------------------------------- -------------------------- -------------------------
3
- --------------------------------------------- -------------------------- ------------------------- -------------------------
PRO FORMA MONARCH
FORUM MONARCH GOVERNMENT FUND
GOVERNMENT FUND(1) GOVERNMENT FUND(2) (COMBINED)(3)
- --------------------------------------------- -------------------------- ------------------------- -------------------------
Investor INVESTOR Investor
Shares Shares Shares
- --------------------------------------------- -------------------------- ------------------------- -------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES
DEDUCTED FROM FUND ASSETS)
- --------------------------------------------- -------------------------- ------------------------- -------------------------
Management Fees 0.13% 0.14% 0.14%
- --------------------------------------------- -------------------------- ------------------------- -------------------------
Distribution (12b-1) Fees 0.30% 0.25% 0.25%
- --------------------------------------------- -------------------------- ------------------------- -------------------------
Other Expenses 4.05% 0.46% 0.46%
- --------------------------------------------- -------------------------- ------------------------- -------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 4.48%(4)(7) 0.85% 0.85%(6)
- --------------------------------------------- -------------------------- ------------------------- -------------------------
(1) Based on amounts incurred during Forum Government Fund's fiscal year ended
August 31, 2002 stated as a percentage of the average daily net assets.
(2) Based on amounts incurred during Monarch Government Fund's fiscal year
ended August 31, 2002 stated as a percentage of the average daily net
assets.
(3) Pro Forma amounts based on combined net assets of Forum Government Fund and
Monarch Government Fund as if the Reorganization had occurred on August 31,
2002. As of August 31, 2002, Institutional Service Shares of Monarch
Government Fund had not commenced operations.
(4) Certain service providers of Forum Government Fund have voluntarily agreed
to waive a portion of their fees and reimburse fund expenses in order to
limit Total Annual Fund Operating Expenses of Institutional, Institutional
Service, and Investor Shares to 0.20%, 0.45%, and 0.90%, respectively, of
that class' average daily net assets. Fee waivers and expense
reimbursements may be reduced or eliminated at any time.
(5) Certain service providers of Monarch Government Fund have voluntarily
agreed to waive a portion of their fees and reimburse fund expenses in
order to limit Total Annual Fund Operating Expenses of Universal, Shares to
0.21% of that class' average daily net assets. Fee waivers and expense
reimbursements may be reduced or eliminated at any time.
(6) Certain service providers of Monarch Government Fund have voluntarily
agreed to waive a portion of their fees and reimburse fund expenses in
order to limit Total Annual Fund Operating Expenses of Universal,
Institutional Service, and Investor Shares to 0.20%, 0.45%, and 0.85%,
respectively, of that class' average daily net assets. Fee waivers and
expense reimbursements may be reduced or eliminated at any time.
(7) Total expenses are high due to minimal assets of the class.
FORUM CASH FUND/MONARCH CASH FUND
- --------------------------------------------- -------------------------- ------------------------- -------------------------
PRO FORMA
FORUM MONARCH MONARCH CASH FUND
CASH FUND(1) CASH FUND(2) (COMBINED)(3)
-------------------------- ------------------------- -------------------------
INSTITUTIONAL UNIVERSAL UNIVERSAL
SHARES SHARES SHARES
- --------------------------------------------- -------------------------- ------------------------- -------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES
DEDUCTED FROM FUND ASSETS)
- --------------------------------------------- -------------------------- ------------------------- -------------------------
Management Fees 0.13% 0.14% 0.14%
- --------------------------------------------- -------------------------- ------------------------- -------------------------
Distribution (12b-1) Fees None None None
- --------------------------------------------- -------------------------- ------------------------- -------------------------
Other Expenses 0.18% 0.11% 0.10%
- --------------------------------------------- -------------------------- ------------------------- -------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.31%(4) 0.25%(5) 0.24%(6)
- --------------------------------------------- -------------------------- ------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
PRO FORMA
FORUM MONARCH CASH FUND
CASH FUND(1) (COMBINED)(3)
- --------------------------------------------- -------------------------- -------------------------
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
Shares Shares
- --------------------------------------------- -------------------------- -------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES
DEDUCTED FROM FUND ASSETS)
- --------------------------------------------- -------------------------- -------------------------
Management Fees 0.13% 0.14%
- --------------------------------------------- -------------------------- -------------------------
Distribution (12b-1) Fees None None
- --------------------------------------------- -------------------------- -------------------------
Other Expenses 0.50% 0.35%
- --------------------------------------------- -------------------------- -------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.63%(4) 0.49%(6)
- --------------------------------------------- -------------------------- -------------------------
4
- ---------------------------------------------- ------------------------- ------------------------- --------------------------
PRO FORMA
FORUM MONARCH MONARCH CASH FUND
CASH FUND(1) CASH FUND(2) (COMBINED)(3)
- ---------------------------------------------- ------------------------- ------------------------- --------------------------
INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES
- ---------------------------------------------- ------------------------- ------------------------- --------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES
DEDUCTED FROM FUND ASSETS)
- ---------------------------------------------- ------------------------- ------------------------- --------------------------
Management Fees 0.13% 0.14% 0.14%
- ---------------------------------------------- ------------------------- ------------------------- --------------------------
Distribution (12b-1) Fees 0.30% 0.25% 0.25%
- ---------------------------------------------- ------------------------- ------------------------- --------------------------
Other Expenses 3.38% 0.44% 0.45%
- ---------------------------------------------- ------------------------- ------------------------- --------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 3.81%(4)(7) 0.83% 0.84%(6)
- ---------------------------------------------- ------------------------- ------------------------- --------------------------
(1) Based on amounts incurred during Forum Cash Fund's fiscal year ended August
31, 2002 stated as a percentage of the average daily net assets.
(2) Based on amounts incurred during Monarch Cash Fund's fiscal year ended
August 31, 2002 stated as a percentage of the average daily net assets.
(3) Pro Forma amounts based on combined net assets of the Forum Cash Fund and
Monarch Cash Fund as if the Reorganization had occurred on August 31, 2002.
As of August 31, 2002, Institutional Service Shares of Monarch Cash Fund
had not commenced operations.
(4) Certain service providers of Forum Cash Fund have voluntarily agreed to
waive a portion of their fees and reimburse fund expenses in order to limit
Total Annual Fund Operating Expenses of Institutional, Institutional
Service, and Investor Shares to 0.20%, 0.45%, and 0.90%, respectively, of
that class' average daily net assets. Fee waivers and expense
reimbursements may be reduced or eliminated at any time.
(5) Certain service providers of Monarch Cash Fund have voluntarily agreed to
waive a portion of their fees and reimburse fund expenses in order to limit
Total Annual Fund Operating Expenses of Universal Shares to 0.21% of that
class' average daily net assets. Fee waivers and expense reimbursements may
be reduced or eliminated at any time.
(6) Certain service providers of Monarch Cash Fund have voluntarily agreed to
waive a portion of their fees and reimburse fund expenses in order to limit
Total Annual Fund Operating Expenses of Universal, and Institutional
Service 0.20% and 0.45%, respectively, of that class' average daily net
assets. Fee waivers and expense reimbursements may be reduced or eliminated
at any time.
(7) Total expenses are high due to minimal assets of the class.
EXAMPLE OF EFFECT ON FUND EXPENSES
The following is a hypothetical example intended to help you compare the
cost of investing in each Forum Series with the costs of investing in the
corresponding Monarch Series after their Reorganization. This example assumes
that you invest $10,000 in a specified fund and class for the time periods
indicated and then redeems all of your shares at the end of those periods. The
example also assumes that your investment has a 5% annual rate of return, that
the Total Annual Fund Operating Expenses of the specified fund and class remain
the same as stated in the above tables and that all dividends and distributions
are reinvested. Although your actual costs may be higher or lower, under these
assumptions your costs would be:
FORUM TREASURY FUND/MONARCH TREASURY FUND
- ---------------- -------------------- -------------------- -------------------- -------------------- --------------------
FORUM MONARCH PRO FORMA FORUM PRO FORMA
TREASURY TREASURY MONARCH TREASURY TREASURY MONARCH
FUND FUND FUND FUND TREASURY FUND
-------------------- -------------------- -------------------- -------------------- --------------------
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL UNIVERSAL UNIVERSAL SERVICE SERVICE
SHARES SHARES SHARES SHARES SHARES
- ---------------- -------------------- -------------------- -------------------- -------------------- --------------------
1 Year $30 $860 $26 $73 $52
- ---------------- -------------------- -------------------- -------------------- -------------------- --------------------
3 Years $93 $2,485 $80 $227 $164
- ---------------- -------------------- -------------------- -------------------- -------------------- --------------------
5 Years $163 $3,990 $141 $395 $285
- ---------------- -------------------- -------------------- -------------------- -------------------- --------------------
10 Years $368 $7,282 $318 $883 $640
- ---------------- -------------------- -------------------- -------------------- -------------------- --------------------
5
FORUM GOVERNMENT FUND/MONARCH GOVERNMENT FUND
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
PRO FORMA PRO FORMA PRO FORMA
FORUM MONARCH MONARCH FORUM MONARCH FORUM MONARCH MONARCH
GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT
FUND FUND FUND FUND FUND FUND FUND FUND
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL UNIVERSAL UNIVERSAL SERVICE SERVICE INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
1 Year $33 $26 $26 $63 $51 $449 $87 $87
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
3 Years $103 $80 $80 $199 $160 $1,355 $271 $271
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
5 Years $180 $141 $141 $346 $280 $2,269 $471 $471
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
10 Years $406 $318 $318 $774 $628 $4,598 $1,049 $1,049
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
FORUM CASH FUND/MONARCH CASH FUND
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
PRO FORMA PRO FORMA PRO FORMA
FORUM MONARCH MONARCH FORUM MONARCH FORUM MONARCH MONARCH
CASH FUND CASH FUND CASH FUND CASH FUND CASH FUND CASH FUND CASH FUND CASH FUND
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL UNIVERSAL UNIVERSAL SERVICE SERVICE INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
1 Year $32 $26 $25 $64 $50 $383 $85 $86
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
3 Years $100 $80 $77 $202 $157 $1,164 $265 $268
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
5 Years $174 $141 $135 $351 $274 $1,962 $460 $466
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
10 Years $393 $318 $306 $786 $616 $4,045 $1,025 $1,037
- ---------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
COMPARISON OF INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES
The investment objective of each Forum Series and its corresponding Monarch
Series is the same - to provide high current income to the extent consistent
with preservation of capital and the maintenance of liquidity.
Each Forum Series and its corresponding Monarch Series seeks to maintain a
stable net asset value of $1.00 per share by investing substantially all of
their assets in the same portfolio of Core Trust (each a "Portfolio,"
collectively, the "Portfolios") pursuant to a Core and Gateway(R) structure.
Each Portfolio (1) invests in a diversified portfolio of money market securities
which are high credit quality, short-term, U.S. dollar denominated debt
securities ("Money Market Securities"); (2) invests in securities with remaining
maturities of 397 days or less; and (3) maintains a dollar weighted average
maturity of its investments of 90 days or less.
The investment policies of each Forum Series and its corresponding Monarch
Series and the Portfolio in which they invest are the same and are summarized in
the following table:
6
- ------------------------------------------------------ ----------------------------------------------------
FUND/PORTFOLIO PRIMARY INVESTMENTS
- ------------------------------------------------------ ----------------------------------------------------
Forum Treasury Fund At least 80% of net assets invested in securities
Monarch Treasury Fund issued or guaranteed by the U.S. Treasury
Treasury Cash Portfolio ("Treasury Securities") and Repurchase agreements
backed by Treasury Securities. Repurchase
agreements are transactions in which securities
are purchased and simultaneously committed to be
resold to another party at an agreed-upon date and
at a price reflecting a market rate of interest
("Repurchase Agreements").
- ------------------------------------------------------ ----------------------------------------------------
Forum Government Fund At least 80% of net assets in securities issued or
Monarch Government Fund guaranteed by the U.S. Government, its agencies,
Government Cash Portfolio or instrumentalities ("Government Securities") and
Repurchase Agreements backed by Government
Securities.
- ------------------------------------------------------ ----------------------------------------------------
Forum Cash Fund Invests in a broad spectrum of Money Market
Monarch Cash Fund Securities including:
Cash Portfolio o Securities issued by financial
institutions, such as certificates of
deposit, bankers' acceptances and time
deposits
o Securities issued by domestic companies,
such as commercial paper
o Government Securities
o Repurchase Agreements
- ------------------------------------------------------ ----------------------------------------------------
Immediately after each Reorganization, each Monarch Series will redeem its
investment in Core Trust and will receive its pro-rata share of the assets of
the Portfolio in which it is invested. Thereafter, Forum Investment Advisors,
LLC ("FIA"), each Portfolio's investment adviser, will manage each Monarch
Series directly. Each Monarch Series will thereafter be managed in the same
manner as the corresponding Portfolio as set forth in the above table. Each
Monarch Series, like its corresponding Portfolio, will also continue to invest
in Money Market Securities with maturities of 397 days or less and will
maintain a dollar weighted average maturity of its investments of 90 days or
less.
FIA'S INVESTMENT PROCESS. FIA continuously monitors economic factors such
as interest rate outlooks and technical factors such as prevailing interest
rates and Federal Reserve policy to determine an appropriate maturity profile
for a Portfolio's investments. FIA searches for securities that satisfy the
maturity profile of a Portfolio and that provide the greatest potential return
relative to the risk of the security. FIA will continue to utilize the same
investment process with respect to each Monarch Series after each Monarch Series
redeems its interest in Core Trust immediately after the Reorganizations.
FIA may sell a Money Market Security held by a Portfolio if:
o Revised economic forecasts or interest rate outlook requires a
repositioning of a Portfolio or a Monarch Series;
o The security subsequently fails to meet FIA's investment criteria; or
o Funds are needed for another purpose.
7
FIA will follow the same process to sell securities on behalf of each
Monarch Series after each Monarch Fund redeems its interest in Core Trust
immediately after the Reorganizations.
COMPARISON OF INVESTMENT ADVISORY SERVICES AND FEES
Each Forum Series and its corresponding Monarch Series invests in the same
Portfolio. FIA is the investment adviser for each Portfolio and is located at
Two Portland Square, Portland, Maine 04101. FIA is a privately owned company
controlled by John Y. Keffer, the chairman of Forum and of Monarch. In addition
to the Portfolios, FIA manages one other money market fund, one taxable bond
fund, and three tax-free bond funds.
Since their inception, Anthony R. Fischer, Jr., has been the portfolio
manager responsible for the day-to-day management of the Portfolios. Mr. Fischer
has over 25 years of experience in the money market industry.
No Forum Series or Monarch Series incurs investment advisory fees directly.
Rather, each Forum Series and its corresponding Monarch Series pay their
pro-rata share of the investment advisory fee of the Portfolio in which they
invest. Under an Investment Advisory Agreement with Core Trust (the "Core
Advisory Agreement"), FIA is entitled to receive the following annual fee from
the Portfolios:
- ------------------------------------------------------ -------------------------------------------------------
FEE AS A % OF THE
ANNUAL AVERAGE DAILY NET ASSETS
PORTFOLIOS OF THE PORTFOLIOS COMBINED
- ------------------------------------------------------ -------------------------------------------------------
Treasury Cash Portfolio, 0.06% for the first $200 million in assets,
Cash Portfolio and 0.04% of the next $300 million in assets,
Government Cash Portfolio and 0.03% of the remaining assets.
- ------------------------------------------------------ -------------------------------------------------------
For the fiscal year ended August 31, 2002, the aggregate advisory fee paid
to FIA from each Portfolio, as a percentage of its average net assets, was:
- ------------------------------------- ----------------------- ------------------------ -----------------------
TREASURY CASH GOVERNMENT CASH CASH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------- ----------------------- ------------------------ -----------------------
Advisory Fee 0.03% 0.03% 0.03%
- ------------------------------------- ----------------------- ------------------------ -----------------------
Immediately after each Reorganization, each Monarch Series will withdraw
its investment in its corresponding Portfolio and FIA, through Mr. Fischer, will
manage the Monarch Series directly under an Investment Advisory Agreement with
Monarch (the "Monarch Advisory Agreement"). The Monarch Advisory Agreement will
be substantially similar to the Core Advisory Agreement and FIA will receive the
same advisory fee from the Monarch Series, as it did from the Portfolios.
8
COMPARISON OF OTHER SERVICE PROVIDERS
The following FFG affiliates serve as service providers to both Forum and
Monarch: (1) Forum Administrative Services, LLC ("FAdS") serves as
administrator; (2) Forum Fund Services, LLC ("FFS") serves as principal
underwriter; (3) Forum Shareholder Services, LLC ("FSS") serves as transfer
agent; (4) Forum Accounting Services, LLC serves as fund accountant; and (5)
Forum Trust, LLC serves as custodian (collectively, the "Forum Companies"). Each
of the Forum Companies is an indirect wholly owned subsidiary of FFG and is
controlled by John Y. Keffer, the Chairman and President of Forum and Monarch.
FFG is indirectly controlled by John Y. Keffer. FFG and Mr. Keffer stand to
benefit financially from each Reorganization in that the consolidation of the
Money Market Assets into one registrant is expected to provide certain economies
of scale that will effectively decrease the level of fee waivers required of FFG
to maintain the net expenses of each Monarch Series at pre-Reorganization
levels. Fee waivers are voluntary and may be reduced or eliminated at any time.
COMPARISON OF MULTIPLE CLASS STRUCTURES
Each Monarch Series offers five (5) share classes - Preferred, Universal,
Institutional, Institutional Service and Investor Shares. Each Forum Series
offers three (3) share classes - Institutional, Institutional Service, and
Investor Shares except Forum Treasury Fund which offers (2) share classes -
Institutional and Institutional Service Shares.
The following classes of each Forum Series will reorganize with and into
the below referenced classes of the corresponding Monarch Series:
- ---------------------------------------------------------- -------------------------------------------------------
FORUM SERIES/CLASS MONARCH SERIES/CLASS
- ---------------------------------------------------------- -------------------------------------------------------
Forum Treasury Fund Monarch Treasury Fund
- ---------------------------------------------------------- -------------------------------------------------------
Institutional Shares Universal Shares
- ---------------------------------------------------------- -------------------------------------------------------
Institutional Service Shares Institutional Service Shares
- ---------------------------------------------------------- -------------------------------------------------------
Forum Government Fund Monarch Government Fund
- ---------------------------------------------------------- -------------------------------------------------------
Institutional Shares Universal Shares
- ---------------------------------------------------------- -------------------------------------------------------
Institutional Service Shares Institutional Service Shares
- ---------------------------------------------------------- -------------------------------------------------------
Investor Shares Investor Shares
- ---------------------------------------------------------- -------------------------------------------------------
Forum Cash Fund Monarch Cash Fund
- ---------------------------------------------------------- -------------------------------------------------------
Institutional Shares Universal Shares
- ---------------------------------------------------------- -------------------------------------------------------
Institutional Service Shares Institutional Service Shares
- ---------------------------------------------------------- -------------------------------------------------------
Investor Shares Investor Shares
- ---------------------------------------------------------- -------------------------------------------------------
Institutional Shares of each Forum Series and Universal Shares of each
Monarch Series are available for purchase by institutional investors.
Institutional Service Shares of each Forum Series and Monarch Series are
available for purchase by banks, trust companies, and certain other financial
institutions for their own and customer accounts. Investor Shares of each Forum
Series and Monarch Series are available for purchase by retail investors.
9
The minimum initial investment for Institutional Shares of each Forum
Series and Universal Series of each Monarch Series is $1 million while the
minimum initial investment for Institutional Service Shares of each Forum Series
and Monarch Series is $100,000. Institutional and Institutional Service Shares
of each Forum Series and Institutional Service Shares of each Monarch Series
also have a minimum subsequent investment of $250.
The minimum initial investment and minimum subsequent investment for
Investor Shares of each Forum Series and each Monarch Series is as follows:
- --------------------------------------------------- -------------------------------- -----------------------------
MINIMUM INITIAL MINIMUM SUBSEQUENT
INVESTMENT INVESTMENT
- --------------------------------------------------- -------------------------------- -----------------------------
FORUM SERIES
- --------------------------------------------------- -------------------------------- -----------------------------
Standard Accounts $10,000 $500
- --------------------------------------------------- -------------------------------- -----------------------------
Traditional and Roth IRA Accounts $2,000 $250
- --------------------------------------------------- -------------------------------- -----------------------------
Accounts with Systematic Investment Plans $250 $250
- --------------------------------------------------- -------------------------------- -----------------------------
Exchanges $2,000 $250
- --------------------------------------------------- -------------------------------- -----------------------------
MONARCH SERIES
- --------------------------------------------------- -------------------------------- -----------------------------
Standard Accounts $5,000 $0
- --------------------------------------------------- -------------------------------- -----------------------------
KEY DIFFERENCES. In contrast to Institutional Shares and Investor Shares of each
Forum Series, Universal Shares and Investor Shares of each Monarch Series do not
have a minimum subsequent investment requirement. Moreover, the minimum initial
investment for purchases of Investor Shares of a Forum Series ranges from $250
to $10,000 depending on the type of account or transaction involved whereas the
minimum initial investment for all accounts and/or transaction types for
investments in Investor Shares of a Monarch Series is $5,000.
COMPARISON OF PURCHASE, REDEMPTION, AND EXCHANGE PRIVILEGES
PURCHASE PROCEDURES. Each Forum Series and Monarch Series continuously
offers its shares through FFS. You may purchase shares of each Forum Series and
Monarch Series by check, wire, ACH payment, systematic investment, or through
financial institutions. All checks must be made payable in U.S. dollars and
drawn on U.S. financial institutions. No Forum Series or Monarch Series may
accept purchases made by cash, cash equivalents (for instance, you may not pay
by money order, cashier's check, bank draft or traveler's check), or credit card
check.
Purchases of Investor Shares of each Forum Series may also be made through
systematic investments. Under a Forum Series' systematic investment plan, you
may invest a specified amount of money in the Forum Series once or twice a month
on specified dates. These payments are taken from your bank account by ACH
payment. Systematic investments must be for at least $250. No Monarch Series
offers a systematic investment plan with respect to Investor Shares.
If you purchase shares directly from a Forum Series, you will receive
monthly statements and a confirmation of each transaction. If you purchase
shares directly from a Monarch Series, you will only receive monthly statements.
If you purchase shares of either a Forum Series or a Monarch Series through a
financial institution, the policies and fees charged by that institution may be
different from those charged by the Forum Series or the Monarch Series.
10
Purchases of shares of a Forum Series and a Monarch Series may be made on
each weekday except on Federal holidays and other days that the Federal Reserve
Bank of San Francisco is closed ("Business Day").
You may purchase shares of a Forum Series or a Monarch Series at the net
asset value ("NAV") of each class next calculated after FSS receives your
request in proper form. Investments are not accepted or invested by a Forum
Series or a Monarch Series during the period before receipt of funds on deposit
at a Federal Reserve Bank ("Federal Funds"). Shares of a Forum Series or a
Monarch Series become entitled to receive distributions on the day of purchase
if the order and payment are received in proper form by FSS as follows:
- ------------------------------------- -----------------------------------
ORDER MUST BE RECEIVED BY PAYMENT MUST BE RECEIVED BY
- ------------------------------------- -----------------------------------
2:00 p.m., Eastern time/ 4:00 p.m., Eastern time/
11:00 a.m., Pacific time 1:00 p.m., Pacific time
- ------------------------------------- -----------------------------------
KEY DIFFERENCES. Each Forum Series offers a systematic investment plan for
investments in Investor Shares while its corresponding Monarch Series does not
offer a similar plan with respect to its Investor Shares. Additionally, if you
purchase shares directly from a Forum Series, you will receive monthly
statements and confirmations of each transaction while if you purchase shares
directly from a Monarch Series, you will only receive monthly statements.
EXCHANGE PROCEDURES. Shareholders of a Forum Series may exchange their
Institutional, Institutional Service, and Investor Shares for Institutional,
Institutional Service and Investor Shares, respectively, of another Forum
Series, or for Institutional, Institutional Service and Investor Shares of Daily
Assets Government Fund, another money market series of Forum, or for certain
other Forum series.
Shareholders of a Monarch Series may exchange their Universal,
Institutional Service, and Investor Shares for Universal, Institutional Service,
and Investor Shares of another Monarch Series. Shareholders of a Monarch Series
may also exchange their Institutional Service Shares for Institutional Service
Shares of Daily Assets Government Obligations Fund, another Monarch series.
Not all classes of a Forum Series or a Monarch Series may be available for
purchase in every state. Shares of Forum's Daily Assets Government Fund, another
series of Forum, and Monarch's Daily Assets Government Obligations Fund also may
not be available for purchase in every state. Forum's Daily Assets Government
Fund and Monarch's Daily Assets Government Obligations Fund have the same
objective and investment policies and Forum's Daily Assets Government Fund is
expected to reorganize with and into Monarch's Daily Assets Government
Obligations Fund, a newly organized series, prior to August 31, 2003. It is
anticipated that Investor Shares and Institutional Shares of Forum's Daily
Assets Government Fund will cease operations prior to the reorganization of the
fund with and into Monarch's Daily Assets Government Obligations Fund.
11
REDEMPTION PROCEDURES. You may redeem shares of a Forum Series and a
Monarch Series at the NAV next calculated for the shares after FSS receives your
request in proper form. Shares of a Forum Series and a Monarch Series are not
entitled to receive distributions declared on or after the day on which a
redemption order is accepted by FSS.
You may redeem shares of a Forum Series or a Monarch Series by mail, wire,
or telephone. If FSS receives your wire redemption order with respect to shares
of a Forum Series or a Monarch Series after 2:00 p.m., Eastern time/11:00 a.m.,
Pacific time, FSS will wire proceeds to you on the next Business Day.
Redemptions of Investor Shares of a Forum Series may also be made through
systematic withdrawal. Under a Forum Series systematic withdraw plan, you may
redeem a specified amount of money once a month on a specified date. These
payments are sent from your shareholder account to a designated bank account by
ACH payment. Systematic withdraws must be for at least $250.
Redemptions of Investor Shares of a Monarch Series may be made by writing
checks provided by the Monarch Series against your account balance. Each Monarch
Series charges a $10 fee for all checks presented in amounts of less than $500
and deducts this fee directly from your shareholder account.
KEY DIFFERENCES. In addition to redeeming shares by mail, wire, or by
phone, you may redeem Investor Shares of a Forum Series pursuant to systematic
withdrawals and you may redeem Investor Shares of a Monarch Series by writing
checks provided by the Monarch Series against your account.
COMPARISON OF DISTRIBUTION POLICIES
Each Forum Series and Monarch Series declares distributions from its net
investment income daily and pays those distributions monthly. In addition, each
Forum Series and Monarch Series pays capital gain distributions at least
annually.
All distributions of each Forum Series and Monarch Series are reinvested in
additional shares unless a shareholder elects to receive distributions in cash.
COMPARISON OF DISTRIBUTION AND SHAREHOLDER SERVICING FEES
FOrum has adopted a Shareholder Service Plan with respect to Institutional
Service Shares and Investor Shares of each Forum Series. Under the Shareholder
Service Plan, Forum may pay FAdS a shareholder service fee of up to 0.20% and
0.25%, respectively, of the average daily net assets of Institutional Service
Shares and Investor Shares of each Forum Series. FAdS may pay any or all of
these fees to various financial institutions that provide shareholder servicing
to their customers who hold Institutional Service Shares and Investor Shares of
a Forum Series.
12
Similarly, Monarch has adopted a Shareholder Service Agreement with respect
to Institutional Service Shares and Investor Shares of each Monarch Series.
Under the Shareholder Service Agreement, Monarch may pay FAdS a shareholder
service fee of up to 0.20% of the average daily net assets of each of
Institutional Service Shares and Investor Shares of each Monarch Series. FAdS
may pay any or all of these fees to various financial institutions that provide
shareholder servicing to their customers who hold Institutional Service Shares
and Investor Shares of a Monarch Series.
Forum has also adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act") under which Forum
pays FFS a distribution fee at an annual rate of up to 0.50% of the average
daily net assets of the Investor Shares of each Forum Series. The Board's
approval of the Distribution Plan was subject to the condition that FFS would
not charge a distribution fee at an annual rate of more than 0.30% of the
average daily net assets of Investor Shares of a Forum Series without additional
Board approval.
Similarly, Monarch has adopted a Distribution Plan pursuant to Rule 12b-1
under the 1940 Act under which Monarch pays FFS a distribution fee at an annual
rate of up to 0.25% of the average daily net assets of the Investor Shares of
each Monarch Series.
KEY DIFFERENCES. The shareholder servicing fee authorized under the Monarch
Shareholder Service Agreement for Investor Shares of a Monarch Series is 0.05%
lower than the shareholder servicing fee authorized under Forum's Shareholder
Service Plan for Investor Shares of a Forum Series. Additionally, the
distribution fee authorized under the Monarch Distribution Plan for Investor
Shares of a Monarch Series is 0.05% lower than the distribution fee authorized
by the Board with respect to Forum's Distribution Plan for Investor Shares of a
Forum Series.
COMPARISON OF NET ASSET VALUE CALCULATION PROCEDURES
Each Forum Series and Monarch Series calculates its NAV as of 4:00 p.m.,
Eastern time/1:00 p.m., Pacific time on each Business Day. The time at which NAV
is calculated may be changed in case of an emergency. In order to maintain a
stable NAV of $1.00 per share, each Forum Series and Monarch Series values
securities in its portfolio on an amortized cost basis.
TAX MATTERS RELATING TO THE REORGANIZATIONS
Forum and Monarch will receive an opinion from Kirkpatrick & Lockhart LLP,
counsel to Monarch and its Independent Trustees, to the effect that each
Reorganization will qualify as a tax-free reorganization within the meaning of
Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the
"Code"). Consequently, no gain or loss will be recognized for federal income tax
purposes by a Forum Series, the corresponding Monarch Series, or their
respective shareholders as a result of a Reorganization. There is additional
information about the federal income tax consequences of the Reorganizations
under "Taxation."
13
INVESTMENT RISKS
An investment in a Forum Series or a Monarch Series is not a deposit in a
bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although each Forum Series and
Monarch Series seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in a Forum Series or Monarch
Series. There is also no assurance that any Forum Series or Monarch Series will
achieve its investment objective. An investment in a Forum Series or a Monarch
Series is not by itself a complete or balanced investment program.
Because each Forum Series and each Monarch Series invest in the same
respective Portfolio they have the same risks. The principal risks of investing
in a Forum Series and a Monarch Series and the Portfolio in which they invest
are:
INTEREST RATE RISK. Interest rates may affect the value of a Portfolio's
investments. Increases in interest rates may cause a decline in the value of a
Portfolio's investments. In addition, those increases may cause the investment
performance of the corresponding Forum Series and Monarch Series to underperform
currently available investments.
CREDIT RISK. The value of a security held by a Portfolio may decline if the
security's credit rating is downgraded or credit quality otherwise falls. In the
worst case, an issuer of a security or a Repurchase Agreement counterparty may
default or otherwise be unable to make timely payments of interest or principal.
Not all Government Securities are supported by the full faith and credit of the
U.S. Government. Generally, credit risk is greatest for Cash Portfolio/Forum
Cash Fund/Monarch Cash Fund followed by Government Cash Portfolio/Forum
Government Fund/Monarch Government Fund and then Treasury Cash Portfolio/Forum
Treasury Fund/Monarch Treasury Fund.
MANAGEMENT RISK. As with all mutual funds, the Portfolio's investment adviser
may make poor investment decisions.
The above risks can result in a decrease in the value of a security or all
the securities owned by a Portfolio and, therefore, cause a change in the $1.00
per share value of the corresponding Forum Series and Monarch Series. These
risks also can result in lower investment performance of the applicable Forum
Series and Monarch Series.
As discussed previously, immediately after the Reorganizations, each
Monarch Series will withdraw its investment in Core Trust and invest directly in
securities. The risks associated with an investment in each Monarch Series will
remain unchanged as a result of the underlying Reorganization and the subsequent
withdraw of its investment in Core Trust.
14
INFORMATION ABOUT THE PLAN
This section summarizes the material terms of the Plan. This section is
qualified in its entirety by the terms and conditions contained in the Plan, a
form of which is attached as Exhibit A to this Proxy Statement/Prospectus.
GENERAL DESCRIPTION OF THE PLAN
The Plan is the second stage of a larger transaction to consolidate the
Money Market Assets of Forum, Core Trust and Monarch in order to take advantage
of the economies of scale and operational efficiencies that would result from
the combination of the Money Fund Assets into one registrant. The first stage
involved the reorganization of Monarch from a Delaware business trust into a
Massachusetts business trust on April 23, 2003. The final stage involves the
redemption of each Monarch Series investment in Core Trust after consummation of
the Reorganizations.
Under the Plan, each Forum Series will transfer its assets to a
corresponding Monarch Series with the same investment objective, policies, and
risks in exchange solely for shares of the Monarch Series and the Monarch
Series' assumption of applicable Forum Series' liabilities. The Plan further
provides that each Forum Series will then distribute the shares received from
the Monarch Series proportionately to its shareholders and terminate. Each Forum
Series' shareholder holding Institutional, Institutional Service, and Investor
Shares will receive Universal, Institutional Service, and Investor Shares,
respectively, of the corresponding Monarch Series.
The Plan contains customary representations, warranties, and conditions
designed to ensure that each Reorganization is fair to the participating Forum
Series and its shareholders. The Plan provides that the consummation of a
Reorganization is contingent upon, among other things, approval of the Plan by
the participating Forum Series' shareholders. The Plan may be terminated with
respect to a Reorganization if, on the closing Date of the Reorganization
("Closing Date"), any of the applicable conditions have not been met or if the
representations and warranties are not true, or if the Board or the Monarch
Board determines that consummation of a Reorganization is not in the best
interests of the shareholders of the participating Forum Series or Monarch
Series, respectively. The Plan also provides that all of the audit, legal, and
proxy solicitation costs of each Reorganization will be borne by FFG. FFG
currently provides administrative, transfer agency, fund accounting and custody
services to each Forum Series and Monarch Series.
The Closing Date of each Reorganization is scheduled to occur on or about
June 6, 2003. The Board and the Monarch Board, by agreement, may change the
Closing Date of a Reorganization.
The approval of the Plan by shareholders of one Forum Series is not
contingent on the approval of the Plan by the shareholders of another Forum
Series. If shareholders of a Forum Series approve the Plan, that Forum Series
will reorganize into the corresponding Monarch Series regardless of whether
shareholders of another Forum Series approve the Plan. If the shareholders of a
Forum Series do not approve the Plan, the Reorganization involving that Forum
Series will not take place.
15
If a Forum Series' shareholders approve the Plan, shares of the Forum
Series thereafter will no longer be offered for sale, except for the
reinvestment of dividend and capital gain distributions or through established
automatic investment plans. From the date of shareholder approval until the
close of business on the Closing Date, shareholders may continue to add to their
existing account only through an established automatic investment plan or
through the reinvestment of dividend and capital gain distributions.
If shareholders of a Forum Series approve the Plan, the stock transfer
books of that Forum Series will be permanently closed as of 4:00 p.m., Eastern
time, on the Closing Date. The Forum Series will only accept requests for
redemption received in proper form before 4:00 p.m., Eastern time, on the
business day immediately preceding the Closing Date. Requests received after
that time will be considered requests to redeem shares of the corresponding
Monarch Series.
SECURITIES TO BE ISSUED
Forum, a Delaware business trust, is subject to Delaware law while Monarch,
a Massachusetts business trust, is subject to Massachusetts' law. Delaware law
provides that Forum's shareholders are entitled to the same limitations of
personal liability extended to stockholders of private corporations for profit.
Forum's Trust Instrument contains an express disclaimer of shareholder liability
for the debts, liabilities, obligations and expenses of each Forum Series and
provides for indemnification out of the Forum Series' property of any
shareholder or former shareholder held personally liable for the obligations of
the Forum Series. Forum's Trust Instrument also provides that each Forum Series
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Forum Series and satisfy any
judgment thereon. Thus, the risk to a Forum Series shareholder of incurring
financial loss on account of shareholder liability is limited to circumstances
in which Delaware law does not apply, no contractual limitation of liability was
in effect, and the Forum Series is unable to meet its obligations. Under
Massachusetts law, shareholders of a Monarch Series may, under certain
circumstances, be held personally liable for the obligations of the Monarch
Series. Monarch's Agreement and Declaration of Trust, however, provides
substantially similar shareholder indemnification coverage as that included in
Forum's Trust Instrument.
Both Forum and Monarch are authorized to issue an unlimited number of
authorized shares of beneficial interest, no par value. The Board and the
Monarch Board may, without shareholder vote, divide the authorized shares into
an unlimited number of separate portfolios or series. The Board and the Monarch
Board may also, without shareholder approval, divide series into two or more
classes of shares.
Each share of each series of Forum and Monarch, regardless of the share
class, has equal distribution, liquidation and voting rights, and fractional
shares have these rights proportionately. Each share class of Forum and of
Monarch bears its own expenses related to the distribution of the shares (and
certain other expenses such as transfer agency, shareholder service and
16
administration expenses). Generally, shares of Forum and Monarch will be voted
separately by individual series except if: (1) the 1940 Act requires shares to
be voted in the aggregate and not by individual series; (2) the 1940 Act
requires a class vote; or (3) the Board or the Monarch Board, as applicable,
determines that the matter affects more than one series and all affected series
must vote.
Neither Delaware nor Massachusetts law requires Forum or Monarch,
respectively, to hold annual meetings of shareholders, and generally Forum and
Monarch will hold shareholder meetings only when required by federal or state
law. Shareholders of Forum or Monarch representing 10% or more of Forum's or
Monarch's (or a series thereof) shares may, as set forth in their respective
organizational documents, call meetings of Forum or Monarch (or a series
thereof), as applicable, for any purpose related to Forum or Monarch (or a
series thereof), as applicable, including, the removal of one or more Trustees.
There are no conversion or preemptive rights in connection with shares of
Forum or Monarch. All shares of Forum and Monarch are fully paid and
non-assessable. A shareholder of a Forum Series or a Monarch Series is entitled
to the shareholder's pro-rata share of all distributions arising from that
series' assets and, upon redeeming shares, will receive the portion of the
series' net assets represented by the redeemed shares.
KEY DIFFERENCE. In contrast to the Forum Series, a Monarch Series may
reorganize into or merge with another registered, open-end investment company
without a shareholder vote.
REASONS FOR THE REORGANIZATIONS
At meetings held on February 11, 2003, the Board and the Monarch Board,
including their Independent Trustees, unanimously approved the Plan and
determined that each Reorganization contemplated by the Plan would be in the
best interests of the shareholders of the partcipants Forum Series and Monarch
Series, respectively.
In considering the Plan, the Board and the Monarch Board considered that
FFG would no longer support fee waivers required to maintain the expenses of
each Forum Series at their current levels. The Board and the Monarch Board,
including their Independent Trustees, also took into consideration (with the
advice and assistance of independent legal counsel) that each Reorganization
would provide certain benefits to the shareholders of each Forum Series and each
Monarch Series based on the following information provided during the meeting:
1. Cost Savings: Each Reorganization would eliminate the marketing and
management overlap arising from operating different funds with the
same investment objective in a Core and Gateway structure.
2. Dilution: The Plan includes provisions intended to avoid dilution of
the interests of the shareholders of each Forum Series. Under the
Plan, each Forum Series' shareholder will receive shares of a
corresponding class of the Monarch Series equal in value to its share
of the net assets of the class of the Forum Series held. Consequently,
the Board and the Monarch Board, including the Independent
17
Trustees, determined that the Reorganizations would not dilute the
interests of the shareholders of the applicable Forum Series.
3. Similarity of Investment Objectives and Policies: Each Forum Series
and its corresponding Monarch Series have the same investment
objective - to provide high current income consistent with
preservation of capital and the maintenance of liquidity. Each Forum
Series and its corresponding Monarch Series also share the same
investment policies.
4. Expenses: Although certain service provider fees of each Monarch
Series are higher than those currently charged to its corresponding
Forum Series, the Reorganization will result in lower gross expenses
for the Forum Series and the same net expenses. The consolidation of
Money Market Assets into one registrant is expected to provide certain
economies of scale that will effectively decrease the level of fee
waivers required of FFG to maintain the net expenses of each Monarch
Series at pre-Reorganization levels. The Board noted, however, that
fee waivers are voluntary and may be reduced or eliminated at any
time.
5. Portfolio Management: Each Reorganization would result in a continuity
of portfolio management. Prior to each Reorganization, each Forum
Series and its corresponding Monarch Series will invest substantially
all of their assets in the same series of Core Trust managed by FIA.
Immediately after the Reorganizations, each Monarch Series will
withdraw its investment from Core Trust and be managed directly by
FIA.
6. Tax-Free Nature of the Reorganization: It is anticipated that each
Reorganization will be accomplished without federal tax consequences
for the Forum Series, Monarch Series and their respective
shareholders.
7. Transaction Costs: The audit, legal and proxy solicitation costs of
each Reorganization will be borne by FFG.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMENDS APPROVAL OF THE PLAN.
18
TAXATION
Each Forum Series and Monarch Series has similar tax treatment and each
intends to continue to qualify each taxable year to be treated as a regulated
investment company (a "RIC") under the Code. As a RIC, each Forum Series and
Monarch Series generally will not be liable for federal income tax on its net
investment income and capital gain it distributes to its shareholders. Each
Forum Series and Monarch Series intends to distribute all of its net income and
net capital gains each year. Accordingly, no Forum Series or Monarch Series
should be subject to federal income or excise taxes.
TAX CONSEQUENCES OF DISTRIBUTIONS
The distribution of net income (including net short-term capital gain) by a
Forum Series or a Monarch Series is taxable as ordinary income. The distribution
of net capital gain (that is, the excess of long-term capital gain over net
short-term capital loss, if any) by a Forum Series or a Monarch Series is
taxable as long-term capital gain regardless of how long shares are held. Each
Forum Series and Monarch Series expects that its distributions will primarily
consist of net income or short-term capital gain, if any, as opposed to net
capital gain. Distributions by a Forum Series and a Monarch Series may also be
subject to certain state and local taxes.
Shareholders of a Forum Series or a Monarch Series that are not U.S.
citizens or residents and that are not considered to be engaged in a U.S. trade
or business under the Code generally will be subject to withholding tax at a 30%
rate on distributions of the series' net income, including net short-term
capital gains. This rate may be reduced under an applicable income tax treaty.
Net capital gain distributions by either Series generally will not be subject to
withholding tax for such shareholders.
TAX CONSEQUENCES OF THE REORGANIZATIONS
As a condition to the consummation of each Reorganization, Forum and
Monarch will receive an opinion from Kirkpatrick & Lockhart LLP to the effect
that, based on the facts and assumptions stated therein as well as certain
representations made by Forum and Monarch, including those in the Plan, for
federal income tax purposes:
(1) Each Monarch Series' acquisition of its corresponding Forum Series'
assets in exchange solely for that Monarch Series' shares and its
assumption of that Forum Series' liabilities, followed by that Forum
Series' distribution of those shares PRO RATA to its shareholders
constructively in exchange for their Forum Series shares, will qualify
as a "reorganization" (as defined in section 368(a)(1)(C) of the
Code), and each Forum Series and Monarch Series will be "a party to a
reorganization" (within the meaning of section 368(b) of the Code);
(2) Each Forum Series will recognize no gain or loss on the transfer of
its assets to its corresponding Monarch Series in exchange solely for
that Monarch Series' shares and its assumption of that Forum Series'
liabilities or on the subsequent distribution of those shares to that
Forum Series' shareholders in constructive exchange for their Forum
Series shares;
19
(3) Each Monarch Series will recognize no gain or loss on its receipt of
the transferred assets in exchange solely for its shares and its
assumption of its corresponding Forum Series' liabilities;
(4) Each Monarch Series' basis in the transferred assets will be the same
as its corresponding Forum Series' basis therein immediately before
the Reorganization in which they particpate, and each Monarch Series'
holding period for those assets will include its corresponding Forum
Series' holding period therefor;
(5) Each Forum Series shareholder will recognize no gain or loss on the
constructive exchange of all its Forum Series shares solely for the
corresponding Monarch Series' shares pursuant to a Reorganization; and
(6) Each Forum Series shareholder's aggregate basis in the corresponding
Monarch Series' shares it receives in a Reorganization will be the
same as the aggregate basis in its Forum Series shares it
constructively surrenders in exchange for those Monarch Series shares,
and its holding period for those Monarch Series shares will include
its holding period for those Forum Series shares, provided the
shareholder holds them as capital assets on the Closing Date.
The tax opinion will state that no opinion is expressed as to the effect of
a Reorganization on a Forum Series and Monarch Series participating therein or
any shareholder thereof with respect to any asset as to which any unrealized
gain or loss is required to be recognized for federal income tax purposes at the
end of a taxable year (or on the termination or transfer thereof) under a
mark-to-market system of accounting.
Shareholders of each Forum Series should consult their tax advisers
regarding the effect on them, if any, of the Reorganization in which that Forum
Series is participating in light of their individual circumstances. Because the
foregoing discussion only relates to the federal income tax consequences of the
Reorganizations, those shareholders also should consult their tax advisers about
state and local tax consequences, if any, of that Reorganization.
CAPITALIZATION
The following tables set forth the capitalization of each class of each
Forum Series and its corresponding Monarch Series as of August 31, 2002 and, on
a pro forma combined basis, the capitalization of each corresponding Monarch
Series' class as of August 31, 2002, assuming that the Plan is approved and the
applicable Reorganization is consummated. For Forum Government Fund and Forum
Cash Fund, only pro-forma capitalization information is provide for
Institutional Service Shares of each Monarch Series as that class will not have
any assets prior to the applicable Reorganization.
20
FORUM TREASURY FUND/MONARCH TREASURY FUND
- -------------------- ----------------- --------------- ----------------- --------------- ----------------- --------------
PRO FORMA
PRO FORMA MONARCH
FORUM MONARCH MONARCH FORUM MONARCH TREASURY FUND
TREASURY FUND TREASURY FUND TREASURY FUND TREASURY FUND TREASURY FUND
----------------- --------------- ----------------- --------------- ----------------- --------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL UNIVERSAL UNIVERSAL SERVICE SERVICE SERVICE
SHARES SHARES SHARES SHARES SHARES SHARES
- -------------------- ----------------- --------------- ----------------- --------------- ----------------- --------------
Net Assets $103,281,355 $104,336 $103,385,691 $11,657,095 $20,067,958 $31,725,053
- -------------------- ----------------- --------------- ----------------- --------------- ----------------- --------------
Net Asset Value
Per Share $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------- ----------------- --------------- ----------------- --------------- ----------------- --------------
Shares Outstanding 103,273,820 104,334 103,378,154 11,655,616 20,058,874 31,714,490
- -------------------- ----------------- --------------- ----------------- --------------- ----------------- --------------
FORUM GOVERNMENT FUND/MONARCH GOVERNMENT FUND
- --------------- -------------- ------------- ------------ ------------- ------------ ------------- ------------ ------------
PRO FORMA PRO FORMA PRO FORMA
FORUM MONARCH MONARCH FORUM MONARCH FORUM MONARCH MONARCH
GOVERNMENT FUND GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT
FUND FUND FUND FUND FUND FUND FUND
-------------- ------------- ------------ ------------- ------------ ------------- ------------ ------------
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL UNIVERSAL UNIVERSAL SERVICE SERVICE INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- --------------- -------------- ------------- ------------ ------------- ------------ ------------- ------------ ------------
Net Assets $51,619,928 $81,425,667 $133,045,595 $57,519,745 $57,519,745 $561,918 $58,397,316 $58,959,234
- --------------- -------------- ------------- ------------ ------------- ------------ ------------- ------------ ------------
Net Asset
Value Per
Share $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------- -------------- ------------- ------------ ------------- ------------ ------------- ------------ ------------
Shares
Outstanding 51,614,191 81,462,046 133,076,237 57,519,503 57,519,503 561,882 58,390,207 58,952,089
- --------------- -------------- ------------- ------------ ------------- ------------ ------------- ------------ ------------
FORUM CASH FUND/MONARCH CASH FUND
- --------------- -------------- ------------- ------------ ------------ ------------ ----------- -------------- -------------
PRO FORMA PRO FORMA PRO FORMA
FORUM CASH FUND MONARCH CASH MONARCH CASH FORUM CASH MONARCH CASH FORUM CASH MONARCH MONARCH CASH
FUND FUND FUND FUND FUND CASH FUND FUND
-------------- ------------- ------------ ------------ ------------- ----------- ------------- -------------
INSTITUTIONAL
INSTITUTIONAL UNIVERSAL UNIVERSAL SERVICE INSTITUTIONALS INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SERVICE SHARE SHARES SHARES SHARES
- --------------- -------------- ------------- ------------ ------------ ------------- ----------- ------------- -------------
Net Assets $35,199,174 46,833,306 $82,032,480 $49,965,409 $49,965,409 $680,501 $646,284,553 $646,965,054
- --------------- -------------- ------------- ------------ ------------ ------------- ----------- ------------- -------------
Net Asset
Value Per
Share $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------- -------------- ------------- ------------ ------------ ------------- ----------- ------------- -------------
Shares
Outstanding 35,196,905 46,831,876 82,028,781 49,962,783 49,962,783 680,466 646,262,172 646,942,638
- --------------- -------------- ------------- ------------ ------------ ------------- ----------- ------------- -------------
VOTING INFORMATION
This Proxy Statement/Prospectus is being furnished by the Board in
connection with the solicitation of proxies for the Special Meeting of Forum
Series shareholders. Solicitation of proxies will be primarily by mail. Officers
of Forum may also solicit proxies by telephone, facsimile, or in person. The
costs of solicitation will be borne by FFG and are estimated to be under $1,000.
Each share of each Forum Series is entitled to one vote. Approval of the
Plan by the shareholders of each Forum Series requires the affirmative vote of
the lesser of (a) 67% or more of the shares of the Forum Series present at the
Special Meeting or represented by proxy if the holders of more than 50% of the
outstanding shares are present or represented by proxy at the Special Meeting or
(b)
21
more than 50% of the outstanding shares of the Forum Series. Shareholders
holding one third of the outstanding shares of each Forum Series as of the
Record Date present in person or by proxy will constitute a quorum for the
transaction of business at the Special Meeting.
For purposes of determining the presence of a quorum and counting votes on
the matters presented, shares represented by abstentions and "broker non-votes"
will be counted as present, but not votes cast at the Special Meeting and
therefore will have the effect of voting "AGAINST" the proposal. Broker
non-votes are shares held in street name for which the broker indicates that
instructions have not been received from the beneficial owners and other persons
entitled to vote for which the broker lacks discretionary voting authority.
You may vote on the Plan on behalf of a Forum Series in which you invest by
utilizing one of the following options:
BY MAIL: Complete the proxy card enclosed with the Proxy
Statement/Prospectus ("Proxy Card") and return it in the
postage paid envelope provided.
BY TELEPHONE: Call the Toll-Free number on your proxy card.
IN PERSON: Attend the Special Meeting in person at 10:00 a.m. (Eastern
time) on May 28, 2003 at the offices of Forum Financial
Group, LLC, Two Portland Square, 2nd Floor Conference Room,
Portland, Maine 04101.
If you plan to vote by mail, you should complete the Proxy Card by:
1. Indicating whether you vote "FOR", "AGAINST", or "ABSTAIN" from voting
on the Plan by checking the appropriate box on the Proxy Card;
2. Signing and dating the Proxy Card; and
3. Returning it to FSS in the enclosed postage-paid envelope.
Any shareholder may revoke his or her proxy at any time before it is voted
by giving written notice of revocation or by executing and delivering a later
dated proxy to FSS at Two Portland Square, Portland, Maine, 04101, or by
personally casting a vote at the Meeting. To change a vote by written notice of
revocation, you must provide FSS with a "Revocation Letter" that:
1. Identifies yourself;
2. States that as shareholder of a Forum Series, you revoke your prior
decisions as set forth in the previously returned Proxy Card; and
3. Indicates your approval, disapproval or abstention from voting on the
Plan.
If you do not specify a choice on a proxy card that is properly executed
and returned in time to be voted at the Special Meeting, it will be voted "FOR"
the approval of the Plan.
If you do not plan to attend the Special Meeting of Shareholders of the
Forum Series in which you invest on May 28, 2003, FSS must receive your vote by
mail or telephone on or before May 27, 2003. If you do not return your Proxy
Card by that date or you abstain from voting, you will be treated as having
voted "AGAINST" the Plan.
22
It is not anticipated that any matters other than the approval of the Plan
will be brought before the meeting. Should other business be brought before the
meeting, it is intended that all proxies will be voted in accordance with the
judgment of the persons named as proxies. If sufficient votes in favor of
approving the Plan are not received by the time scheduled for the meeting, the
persons named as proxies may propose one or more adjournments of the meeting for
a reasonable period of time to permit further solicitation of proxies. Any
adjournment will require the affirmative vote of a majority of the votes cast on
the question in person or by proxy at the session of the meeting to be
adjourned. The persons named as proxies will vote "FOR" adjournment those
proxies required to be voted "FOR" the approval of the proposal. The persons
named as proxies will vote "AGAINST" adjournment those proxies required to be
voted "AGAINST" the proposal. The costs of any additional solicitation and of
any adjourned session will be paid by FFG.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Forum Series involved in validating
your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration
on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
REGISTRATION VALID SIGNATURE
CORPORATE ACCOUNTS
(1) ABC Corp...................................... ABC Corp.
John Doe, Treasurer
(2) ABC Corp...................................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer............. John Doe
(4) ABC Corp. Profit Sharing Plan................. John Doe, Director
PARTNERSHIP ACCOUNTS
--------------------
(1) The XYZ Partnership........................... Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership.......... Jane B. Smith,
General Partner
TRUST ACCOUNTS
--------------
(1) ABC Trust Account............................. Jane B. Doe, Director
(2) Jane B. Doe, Director u/t/d 12/28/78.......... Jane B. Doe
CUSTODIAL OR ESTATE ACCOUNTS
----------------------------
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr.
UGM/UTMA...................................... John B. Smith
(2) Estate of John B. Smith....................... John B. Smith, Executor
23
INFORMATION REGARDING SHARES OF EACH FORUM SERIES OUTSTANDING
Only shareholders of a Forum Series on April 16, 2003 (the "Record Date")
are entitled to notice of and to vote at the Special Meeting. As of April 16,
2003, shares outstanding of each Forum Series were:
- --------------------------------------------- ----------------------------------- ----------------------------------
TRUST SERIES CLASS OUTSTANDING SHARES
- --------------------------------------------- ----------------------------------- ----------------------------------
Forum Treasury Fund Institutional Shares 120,136,607
- --------------------------------------------- ----------------------------------- ----------------------------------
Forum Treasury Fund Institutional Service Shares 10,384,174
- --------------------------------------------- ----------------------------------- ----------------------------------
Forum Government Fund Institutional Shares 60,496,889
- --------------------------------------------- ----------------------------------- ----------------------------------
Forum Government Fund Institutional Service Shares 53,330,296
- --------------------------------------------- ----------------------------------- ----------------------------------
Forum Government Fund Investor Shares 818,495
- --------------------------------------------- ----------------------------------- ----------------------------------
Forum Cash Fund Institutional Shares 42,427,254
- --------------------------------------------- ----------------------------------- ----------------------------------
Forum Cash Fund Institutional Service Shares 39,517,636
- --------------------------------------------- ----------------------------------- ----------------------------------
Forum Cash Fund Investor Shares 1,219,466
- --------------------------------------------- ----------------------------------- ----------------------------------
From time to time, certain shareholders may own a large percentage of the
shares of a Forum Series. Accordingly, those shareholders may be able to greatly
affect (if not determine) the outcome of a shareholder vote. As of April 16,
2003, and to the best of Forum's knowledge, the following persons
beneficially owned 25% or more of the shares of a Forum Series and may be deemed
to control the Forum Series. For each person that is a company, the jurisdiction
under the laws of which the company is organized and the company's parents are
listed.
- ---------------------------------------- -------------------------------------- -------------------------------------
NAME NUMBER OF SHARES PERCENTAGE OF FUND SHARES
ADDRESS OWNED OWNED
- ---------------------------------------- -------------------------------------- -------------------------------------
Forum Treasury Fund
- ---------------------------------------- -------------------------------------- -------------------------------------
Stratevest & Co.* 120,136,607 92.04%
P.O. Box 2499
Brattleboro, VT 05303
- ---------------------------------------- -------------------------------------- -------------------------------------
Forum Government Fund
- ---------------------------------------- -------------------------------------- -------------------------------------
Stratevest & Co.* 81,739,116 71.30%
P.O. Box 2499
Brattleboro, VT 05303
- ---------------------------------------- -------------------------------------- -------------------------------------
Forum Cash Fund
- ---------------------------------------- -------------------------------------- -------------------------------------
Stratevest & Co.* 32,441,834.38 39.01%
P.O. Box 2499
Brattleboro, VT 05303
- ---------------------------------------- -------------------------------------- -------------------------------------
* Stratevest & Co. is a wholly owned subsidiary of Banknorth Grove, NA and a
Delaware Corporation.
As of April 16, 2003, and to the best of Forum's knowledge, the following
shareholders owned beneficially or of record 5% or more of a class of a Forum
Series:
- -------------------------------------- -------------------------- ------------------------- -------------------------
NAME NUMBER OF SHARES OWNED PERCENTAGE OF CLASS PERCENTAGE OF FUND
ADDRESS OWNED SHARES OWNED
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Treasury Fund - Institutional
Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Stratevest & Co. 120,136,607 100% 92.04%
P.O. Box 2499
Brattleboro, VT 05303
- -------------------------------------- -------------------------- ------------------------- -------------------------
24
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Treasury Fund -
Institutional Service Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Auer & Co. 3,447,879 33.20% 0.03%
C/O Deutsche Bank Trust Co.
A-C 94588
684 Grassmere Park Rd.
Attn. Mutual Funds 2nd Floor
Nashville, TN 37211
- -------------------------------------- -------------------------- ------------------------- -------------------------
Adams Plumbing & Heating Inc. 2,316,708 22.31% 0.02%
P.O. Box 126
Adams, MA 01220
- -------------------------------------- -------------------------- ------------------------- -------------------------
- -------------------------------------- -------------------------- ------------------------- -------------------------
NAME NUMBER OF SHARES OWNED PERCENTAGE OF CLASS PERCENTAGE OF FUND
ADDRESS OWNED SHARES OWNED
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Treasury Fund -
Institutional Service Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Auer & Co. 1,010,019 9.73% 0.77%
C/O Deutsche Bank Trust Co.
A-C 94585
684 Grassmere Park Rd.
Attn. Mutual Funds 2nd Floor
Nashville, TN 37211
- -------------------------------------- -------------------------- ------------------------- -------------------------
Holland Company, Inc. 832,000 8.01% 0.64%
153 Howland Ave.
Adams, MA 01220
- -------------------------------------- -------------------------- ------------------------- -------------------------
National Yiddish Book Center 657,213 6.33% 0.50%
1021 West Street
Amherst, MA 01002-3375
- -------------------------------------- -------------------------- ------------------------- -------------------------
Western Mass Lifecare Corp 550,850 5.30% 0.42%
807 Wilbraham Road
Springfield, MA 01109
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Government Fund -
Institutional Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Stratevest & Co. 60,496,889 77.96% 52.77%
P.O. Box 2499
Brattleboro, VT 05303
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Government Fund -
Institutional Service Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Stratevest & Co. 21,242,227 39.83% 18.53%
P.O. Box 2499
Brattleboro, VT 05303
- -------------------------------------- -------------------------- ------------------------- -------------------------
Mardens Inc. 9,095,019 17.05% 7.93%
184 College Ave.
Waterville, ME 04901
- -------------------------------------- -------------------------- ------------------------- -------------------------
Holyoke Community College 8,222,240 15.42% 7.17%
Business Office
303 Homestead Ave.
Holyoke, MA 01040
- -------------------------------------- -------------------------- ------------------------- -------------------------
Auer & Co. 3,462,802 6.49% 3.02%
C/0 Deutsche Bank Trust Co.
93413 FBO Sound Shore Fund
648 Grassmere Park Rd.
Attn. Mutual Funds, 2nd Floor
Nashville, TN 37211
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Government Fund -
Investor Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Robots Road Associates 603,097 73.68% 0.53%
C/O Boulos Property Mgmt
One Canal Plaza
Portland, Maine 04101
- -------------------------------------- -------------------------- ------------------------- -------------------------
Tell Tool Inc. 107,587 13.14% 0.09%
35 turnpike Industrial Rd
Westfield, MA 01086
- -------------------------------------- -------------------------- ------------------------- -------------------------
25
- -------------------------------------- -------------------------- ------------------------- -------------------------
NAME NUMBER OF SHARES OWNED PERCENTAGE OF CLASS PERCENTAGE OF FUND
ADDRESS OWNED SHARES OWNED
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Government Fund - Investor
Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Central Computer Associates 104,811 12.81% 0.09%
DBA Techknowledge
P.O. Box 2668 227 Water Street
Augusta, ME 04338-2668
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Cash Fund -
Institutional Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Stratevest & Co. 30,290,873 71.39% 34.42%
P.O. Box 2499
Brattleboro, VT 05303
- -------------------------------------- -------------------------- ------------------------- -------------------------
H.M. Payson & Co. Custody ,6,972,896 16.43% 5.42%
Acct
FBO Customer Funds Under
Mgmt
P.O. Box 31 Portland, Maine 04112
- -------------------------------------- -------------------------- ------------------------- -------------------------
Spectrum Medical Group PA 2,670,531 6.29% 3.21%
300 Professional Drive
Scarborough, ME 04074-8433
- -------------------------------------- -------------------------- ------------------------- -------------------------
H.M. Payson & Co. Custody 2,469,309 5.82% 2.97%
Acct
FBO Trust Funds Under
Mgmt
P.O. Box 31
Portland, ME 04112
- -------------------------------------- -------------------------- ------------------------- -------------------------
Maine Mutual Fire Insurance 2,347,956 5.53% 2.83%
44 Maysville Road
P.O. Box 729 Presque Isle, ME 04769
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Cash Fund -
Institutional Service Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
AW Hastings & Co. LLC 3,669,811 9.29% 4.41%
2 Pearson Way
Enfield, CT 06082
- -------------------------------------- -------------------------- ------------------------- -------------------------
Tighe & Bond Inc. 3,408,314 8.62% 4.10
53 Southampton Road
Westfield, MA 01085
- -------------------------------------- -------------------------- ------------------------- -------------------------
PMTI 3,332,953.510 8.43% 4.01%
82 Cambridge St
Burlington, MA 01803
- -------------------------------------- -------------------------- ------------------------- -------------------------
Auer & Co. 2,573,355 6.51% 3.04%
C/0 Deutsche Bank Trust Co.
93413 FBO Sound Shore Fund
648 Grassmere Park Rd.
Attn. Mutual Funds, 2nd Floor
Nashville, TN 37211
- -------------------------------------- -------------------------- ------------------------- -------------------------
Eastern General Contractors, Inc. 2,510,813 6.35% 3.02%
52-60 Berkshire Ave.
Springfield, MA 01109
- -------------------------------------- -------------------------- ------------------------- -------------------------
Auer & Co. 2,343,847 5.93% 2.82%
C/0 Deutsche Bank Trust Co.
A-C 94588
648 Grassmere Park Rd.
Attn. Mutual Funds, 2nd Floor
Nashville, TN 37211
- -------------------------------------- -------------------------- ------------------------- -------------------------
26
- -------------------------------------- -------------------------- ------------------------- -------------------------
NAME NUMBER OF SHARES PERCENTAGE OF CLASS PERCENTAGE OF FUND
ADDRESS OWNED OWNED SHARES OWNED
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Cash Fund - Institutional
Service Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Stratevest & Co. 2,150,961 5.44% 2.59%
P.O. Box 2499
Brattleboro, VT 05303
- -------------------------------------- -------------------------- ------------------------- -------------------------
Forum Cash Fund - Investor Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
FISERV Securities 905,415 74.25% 1.09%
Cash Sweep Department
2005 Market Street
One Commerce Square
Philadelphia, PA 19103
- -------------------------------------- -------------------------- ------------------------- -------------------------
Employee Benefit Management 158,071 12.96% 0.19%
47 Portland Street
Portland, ME 04101
- -------------------------------------- -------------------------- ------------------------- -------------------------
J K MacMillan TTEE 101,624 8.33% 0.12%
J K MacMillan P-S Plan Trust
FBO J K MacMillan U-A-D
01-01-97
3621 Maplewood Avenue
Los Angeles, CA 90066
- -------------------------------------- -------------------------- ------------------------- -------------------------
As of the April 16, 2003, Forum's officers and Trustees, as a group, owned
less than 1% of each class of each Forum Series.
INFORMATION REGARDING SHARES OF EACH MONARCH SERIES OUTSTANDING
From time to time, certain shareholders may own a large percentage of the
shares of a Monarch Series. Accordingly, those shareholders may be able to
greatly affect (if not determine) the outcome of a shareholder vote. As of April
16, 2003, and to the best of Monarch's knowledge, no person beneficially owned
25% or more of the shares of a Monarch Series and may be deemed to control the
Monarch Series.
27
As of April 16, 2003, and to the best of Monarch's knowledge, the following
shareholders owned beneficially or of record 5% or more of a Monarch Series or a
class thereof:
- -------------------------------------- -------------------------- ------------------------- -------------------------
NAME NUMBER OF SHARES OWNED PERCENTAGE OF CLASS PERCENTAGE OF FUND
ADDRESS OWNED SHARES OWNED
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Treasury Fund -
Universal Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Comerica Securities Inc. 105,082 100% 0.10%
9920 South La Cienega Blvd
14th Floor
Inglewood, CA 90301
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Treasury Fund -
Institutional Service Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Union Bank of California 10,422,832 49.80% 9.77%
P.O. Box 85636
San Diego, CA 92186
- -------------------------------------- -------------------------- ------------------------- -------------------------
David A. Gill, Receiver for 7,499,700 35.84% 7.03%
Physicians InterIndemnity Trust
La Superior Court Case 145996
2029 Century Park East, 3rd Fl.
Los Angeles, CA 90067
- -------------------------------------- -------------------------- ------------------------- -------------------------
Sullivan Kelly & Associates Inc. 1,569,574 7.50% 1.47%
In Trust for Various Entities
Under Calif. Insurance
Code Section 1733 & 1734
301 North Lake Avenue, 9th Fl.
Pasadena, CA 91101
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Treasury Fund - Investor
Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Lifemark Corporation 15,140,557 17.67% 11.92%
7600 N. 16th Street, Suite 150
Phoenix, AZ 85020
- -------------------------------------- -------------------------- ------------------------- -------------------------
Robert F. Driver Co., Inc. 7,254,994 8.47% 6.80%
(Trust Account)
1620 Fifth Avenue
Dan Diego, CA 92101
- -------------------------------------- -------------------------- ------------------------- -------------------------
Ignis Optics, inc. DBA 5,864,514 6.84% 5.49%
Primalux Optics
482 West San Carlos Street
San Jose, CA 95110
- -------------------------------------- -------------------------- ------------------------- -------------------------
Yahoo, Inc. 5,166,204 6.03% 4.84%
3400 Central Expressway
Suite 201
Santa Clara, CA 95051
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Government Fund -
Universal Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
PFF Bank & Trust 26,000,000 24.54% 9.39%
Attn. Accounting Dept.
399 N. Garey Avenue
Pomona, CA 91767
- -------------------------------------- -------------------------- ------------------------- -------------------------
Gilbane Building Company 23,689,040 22.36% 5.74%
7 Jackson Walkway
Providence, RI 02940
- -------------------------------------- -------------------------- ------------------------- -------------------------
28
- -------------------------------------- -------------------------- ------------------------- -------------------------
NAME NUMBER OF SHARES OWNED PERCENTAGE OF CLASS PERCENTAGE OF FUND
ADDRESS OWNED SHARES OWNED
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Government Fund -
Universal Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
PLM International Inc. 20,010,384 18.88% 7.23%
Attn: Michelle Kugler
235 3rd Street South, Suite 200
St. Petersburg, FL 33701
- -------------------------------------- -------------------------- ------------------------- -------------------------
Los Angeles Lakers 15,907,215 15.01% 5.74%
Attn Accounting Dept
555 N. Nash St.
El Segundo, CA 90245
- -------------------------------------- -------------------------- ------------------------- -------------------------
Trivirix International Inc. 11,019,741 10.40% 3.98%
2800 Meridan Parkway
Suite 175
Durham, NC 27713
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Government Fund -
Institutional Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Union Bank of California 30,653,364 33.75% 11.07%
P.O. Box 85636
San Diego, CA 92186
- -------------------------------------- -------------------------- ------------------------- -------------------------
Microsemi Corporation 12,741,115 14.03% 4.60%
2381 Morse Ave.
Irvine, CA 92614
- -------------------------------------- -------------------------- ------------------------- -------------------------
Novera Optics, Inc. 6,825,008 7.51% 2.46%
401 Charcot Ave.
San Jose, CA 95131
- -------------------------------------- -------------------------- ------------------------- -------------------------
Lockton Companies Inc. 5,572,844 6.14% 2.01%
444 West 47th Street Suite 900
Kansas City, MO 64112-1906
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Government Fund -
Preferred Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Sunwest Bank 21,113,168 100% 7.62%
17542 East 17th Street
Suite 200
Tustin, CA 92780
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Government Fund -
Investor Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Overland Storage Inc. 9,356,902 15.85% 3.38%
4820 Overland Ave.
San Diego, CA 92123
- -------------------------------------- -------------------------- ------------------------- -------------------------
Ventana Health Systems 8,868,672 15.02% 3.20%
7600 North 16th Street
Suite 150
Phoenix, AZ
- -------------------------------------- -------------------------- ------------------------- -------------------------
Sentillion Inc. 5,045,912 8.55% 1.82%
300 Brickstone Square
Andover, MA 01810
- -------------------------------------- -------------------------- ------------------------- -------------------------
29
- -------------------------------------- -------------------------- ------------------------- -------------------------
NAME NUMBER OF SHARES OWNED PERCENTAGE OF CLASS PERCENTAGE OF FUND
ADDRESS OWNED SHARES OWNED
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Cash Fund - Universal
Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Trust Co. of America - APB 41,723,612 44.25% 6.65%
Attn: Accounting/Treasury
P.O. Box 3857 Englewood, CO 80155-3857
- -------------------------------------- -------------------------- ------------------------- -------------------------
Trust Co. of America Corp. 19,957,650 21.17% 3.18%
7103 S. Revere Pkwy
Englewood, CO 80112-3936
- -------------------------------------- -------------------------- ------------------------- -------------------------
Comerica Securities, Inc. 14,877,350 15.78% 2.37%
9920 S. La Cienega Blvd.
Inglewood, CA 90301
- -------------------------------------- -------------------------- ------------------------- -------------------------
Sound Shore Fund 9,215,041 9.77% 1.47%
Two Portland Square
Portland, ME 04101
- -------------------------------------- -------------------------- ------------------------- -------------------------
CoastCast Corporation 6,239,194 6.62% 0.99%
3025 East Victoria St.
Rancho Dominguez, CA 90221
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Cash Fund - Institutional
Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Union Bank of California 27,839,541 26.06% 4.44%
P.O. Box 85636
San Diego, CA 92186
- -------------------------------------- -------------------------- ------------------------- -------------------------
Selectica Inc. 8,209,122 7.69% 1.31%
Attn: Tami Lam
3 West Plumeria Drive
San Jose, CA 95134
- -------------------------------------- -------------------------- ------------------------- -------------------------
Nextance Inc. 6,529,785 6.11% 1.04%
27284 Byrne Park Lane
Los Altos Hills, CA 94022
- -------------------------------------- -------------------------- ------------------------- -------------------------
Pacific Maritime Association 5,493,311 5.13% 0.87%
550 California Street 2nd Floor
San Francisco, CA 94104
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Cash Fund - Preferred
Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Sunwest Bank 21,113,286 81.15% 3.37%
17542 East 17th Street
Suite 200
Tustin, CA 92780
- -------------------------------------- -------------------------- ------------------------- -------------------------
Calhoun & Co 4,904,058 18.85% 0.78%
C/O Comerica Bank
411 Lafayette St., Mail Code
3455
Detroit, MI 48226
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Cash Fund - Investor
Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
Prometheus Laboratories, Inc. 31,938,912 7.98% 5.09%
5739 Pacific Center Blvd.
San Diego, CA 92121
- -------------------------------------- -------------------------- ------------------------- -------------------------
Union Bank of California 29,447,095 7.36% 4.69%
P.O. Box 85636
San Diego, CA 92186
- -------------------------------------- -------------------------- ------------------------- -------------------------
30
- -------------------------------------- -------------------------- ------------------------- -------------------------
NAME NUMBER OF SHARES PERCENTAGE OF CLASS PERCENTAGE OF FUND
ADDRESS OWNED OWNED SHARES OWNED
- -------------------------------------- -------------------------- ------------------------- -------------------------
Monarch Cash Fund - Investor
Shares
- -------------------------------------- -------------------------- ------------------------- -------------------------
LG Infocomm USA Inc. 27,058,006 6.76% 4.13%
10225 Willow Creek road
San Diego, CA 92131
- -------------------------------------- -------------------------- ------------------------- -------------------------
As of April 16, 2003, Monarch's officers and Trustees as a group owned less
than 1% of each class of each Monarch Series.
ADDITIONAL INFORMATION
LEGAL MATTERS
Seward & Kissel LLP ("S&K") serves as counsel for each Forum Series and
Forum. S&K does not represent FIA or FFS regarding the Plan or any related
transaction. Kirkpatrick & Lockhart LLP ("K&L") serves as counsel to Forum's
Independent Trustees and does not represent FIA or FFS regarding the Plan or any
related transaction. K&L also serves as counsel to Monarch and its Independent
Trustees. K&L does not represent FIA or FFS regarding the Plan or any related
transaction.
EXPERTS
KPMG LLP ("KPMG") are the independent accountants for each Forum Series and
each Monarch Series. KPMG is considered to be an expert due to its experience in
auditing and accounting.
Please refer to Exhibits B and C to this Proxy Statement/Prospectus for
financial highlight information for Institutional, Institutional Service, and
Investor Shares of each Forum Series and for Universal, Service (now known as
Institutional Service), and Investor Shares of each Monarch Series,
respectfully.
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
This Proxy Statement/Prospectus and the related Statement of Additional
Information does not contain all of the information set forth in the
registration statements and exhibits of each Forum Series or Monarch Series
filed with the SEC under the Securities Act of 1933, as amended, and the 1940
Act.
Forum, on behalf of each Forum Series, and Monarch, on behalf of each
Monarch Series, file proxy materials, reports and other information with the SEC
in accordance with the informational requirements of the Securities Act of 1934,
as amended, and the 1940 Act. These materials can be inspected and copied at the
SEC's Public Reference Room at 450 Fifth Street NW, Washington, D.C. 20549, and
at the SEC's regional and district offices located at 73 Tremont Street, Suite
600, Boston, MA 02108-3912, 601 Walnut Street, Suite 1120E, Philadelphia, PA
19106 3475 Lenox Road, N.E., Suite 1000, Atlanta, GA 30326 and 175 Jackson
Boulevard, Suite 900, Chicago, IL 60604. Copies of such materials can also be
obtained by mail from the Public Reference Branch, Office of Consumer Affairs
and Information Services, SEC, Washington, D.C. 20549 at prescribed rates.
31
EXHIBIT A
Agreement and Plan of Reorganization
A-1
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is made as of this
23rd day of April, 2003, by and between Monarch Funds (the "Trust"), a
Massachusetts business trust, for itself and on behalf of its series listed in
the Acquiring Funds column below (each an "Acquiring Fund") and Forum Funds
("Forum"), a Delaware statutory trust, for itself and on behalf of its series
listed in the Target Funds column below (each a "Target Fund").
- ------------------------------------ --------------------------------------------- ---------------------------------
Acquiring Funds TARGET FUNDS MASTER FUNDS
- ------------------------------------ --------------------------------------------- ---------------------------------
- ------------------------------------ --------------------------------------------- ---------------------------------
Daily Assets Treasury Fund Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
- ------------------------------------ --------------------------------------------- ---------------------------------
Daily Assets Government Fund Daily Assets Government Obligations Fund Government Cash Portfolio
- ------------------------------------ --------------------------------------------- ---------------------------------
Daily Assets Cash Fund Daily Assets Cash Fund Cash Portfolio
- ------------------------------------ --------------------------------------------- ---------------------------------
WHEREAS, the parties desire that each Acquiring Fund acquire the assets and
assume the liabilities of the Target Fund listed opposite the Acquiring Fund
above ("Corresponding Target Fund") in exchange for shares of equal value of the
Acquiring Fund and the distribution of those shares of the Acquiring Fund to the
shareholders of the Corresponding Target Fund in connection with the dissolution
and liquidation of the Corresponding Target Fund (each a "Reorganization"); and
WHEREAS, each Acquiring Fund and each Target Fund (each a "Fund") is a
feeder fund in a "master/feeder fund structure," pursuant to which each
Acquiring Fund and its Corresponding Target Fund invest substantially all of
their respective net investable assets in Core Trust (Delaware), a Delaware
statutory trust registered as an open-end management investment company under
the Investment Company Act of 1940, as amended ("1940 Act") ("Core Trust"),
listed in the Master Funds column above (each such subtrust a "Corresponding
Portfolio") and are the only interestholders therein, and each Corresponding
Portfolio is classified for federal tax purposes as a partnership; and
WHEREAS, the parties, for convenience, have structured this Plan so that it
generally refers to a single Reorganization between a single Acquiring Fund and
its Corresponding Target Fund, but intend for this Plan and its terms and
conditions to apply to each Reorganization; and
WHEREAS, the parties intend that the Reorganization qualify as a
"reorganization" (as defined in Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code")), that the Acquiring Fund and the Target Fund each
be a "party to a reorganization," within the meaning of Section 368(b) of the
Code, with respect to the Reorganization, and that this Plan be, and they adopt
it as, a "plan of reorganization" within the meaning of the regulations under
the Code ("Regulations").
NOW, THEREFORE, in accordance with the mutual promises described herein,
the parties agree as follows:
1. DEFINITIONS.
In addition to the terms above, the following terms shall have the
following meanings:
1933 ACT The Securities Act of 1933, as amended.
ACQUIRING CLASS The class of voting shares of the Acquiring Fund
that the Trust will issue to the shareholders of
the Corresponding Target Class set forth in
Schedule A.
A-2
ASSETS All property and assets of any kind the Target
Fund owns at the Effective Time and all
interests, rights, privileges and powers of or
attributable to the Target Fund at that time,
wherever located. Assets include all cash, cash
equivalents, securities (including the Target
Fund's interest in its Corresponding Portfolio),
claims (whether absolute or contingent, Known or
unknown, accrued or unaccrued or conditional or
unmatured), contract rights and receivables
(including dividend and interest receivables)
owned by or attributed to the Target Fund and
any deferred or prepaid expense shown as an
asset on the Target Fund's books.
ASSETS LIST A list of securities and other Assets and Known
Liabilities of or attributable to the Target
Fund as of the date provided to the Trust.
BUSINESS DAY Each weekday except Federal holidays and other
days that the Federal Reserve Bank of San
Francisco is closed.
CLOSING DATE June 6, 2003.
CORRESPONDING TARGET CLASS The Target Fund share class set forth opposite
the Acquiring Class in Schedule A.
EFFECTIVE TIME 9:00 a.m. Eastern time on the Business Day
following the Closing Date, or such other time
as the parties may agree to in writing.
FUND The Acquiring Fund or the Target Fund, as the
context may require.
KNOW, KNOWN OR KNOWLEDGE Known after reasonable inquiry.
LIABILITIES All liabilities of, allocated or attributable to
the Target Fund, whether Known or unknown,
accrued or unaccrued, absolute or contingent or
conditional or unmatured.
N-14 REGISTRATION STATEMENT The Trust's Registration Statement on Form N-14
under the 1940 Act that will register the shares
of the Acquiring Fund to be issued in the
Reorganization and will include the proxy
materials necessary for shareholders of the
Target Fund to consider approving the
Reorganization.
NET VALUE OF ASSETS Value of Assets, determination in accordance
with Section 3(a)(2), net of Liabilities.
REORGANIZATION DOCUMENTS Such bills of sale, assignments, assumptions,
and other instruments as desirable for the
Target Fund to transfer to the Acquiring Fund
all right and title to and interest in the
Assets and for the Acquiring Fund to assume the
Liabilities.
SCHEDULE A Schedule A to this Plan.
TARGET FINANCIAL STATEMENTS The audited financial statements of the Target
Fund for its most recently completed fiscal year
and, if applicable, the unaudited financial
statements of the Target Fund for it's most
recently completed semi-annual period.
VALUATION TIME The time on the Closing Date, the Business Day
immediately preceding the Closing Date if the
Closing Date is not a Business Day, or such
other date as the parties may agree to in
writing, that the Trust determines the net asset
value of the shares of the Acquiring Fund and
the Net Value of Assets. Unless otherwise agreed
to in writing, the Valuation Time shall be at
the time of day then set forth in the Target
Fund's Registration Statement on Form N-1A as
the time of day at which net asset value is
calculated.
A-3
2. REGULATORY FILINGS AND SHAREHOLDER ACTION.
(a) The Trust shall promptly prepare and file the N-14 Registration
Statement with the SEC. The Trust and Forum shall promptly
prepare and file any other appropriate regulatory filings,
including, without limitation, filings with federal, state or
foreign securities regulatory authorities.
(b) The parties shall seek an order of the SEC, if appropriate,
providing them with any necessary relief from Section 17 of the
1940 Act to permit them to consummate the transactions
contemplated by this Plan.
(c) As soon as practicable after the effective date of the N-14
Registration Statement, the Target Fund shall hold a shareholder
meeting to consider and approve this Plan and such other matters
as Forum's Board of Trustees may determine.
3. TRANSFER OF ASSETS AND RELATED TRANSACTIONS. The Trust and Forum shall
take the following steps with respect to the Reorganization:
(a) On or prior to the Closing Date, (i) Forum shall endeavor to pay
or make reasonable provision to pay all of the Liabilities,
expenses, costs and charges of or attributable to the Target Fund
that are Known to the Target Fund and that are due and payable as
of the Closing Date, and (ii) the Target Fund shall declare and
pay to its shareholders a dividend and/or other distribution in
an amount large enough so that it will have distributed
substantially all (and in any event not less than 90%) of its
"investment company taxable income" (as defined in section
852(b)(2) of the Code, computed without regard to any deduction
for dividends paid) and substantially all of its "net capital
gain," if any (as defined in section 1222(11)) for the current
taxable year through the Effective Time.
(b) At the Effective Time, Forum shall assign, transfer, deliver and
convey all of the Assets to the Acquiring Fund, subject to all of
the Liabilities. The Trust shall then accept the Assets and
assume the Liabilities such that at and after the Effective Time
(i) all of the Assets at or after the Effective Time shall become
and be the assets of the Acquiring Fund and (ii) all of the
Liabilities at the Effective Time shall attach to the Acquiring
Fund, enforceable against the Acquiring Fund to the same extent
as if initially incurred by the Acquiring Fund. As a result of
such transfer of Assets (including the Target Fund's interest in
its Corresponding Portfolio), the Acquiring Fund will become the
sole interestholder in such subtrust, whereupon such subtrust
will distribute its assets in kind to the Acquiring Fund and will
be terminated as a subtrust of Core Trust
(c) Forum shall assign, transfer, deliver and convey the Assets to
the Acquiring Fund at the Effective Time on the following bases:
(1) In exchange for the transfer of the Assets, the Trust shall
simultaneously issue and deliver to the Target Fund full and
fractional shares of beneficial interest of each Acquiring
Class. The Trust shall determine the number of shares of
each Acquiring Class to be issued by dividing the Net Value
of Assets attributable to the Corresponding Target Class by
the net asset value of one Acquiring Class share. Based on
this calculation, the Trust shall issue shares of beneficial
interest of each Acquiring Class with an aggregate net asset
value equal to the Net Value of Assets attributable to the
Corresponding Target Class.
A-4
(2) The parties shall determine, as of the Valuation Time, the
net asset value of the Acquiring Fund shares to be delivered
and the Net Value of Assets to be conveyed, substantially in
accordance with the Trust's current valuation procedures.
The parties shall make all computations to the fourth
decimal place or such other decimal place as the parties may
agree to in writing.
(3) Forum shall transfer the Assets with good and marketable
title to the Trust for the benefit the Acquiring Fund. Forum
shall transfer all cash in the form of immediately available
funds payable to the order of the Trust for the benefit of
the Acquiring Fund. Forum shall transfer any of the Assets
that were not transferred to the Trust at the Effective Time
to the Trust at the earliest practicable date thereafter.
(d) The foregoing steps, together with all other related acts
necessary to consummate the Reorganization, shall occur at the
Trust's principal office on the Closing Date, or at such other
place as the parties may agree on. All steps and acts shall be
deemed to take place simultaneously at the Effective Time.
(e) Promptly after the Closing Date (usually within one week), Forum
will deliver to the Trust a Statement of Assets and Liabilities
of the Target Fund as of the Closing Date.
4. DISSOLUTION AND LIQUIDATION OF THE TARGET FUND, REGISTRATION OF SHARES
AND ACCESS TO RECORDS. The Trust and Forum also shall take the
following steps in connection with the Reorganization:
(a) At or as soon as reasonably practical after the Effective Time,
the Target Fund shall dissolve and liquidate by transferring to
shareholders of record of each Corresponding Target Class full
and fractional shares of beneficial interest of the Acquiring
Class equal in value to the shares of the Corresponding Target
Class held by the shareholder. Each Corresponding Target Class
shareholder also shall have the right to receive any unpaid
dividends or other distributions that the Target Fund declared
with respect to the shareholder's Corresponding Target Class
shares at or before the Effective Time. The Trust shall record on
its books the ownership by the shareholders of the respective
Acquiring Fund shares; the Target Fund shall simultaneously
redeem and cancel on its books all of its issued and outstanding
shares of each Corresponding Target Class. The Target Fund shall
then wind up its affairs and dissolve as soon as is reasonably
possible, but in no event more than six (6) months after the
Effective Time, and in accordance with all applicable laws and
regulations.
(b) If a Target Fund shareholder requests a change in the
registration of the shareholder's Acquiring Fund shares to a
person other than the shareholder, the Acquiring Fund shall
require the shareholder to (i) furnish the Acquiring Fund with an
instrument of transfer properly endorsed, accompanied by any
required signature guarantees and otherwise in proper form for
transfer; (ii) if any of the shares is outstanding in certificate
form, deliver to the Acquiring Fund the certificate representing
such shares; and (iii) pay to the Acquiring Fund any transfer or
other taxes required by reason of such registration or establish
to the reasonable satisfaction of the Acquiring Fund that such
tax has been paid or does not apply.
(c) At and after the Closing Date, Forum shall provide the Trust and
its transfer agent with immediate access to: (i) all records
containing the names, addresses and taxpayer identification
numbers of all of the Target Fund shareholders and the number and
percentage ownership of the outstanding shares of the
Corresponding Target Classes owned by each shareholder as of the
Effective Time and (ii) all original documentation (including all
applicable Internal Revenue Service forms, certificates,
certifications and correspondence) relating to the Target Fund
shareholders' taxpayer identification
A-5
numbers and their liability for or exemption from back-up
withholding. The Target Fund shall preserve and maintain, or
shall direct its service providers to preserve and maintain, its
records as required by Section 31 of and Rules 31a-1 and 31a-2
under the 1940 Act.
5. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF FORUM. Forum, on
behalf of itself and, as appropriate, the Target Fund, represents and
warrants to, and agrees with, the Trust as follows:
(a) Forum is a statutory trust, validly existing and in good standing
under the laws of the State of Delaware. Forum's Board of
Trustees has duly established and designated the Target Fund as a
series of Forum and each Corresponding Target Class as a class of
the Target Fund. Forum is registered with the SEC as an open-end
management investment company under the 1940 Act, and such
registration is in full force and effect. Before January 1, 1997,
Forum "claimed" classification for federal tax purposes as an
association taxable as a corporation and has not elected
otherwise since.
(b) Forum has the power and all necessary federal, state and local
qualifications and authorizations to own all of its properties
and Assets, to carry on its business as now being conducted and
described in its currently effective Registration Statement on
Form N-1A, and to enter into this Plan and to consummate the
transactions contemplated herein.
(c) Forum's Board of Trustees has duly authorized the execution and
delivery of this Plan and the transactions contemplated herein.
Duly authorized officers of Forum have executed and delivered
this Plan. Assuming due execution and delivery of this Plan by
the Trust, this Plan represents a valid and binding contract,
enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium, and other similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles. The execution and delivery of this
Plan does not, and, subject to the approval of shareholders
referenced in Section 2(c), the consummation of the transactions
contemplated by this Plan will not, violate Forum's Trust
Instrument or By-Laws. Except for obtaining the approval of
Target Fund shareholders, Forum does not need to take any other
action to authorize its officers to effectuate this Plan and the
transactions contemplated herein.
(d) The Target Fund is a "fund" (as defined in Section 851(g)(2) of
the Code); it has qualified for treatment as a regulated
investment company under Part I of Subchapter M of Subtitle A,
Chapter 1, of the Code ("RIC") for each taxable year since the
commencement of its operations and qualifies and shall continue
to qualify for treatment as a RIC for its taxable year which
includes the Effective Time; it will invest its assets at all
times through the Effective Time in a manner that ensures
compliance with the foregoing; and it has no earnings and profits
accumulated in any taxable year in which the provisions of such
Subchapter M did not apply to it.
(e) The materials included within the N-14 Registration Statement
when filed with the SEC, when Part A of the N-14 Registration
Statement is distributed to shareholders, at the time of the
Target Fund shareholder meeting and at the Effective Time,
insofar as they relate to Forum and the Target Fund (i) shall
comply in all material respects with the applicable provisions of
the 1933 Act and the 1940 Act, the rules and regulations
thereunder and state securities laws, and (ii) shall not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements made therein not misleading.
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(f) Forum has duly authorized and validly issued all of its issued
and outstanding shares and all of the shares are validly
outstanding, fully paid and non-assessable, and are offered for
sale and sold in conformity with the registration requirements of
all applicable federal and state securities laws. There are no
outstanding options, warrants or other rights to subscribe for or
purchase Target Fund shares, nor are there any securities
convertible into Target Fund shares.
(g) Forum shall operate the business of the Target Fund in the
ordinary course between the date hereof and the Effective Time,
it being agreed that such ordinary course of business will
include the declaration and payment of customary dividends and
other distributions and any other distributions deemed advisable
in anticipation of the Reorganization (including distributions
pursuant to Section 3(a)(2) hereof). From the date it commenced
operations through the Effective Time, the Target Fund shall
conduct its "historic business" (within the meaning of section
1.368-1(d)(2) of the Regulations) in a substantially unchanged
manner; and before the Effective Time the Target Fund will not
(a) dispose of and/or acquire any assets (i) for the purpose of
satisfying the Acquiring Fund's investment objective or policies
or (ii) for any other reason except in the ordinary course of its
business as a RIC, or (b) otherwise change its historic
investment policies.
(h) At the Effective Time, the Target Fund will have good and
marketable title to the Assets and full right, power and
authority to assign, transfer, deliver and convey the Assets.
(i) The Target Financial Statements, copies of which have been
previously delivered to the Trust, fairly present the financial
position of the Target Fund as of it's most recent fiscal
year-end and the results of it's operations and changes in its
net assets for the periods indicated. The Target Financial
Statements are in accordance with generally accepted accounting
principles consistently applied.
(j) To the Knowledge of the Trust, the Target Fund has no
liabilities, whether or not determined or determinable, other
than the Liabilities disclosed or provided for in the Target
Financial Statements or Liabilities incurred in the ordinary
course of business subsequent to the date of the Target Financial
Statements, and Liabilities set forth in the Assets List.
(k) Forum does not Know of any claims, actions, suits, investigations
or proceedings of any type pending or threatened against the
Target Fund or the Assets or it's businesses. Forum does not Know
of any facts that it currently has reason to believe are likely
to form the basis for the institution of any such claim, action,
suit, investigation or proceeding against the Target Fund. For
purposes of this provision, investment underperformance or
negative investment performance shall not be deemed to constitute
such facts, provided all required performance disclosures have
been made. The Target Fund is not a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body that adversely affects, or is reasonably likely
to adversely affect, its financial condition, results of
operations, business, properties or the Assets or its ability to
consummate the transactions contemplated by the Plan.
(l) Except for contracts, agreements, franchises, licenses, or
permits entered into or granted in the ordinary course of its
business each case under which no material default exists, Forum
is not a party to or subject to any material contract, debt
instrument, employee benefit plan, lease, franchise, license or
permit of any kind or nature whatsoever on behalf of the Target
Fund.
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(m) Forum has filed federal income tax returns of the Target Fund,
copies of which have been previously delivered to the Trust, for
all taxable years, and has paid all taxes payable pursuant to
such returns. No such return is currently under audit and no
assessment has been asserted with respect to such returns.
(n) Since the date of the Target Financial Statements, there has been
no material adverse change in the financial condition, results of
operations, business, properties or assets of the Target Fund.
For all purposes under this Plan, investment underperformance,
negative investment performance and/or investor redemptions shall
not be considered material adverse changes, provided all required
performance disclosures have been made.
(o) The Target Fund incurred the Liabilities in the ordinary course
of its business.
(p) The Target Fund is not under the jurisdiction of a court in a
"title 11 or similar case" (as defined in section 368(a)(3)(A) of
the Code).
(q) During the five-year period ending at the Effective Time, (a)
neither the Target Fund nor any person "related" (within the
meaning of section 1.368-1(e)(3) of the Regulations) to it will
have acquired Target Fund shares, either directly or through any
transaction, agreement, or arrangement with any other person,
with consideration other than Acquiring Fund shares or Target
Fund shares, except for shares redeemed in the ordinary course of
the Target Fund's business as a series of an open-end investment
company as required by section 22(e) of the 1940 Act, and (b) no
distributions will have been made with respect to Target Fund
shares, other than normal, regular dividend distributions made
pursuant to the Target Fund's historic dividend-paying practice
and other distributions that qualify for the deduction for
dividends paid (within the meaning of section 561 of the Code)
referred to in sections 852(a)(1) and 4982(c)(1)(A) of the Code.
(r) Not more than 25% of the value of the Target Fund's total assets
(excluding cash, cash items and U.S. government securities) is
invested in the stock and securities of any one issuer, and not
more than 50% of the value of such assets is invested in the
stock and securities of five or fewer issuers.
6. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRUST. The
Trust, on behalf of itself and, as appropriate, the Acquiring Fund,
represents and warrants to, and agrees with Forum as follows:
(a) The Trust is organized as a business trust duly created, validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts. The Trust's Board of Trustees has duly
established and designated the Acquiring Fund as a series of the
Trust and each Acquiring Class as a class of the Acquiring Fund.
The Trust is registered with the SEC as an open-end management
investment company under the 1940 Act, and such registration is
in full force and effect. Before January 1, 1997, the Trust
"claimed" classification for federal tax purposes as an
association taxable as a corporation and has not elected
otherwise since
(b) The Trust has the power and all necessary federal, state and
local qualifications and authorizations to own all of its
properties and Assets, to carry on its business as now being
conducted and described in its currently effective Registration
Statement on Form N-1A, and to enter into this Plan and to
consummate the transactions contemplated herein.
(c) The Trust's Board of Trustees has duly authorized the execution
and delivery of this Plan and the transactions contemplated
herein. Duly authorized officers of the Trust have executed and
delivered this Plan. Assuming due execution and delivery of this
Plan by the Trust, this Plan represents a valid and binding
contract, enforceable in accordance
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with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The execution
and delivery of this Plan does not, and the consummation of the
transactions contemplated by this Plan will not, violate the
Trust's Trust Instrument or By-Laws. The Trust does not need to
take any other action to authorize its officers to effectuate the
Plan and the transactions contemplated herein.
(d) The Acquiring Fund is a "fund" (as defined in Section 851(g)(2)
of the Code); it has qualified for treatment as a regulated
investment company under Part I of Subchapter M of Subtitle A,
Chapter 1, of the Code ("RIC"), for each taxable year since the
commencement of its operations and qualifies and shall continue
to qualify for treatment as a RIC for its taxable year which
includes the Effective Time; it will invest its assets at all
times through the Effective Time in a manner that ensures
compliance with the foregoing; and it has no earnings and profits
accumulated in any taxable year in which the provisions of such
Subchapter M did not apply to it.
(e) The materials included within the N-14 Registration Statement
when filed with the SEC, when Part A of the N-14 Registration
Statement is distributed to shareholders, at the time of the
Target Fund shareholder meeting and at the Effective Time of the
Reorganization, insofar as they relate to the Trust and the
Acquiring Fund (i) shall comply in all material respects with the
applicable provisions of the 1933 Act and the 1940 Act, the rules
and regulations thereunder and state securities laws, and (ii)
shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading.
(f) The Trust shall duly authorize the Acquiring Fund shares to be
issued and delivered to the Target Fund as of the Effective Time.
When issued and delivered, the Acquiring Fund shares shall be
duly and validly issued, fully paid and non-assessable, and no
shareholder of the Acquiring Fund shall have any preemptive right
of subscription or purchase in respect of them. There are no
outstanding options, warrants or other rights to subscribe for or
purchase Acquiring Fund shares, nor are there any securities
convertible into Acquiring Fund shares.
(g) The Trust does not Know of any claims, actions, suits,
investigations or proceedings of any type pending or threatened
against the Acquiring Fund or its assets or businesses. There are
no facts that the Trust currently has reason to believe are
likely to form the basis for the institution of any such claim,
action, suit, investigation or proceeding against it. The
Acquiring Fund is not a party to or subject to the provisions of
any order, decree or judgment of any court or governmental body
that adversely affects, or is reasonably likely to adversely
affect, its financial condition, results of operations, business,
properties or assets or its ability to consummate the
transactions contemplated herein.
(h) Except for contracts, agreements, franchises, licenses or permits
entered into or granted in the ordinary course of its business,
in each case under which no material default exists, the Trust is
not a party to or subject to any material contract, debt
instrument, employee benefit plan, lease, franchise, license or
permit of any kind or nature whatsoever on behalf of the
Acquiring Fund.
(i) The Trust has filed federal income tax returns of the Acquiring
Fund, copies of which have been previously delivered to Forum,
for all taxable years, and has paid all taxes payable pursuant to
such returns. No such return is currently under audit and no
assessment has been asserted with respect to such returns.
(j) The Trust has made all state filings to register each Acquiring
Class in each jurisdiction that the Corresponding Target Class is
currently registered and all necessary steps have
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been taken under all relevant jurisdictions' securities laws to
consummate the Reorganization.
(k) Since August 31, 2002, there has been no material adverse change
in the financial condition, business, properties or assets of the
Acquiring Fund. For all purposes under this Plan, investment
underperformance, negative investment performance and/or investor
redemptions shall not be considered material adverse changes,
provided all required performance disclosures have been made.
(l) No consideration other than Acquiring Fund shares (and the
Acquiring Fund's assumption of the Liabilities) will be issued in
exchange for the Assets in the Reorganization.
(m) The Acquiring Fund has no plan or intention to issue additional
Acquiring Fund shares following the Reorganization except for
shares issued in the ordinary course of its business as a series
of an open-end investment company; nor does the Acquiring Fund,
or any person "related" (within the meaning of section
1.368-1(e)(3) of the Regulations) to it, have any plan or
intention to acquire -- during the five-year period beginning at
the Effective Time, either directly or through any transaction,
agreement, or arrangement with any other person -- with
consideration other than Acquiring Fund shares, any Acquiring
Fund shares issued to the Target Fund's shareholders pursuant to
the Reorganization, except for redemptions in the ordinary course
of such business as required by section 22(e) of the 1940 Act.
(n) Following the Reorganization, the Acquiring Fund (a) will
continue the Target Fund's "historic business" (within the
meaning of section 1.368-1(d)(2) of the Regulations) and (b) will
use a significant portion of the Target Fund's "historic business
assets" (within the meaning of section 1.368-1(d)(3) of the
Regulations) in a business; in addition, the Acquiring Fund (c)
has no plan or intention to sell or otherwise dispose of any of
the Assets, except for dispositions made in the ordinary course
of that business and dispositions necessary to maintain its
status as a RIC and (d) expects to retain substantially all the
Assets in the same form as it receives them in the
Reorganization, unless and until subsequent investment
circumstances suggest the desirability of change or it becomes
necessary to make dispositions thereof to maintain such status.
(o) There is no plan or intention for the Acquiring Fund to be
dissolved or merged into another business trust or a corporation
or any "fund" thereof (as defined in section 851(g)(2) of the
Code) following the Reorganization.
(p) Immediately after the Reorganization, (a) not more than 25% of
the value of the Acquiring Fund's total assets (excluding cash,
cash items and U.S. government securities) will be invested in
the stock and securities of any one issuer and (b) not more than
50% of the value of such assets will be invested in the stock and
securities of five or fewer issuers.
(q) The Acquiring Fund does not directly or indirectly own, nor at
the Effective Time will it directly or indirectly own, nor has it
directly or indirectly owned at any time during the past five
years, any shares of the Target Fund.
(r) During the five-year period ending at the Effective Time, neither
the Acquiring Fund nor any person "related" (within the meaning
of section 1.368-1(e)(3) of the Regulations) to it will have
acquired Target Fund shares with consideration other than
Acquiring Fund shares.
6A. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF EACH FUND.
Forum, on behalf of itself and, as appropriate, the Target Fund,
represents and warrants to, and agrees with, the Trust, and
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the Trust, on behalf of itself and, as appropriate, the Acquiring
Fund, represents and warrants to, and agrees with, Forum, as follows:
(a) The fair market value of the Acquiring Fund shares each Target
Fund shareholder receives will be approximately equal to the fair
market value of the Target Fund shares it constructively
surrenders in exchange therefore.
(b) Its management (a) is unaware of any plan or intention of the
Target Fund's shareholders to redeem, sell or otherwise dispose
of (i) any portion of their Target Fund shares before the
Reorganization to any person "related" (within the meaning of
section 1.368-1(e)(3) of the Regulations) to either Fund or (ii)
any portion of the Acquiring Fund shares they receive in the
Reorganization to any person "related" (within such meaning) to
the Acquiring Fund, (b) does not anticipate dispositions of those
Acquiring Fund shares at the time of or soon after the
Reorganization to exceed the usual rate and frequency of
dispositions of shares of the Target Fund as a series of an
open-end investment company, (c) expects that the percentage of
Target Fund shareholder interests, if any, that will be disposed
of as a result of or at the time of the Reorganization will be DE
MINIMIS, and (d) does not anticipate that there will be
extraordinary redemptions of Target Fund shares immediately
following the Reorganization.
(c) Each Target Fund shareholder will pay his or her own expenses
(including fees of personal investment or tax advisors for advice
regarding the Reorganization), if any, he or she incurs in
connection with the Reorganization.
(d) The fair market value of the Assets on a going concern basis will
equal or exceed the Liabilities to be assumed by the Acquiring
Fund and those to which the Assets are subject.
(e) There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount.
(f) Pursuant to the Reorganization, the Target Fund will transfer to
the Acquiring Fund, and the Acquiring Fund will acquire, at least
90% of the fair market value of the net assets, and at least 70%
of the fair market value of the gross assets, the Target Fund
held immediately before the Reorganization. For the purposes of
the foregoing, any amounts the Target Fund uses to pay its
Reorganization expenses and to make redemptions and distributions
immediately before the Reorganization (except (a) redemptions in
the ordinary course of its business required by section 22(e) of
the 1940 Act and (b) regular, normal dividend distributions made
to conform to its policy of distributing all or substantially all
of its income and gains to avoid the obligation to pay federal
income tax and/or the excise tax under section 4982 of the Code)
will be included as assets held thereby immediately before the
Reorganization.
(g) None of the compensation received by any Target Fund shareholder
who is an employee of or service provider to the Target Fund will
be separate consideration for, or allocable to, any of the Target
Fund shares that shareholder held; none of the Acquiring Fund
shares any such shareholder receives will be separate
consideration for, or allocable to, any employment agreement,
investment advisory agreement or other service agreement; and the
consideration paid to any such shareholder will be for services
actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
(h) Immediately after the Reorganization, the Target Fund's
shareholders will not own shares constituting "control" (as
defined in section 304(c) of the Code) of the Acquiring Fund.
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(i) Neither Fund will be reimbursed for any expenses incurred by it
or on its behalf in connection with the Reorganization unless
those expenses are solely and directly related to the
Reorganization (determined in accordance with the guidelines set
forth in Rev. Rul. 73-54, 1973-1 C.B. 187).
(j) The aggregate value of the acquisitions, redemptions and
distributions limited by Sections 5(q), 6(l) and 6(q) will not
exceed 50% of the value (without giving effect to such
acquisitions, redemptions, and distributions) of the proprietary
interest in the Target Fund at the Effective Time.
7. CONDITIONS TO FORUM'S OBLIGATIONS. The obligations of Forum set forth
herein shall be subject to the following conditions precedent:
(a) The Trust shall have duly executed and delivered its applicable
Reorganization Documents to Forum.
(b) The Target Fund's shareholders shall have approved this Plan in
the manner required by Forum's Trust Instrument and applicable
law. If the Target Fund shareholders fail to approve this Plan,
that failure shall release Forum's obligations with respect to
the Target Fund under this Plan.
(c) The Trust shall have delivered to Forum a certificate dated as of
the Closing Date and executed in its name by the Secretary or
Assistant Secretary of the Trust, in a form reasonably
satisfactory to Forum, stating that the representations and
warranties of the Trust in this Plan are true and correct in all
material respects at and as of the Effective Time.
(d) Forum shall have received an opinion of Kirkpatrick & Lockhart
LLP with respect to the tax matters specified in Section 8(d)
addressed to Forum and the Trust in form and substance reasonably
satisfactory to them, and dated as of the Closing Date.
(e) The N-14 Registration Statement shall have become effective under
the 1933 Act as to the Acquiring Fund's shares, and the SEC shall
not have instituted or, to the Knowledge of the Trust,
contemplated instituting, any stop order suspending the
effectiveness of the N-14 Registration Statement.
(f) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief
in connection with the Reorganization.
(g) The SEC shall not have issued any unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted any proceeding
seeking to enjoin consummation of the Reorganization under
Section 25(c) of the 1940 Act.
(h) The Trust shall have performed and complied in all material
respects with each of its agreements and covenants required by
this Plan to be performed or complied with by it prior to or at
the Valuation Time and Effective Time.
(i) Forum shall have received from the Trust a duly executed
instrument whereby the Acquiring Fund assumes all of the
Liabilities of or attributable to the Target Fund.
(j) Neither party shall have terminated this Plan pursuant to Section
10 of this Plan.
(k) The parties shall have received any necessary order of the SEC
exempting the parties from the prohibitions of Section 17 of the
1940 Act or any similar relief necessary to permit consummation
of the Reorganization.
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(l) The parties shall have received a certificate from Forum
Financial Group, LLC stating that it and/or its affiliates will
pay all audit, legal and proxy solicitation costs incurred by
Funds in connection with the Reorganization.
(m) Forum's Board of Trustees, including a majority of the trustees
who are not "interested persons" (as that term is defined in
section 2(a)(19) of the 1940 Act) of Forum or the Trust
("Independent Trustees"), shall have determined that the Target
Fund's participation in the Reorganization is in the best
interests of the Target Fund and that the interests of its
existing shareholders will not be diluted as a result of the
Reorganization.
(n) The Parties shall have received such assurances as they deem
appropriate with respect to the audited and PRO FORMA financial
information of the Funds contained in the N-14 Registration
Statement.
8. CONDITIONS TO THE TRUST'S OBLIGATIONS. The obligations of the Trust
set forth herein shall be subject to the following conditions
precedent:
(a) Forum shall have duly executed and delivered its applicable
Reorganization Documents to the Trust.
(b) The Target Fund's shareholders shall have approved this Plan in
the manner required by Forum's Trust Instrument and applicable
law. If the Target Fund shareholders fail to approve this Plan,
that failure shall release the Trust's obligations with respect
to the Acquiring Fund under this Plan.
(c) Forum shall have delivered to the Trust a certificate dated as of
the Closing Date executed in its name by its Secretary or
Assistant Secretary, in a form reasonably satisfactory to the
Trust, stating that the representations and warranties of Forum
in this Plan are true and correct in all material respects at and
as of the Effective Time.
(d) The Trust shall have received an opinion of Kirkpatrick &
Lockhart LLP addressed to the Trust and Forum in form and
substance reasonably satisfactory to them as to the federal
income tax consequences mentioned below ("Tax Opinion"). In
rendering the Tax Opinion, such counsel may rely as to factual
matters, exclusively and without independent verification, on the
representations and warranties made in this Plan, which such
counsel may treat as representations and warranties made to it,
and in separate letters addressed to such counsel and
certificates delivered pursuant to this Plan. The Tax Opinion
shall be substantially to the effect that, based on the facts and
assumptions stated therein and conditioned on consummation of the
Reorganization in accordance with this Plan, for federal income
tax purposes:
(1) The Reorganization will qualify as a "reorganization" (as
defined in Code Section 368(a)) and the each Fund will be a
"party to a reorganization" within the meaning of Code
Section 368(b).
(2) The Target Fund shareholders will recognize no gain or loss
on their receipt of Acquiring Fund shares constructively in
exchange for their Target Fund shares pursuant to the
Reorganization.
(3) The Target Fund will recognize no gain or loss on the
transfer of all of the Assets to the Acquiring Fund solely
in exchange for Acquiring Fund shares and the assumption by
the Acquiring Fund of the Liabilities pursuant to the
Reorganization or on its distribution of those shares to its
shareholders pursuant to its liquidation in constructive
exchange for their Target Fund shares.
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(4) The Acquiring Fund will recognize no gain or loss on its
acquisition of all of the Assets in solely exchange for
Acquiring Fund shares and its assumption of the Liabilities.
(5) The aggregate tax basis in the Acquiring Fund shares
received by each Target Fund shareholder pursuant to the
Reorganization will equal the aggregate tax basis in the
Target Fund shares surrendered in exchange therefore, (1)
and(5) the shareholder's holding period for the Acquiring
Fund shares will include the period that the shareholder
held the Target Fund shares exchanged therefore, provided
that the shareholder held such Target Fund shares as a
capital asset at the Effective Time.
(6) The Acquiring Fund's basis in the Assets will equal the
Target Fund's basis in the Assets immediately before the
Reorganization, and the Acquiring Fund's holding period for
the Assets will include the period during which the Target
Fund held the Assets.
(7) The Acquiring Fund will succeed to and take into account the
items of the Target Fund described in Code Section 381(c),
including the earnings and profits, or deficit in earnings
and profits, of the Target Fund as of the Effective Time.
The Acquiring Fund will take these items into account
subject to the conditions and limitations specified in Code
Sections 381, 382, 383 and 384 and applicable regulations
thereunder.
(e) The N-14 Registration Statement shall have become effective under
the 1933 Act as to the Acquiring Fund's shares, and no stop order
suspending the effectiveness of the N-14 Registration Statement
shall have been instituted or, the Knowledge of the Trust,
contemplated by the SEC.
(f) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it is
sought to restrain or prohibit or obtain damages or other relief
in connection with the Reorganization.
(g) The SEC shall not have issued any unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted any proceeding
seeking to enjoin consummation of the Reorganization under
Section 25(c) of the 1940 Act.
(h) Forum shall have performed and complied in all material respects
with each of its agreements and covenants required by this Plan
to be performed or complied with by it prior to or at the
Valuation Time and Effective Time.
(i) Neither party shall have terminated this Plan pursuant to Section
10 of this Plan.
(j) The parties shall have received any necessary order of the SEC
exempting the parties from the prohibitions of Section 17 of the
1940 Act or any similar relief necessary to permit consummation
of the Reorganization.
(k) The parties shall have received a certificate from Forum
Financial Group, LLC stating that it and/or its affiliates will
pay all audit, legal and proxy solicitation costs incurred by the
Funds in connection with the Reorganization.
(l) The Board of Trustees of the Trust, including its Independent
Trustee, shall have determined that the Acquiring Fund's
participation in the Reorganization is in the best interests of
the Acquiring Fund and that the interests of its existing
shareholders will not be diluted as a result of the
Reorganization.
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(m) The Parties shall have received such assurances as they deem
appropriate with respect to the audited and PRO FORMA financial
information of the Funds contained in the N-14 Registration
Statement.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties hereto shall survive the completion of the
transactions contemplated herein.
10. TERMINATION OF PLAN. A majority of a party's Board of Trustees may
terminate this Plan, by giving notice to the other party at any time
before the Effective Time if: (i) the party's conditions precedent set
forth in Sections 7 or 8, as appropriate, are not satisfied or (ii)
the Board of Trustees determines that the consummation of the
Reorganization is not in the best interests of shareholders.
11. GOVERNING LAW. This Plan and the transactions contemplated hereby
shall be governed, construed and enforced in accordance with the laws
of the State of Delaware, except to the extent preempted by federal
law, without regard to conflicts of law principles.
12. BROKERAGE FEES. Each party represents and warrants that there are no
brokers or finders entitled to receive any payments in connection with
the transactions provided for in this Plan.
13. AMENDMENTS. The parties may, by agreement in writing authorized by its
respective Boards of Trustees, amend this Plan at any time before or
after the Target Fund's shareholders approve this Plan. However, after
the Target Fund's shareholders have approved this Plan, the parties
may not amend this Plan in a manner that materially alters the
obligations of either party with respect to the Reorganization. The
parties shall not deem this Section to preclude them from changing the
Closing Date or the Effective Time by mutual agreement.
14. WAIVERS. At any time prior to the Closing Date, either party may by
written instrument signed by it (i) waive the effect of any
inaccuracies in the representations and warranties made to it
contained herein and (ii) waive compliance with any of the agreements,
covenants or conditions made for its benefit contained herein. The
parties agree that any waiver shall apply only to the particular
inaccuracy or requirement for compliance waived, and not any other or
future inaccuracy or lack of compliance.
15. COOPERATION AND FURTHER ASSURANCES. Each party will cooperate with the
other in fulfilling its obligations under this Plan and will provide
such information and documentation as is reasonably requested by the
other in carrying out this Plan's terms. Each party will provide such
further assurances concerning the performance of obligations under
this Plan and the consummation of the Reorganization, as the other
shall deem necessary, advisable or appropriate.
16. UPDATING OF N-14 REGISTRATION STATEMENT. If at any time prior to the
Effective Date, a party becomes aware of any material information that
is not reflected in the N-14 Registration Statement, the party
discovering the information shall promptly notify the other party and
the parties shall cooperate in promptly preparing, filing and clearing
with the SEC, and, if appropriate, distributing to shareholders
appropriate disclosure with respect to the information.
17. LIMITATION ON LIABILITIES. The obligations of Forum and the Target
Fund or the Trust and the Acquiring Fund shall not bind any of their
respective Trustees, shareholders, nominees, officers, agents, or
employees of Forum or the Trust personally, but shall bind only the
assets and property of the Target Fund and Acquiring Fund,
respectively. The execution and delivery of this Plan by the parties'
officers shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the Assets and the property of the Target Fund or the
Acquiring Fund, as appropriate.
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18. NOTICES. Any notice, report, statement, certificate or demand required
or permitted by any provision of this Plan shall be in writing and
shall be given by prepaid telegraph, telecopy, certified mail or
overnight express courier to:
For Forum:
Leslie K. Klenk
Forum Financial Group, LLC
Two Portland Square
Portland, Maine 04101
With copies to:
Anthony C.J. Nuland, Esq.
Seward & Kissel LLP
1200 G Street, N.W., Suite 350
Washington, D.C. 20005
For Monarch:
Patrick J. Keniston
Forum Financial Group, LLC
Two Portland Square
Portland, ME 04101
With copies to:
Robert J. Zutz, Esq.
Kirkpatrick & Lockart LLP
1800 Massachusetts Avenue, NW
Washington, D.C. 20036-1800
19. GENERAL. This Plan supersedes all prior agreements between the parties
(written or oral), is intended as a complete and exclusive statement
of the terms of the agreement between the parties and may not be
changed or terminated orally. The parties may execute this Plan in
counterparts, which shall be considered one and the same agreement,
and shall become effective when the counterparts have been executed by
and delivered to both parties. The headings contained in this Plan are
for reference only and shall not affect in any way the meaning or
interpretation of this Plan. Nothing in this Plan, expressed or
implied, confers upon any other person any rights or remedies under or
by reason of this Plan. Neither party may assign or transfer any right
or obligation under this Plan without the written consent of the other
party.
THE REMAINDER OF THIS PAGE
WAS INTENTIONALLY LEFT BLANK
A-16
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers designated below to execute this Plan as of the date first written
above.
FORUM FUNDS,
for itself and on behalf of each of Daily Assets
Treasury Obligations Fund, Daily Assets Government
Obligations Fund, and Daily Assets Cash Fund
ATTEST:
____________________________________________ By: ______________________________________________
Name: Name:
Title: Title:
MONARCH FUNDS,
for itself and on behalf of each of Daily Assets Treasury
Fund, Daily Assets Government Fund, and Daily Assets
Cash Fund
ATTEST:
____________________________________________ By: ______________________________________________
Name: Name:
Title: Title:
A-17
SCHEDULE A
CORRESPONDING CLASS TABLE
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
CORRESPONDING CORRESPONDING
ACQUIRING FUND ACQUIRING CLASS TARGET FUND TARGET CLASS
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
DAILY ASSETS TREASURY FUND Universal Shares DAILY ASSETS TREASURY Institutional Shares
OBLIGATIONS FUND
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
Institutional Service Shares Institutional Service Shares
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
DAILY ASSETS GOVERNMENT FUND Universal Shares DAILY ASSETS GOVERNMENT Institutional Shares
OBLIGATIONS FUND
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
Institutional Service Shares Institutional Service Shares
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
Investor Shares Investor Shares
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
DAILY ASSETS CASH FUND Universal Shares DAILY ASSETS CASH FUND Institutional Shares
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
Institutional Service Shares Institutional Service Shares
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
Investor Shares Investor Shares
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
- --------------------------------- ------------------------------- ------------------------------ -------------------------------
-A1-
EXHIBIT B
FINANCIAL HIGHLIGHTS
FORUM TREASURY FUND
FORUM GOVERNMENT FUND
FORUM CASH FUND
The following tables are intended to help you understand the performance of each
Forum Series. Total return in the table represents the rate an investor would
have earned on an investment in a Forum Series (assuming the reinvestment of all
distributions). This information has been audited by KPMG LLP. Each Forum
Series' financial statements and independent auditors' report are included in
the Annual Report dated August 31, 2002, which is available upon request,
without charge.
INSTITUTIONAL SHARES OF EACH FORUM SERIES
SELECTED DATA FOR A SINGLE SHARE RATIOS/SUPPLEMENTAL DATA
---------------------------------------------- ---------------------------------------------
Net Ratios to
Assets at Average Net Assets(a)
Beginning Distributions Distribution Ending End of ----------------------------------
Net Asset Net From Net From Net Net Asset Period Net
Value Per Investment Investment Realized Value per Total (000's Net Investment Gross
Year Ended August 31 Share Income Income Gain Share Return Omitted) Expenses Income Expenses(b)
- ------------------------------------------------------------------------------------------------------------------------------------
FORUM TREASURY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.02 $(0.02) -(d) $1.00 1.82% $103,281 0.20% 1.86% 0.29%
- ------------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) - 1.00 5.18% 167,593 0.20% 4.91% 0.29%
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) - 1.00 5.74% 108,372 0.20% 5.65% 0.33%
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.05 (0.05) -(d) 1.00 4.67% 86,295 0.20% 4.58% 0.32%
- ------------------------------------------------------------------------------------------------------------------------------------
1998 (c) 1.00 0.03 (0.03) - 1.00 3.34% 110,561 0.20% 5.41% 0.47%
- ------------------------------------------------------------------------------------------------------------------------------------
FORUM GOVERNMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.02 $(0.02) -(d) $1.00 2.17% $51,620 0.20% 2.16% 0.32%
- ------------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) -(d) 1.00 5.34% 56,093 0.20% 5.18% 0.32%
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) -(d) 1.00 5.94% 34,909 0.20% 5.83% 0.37%
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.05 (0.05) - 1.00 4.98% 26,627 0.20% 4.85% 0.40%
- ------------------------------------------------------------------------------------------------------------------------------------
1998 (c) 1.00 0.03 (0.03) - 1.00 3.24% 15,352 0.20% 5.43% 0.74%
- ------------------------------------------------------------------------------------------------------------------------------------
FORUM CASH FUND
- ------------------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.02 $(0.02) -(d) $1.00 2.13% $35,199 0.20% 2.20% 0.31%
- ------------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) - 1.00 5.50% 56,263 0.20% 5.20% 0.31%
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) - 1.00 6.05% 42,165 0.20% 5.93% 0.34%
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.05 (0.05) - 1.00 5.07% 38,926 0.20% 4.93% 0.35%
- ------------------------------------------------------------------------------------------------------------------------------------
1998 (c) 1.00 0.03 (0.03) - 1.00 2.70% 28,396 0.20% 5.46% 0.68%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) All ratios for periods less than one year are annualized.
(b) During each period, certain fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio excluding any fee waivers and expense reimbursements for
each Forum Series and its corresponding Portfolio.
(c) Institutional Shares of Forum Treasury Fund, Forum Government Fund and
Forum Cash Fund commenced operations on January 22, 1998, January 30, 1998
and March 13, 1998, respectively.
(d) Less than $0.01 per share.
B-1
INSTITUTIONAL SERVICE SHARES OF EACH FORUM SERIES
SELECTED DATA FOR A SINGLE SHARE RATIOS/SUPPLEMENTAL DATA
---------------------------------------------- ---------------------------------------------
Net Ratios to
Assets at Average Net Assets(a)
Beginning Distributions Distribution Ending End of ----------------------------------
Net Asset Net From Net From Net Net Asset Period Net
Value Per Investment Investment Realized Value per Total (000's Net Investment Gross
Year Ended August 31 Share Income Income Gain Share Return Omitted) Expenses Income Expenses(b)
- ------------------------------------------------------------------------------------------------------------------------------------
FORUM TREASURY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.02 $(0.02) - (d) $1.00 1.57% $11,657 0.45% 1.59% 0.71%
- ------------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) - 1.00 4.92% 15,575 0.45% 4.62% 0.70%
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.05 (0.05) - 1.00 5.48% 7,374 0.45% 5.25% 0.78%
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.04 (0.04) - 1.00 4.41% 18,369 0.45% 4.34% 0.89%
- ------------------------------------------------------------------------------------------------------------------------------------
1998 (c) 1.00 0.02 (0.02) - 1.00 2.19% 4,448 0.45% 5.16% 1.53%
- ------------------------------------------------------------------------------------------------------------------------------------
FORUM GOVERNMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.02 $(0.02) -(d) $1.00 1.91% $57,520 0.45% 1.93% 0.62%
- ------------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) -(d) 1.00 5.08% 46,764 0.45% 5.04% 0.62%
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) -(d) 1.00 5.68% 57,347 0.45% 5.67% 0.70%
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.05 (0.05) - 1.00 4.72% 22,328 0.45% 4.54% 0.80%
- ------------------------------------------------------------------------------------------------------------------------------------
1998 (c) 1.00 0.02 (0.02) - 1.00 2.22% 2,390 0.45% 5.16% 2.13%
- ------------------------------------------------------------------------------------------------------------------------------------
FORUM CASH FUND
- ------------------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.02 $(0.02) - (d) $1.00 1.87% $49,965 0.45% 1.87% 0.63%
- ------------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) - 1.00 5.23% 54,475 0.45% 5.14% 0.62%
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) - 1.00 5.78% 52,428 0.45% 5.61% 0.66%
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.05 (0.05) -(d) 1.00 4.81% 58,661 0.45% 4.59% 0.70%
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1.00 0.05 (0.05) - 1.00 5.34% 5,235 0.46% 5.22% 0.90%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) All ratios for periods less than one year are annualized.
(b) During each period, certain fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio excluding any fee waivers and expense reimbursements for
each Forum Series and its corresponding Portfolio.
(c) Institutional Service Shares of Forum Treasury Fund and Forum Government
Fund commenced operations on April 1, 1998 and March 30, 1998,
respectively.
(d) Less than $0.01 per share.
INVESTOR SHARES OF EACH FORUM SERIES
SELECTED DATA FOR A SINGLE SHARE RATIOS/SUPPLEMENTAL DATA
---------------------------------------------- ---------------------------------------------
Net Ratios to
Assets at Average Net Assets(a)
Beginning Distributions Distribution Ending End of ----------------------------------
Net Asset Net From Net From Net Net Asset Period Net
Value Per Investment Investment Realized Value per Total (000's Net Investment Gross
Year Ended August 31 Share Income Income Gain Share Return Omitted) Expenses Income Expenses(b)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FORUM GOVERNMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.01 $(0.01) -(d) $1.00 1.46% $562 0.90% 1.37% 4.48%
- ------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) -(d) 1.00 4.61% 364 0.90% 4.48% 5.46%
- ------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.05 (0.05) -(d) 1.00 5.21% 406 0.90% 5.33% 6.24%
- ------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.04 (0.04) - 1.00 4.32% 11 0.84% 4.24% 148.94%
- ------------------------------------------------------------------------------------------------------------------------------
1998 (c) 1.00 0.02 (0.02) - 1.00 0.35% 10 0.78% 5.06% 766.21%
- ------------------------------------------------------------------------------------------------------------------------------
FORUM CASH FUND
- ------------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.01 $(0.01) -(d) $1.00 1.41% $681 0.90% 1.47% 3.81%
- ------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) - 1.00 4.76% 585 0.90% 4.79% 3.37%
- ------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.05 (0.05) - 1.00 5.31% 4,333 0.90% 5.58% 1.84%
- ------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.04 (0.04) - 1.00 4.40% 458 0.90% 4.13% 9.24%
- ------------------------------------------------------------------------------------------------------------------------------
1998 (c) 1.00 0.02 (0.02) - 1.00 0.37% 10 0.78% 5.25% 709.02%
- ------------------------------------------------------------------------------------------------------------------------------
(a) All ratios for period less than one year are annualized.
(b) During each period, certain fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio excluding any fee waivers and expense reimbursements for
the Fund and its corresponding Portfolio.
(c) Investor Shares of Forum Government Fund and Forum Cash Fund commenced
operations on August 6, 1998.
(d) Less than $0.01 per share.
B-2
EXHIBIT C
FINANCIAL HIGHLIGHTS
MONARCH TREASURY FUND
MONARCH GOVERNMENT FUND
MONARCH CASH FUND
The following tables are intended to help you understand the performance of each
Monarch Series. Total return in the table represents the rate an investor would
have earned on an investment in a Monarch Series (assuming the reinvestment of
all distributions). This information has been audited by KPMG LLP. Each Monarch
Series' financial statements and independent auditors' report are included in
the Annual Report for the fiscal year ended August 31, 2002, which is available
upon request, without charge.
UNIVERSAL SHARES OF EACH MONARCH SERIES
SELECTED DATA FOR A SINGLE SHARE RATIOS/SUPPLEMENTAL DATA
---------------------------------------------- -----------------------------------------------
Net Ratios to
Assets at Average Net Assets(a)
Beginning Distributions Ending End of ------------------------------------
Net Asset Net From Net Net Asset Period Net
Value Per Investment Investment Value per Total (000's Net Investment Gross
Year Ended August 31 Share Income Income Share Return Omitted) Expenses Income Expenses(b)
- ------------------------------------------------------------------------------------------------------------------------------
MONARCH TREASURY FUND
- ------------------------------------------------------------------------------------------------------------------------------
2002(c) $1.00 $0.02 $(0.02) $1.00 1.82% $ 105 0.20% 1.81% 8.77%
- ------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) 1.00 5.24% 102 0.20% 6.22% 0.92%
- ------------------------------------------------------------------------------------------------------------------------------
2000(d) 1.00 0.04 (0.04) 1.00 4.02% 5,976 0.20% 5.86% 0.38%
- ------------------------------------------------------------------------------------------------------------------------------
MONARCH GOVERNMENT
FUND
- ------------------------------------------------------------------------------------------------------------------------------
2002(c) $1.00 $0.02 $(0.02) $1.00 2.17% $ 81,426 0.21% 2.17% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) 1.00 5.34% 164,500 0.20% 5.29% 0.23%
- ------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) 1.00 5.94% 225,697 0.20% 5.73% 0.24%
- ------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.05 (0.05) 1.00 5.00% 277,549 0.18% 4.88% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------
1998 1.00 0.05 (0.05) 1.00 5.63% 253,644 0.18% 5.48% 0.26%
- ------------------------------------------------------------------------------------------------------------------------------
MONARCH CASH FUND
- ------------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.02 $(0.02) $1.00 2.12% $46,833 0.21% 2.03% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) 1.00 5.49% 37,236 0.20% 5.68% 0.24%
- ------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) 1.00 6.04% 70,451 0.20% 5.84% 0.23%
- ------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.05 (0.05) 1.00 5.09% 98,705 0.18% 4.99% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------
1998 1.00 0.06 (0.06) 1.00 5.65% 91,671 0.18% 5.48% 0.29%
- ------------------------------------------------------------------------------------------------------------------------------
(a) All ratios for periods less than one year are annualized.
(b) During certain periods, fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements.
(c) Net Realized Gains on Investments and Distributions from Net Realized Gains
were less than $0.01 per share for 2002.
(d) Commenced operations on December 30, 1999.
C-1
INSTITUTIONAL SERVICE SHARES (FORMERLY INSTITUTIONAL SHARES) OF MONARCH TREASURY
FUND
SELECTED DATA FOR A SINGLE SHARE RATIOS/SUPPLEMENTAL DATA
---------------------------------------------- -----------------------------------------------
Net Ratios to
Assets at Average Net Assets(a)
Beginning Distributions Ending End of ------------------------------------
Net Asset Net From Net Net Asset Period Net
Value Per Investment Investment Value per Total (000's Net Investment Gross
Year Ended August 31 Share Income Income Share Return Omitted) Expenses Income Expenses(b)
- ------------------------------------------------------------------------------------------------------------------------------
MONARCH TREASURY FUND
- ------------------------------------------------------------------------------------------------------------------------------
2002(b) $1.00 $0.02 $(0.02) $1.00 1.57% $20,068 0.45% 1.68% 0.62%
- ------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) 1.00 4.92% 50,554 0.45% 4.57% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.05 (0.05) 1.00 5.47% 30,480 0.45% 5.30% 0.62%
- ------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.04 (0.04) 1.00 4.50% 55,134 0.45% 4.43% 0.62%
- ------------------------------------------------------------------------------------------------------------------------------
1998 1.00 0.05 (0.05) 1.00 5.11% 91,122 0.45% 5.00% 0.67%
- ------------------------------------------------------------------------------------------------------------------------------
(a) During certain periods, fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements.
(b) Net Realized Gains on Investments and Distributions from Net Realized Gains
were less than $0.01 per share for 2002.
INSTITUTIONAL SERVICE SHARES OF MONARCH GOVERNMENT FUND AND MONARCH CASH FUND
Data for Universal Shares of Monarch Government Fund and Monarch Cash Fund are
included in the table as Institutional Service Shares had not commenced
operations as of August 31, 2002. The total return of Institutional Service
Shares would have been different from that of Universal Shares because of the
different expenses of Institutional Service Shares.
SELECTED DATA FOR A SINGLE SHARE RATIOS/SUPPLEMENTAL DATA
---------------------------------------------- -----------------------------------------------
Net Ratios to
Assets at Average Net Assets(a)
Beginning Distributions Ending End of ------------------------------------
Net Asset Net From Net Net Asset Period Net
Value Per Investment Investment Value per Total (000's Net Investment Gross
Year Ended August 31 Share Income Income Share Return Omitted) Expenses Income Expenses(b)
- -------------------------------------------------------------------------------------------------------------------------------
MONARCH GOVERNMENT FUND
- -------------------------------------------------------------------------------------------------------------------------------
2002(b) $1.00 $0.02 $(0.02) $1.00 2.17% $ 81,426 0.21% 2.17% 0.25%
- -------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) 1.00 5.34% 164,500 0.20% 5.29% 0.23%
- -------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) 1.00 5.94% 225,697 0.20% 5.73% 0.24%
- -------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.05 (0.05) 1.00 5.00% 277,549 0.18% 4.99% 0.25%
- -------------------------------------------------------------------------------------------------------------------------------
1998 1.00 0.05 (0.05) 1.00 5.63% 253,644 0.18% 5.48% 0.26%
- -------------------------------------------------------------------------------------------------------------------------------
MONARCH CASH FUND
- -------------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.02 $(0.02) $1.00 2.12% $46,833 0.21% 2.03% 0.25%
- -------------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) 1.00 5.49% 37,236 0.20% 5.68% 0.24%
- -------------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.06 (0.06) 1.00 6.04% 70,451 0.20% 5.84% 0.23%
- -------------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.05 (0.05) 1.00 5.09% 98,705 0.18% 4.99% 0.25%
- -------------------------------------------------------------------------------------------------------------------------------
1998 1.00 0.06 (0.06) 1.00 5.65% 91,671 0.18% 5.48% 0.29%
- -------------------------------------------------------------------------------------------------------------------------------
(a) During each period, certain fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements.
(b) Net Realized Gains on Investments and Distributions from Net Realized Gains
were less than $0.01 per share
C-2
INVESTOR SHARES OF EACH MONARCH SERIES
SELECTED DATA FOR A SINGLE SHARE RATIOS/SUPPLEMENTAL DATA
---------------------------------------------- -----------------------------------------------
Net Ratios to
Assets at Average Net Assets(a)
Beginning Distributions Ending End of ------------------------------------
Net Asset Net From Net Net Asset Period Net
Value Per Investment Investment Value per Total (000's Net Investment Gross
Year Ended August 31 Share Income Income Share Return Omitted) Expenses Income Expenses(b)
- -------------------------------------------------------------------------------------------------------------------------------
MONARCH TREASURY FUND
- -----------------------------------------------------------------------------------------------------------------------------
2002(c) $1.00 $0.01 $(0.01) $1.00 1.17% $133,758 0.85% 1.22% 0.87%
- -----------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.04 (0.04) 1.00 4.52% 233,138 0.84% 4.52% 0.84%
- -----------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.05 (0.05) 1.00 5.06% 314,305 0.84% 5.01% 0.85%
- -----------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.04 (0.04) 1.00 4.10% 232,624 0.83% 4.02% 0.89%
- -----------------------------------------------------------------------------------------------------------------------------
1998 1.00 0.05 (0.05) 1.00 4.72% 57,957 0.82% 4.62% 0.91%
- -----------------------------------------------------------------------------------------------------------------------------
MONARCH GOVERNMENT FUND
- -----------------------------------------------------------------------------------------------------------------------------
2002(c) $1.00 $0.02 $(0.02) $1.00 1.52% $58,397 0.85% 1.43% 0.85%
- -----------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) 1.00 4.68% 61,546 0.84% 4.51% 0.84%
- -----------------------------------------------------------------------------------------------------------------------------
2000(d) 1.00 0.04 (0.04) 1.00 3.68% 36,091 0.85% 5.70% 0.97%
- -----------------------------------------------------------------------------------------------------------------------------
MONARCHS CASH FUND
- -----------------------------------------------------------------------------------------------------------------------------
2002 $1.00 $0.01 $(0.01) $1.00 1.48% $646,285 0.83% 1.51% 0.83%
- -----------------------------------------------------------------------------------------------------------------------------
2001 1.00 0.05 (0.05) 1.00 4.85% 791,138 0.82% 4.78% 0.82%
- -----------------------------------------------------------------------------------------------------------------------------
2000 1.00 0.05 (0.05) 1.00 5.38% 994,191 0.83% 5.40% 0.85%
- -----------------------------------------------------------------------------------------------------------------------------
1999 1.00 0.04 (0.04) 1.00 4.41% 269,421 0.83% 4.30% 0.85%
- -----------------------------------------------------------------------------------------------------------------------------
1998 1.00 0.05 (0.05) 1.00 4.97% 181,754 0.83% 4.86% 0.86%
- -----------------------------------------------------------------------------------------------------------------------------
(a) All ratios for periods of less than one year are annualized.
(b) During each period, certain fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any fee waivers and expense
reimbursements.
(c) Net Realized Gains on Investments and Distributions from Net Realized Gains
were less than $0.01 per share for 2002.
(d) Commenced operations on December 30, 1999.
C-3
STATEMENT OF ADDITIONAL INFORMATION
MONARCH FUNDS
DAILY ASSETS TREASURY FUND ("MONARCH TREASURY FUND")
DAILY ASSETS GOVERNMENT FUND ("MONARCH GOVERNMENT FUND")
DAILY ASSETS CASH FUND ("MONARCH CASH FUND")
APRIL 25, 2003
This Statement of Additional Information supplements the Combined Proxy
Statement/Prospectus dated April 25, 2003 relating to:
1. A proposal to approve an Agreement and Plan of Reorganization between Forum
Funds, another registered investment company, on behalf of Daily Assets
Treasury Obligations Fund ("Forum Treasury Fund"), Daily Assets Government
Obligations Fund ("Forum Government Fund"), and Daily Assets Cash Fund
("Forum Cash Fund") (each a "Forum Series"), and Monarch Funds ("Monarch"),
on behalf of its series, Monarch Treasury Fund, Monarch Government Fund,
and Monarch Cash Fund (the "Plan"). Under the Plan, each of Forum Treasury
Fund, Forum Government Fund, and Forum Cash Fund will (a) transfer its
assets to Monarch Treasury Fund, Monarch Government Fund, and Monarch Cash
Fund, respectively (each a "Monarch Series"), solely in exchange for shares
of that corresponding Monarch Series and the corresponding Monarch Series'
assumption of the applicable Forum Series' liabilities and (b) then
distribute the shares received from the Monarch Series proportionately to
its shareholders and terminate (collectively, the "Reorganizations").
This Statement of Additional Information consists of this cover page and
the Pro Forma financial statements for each Monarch Series reflecting the
Reorganizations as of August 31, 2002, which follows as Appendix A.
The following documents, each of which has been filed with the
Securities and Exchange Commission, are incorporated herein by reference and
legally part of this Statement of Additional Information:
1. Statement of Additional Information dated April 23, 2003 for each
Monarch Series;
2. Statement of Additional Information dated December 31, 2002 for each
Forum Series;
3. Annual Report dated August 31, 2002 for each Monarch Series; and
4. Annual Report dated August 31, 2002 for each Forum Series.
This Statement of Additional Information is not a Prospectus; a Combined
Proxy Statement/Prospectus dated April 25, 2003, relating to the Reorganizations
may be obtained without charge by writing Forum Shareholder Services, LLC at
P.O. Box 446, Portland, Maine 04112 or calling (800) 754-8757. This Statement of
Additional Information relates to, and should be read in conjunction with, such
Combined Prospectus/Proxy Statement.
PRO FORMA FINANCIAL STATEMENTS OF EACH MONARCH SERIES
REFLECTING THE REORGANIZATIONS AS OF AUGUST 31, 2002
Appendix A-1
PRO FORMA COMBINED FINANCIAL
INFORMATION FOR THE PERIOD ENDED AUGUST 31, 2002
------------------------------------------------
The following unaudited pro forma combined financial information relates to
the acquisition of all the assets and liabilities of Daily Assets Treasury
Obligations Fund, Daily Assets Government Obligations Fund, and Daily Assets
Cash Fund (the "Daily Assets Funds") in exchange for shares of Monarch Daily
Assets Treasury Fund, Monarch Daily Assets Government Fund, and Monarch Daily
Assets Cash Fund (the "Monarch Funds"), respectively. The information gives
effect to the reorganization of the funds as if it had occurred on August 31,
2002, and consists of a statement of assets and liabilities as of August 31,
2002, a statement of operations for the year ended August 31, 2002, and a
capitalization table as of August 31, 2003. The Monarch Funds and Daily Asset
Funds (each a "Fund") are currently part of a master-feeder arrangement where
each Fund seeks to achieve its investment objective by investing all its
investable assets in a separate portfolio (each a "Portfolio") of Core Trust
(Delaware) ("Core Trust"), a registered open-end management investment company
that has the same investment objective and substantially similar policies as the
Fund. The Core Trust schedule of investments in available in both the Funds' and
Monarch Funds' annual report.
Each Portfolio directly acquires securities and a Fund investing in the
Portfolio acquires an indirect interest in those securities. Each Fund accounts
for its investment in a Portfolio as a partnership investment, and records daily
its share of the Portfolio's income, expenses and realized and unrealized gain
and loss. In addition, each Fund incurs its own expenses. Each Fund may withdraw
its investment from its corresponding Portfolio at any time if its Board of
Trustees determines that it is in the best interest of the Fund and its
shareholders to do so. This is commonly referred to as a master-feeder
arrangement. As a result of the reorganization, the master-feeder structure will
be dissolved and the Funds will invest their investable assets directly in
securities to achieve its investment objective.
The pro forma combined results of operations represent the level of
expenses of Monarch Daily Assets Treasury Fund, Monarch Daily Assets Government
Fund, and Monarch Daily Assets Cash Fund following the merger as if the merger
had been consummated on August 31, 2002. There is no guarantee that the pro
forma financial information will accurately predict the actual results of the
surviving Monarch Daily Assets Treasury Fund, Monarch Daily Assets Government
Fund, and Monarch Daily Assets Cash Fund. This unaudited information should be
read in conjunction with the separate financial statements of the Monarch Funds
and the Daily Asset Funds.
Appendix A-2
PRO FORMA STATEMENTS OF ASSETS AND LIABILITIES - MONARCH DAILY ASSETS TREASURY FUND
AUGUST 31, 2002
- --------------------------------------------------------------------------------
PRO FORMA
MONARCH
MONARCH DAILY ASSETS DAILY ASSETS
DAILY ASSETS TREASURY TREASURY
TREASURY OBLIGATIONS FUND
FUND FUND ADJUSTMENTS TOTAL
---------------- ---------------- -----------------------------------
Assets
Investments
Securities at amortized cost $ 156,553,029 $ 115,111,061 $ (75,567,894)1 $ 196,096,196
Repurchase agreements at amortized cost - - 75,550,000 1 75,550,000
Total investment, at amortized cost 156,553,029 115,111,061 (17,894)1 271,646,196
Cash - - 39,274 1 39,274
Receivables:
Interest and other receivables - - 7,817 1 7,817
Receivable from Administrator 1,147 - - 1,147
Organization costs, net of amortization - 457 (457)3 -
Prepaid expenses 1,590 4,432 8,081 1,3 14,103
---------------- ---------------- ---------------- ----------------
Total Assets 156,555,766 115,115,950 36,821 271,708,537
---------------- ---------------- ---------------- ----------------
Liabilities
Payables:
Fund shares redeemed - - 2,509,198 2 2,509,198
Dividends 10,892 159,620 - 170,512
Accrued Liabilities:
Investment advisory fees - - 9,534 1 9,534
Administration fees 9,904 - 13,686 1 23,590
Transfer agent fees 35,630 6,383 - 42,013
Custodian fees - - 5,999 1 5,999
Shareholder Service Agent fees 18,789 1,780 - 20,569
Distributor fees 35,198 - - 35,198
Other 5,618 9,717 7,602 1 22,937
---------------- ---------------- ---------------- ----------------
Total Liabilities 116,031 177,500 2,546,019 2,839,550
---------------- ---------------- ---------------- ----------------
Net Assets $ 156,439,735 $ 114,938,450 $ (2,509,198) $ 268,868,987
================ ================ ================ ================
Components of Net Assets
Paid in capital $ 156,414,732 $ 114,929,437 $ (2,509,198)2 $ 268,834,971
Undistributed (distributions in excess of) net investment income 24,951 9,002 - 33,953
Accumulated net realized gain 52 11 - 63
---------------- ---------------- ---------------- ----------------
Net Assets $ 156,439,735 $ 114,938,450 $ (2,509,198) $ 268,868,987
================ ================ ================ ================
Net Assets by Class of Shares
Universal Shares $ 104,336 $ - $ 103,281,355 4 $ 103,385,691
Institutional Service Shares - 11,657,095 20,067,958 4 31,725,053
Institutional Shares 20,067,958 103,281,355 (123,349,313)4 -
Investor Shares 133,758,243 - - 133,758,243
Service Shares 2,509,198 - (2,509,198)2 -
---------------- ---------------- ---------------- ----------------
Net Assets $ 156,439,735 $ 114,938,450 $ (2,509,198) $ 268,868,987
================ ================ ================ ================
Shares of Beneficial Interest
Universal Shares 104,334 - 103,273,820 4 103,378,154
Institutional Service Shares - 11,655,616 20,058,874 4 31,714,490
Institutional Shares 20,058,874 103,273,820 (123,332,694)4 -
Investor Shares 133,742,691 - - 133,742,691
Service Shares 2,508,834 - (2,508,834)2 -
---------------- ---------------- ---------------- ----------------
156,414,733 114,929,436 (2,508,834) 268,835,335
Net Asset Value Per Share (Offering and Redemption
Price per Share) for each Class $ 1.00 $ 1.00 $ - $ 1.00
1 Reflects dissolving the master-feeder structure
2 Reflects the redemption of Service Share Class
3 Reflects the elimination of organizational costs
4 Reflects the transfer from Institutional and Institutional Service to Universal share class
Appendix A-3
PRO FORMA STATEMENTS OF OPERATIONS - MONARCH DAILY ASSETS TREASURY FUND
YEAR ENDED AUGUST 31, 2002
- --------------------------------------------------------------------------------
PRO FORMA
MONARCH DAILY ASSETS MONARCH
DAILY ASSETS TREASURY DAILY ASSETS
TREASURY OBLIGATIONS TREASURY FUND
FUND FUND ADJUSTMENTS TOTAL
--------------- --------------- ----------------- ---------------
Investment Income
Interest income allocated from Core Portfolio $ 4,716,486 $ 3,265,698 $ (7,982,184)1 $ -
Interest income - - 7,982,184 1 7,982,184
Net expenses allocated form Core Portfolio (296,248) (205,563) 501,811 1 -
--------------- --------------- ----------------- ---------------
Net Investment Income 4,420,238 3,060,135 501,811 7,982,184
--------------- --------------- ----------------- ---------------
Expenses
Investment Advisory - - 128,396 1 128,396
Custody - - 72,831 1 72,831
Administration
Universal Shares 56 - 149,964 1 150,020
Institutional Service Shares - 6,823 49,989 1, 3 56,812
Institutional Shares 21,691 72,416 (94,107)1, 3 -
Investor Shares 97,467 - 90,332 1 187,799
Service Shares 4,350 - (4,350)2 -
Transfer Agency
Universal Shares 7,753 - 79,491 4 87,244
Institutional Service Shares - 26,202 35,710 3 61,912
Institutional Shares 92,146 86,707 (178,853)3 -
Investor Shares 386,084 - 7,566 4 393,650
Service Shares 16,204 - (16,204)2 -
Shareholder services
Institutional Service Shares - 34,113 75,662 3 109,775
Institutional Shares 82,485 - (82,485)4 -
Investor Shares 362,872 - - 362,872
Service Shares 10,569 - (10,569)2 -
Distribution
Investor Shares 453,590 - - 453,590
Service Shares 31,708 - (31,708)2 -
Professional services 8,753 20,211 (490)4 28,474
Accounting 3,000 25,900 34,100 1 63,000
Trustees 7,797 7,178 (9,240)4 5,735
Compliance 9,441 2,395 (5,673)4 6,163
Reporting 772 1,760 (668)4 1,864
Amortization of organization costs - 1,173 - 1,173
Insurance expense - 3,077 (3,077)4 -
Miscellaneous 13,888 19,340 (959)4 32,269
--------------- --------------- ----------------- ---------------
Total Expenses 1,610,626 307,295 285,658 2,203,579
Expenses reimbursed and fees waived (127,307) (155,281) 173,335 1, 3 (109,253)
--------------- --------------- ----------------- ---------------
Net Expenses 1,483,319 152,014 458,993 2,094,326
--------------- --------------- ----------------- ---------------
Net Investment Income 2,936,919 2,908,121 42,818 5,887,858
Net Realized Gain on Investments Allocated from Portfolios 54 11 - 65
--------------- --------------- ----------------- ---------------
Net Increase in Net Assets from Operations $ 2,936,973 $ 2,908,132 $ 42,818 $ 5,887,923
=============== =============== ================= ===============
1 Reflects dissolving the master-feeder structure
2 Reflects the redemption of Service Share Class
3 Reflects adjustments in contractual rates
4 Certain expenses have been adjusted to reflect the expected expenses of the combined entity
Appendix A-4
PRO FORMA CAPITALIZATION - MONARCH DAILY ASSETS TREASURY FUND
AUGUST 31, 2002
- --------------------------------------------------------------------------------
The following table sets forth the capitalization of Monarch Daily Assets
Treasury Fund and indicates the pro forma combined capitalization as of August
31, 2002 as if the reorganization had occurred on that date.
PRO FORMA
MONARCH DAILY ASSETS MONARCH
DAILY ASSETS REDEMPTION OF TREASURY DAILY ASSETS
TREASURY SERVICE SHARE OBLIGATIONS TREASURY FUND
FUND CLASS FUND TOTAL
-----------------------------------------------------------------------------
Net assets $ 156,439,735 $ (2,509,198) $ 114,938,450 $ 268,868,987
Net asset value per share: $ 1.00 $ 1.00 $ 1.00 $ 1.00
Shares outstanding: 156,414,733 (2,508,834) 114,929,436 268,835,335
Shares authorized Unlimited NA Unlimited Unlimited
Appendix A-5
PRO FORMA STATEMENTS OF ASSETS AND LIABILITIES - MONARCH DAILY ASSETS GOVERNMENT FUND
AUGUST 31, 2002
- --------------------------------------------------------------------------------
PRO FORMA
MONARCH DAILY ASSETS MONARCH
DAILY ASSETS GOVERNMENT DAILY ASSETS
GOVERNMENT OBLIGATIONS GOVERNMENT
FUND FUND ADJUSTMENTS FUND
---------------- ---------------- -----------------------------------
Assets
Investments
Securities at amortized cost $ 270,911,188 $ 109,815,103 $ (113,380,630)1 $ 267,345,661
Repurchase agreements at amortized cost - - 111,210,000 1 111,210,000
Total investment, at amortized cost 270,911,188 109,815,103 (2,170,630)1 378,555,661
Cash - - 15,872 1 15,872
Receivables:
Interest and other receivables - - 2,179,199 1 2,179,199
Receivable from Administrator 3,566 - - 3,566
Organization costs, net of amortization - 601 (601)3 -
Prepaid expenses 2,710 13,042 16,766 1,3 32,518
---------------- ---------------- ---------------- -----------------
Total Assets 270,917,464 109,828,746 40,606 380,786,816
---------------- ---------------- ---------------- -----------------
Liabilities
Payables:
Fund shares redeemed - - 1,379,113 2 1,379,113
Dividends 98,740 107,739 - 206,479
Accrued Liabilities:
Investment advisory fees - - 12,224 1 12,224
Administration fees 14,779 - 17,548 1 32,327
Transfer agent fees 33,458 4,317 - 37,775
Custodian fees - - 8,091 1 8,091
Shareholder Service Agent fees 23,978 10,360 - 34,338
Distributor fees 14,885 - - 14,885
Other 12,723 4,739 2,743 1 20,205
---------------- ---------------- ---------------- -----------------
Total Liabilities 198,563 127,155 1,419,719 1,745,437
---------------- ---------------- ---------------- -----------------
Net Assets $ 270,718,901 $ 109,701,591 $ (1,379,113) $ 379,041,379
================ ================ ================ =================
Components of Net Assets
Paid in capital $ 270,738,860 $ 109,690,578 $ (1,379,113)2 $ 379,050,325
Undistributed (distributions in excess of) net investment income(31,162) 8,445 - (22,717)
Accumulated net realized gain 11,203 2,568 - 13,771
---------------- ---------------- ---------------- -----------------
Net Assets $ 270,718,901 $ 109,701,591 $ (1,379,113) $ 379,041,379
================ ================ ================ =================
Net Assets by Class of Shares
Preferred Shares $ 12,041,343 $ - $ - $ 12,041,343
Universal Shares 81,425,667 - 51,619,928 4 133,045,595
Institutional Service Shares - 57,519,745 - 57,519,745
Institutional Shares 117,475,462 51,619,928 (51,619,928)4 117,475,462
Investor Shares 58,397,316 561,918 - 58,959,234
Service Shares 1,379,113 - (1,379,113)2 -
---------------- ---------------- ---------------- -----------------
Net Assets $ 270,718,901 $ 109,701,591 $ (1,379,113) $ 379,041,379
================ ================ ================ =================
Shares of Beneficial Interest
Preferred Shares 12,040,678 - - 12,040,678
Universal Shares 81,462,046 - 51,614,191 4 133,076,237
Institutional Service Shares - 57,514,503 - 57,514,503
Institutional Shares 117,467,521 51,614,191 (51,614,191)4 117,467,521
Investor Shares 58,390,207 561,882 - 58,952,089
Service Shares 1,378,408 - (1,378,408)2 -
---------------- ---------------- ---------------- -----------------
270,738,860 109,690,576 (1,378,408) 379,051,028
Net Asset Value Per Share (Offering and Redemption
Price per Share) for each Class $ 1.00 $ 1.00 $ - $ 1.00
1 Reflects dissolving the master-feeder structure
2 Reflects the redemption of Service Share Class
3 Reflects the elimination of organizational costs
4 Reflects the transfer from Institutional to Universal share class
Appendix A-6
PRO FORMA STATEMENTS OF OPERATIONS - MONARCH DAILY ASSETS GOVERNMENT FUND
YEAR ENDED AUGUST 31, 2002
- -----------------------------------------------------
PRO FORMA
MONARCH DAILY ASSETS MONARCH
DAILY ASSETS GOVERNMENT DAILY ASSETS
GOVERNMENT OBLIGATIONS GOVERNMENT
FUND FUND ADJUSTMENTS FUND
------------- -------------- --------------- --------------
Investment Income
Interest income allocated from Core Portfolio $ 12,875,100 $ 2,568,209 $ (15,443,309)1 $ -
Interest income - - 15,443,309 1 15,443,309
Net expenses allocated form Core Portfolio (610,556) (129,594) 740,150 1 -
------------- -------------- --------------- --------------
Net Investment Income 12,264,544 2,438,615 740,150 15,443,309
------------- -------------- --------------- --------------
Expenses
Investment Advisory - - 207,950 1 207,950
Custody - - 117,957 1 117,957
Administration
Preferred Shares 15,745 - 14,823 1 30,568
Universal Shares 77,719 - 123,852 1 201,571
Institutional Service Shares - 28,814 30,835 1, 3 59,649
Institutional Shares 136,034 25,055 111,013 1, 3 272,102
Investor Shares 39,287 241 35,726 1, 3 75,254
Service Shares 8,739 - (8,739)2 -
Transfer Agency
Preferred Shares 8,154 - (5,043)4 3,111
Universal Shares 86,090 - 33,262 4 119,352
Institutional Service Shares - 71,260 (7,207)3 64,053
Institutional Shares 543,819 37,928 (26,644)3 555,103
Investor Shares 154,397 13,271 (13,350)3 154,318
Service Shares 24,722 - (24,722)2 -
Shareholder Services
Preferred Shares - - - -
Universal Shares - - - -
Institutional Service Shares - 144,071 (28,815)3 115,256
Institutional Shares 525,766 - - 525,766
Investor Shares 144,444 1,206 (241)3 145,409
Service Shares 21,409 - (21,409)2 -
Distribution
Investor Shares 180,555 1,448 (242)3 181,761
Service Shares 64,227 - (64,227)2 -
Professional services 24,644 15,659 (2,200)4 38,103
Accounting 3,000 37,900 46,100 1 87,000
Trustees 18,633 4,710 (14,055)4 9,288
Compliance 9,625 9,527 (9,171)4 9,981
Reporting 2,557 1,556 (1,094)4 3,019
Amortization of organization costs - 1,461 - 1,461
Insurance expense - 1,904 (1,904)4 -
Miscellaneous 27,536 14,015 11,150 1 52,701
------------- -------------- --------------- --------------
Total Expenses 2,117,102 410,026 503,605 3,030,733
Expenses reimbursed and fees waived (144,661) (171,291) 108,537 1, 3 (207,415)
------------- -------------- --------------- --------------
Net Expenses 1,972,441 238,735 612,142 2,823,318
------------- -------------- --------------- --------------
Net Investment Income 10,292,103 2,199,880 128,008 12,619,991
Net Realized Gain on Investments Allocated from Portfolios 16,108 3,058 - 19,166
------------- -------------- --------------- --------------
Net Increase in Net Assets from Operations $ 10,308,211 $ 2,202,938 $ 128,008 $ 12,639,157
============= ============== =============== ==============
1 Reflects dissolving the master-feeder structure
2 Reflects the redemption of Service Share Class
3 Reflects adjustments in contractual rates
4 Certain expenses have been adjusted to reflect the expected expenses of the combined entity
Appendix A-7
PRO FORMA CAPITALIZATION - MONARCH DAILY ASSETS GOVERNMENT FUND
AUGUST 31, 2002
- --------------------------------------------------------------------------------
The following table sets forth the capitalization of Monarch Daily Assets
Government Fund and indicates the pro forma combined capitalization as of August
31, 2002 as if the reorganization had occurred on that date.
PRO FORMA
MONARCH
MONARCH DAILY ASSETS DAILY ASSETS
DAILY ASSETS REDEMPTION OF GOVERNMENT GOVERNMENT
GOVERNMENT SERVICE SHARE OBLIGATIONS FUND
FUND CLASS FUND TOTAL
-----------------------------------------------------------------------------
Net assets $ 270,718,901 $ (1,379,113) $ 109,701,591 $ 379,041,379
Net asset value per share: $ 1.00 $ 1.00 $ 1.00 $ 1.00
Shares outstanding: 270,738,860 (1,378,408) 109,690,576 379,051,028
Shares authorized Unlimited NA Unlimited Unlimited
Appendix A-8
PRO FORMA STATEMENTS OF ASSETS AND LIABILITIES - MONARCH DAILY ASSETS CASH FUND
AUGUST 31, 2002
- --------------------------------------------------------------------------------
PRO FORMA
MONARCH MONARCH
DAILY ASSETS DAILY ASSETS DAILY ASSETS
CASH CASH CASH
FUND FUND ADJUSTMENTS FUND
----------------- ----------------- -----------------------------------
Assets
Investments
Securities at amortized cost $ 1,061,932,382 $ 85,901,295 $ (382,094,432)1 $ 765,739,245
Repurchase agreements at amortized cost 381,300,000 1 381,300,000
Total investment, at amortized cost 1,061,932,382 85,901,295 (794,432)1 1,147,039,245
Cash - - 14,931 1 14,931
Receivables:
Interest and other receivables - - 858,037 1 858,037
Receivable from Administrator 2,452 - - 2,452
Prepaid expenses 9,695 3,085 26,811 1 39,591
----------------- ----------------- ---------------- -----------------
Total Assets 1,061,944,529 85,904,380 105,347 1,147,954,256
----------------- ----------------- ---------------- -----------------
Liabilities
Payables:
Fund shares redeemed - - 7,695,178 2 7,695,178
Dividends 30,797 39,821 - 70,618
Accrued Liabilities:
Investment advisory fees - - 33,361 1 33,361
Administration fees 51,217 - 47,890 1 99,107
Transfer agent fees 164,929 1,958 - 166,887
Custodian fees - - 22,596 1 22,596
Shareholder Service Agent fees 161,784 9,899 - 171,683
Distributor fees 129,740 - - 129,740
Other 28,862 7,618 1,500 1 37,980
----------------- ----------------- ---------------- -----------------
Total Liabilities 567,329 59,296 7,800,525 8,427,150
----------------- ----------------- ---------------- -----------------
Net Assets $ 1,061,377,200 $ 85,845,084 $ (7,695,178) $ 1,139,527,106
================= ================= ================ =================
Components of Net Assets
Paid in capital $ 1,061,339,332 $ 85,840,154 $ (7,695,178)2 $ 1,139,484,308
Undistributed (distributions in
excess of) net investment income - 797 - 797
Accumulated net realized gain 37,868 4,133 - 42,001
----------------- ----------------- ---------------- -----------------
Net Assets $ 1,061,377,200 $ 85,845,084 $ (7,695,178) $ 1,139,527,106
================= ================= ================ =================
Net Assets by Class of Shares
Preferred Shares $ 13,095,274 $ - $ - 13,095,274
Universal Shares 46,833,306 - 35,199,174 3 82,032,480
Institutional Service Shares - 49,965,409 - 49,965,409
Institutional Shares 347,468,889 35,199,174 (35,199,174)3 347,468,889
Investor Shares 646,284,553 680,501 - 646,965,054
Service Shares 7,695,178 - (7,695,178)2 -
----------------- ----------------- ---------------- -----------------
Net Assets $ 1,061,377,200 $ 85,845,084 $ (7,695,178) $ 1,139,527,106
================= ================= ================ =================
Shares of Beneficial Interest
Preferred Shares 13,092,899 - - 13,092,899
Universal Shares 46,831,876 - 35,196,905 3 82,028,781
Institutional Service Shares - 49,962,783 - 49,962,783
Institutional Shares 347,458,274 35,196,905 (35,196,905)3 347,458,274
Investor Shares 646,262,172 680,466 - 646,942,638
Service Shares 7,694,108 - (7,694,108)2 -
----------------------------------- ---------------- -----------------
1,061,339,329 85,840,154 (7,694,108) 1,139,485,375
Net Asset Value Per Share (Offering and Redemption
Price per Share) for each Class $ 1.00 $ 1.00 $ - $ 1.00
1 Reflects dissolving the master-feeder structure
2 Reflects the redemption of Service Share Class
3 Reflects the transfer from Institutional to Universal share class
Appendix A-9
PRO FORMA STATEMENTS OF OPERATIONS - MONARCH DAILY ASSETS CASH FUND
YEAR ENDED AUGUST 31, 2002
- --------------------------------------------------------------------------------
PRO FORMA
MONARCH MONARCH
DAILY ASSETS DAILY ASSETS DAILY ASSETS
CASH CASH CASH
FUND FUND ADJUSTMENTS FUND
--------------- --------------- ----------------- ---------------
Investment Income
Interest income allocated from Core Portfolio $ 32,013,680 $ 2,504,922 $ (34,518,602)1 $ -
Interest income - - 34,518,602 1 34,518,602
Net expenses allocated form Core Portfolio (1,542,845) (119,822) 1,662,667 1 -
--------------- --------------- ----------------- ---------------
Net Investment Income Allocated 30,470,835 2,385,100 1,662,667 34,518,602
--------------- --------------- ----------------- ---------------
Expenses
Investment Advisory - - 488,010 1 488,010
Custody - - 276,818 1 276,818
Administration
Preferred Shares 37,898 - 31,094 1 68,992
Universal Shares 25,540 - 76,556 1 102,096
Institutional Service Shares - 26,753 28,630 1, 3 55,383
Institutional Shares 284,274 25,933 245,374 1, 3 555,581
Investor Shares 372,094 324 345,450 1, 3 717,868
Service Shares 17,885 - (17,885)2 -
Transfer Agency
Preferred Shares 8,527 - (3,948)4 4,579
Universal Shares 33,278 - 26,489 4 59,767
Institutional Service Shares - 68,366 (9,049)3 59,317
Institutional Shares 1,098,548 38,993 (24,901)3 1,112,640
Investor Shares 1,419,424 14,591 12,193 3 1,446,208
Service Shares 44,030 - (44,030)2 -
Shareholder services
Institutional Service Shares - 133,767 (26,754)3 107,013
Institutional Shares 1,073,516 - - 1,073,516
Investor Shares 1,385,796 1,620 (324)3 1,387,092
Service Shares 43,810 - (43,810)2 -
Distribution
Investor Shares 1,732,245 1,944 (323)3 1,733,866
Service Shares 131,429 - (131,429)2 -
Professional services 56,589 14,889 523 4 72,001
Accounting 3,000 37,900 46,100 1 87,000
Trustees 46,017 4,643 (28,863)4 21,797
Compliance 12,401 11,865 (842)4 23,424
Reporting 3,636 1,376 2,073 4 7,085
Insurance expense - 1,797 (1,797)4 -
Miscellaneous 57,990 17,108 52,008 1 127,106
--------------- --------------- ----------------- ---------------
Total Expenses 7,887,927 401,869 1,297,363 9,587,159
Expenses reimbursed and fees waived (122,567) (166,991) 123,231 1, 3 (166,327)
--------------- --------------- ----------------- ---------------
Net Expenses 7,765,360 234,878 1,420,594 9,420,832
--------------- --------------- ----------------- ---------------
Net Investment Income 22,705,475 2,150,222 242,073 25,097,770
Net Realized Gain on Investments Allocated
from Portfolios 54,031 4,150 - 58,181
--------------- --------------- ----------------- ---------------
Net Increase in Net Assets from Operations $ 22,759,506 $ 2,154,372 $ 242,073 $ 25,155,951
=============== =============== ================= ===============
1 Reflects dissolving the master-feeder structure
2 Reflects the redemption of Service Share Class
3 Reflects adjustments in contractual rates
4 Certain expenses have been adjusted to reflect the expected expenses of the combined entity
Appendix A-10
PRO FORMA CAPITALIZATION - MONARCH DAILY ASSETS CASH FUND
AUGUST 31, 2002
- --------------------------------------------------------------------------------
The following table sets forth the capitalization of Monarch Daily Assets Cash
Fund and indicates the pro forma combined capitalization as of August 31, 2002
as if the reorganization had occurred on that date.
PRO FORMA
MONARCH MONARCH
DAILY ASSETS REDEMPTION OF DAILY ASSETS DAILY ASSETS
CASH SERVICE SHARE CASH CASH FUND
FUND CLASS FUND TOTAL
-----------------------------------------------------------------------------
Net assets $ 1,061,377,200 $ (7,695,178) $ 85,845,084 $ 1,139,527,106
Net asset value per share: $ 1.00 $ 1.00 $ 1.00 $ 1.00
Shares outstanding: 1,061,339,329 (7,694,108) 85,840,154 1,139,485,375
Shares authorized Unlimited NA Unlimited Unlimited
Appendix A-11
PRO FORMA FOOTNOTES REGARDING THE REORGANIZATION OF DAILY ASSETS TREASURY
OBLIGATIONS FUND, DAILY ASSETS GOVERNMENT OBLIGATIONS FUND, AND DAILY ASSETS
CASH FUND INTO MONARCH DAILY ASSETS TREASURY FUND, MONARCH DAILY ASSETS
GOVERNMENT FUND, AND MONARCH DAILY ASSETS CASH FUND AS OF AUGUST 31, 2002
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1. BASIS OF COMBINATION
- --------------------------------------------------------------------------------
The accompanying pro forma financial statements are presented to show the effect
of the proposed reorganization of the Daily Assets Treasury Obligations Fund,
the Daily Assets Government Obligations Fund, and the Daily Assets Cash Fund
(the "Funds") into Monarch Daily Assets Treasury Fund, Monarch Daily Assets
Government Fund, and Monarch Daily Assets Cash Fund, respectively, each a series
of Monarch Funds, a Massachusetts business trust (the "Monarch Funds"), as if
such reorganization had taken place as of August 31, 2002, the fiscal year-end
of the Monarch Funds. The following notes refer to the accompanying pro forma
financial statements as if the above-mentioned reorganization of the Funds with
and into the Monarch Funds had taken place as of August 31, 2002. For purposes
of these pro forma statements, the data for the Funds and the Monarch Funds is
for the twelve month period ended August 31, 2002. These pro forma statements
are shown as if the master-feeder structure has been dissolved and each fund has
invested its investable assets directly in securities to achieve its investment
objective.
Under the terms of the Agreement and Plan of Reorganization, the reorganization
of the Funds and the Monarch Funds should be treated as a tax free business
combination and accordingly will be accounted for by a method of accounting for
tax free mergers of investment companies. The acquisition would be accomplished
by an acquisition of the net assets of the Funds in exchange for shares of the
Monarch Funds at net asset value. The statements of assets and liabilities and
the related statements of operations of the Funds and the Monarch Funds have
been combined using data from the Funds and data from the Monarch Funds as of
August 31, 2002.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements and schedules of investments of the Funds and the
Monarch Funds should be read in conjunction with the historical financial
statements of each of the Funds and the Monarch Funds which have been
incorporated by reference into this Statement of Additional Information.
- --------------------------------------------------------------------------------
NOTE 2. SHARES OF BENEFICIAL INTEREST
- --------------------------------------------------------------------------------
Under the proposed reorganization, the Funds will receive shares of the Monarch
Funds with an aggregate value equal to the Funds' net assets transferred to the
Monarch Funds. Shareholders will receive shares of a comparable class of the
Monarch Funds equal in value to aggregate value of the shares of the Fund class
in which they invest. Accordingly, shareholders of a Fund's class will become
shareholders of a comparable class of the Monarch Funds.
The pro forma net asset value per share assumes that additional shares of the
Monarch Funds would have been issued on August 31, 2002 as a result of the
proposed reorganization. The amount of additional shares assumed to be issued
was calculated based on net assets of the Funds and the net asset value per
share of the Monarch Funds as of August 31, 2002.
- --------------------------------------------------------------------------------
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
These financial statements require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of increase and decrease in net assets from operations
during the fiscal period. Actual results could differ from those estimates. The
following summarizes the significant accounting policies of the Portfolios:
SECURITY VALUATION
After the reorganization, each of the Monarch Funds will determine its net asset
value per share as of 4:00 p.m., Eastern time, on each fund business day,
utilizing the amortized cost method pursuant to Rule 2a-7 under the Investment
Company Act of 1940, as amended. 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.
FEDERAL TAXES
Each fund intends to continue to qualify each year as a regulated investment
company and distribute all its net investment income. In addition, by
distributing in each calendar year substantially all its net investment income,
capital gain and certain other amounts, each fund will not be subject to a
federal excise tax. Therefore, no federal income or excise tax provision is
required.
- --------------------------------------------------------------------------------
NOTE 4. PRO FORMA ADJUSTMENTS
- --------------------------------------------------------------------------------
The Pro Forma Statement of Operations assumes similar rates of gross investment
income for the Funds' and the Monarch Funds' investments. Accordingly, the
combined gross investment income is equal to the sum of each of the Funds' and
the Monarch Funds' gross investment income. Certain expenses have been adjusted
to reflect the expected expenses of the combined entity. The pro forma
investment advisory, administration, transfer agency, custody, and shareholder
servicing fees of the combined funds and/or any related waivers and
reimbursements are based on the fee schedule in effect for the Monarch Funds
based on the average net assets of Funds and the Monarch Funds for the twelve
months ended August 31, 2002.
PART C
OTHER INFORMATION
ITEM 15 - INDEMNIFICATION.
AGREEMENT AND DECLARATION OF TRUST
The Registrant's Agreement and Declaration of Trust requires the Registrant to
indemnify existing or former trustees and officers of the Registrant 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 qualified in its entirety by the contents of the
Agreement and Declaration of Trust included in this Registration Statement as
Exhibit 16(1) and which is incorporated herein by reference.
DISTRIBUTION AGREEMENT
The Registrant's Distribution Agreement requires the Registrant's distributor to
indemnify, defend and hold the Registrant and its several officers and trustees
free and harmless from and against any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, cots, charges, reasonable counsel fees
and other expenses of ever nature and character (including the cost of
investigating or defending such claims, demands, actions, suits or liabilities
and any reasonable counsel fees incurred in connection therewith) (collectively,
"Damages") but only if such Damages arise out of or are based upon:
(i) any alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or any alleged omission of a
material fact required to be stated or necessary to make the statements
therein not misleading, if such statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Trust in writing in connection with the preparation of the Registration
Statement or Prospectus by or on behalf of the distributor; or
(ii) any error of judgment or mistake of law, for any loss arising out
of any investment, or for any action or inaction of the distributor in
the absence of bad faith, willful misfeasance or gross negligence in
the performance of the distributor's duties or obligations under this
Agreement or by reason or the distributor's reckless disregard of its
duties and obligations under this Agreement.
This description is qualified in its entirety by the contents of the
Distribution Agreement included in this Registration Statement as Exhibit 16(7)
and which is incorporated herein by reference.
INVESTMENT ADVISORY AGREEMENT
The Registrant's Investment Advisory Agreement provides the adviser will be
liable to the Registrant for error of judgment or mistake of law, for any loss
arising out of any investment, or in any event due resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties
under the agreement, or by reason of reckless disregard of its obligations and
duties under the agreement.
This description is qualified in its entirety by the contents of the Investment
Advisory Agreement included in this Registration Statement as Exhibit 16(6) and
which is incorporated herein by reference.
OTHER AGREEMENTS OF THE REGISTRANT
The Registrant's Administration Agreement requires the Registrant's
administrator to indemnify and hold harmless the Registrant, its employees,
agents, trustees, and officers against and from any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of ever nature and character
(collectively, "Damages") arising out of the administrator's actions taken or
failures to act with respect to a series of the Registrant due to bad faith,
willful misfeasance or gross negligence in the performance of the
administrator's duties or obligations under the agreement or by reason of the
administrator's reckless disregard of its duties and obligations under the
agreement.
2
The Registrant's Transfer Agency Agreement and Fund Accounting Agreement contain
similar indemnification language.
This description is qualified in its entirety by the contents of the
Administration Agreement, the Transfer Agency Agreement, and the Fund Accounting
Agreement included in this Registration Statement as Exhibit 16(13)(a), Exhibit
16(13)(b), and Exhibit 16(13)(c), respectively, and which are incorporated
herein by reference.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 16 - EXHIBITS.
(1) Agreement and Declaration of Trust dated February 7, 2003 (Exhibit
incorporated by reference as filed in Post-Effective Amendment No. 32
to the Registrant's Registration Statement on Form N-1a via EDGAR on
April 23, 2003, accession number 0001004402-03-000257).
(2) By-Laws dated February 11, 2003 (Exhibit incorporated by reference as
filed in Post-Effective Amendment No. 32 to the Registrant's
Registration Statement on Form N-1a via EDGAR on April 23, 2003,
accession number 0001004402-03-000257).
(3) None.
(4) Form of Agreement and Plan of Reorganization between Registrant and
Forum Funds is filed herewith as Exhibit A to the Proxy
Statement/Prospectus.
(5) Sections 2.10 and 10.3 and Article VII of the Agreement and Declaration
of Trust filed as Exhibit 16(1).
(6) Investment Advisory Agreement between Registrant and Forum Investment
Advisors, LLC dated April 23, 2003 (Exhibit incorporated by reference
as filed in Post-Effective Amendment No. 32 to the Registrant's
Registration Statement on Form N-1a via EDGAR on April 23, 2003,
accession number 0001004402-03-000257).
(7) (a) Distribution Agreement between the Registrant and Forum Fund
Services, LLC dated April 23, 2003 (Exhibit incorporated by reference
as filed in Post-Effective Amendment No. 32 to the Registrant's
Registration Statement on Form N-1a via EDGAR on April 23, 2003,
accession number 0001004402-03-000257).
(b) Form of Selected Dealer Agreement between Forum Fund Services, LLC
and securities brokers (Exhibit incorporated herein by reference as
filed as Exhibit (e)(1) in PEA 105 via EDGAR on November 2, 2001,
accession number 0001004402-01-500277).
(8) None.
(9) None.
(10) (a) Distribution Plan for Investor Shares dated February 11, 2003
(Exhibit incorporated by reference as filed in Post-Effective Amendment
No. 32 to the Registrant's Registration Statement on Form N-1a via
EDGAR on April 23, 2003, accession number 0001004402-03-000257).
(b) Multiclass (Rule 18f-3) Plan dated February 11, 2003 (Exhibit
incorporated by reference as filed in Post-Effective Amendment No. 32
to the Registrant's Registration Statement on Form N-1a via EDGAR on
April 23, 2003, accession number 0001004402-03-000257).
(11) Opinion and consent of Kirkpatrick & Lockhart LLP regarding legality
of securities (filed herewith).
3
(12) Opinion and consent of Kirkpatrick & Lockhart LLP regarding the tax
consequences of each reorganization (to be filed pursuant to a
post-effective amendment).
(13) (a) Administration Agreement between Registrant and Forum
Administrative Services, LLC dated February 11, 2003 (Exhibit
incorporated by reference as filed in Post-Effective Amendment No. 32
to the Registrant's Registration Statement on Form N-1a via EDGAR on
April 23, 2003, accession number 0001004402-03-000257).
(b) Transfer Agency Agreement between Registrant and Forum
Administrative Services, LLC dated February 11, 2003 (Exhibit
incorporated by reference as filed in Post-Effective Amendment No. 32
to the Registrant's Registration Statement on Form N-1a via EDGAR on
April 23, 2003, accession number 0001004402-03-000257).
(c) Shareholder Service Agreement between Registrant and Forum
Administrative Services, LLC dated February 11, 2003 relating to
Institutional Shares, Institutional Service Shares, and Investor Shares
(Exhibit incorporated by reference as filed in Post-Effective Amendment
No. 32 to the Registrant's Registration Statement on Form N-1a via
EDGAR on April 23, 2003, accession number 0001004402-03-000257).
(d) Fund Accounting Agreement between Registrant and Forum Accounting
Services, LLC dated February 11, 2003 (Exhibit incorporated by
reference as filed in Post-Effective Amendment No. 32 to the
Registrant's Registration Statement on Form N-1a via EDGAR on April 23,
2003, accession number 0001004402-03-000257).
(14) Consents of independent accountants (filed herewith).
(15) None.
(16) (a) Powers of Attorney of John Y. Keffer, James C. Cheng, J. Michael
Parish and Costas Azariadis, Trustees of Registrant and Core Trust
(Delaware) (Exhibit incorporated by reference as filed with the
Registrant's Registration Statement on Form N-14 via Edgar on March 24,
2003, accession number 0001004402-03-000242).
(17) (a) Form of Proxy Card for Daily Assets Treasury Obligations Fund
(Exhibit incorporated by reference as filed with the Registrant's
Registration Statement on Form N-14 via Edgar on March 24, 2003,
accession number 0001004402-03-000242).
(b) Proxy Card for Daily Assets Government Obligations Fund (Exhibit
incorporated by reference as filed with the Registrant's Registration
Statement on Form N-14 via Edgar on March 24, 2003, accession number
0001004402-03-000242).
(c) Proxy Card for Daily Assets Cash Fund (Exhibit incorporated by
reference as filed with the Registrant's Registration Statement on Form
N-14 via Edgar on March 24, 2003, accession number
0001004402-03-000242).
ITEM 17 - UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public re-offering of
the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act [17 CFR
230.145c], the re-offering prospectus will contain the information called for by
the applicable registration form for re-offerings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the Securities Act, each post- effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees to file copies of the tax opinions
required to be filed as an exhibit to the registration statement by Item 16 (12)
of Form N-14 under the Securities Act of 1933, as amended, by means of a
post-effective amendment to the registration statement.
4
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the Registrant in the city of Portland and State of
Maine on April 24, 2003.
MONARCH FUNDS
By: /S/ JOHN Y. KEFFER
------------------------------
John Y. Keffer
President
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated:
SIGNATURE TITLE DATE
- -------- ----- ----
Principal Executive Officer
/S/ JOHN Y. KEFFER Chairman April 24, 2003
- --------------------------- and President
John Y. Keffer
Principal Financial
and Accounting Officer
/S/ STACEY A. HONG Treasurer April 24, 2003
- ---------------------------
Stacey A. Hong
A majority of the Trustees
/S/ JOHN Y. KEFFER April 24, 2003
- ---------------------------
John Y. Keffer
Costas Azariadis, Trustee
James C. Cheng, Trustee
J. Michael Parish, Trustee
/S/ JOHN Y. KEFFER April 24, 2003
- ---------------------------
By: John Y. Keffer
(Attorney-in-fact)
*Pursuant to powers of attorney previously filed as Exhibits to this
Registration Statement.
5
SIGNATURES
On behalf of Core Trust (Delaware), being duly authorized, I have duly caused
this Registration Statement of Monarch Funds to be signed in the City of
Portland, State of Maine on April 24, 2003.
CORE TRUST (DELAWARE)
By: /S/ JOHN Y. KEFFER
-----------------------------------------
John Y. Keffer, President
On behalf of Core Trust (Delaware), this Registration Statement of Monarch Funds
has been signed below by the following persons in the capacities indicated on
April 24, 2003.
(a) Principal Executive Officer
/S/ JOHN Y. KEFFER
-----------------------------------------
John Y. Keffer, Chairman and President
(b) Principal Financial Officer
/S/ STACEY E. HONG
-----------------------------------------
Stacey E. Hong, Treasurer
(c) A majority of the Trustees
/S/ JOHN Y. KEFFER
-----------------------------------------
John Y. Keffer, Chairman
Costas Azariadis, Trustee
J. Michael Parish, Trustee
James C. Cheng, Trustee
By: /S/ JOHN Y. KEFFER
---------------------------------------
John Y. Keffer, Attorney in fact*
* Pursuant to powers of attorney previously filed as Exhibits to this
Registration Statement.
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INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
16(11) Opinion and consent of Kirkpatrick & Lockhart LLP regarding legality of
securities.
16(14) Consents on independent accountants.
7