DEFINITIVE COPIES
(File Nos. 33-49570 and 811-6742)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
MONARCH FUNDS
Two Portland Square
Portland, Maine 04101
(207) 879-1900
David M. Whitaker
Citigroup Fund Services, LLC
Two Portland Square
Portland, Maine 04101
Copies to:
R. Darrell Mounts, Esq.
Kirkpatrick & Lockhart Nicholson Graham LLP
1800 Massachusetts Avenue NW
Washington, D.C. 20036
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
1) Title of each class of securities to which transaction
applies:
____________________________
2) Aggregate number of securities to which transaction
applies:
___________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
___________________________
4) Proposed maximum aggregate value of transaction:
___________________________
5) Total fee paid:
___________________________
[ ] Fee paid previously with preliminary materials.
1
DEFINITIVE COPIES
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
________________________
2) Form, Schedule or Registration Statement No.:
________________________
3) Filing Party:
________________________
4) Date Filed:
________________________
2
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MONARCH FUNDS
TWO PORTLAND SQUARE, FOURTH FLOOR
PORTLAND, MAINE 04101
September 27, 2005
Dear Shareholder:
The Board of Trustees of Monarch Funds (the "Trust") has called a
special meeting of the shareholders of Daily Assets Treasury Fund, Daily Assets
Government Fund, Daily Assets Cash Fund and Daily Assets Government Obligations
Fund, each a series of the Trust (a "Fund" and collectively, the "Funds"), to
approve a new investment advisory agreement (the "New Agreement") between the
Trust and Monarch Investment Advisors, LLC, formerly known as Forum Investment
Advisors, LLC ("MIA"), with respect to the Funds. The New Agreement contains the
same terms and conditions as the current investment advisory agreements (the
"Current Agreements"). The meeting is scheduled to be held on November 1, 2005.
MIA has served as the investment adviser for the Daily Assets Treasury
Fund, Daily Assets Government Fund and Daily Assets Cash Fund pursuant to an
investment advisory agreement between the Trust and MIA since April 17, 2003.
From January 2, 1998 to April 16, 2003, MIA managed the Funds when they were
series of another registered investment company. MIA has served as the Daily
Assets Government Obligations Fund's investment adviser pursuant to an
investment advisory agreement between the Trust and MIA since July 14, 2003.
From March 13, 1998 (the Fund's inception date) to July 21, 2003, MIA managed
the Fund when it was a series of another registered investment company. The
Funds' portfolio manager has managed all of the Funds since their inception.
MIA is a wholly owned subsidiary of Forum Trust, LLC ("Forum Trust").
Forum Trust intends to sell all of its ownership interest in MIA to Anthony R.
Fischer, Jr., the Funds' portfolio manager and Jack J. Singer, Executive
Director, Vice President, Secretary and Assistant Treasurer of MIA, on or about
November 1, 2005 (the "Sale"). Pursuant to the terms of the Current Agreements,
the Sale will operate to automatically terminate the Current Agreements. In
order to continue to provide advisory services to the Funds following the Sale,
at the March 24, 2005 meeting of the Board of Trustees of Monarch Funds (the
"Board"), the Board, after careful consideration, unanimously approved the New
Agreement with respect to each Fund subsequent to the Sale, subject to the
approval of each Fund's shareholders. The Board recommends that the shareholders
of each Fund vote "FOR" the approval of the New Agreement subsequent to the
Sale.
Shareholders of each Fund are being asked to approve the New Agreement
only with respect to the Fund in which they own shares. The approval of the New
Agreement by the shareholders of one Fund is not contingent on the approval of
the New Agreement by the shareholders of any other Fund.
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. IT IS
IMPORTANT THAT YOUR VOTE BE RECEIVED NO LATER THAN OCTOBER 31, 2005. IF YOU HAVE
ANY QUESTIONS ABOUT THE PROXY STATEMENT, PLEASE DO NOT HESITATE TO CALL US AT
(800) 754-8757.
We appreciate your participation and prompt response and thank you for
your continued support.
Sincerely,
/s/ David M. Whitaker
David M. Whitaker
Secretary
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MONARCH FUNDS
TWO PORTLAND SQUARE, FOURTH FLOOR
PORTLAND, MAINE 04101
-------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 1, 2005
-------------------------
To the Shareholders of Daily Assets Treasury Fund, Daily Assets Government Fund,
Daily Assets Cash Fund and Daily Assets Government Obligations Fund:
Notice is hereby given that a special meeting of shareholders (the
"Meeting") of Daily Assets Treasury Fund, Daily Assets Government Fund, Daily
Assets Cash Fund and Daily Assets Government Obligations Fund, each a series of
Monarch Funds (the "Trust"), will be held at the offices of Citigroup Fund
Services, LLC, Two Portland Square, Fourth Floor, Portland, Maine 04101 on
November 1, 2005 at 2:00 p.m. (Eastern time). The purpose of the Meeting is:
1. To approve the new investment advisory agreement between the Trust and
Monarch Investment Advisors, LLC with respect to Daily Assets Treasury
Fund;
2. To approve the new investment advisory agreement between the Trust and
Monarch Investment Advisors, LLC with respect to Daily Assets
Government Fund;
3. To approve the new investment advisory agreement between the Trust and
Monarch Investment Advisors, LLC with respect to Daily Assets Cash
Fund;
4. To approve the new investment advisory agreement between the Trust and
Monarch Investment Advisors, LLC with respect to Daily Assets
Government Obligations Fund; and
5. To transact such other business as may properly come before the
Meeting.
The Trust's Board of Trustees has fixed the close of business on
September 8, 2005 as the record date for the determination of shareholders
entitled to notice of, and to vote at, the Meeting or any postponement or
adjournment thereof. Please carefully read the accompanying Proxy Statement.
By Order of the Board of Trustees,
/s/ David M. Whitaker
David M. Whitaker
Secretary
Portland, Maine
September 27, 2005
YOUR VOTE IS VERY IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. IN ORDER TO AVOID
THE UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU TO INDICATE YOUR
VOTING INSTRUCTIONS (1) ON THE ENCLOSED PROXY, DATE AND SIGN IT, AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED; OR (2) BY CALLING (TOLL FREE), THE TELEPHONE
NUMBER ON YOUR PROXY CARD.
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TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
INTRODUCTION...................................................................1
PROPOSAL.......................................................................2
Summary of Proposal...................................................2
Evaluation By the Board of Trustees...................................3
Discussion of the Provisions of the Current Agreements................5
Advisory Fees.........................................................6
Information About MIA (Prior to the Sale).............................6
Information About MIA (After the Sale)................................6
OTHER MATTERS..................................................................7
ADDITIONAL INFORMATION.........................................................8
Other Fund Service Providers......................................... 8
REPORTS TO SHAREHOLDERS....................................................... 9
ADVISORY AGREEMENT ....................................................Exhibit A
PROXY
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PROXY STATEMENT
DAILY ASSETS TREASURY FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
MONARCH FUNDS
TWO PORTLAND SQUARE, FOURTH FLOOR
PORTLAND, MAINE 04101
--------------------
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 1, 2005
-------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees (the "Board") of Monarch Funds (the
"Trust"), a Massachusetts business trust, on behalf of Daily Assets Treasury
Fund, Daily Assets Government Fund, Daily Assets Cash Fund and Daily Assets
Government Obligations Fund, each a series of the Trust (a "Fund"). The Trust is
a registered open-end investment company whose executive offices are located at
Two Portland Square, Fourth Floor, Portland, Maine 04101. Proxies will be voted
at a special meeting of shareholders (the "Meeting") of each Fund to be held at
the offices of the Trust's administrator, Citigroup Fund Services, LLC
("Citigroup"), Two Portland Square, Fourth Floor, Portland, Maine 04101 on
November 1, 2005, at 2:00 p.m. (Eastern time), or at any postponement or
adjournment thereof for the purposes set forth in the accompanying Notice of
Special Meeting of Shareholders. The Notice of Meeting, this Proxy Statement and
the proxy card are first being mailed to shareholders on or about September 30,
2005.
The Board has authorized the officers of the Trust to determine and fix
the close of business on September 8, 2005 as the record date (the "Record
Date") for the determination of shareholders of each Fund entitled to notice of,
and to vote at, the Meeting and any postponement or adjournment thereof. As of
the Record Date, there were 69,206,044.31 shares outstanding of Daily Assets
Treasury Fund, 2,149,137,395.72 shares outstanding of Daily Assets Government
Fund, 355,387,501.88 shares outstanding of Daily Assets Cash Fund and
17,722,578.65 shares outstanding of Daily Assets Government Obligations Fund.
Each shareholder will be entitled to one vote for each whole Fund share and a
fractional vote for each fractional Fund share held. Shares may be voted in
person or by proxy. Shareholders holding one-third of the outstanding shares of
a Fund as of the Record Date present in person or by proxy will constitute a
quorum for the transaction of business regarding the Fund at the Meeting. All
properly executed proxies received in time to be voted at the Meeting will be
counted at the Meeting and any adjournment thereof in accordance with the
instructions marked thereon or otherwise provided therein.
For purposes of determining the presence of a quorum and counting votes
on the matters presented, Fund shares represented by abstentions and "broker
non-votes" will be counted as present, but not as votes cast at the Meeting.
Broker non-votes are Fund 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 and for which the broker lacks discretionary
voting authority. Under the Investment Company Act of 1940 (the "1940 Act"), the
affirmative vote necessary to approve a matter under consideration may be
determined with reference to a percentage of votes present at the Meeting. For
this reason, abstentions and broker non-votes have the effect of votes "AGAINST"
a Proposal. In completing proxies, therefore, shareholders should be aware that
checking the box labeled "ABSTAIN" would result in the shares covered by the
proxy being treated as if they were voted "AGAINST" a Proposal.
1
IF A CHOICE IS NOT SPECIFIED ON A PROPERLY EXECUTED PROXY THAT IS
RETURNED IN TIME TO BE VOTED AT THE MEETING, THE PROXY WILL BE VOTED "FOR" THE
PROPOSAL FOR WHICH THE PROXY WAS SUBMITTED.
If a quorum is not present at the Meeting, or if a quorum is present at
the Meeting but sufficient votes to approve a Proposal are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies with respect to a Proposal. Any
adjournment will require the affirmative vote of a majority of shares
represented in person or by proxy at the Meeting. In that case, the persons
named as proxies will vote all proxies that they are entitled to vote for a
Proposal as "FOR" such an adjournment; provided, however, any proxies required
to be voted against a Proposal will be voted "AGAINST" such adjournment. A
shareholder vote may be taken on a Proposal prior to adjournment if sufficient
votes have been received and it is otherwise appropriate.
Approval of a Proposal by a Fund requires the affirmative vote of
either (a) 67% or more of the shares of the Fund present at the Meeting or
represented by proxy if the holders of more than 50% of the outstanding shares
are present or represented by proxy at the Meeting or (b) more than 50% of the
outstanding shares of the Fund.
You may vote on each proposal 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 2:00 p.m.
(Eastern time) on November 1, 2005, at the
offices of Citigroup, Two Portland Square, 4th
Floor Conference Room, Portland, Maine 04101.
To change your vote, you may send a written notice of revocation (the
"Revocation Letter") to Citigroup, at Two Portland Square, Portland, Maine,
04101, or by personally casting a vote at the Meeting. The Revocation Letter
must:
(1) Identify you;
(2) State that as a Fund shareholder, you revoke your prior vote; and
(3) Indicate your approval, disapproval or abstention from voting with
respect to the Proposal.
The solicitation of proxies will be primarily by mail but may also
include telephone or oral communications by the officers of the Trust, the
prospective purchasers of Monarch Investment Advisors, LLC, formerly known as
Forum Investment Advisors, LLC ("MIA"), by regular employees of Citigroup, MIA
or their affiliates, or by Automatic Data Processing Inc., a professional proxy
solicitor. The estimated cost to retain a proxy solicitor is approximately
$6,000.00. Anthony R. Fischer, Jr., and Jack J. Singer, the prospective
purchasers of MIA as discussed below, will bear all of the costs of the Meeting
and the preparation, printing, mailing and solicitation of this Proxy Statement
and proxy cards.
PROPOSAL
SUMMARY OF PROPOSAL
The Meeting is being called to approve the new investment advisory
agreement (the "New Agreement") between the Trust and MIA with respect to each
Fund (the "Proposal"). Currently, there are two investment advisory agreements,
one with Daily Assets Treasury Fund, Daily Assets Government Fund and Daily
Assets Cash Fund (the "First Agreement") and one with Daily Assets Government
Obligations Fund (the "Second Agreement"). Both agreements (the "Current
Agreements") are identical except for the fees. The Current Agreements have been
combined into the New Agreement, with the same terms and conditions as the
Current Agreements. A copy of the New Agreement is attached as Exhibit A.
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From January 2, 1998 to June 9, 2003, MIA managed Daily Assets Treasury
Fund, Daily Assets Government Fund and Daily Assets Cash Fund while they were
series of another registered investment company. In addition, MIA has served as
the investment adviser for those Funds since they merged into the Trust on June
9, 2003. The First Agreement was approved prior to the merger by written consent
of the initial shareholder of each of those Funds on April 17, 2003. The Board
approved the continuation of the First Agreement for an additional twelve months
on December 9, 2004.
MIA has also served as the Daily Assets Government Obligations Fund's
investment adviser since its inception on March 13, 1998 as a series of another
registered investment company. In addition, MIA has served as the investment
adviser for that Fund since it merged into the Trust on July 22, 2003.
Similarly, the initial shareholder of the Fund approved the Second Agreement by
written consent on July 14, 2003. The Board approved the continuation of the
Second Agreement for an additional twelve months on December 9, 2004.
MIA is a wholly owned subsidiary of Forum Trust, LLC ("Forum Trust").
Forum Trust intends to sell all of its ownership interest in MIA to Anthony R.
Fischer, Jr., the Funds' portfolio manager, and Jack J. Singer, Executive
Director, Vice President, Secretary and Assistant Treasurer of MIA, on or about
November 1, 2005 or such other date as may be agreed to by Forum Trust and the
investors (the "Sale"). Pursuant to the terms of the Current Agreements, the
Sale will operate to automatically terminate the Current Agreements. In order to
obtain advisory services for the Funds following the Sale, the Board unanimously
approved the New Agreement with respect to each Fund subsequent to the Sale,
subject to the approval of the requisite percentage of each Fund's shareholders.
The Board proposes, and recommends that, the shareholders of each Fund vote
"FOR" the approval of the New Agreement with respect to the Fund for the period
subsequent to the Sale. Shareholders of each Fund are being asked to approve the
New Agreement only with respect to the Fund in which they own shares. The
approval of the New Agreement by the shareholders of one Fund is not contingent
on the approval of the New Agreement by the shareholders of any other Fund.
After the Sale, Mr. Fischer and Mr. Singer will each own 50% of MIA
(the "Proposed Adviser") and the Proposed Adviser's address will be 812 N.
Linden Dr., Beverly Hills, CA 90210. As a result of the Sale, Forum Trust will
receive from Messrs. Fischer and Singer $1,000,000 to be paid as follows:
$100,000 upon execution of the purchase and sale agreement containing the terms
of the Sale and $900,000 to be paid as monthly earn-out payments commencing
after the Sale. Each monthly earn-out payment will be equal to 15% of MIA's
gross revenues for the prior month. For any month in which MIA's gross revenues
do not exceed $29,400, the earn-out payment shall equal the amount by which
MIA's gross revenues exceed $25,000. The earn-out payments will continue until
they total $900,000. Forum Trust is indirectly owned and controlled by John Y.
Keffer, a Trustee of the Trust and Chairman of MIA. It is expected that
immediately following the Sale, the Funds will be the Proposed Adviser's only
clients.
EVALUATION BY THE BOARD OF TRUSTEES
On March 24, 2005, the Board met and discussed the Proposal and its
possible effect on the Trust, each Fund and its respective shareholders. In
evaluating the New Agreement, the Board reviewed materials furnished by MIA and
the Fund's administrator. Specifically, the Board considered: (1) the nature,
extent and quality of the services to be provided to the Funds by MIA, including
investment performance; (2) the advisory fees and total expense ratios of the
Funds compared to relevant peer groups of funds; (3) the costs of the services
to be provided and profits realized by MIA with respect to its relationship with
the Funds; (4) the extent to which economies of scale would be realized as the
Funds grow and whether the advisory fee reflects these economies of scale for
the benefit of Fund investors; and (5) other benefits received by MIA from its
relationship with the Funds. In its deliberations, the Board did not identify
any particular information that was all-important or controlling, and the Board
attributed different weights to the various factors. In particular, the Board
focused on the factors discussed below.
The Board met with Messrs. Fischer and Singer and discussed how the
Sale would affect MIA's services. The Proposed Adviser represented that the Sale
would not cause any diminution or disruption to the quality or extent of
services provided to the Funds and that they would continue to provide the same
services. The Board then
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considered the financial solvency of MIA and its proposed Errors and Omissions
Insurance coverage. Based on the foregoing, the Board concluded that MIA was
sufficiently capitalized to be economically viable during the coming year and
possessed the resources necessary to meet its investment mandate. In considering
the nature, extent and quality of the services provided to the Funds by MIA, the
Board observed that Mr. Fischer, the Funds' portfolio manager since their
inception, is one of the prospective owners and would continue to manage the
Funds after the Sale. In addition, Mr. Singer, the other prospective owner, was
previously employed by Imperial Bank, and its successor, Comerica Bank, whose
customers comprised the majority of the Funds' shareholder base. Mr. Singer was
the Funds' primary point of contact with respect to Fund business at this
intermediary since the Funds' inception. The Board also considered the Funds'
performance, noting that the Institutional Service, Institutional, Preferred,
and Universal share classes each outperformed its Lipper Inc. peer group for the
3-month, 6-month, 1-year, 3-year, and 5-year periods ending December 31, 2004
with respect to total return and that the Funds' performance should not be
affected by the Sale since Mr. Fischer will continue to serve as each Fund's
portfolio manager. Based upon its review of these factors, the Board concluded
that it was satisfied with the nature, extent and quality of services to be
provided to the Funds by MIA.
The Board considered MIA's proposed compensation for providing advisory
services to the Funds and analyzed comparative information on fees and total
expenses of similar mutual funds. The Board noted that the actual advisory fee
for the Funds was lower than comparable advisory fees for funds in their Lipper
Inc. peer group and would not increase as a result of the Sale. The Board also
considered the Funds' total expenses, noting that almost half of the Funds'
share classes had lower total expense ratios than the mean total expense ratios
of their Lipper Inc. peer groups.
The Board also considered the costs of services and profits of MIA. The
Board considered that MIA provides office space, administrative and other
services as will be necessary for the Funds' operations. With respect to MIA's
projected profitiablility on services rendered to the Funds, the Board
determined that the anticipated level of profits were not excessive in light of
the services to be provided. The Board concluded that MIA's proposed advisory
fees were fair and reasonable.
The Board then considered whether the Funds would benefit from any
economies of scale, noting that the investment advisory fees for the Funds do
not contain breakpoints. The Board considered the amount of assets of the Funds
and concluded that it would not be necessary to consider the implementation of
fee breakpoints at this time as the assets are not large enough to supoort
breakpoints.
The Board noted that following the Sale, the Funds will maintain their
existing contracts with the Fund's custodian, transfer agent, fund accountant,
distributor and administrator. Thus, there will be no change in the agreements
for those service providers. The Board also noted that Mr. Fischer and Mr.
Singer will bear all of the costs of the shareholder meeting including the
preparation, printing and mailing of a proxy statement and ballot cards and
proxy tabulation.
The Board noted that the Sale would satisfy the terms of Section 15(f)
of the 1940 Act, which requires that 75% of the Board continue to consist of
independent trustees after the Sale and for the next three years. The Board
concluded that the approval of the New Agreement subsequent to the Sale would
not result in: (1) an increase in the Funds' advisory fee or total expenses; (2)
a change in advisory services, portfolio management personnel or other service
provider services; or (3) costs to the Funds in order to seek shareholder
approval of the New Agreement.
The Board concluded that other benefits received by MIA from its
relationship with the Funds were not a material factor to consider in approving
and recommending to each Fund's shareholders the approval of the New Agreement
subsequent to the Sale.
Based upon its review, the Board concluded that the approval of the New
Agreement subsequent to the Sale was reasonable, fair and in the best interests
of each Fund and its respective shareholders.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND VOTE "FOR" THE PROPOSAL.
4
If the shareholders of a Fund approve the Proposal, the New Agreement
will be effective with respect to that Fund subsequent to the Sale, which is
expected to be finalized on or about November 1, 2005.
DISCUSSION OF THE PROVISIONS OF THE CURRENT AGREEMENTS
No substantive changes to the Current Agreements will result from the
Sale, other than the fact that the two Current Agreements will be combined into
a single new agreement, with each Fund paying the same fees as it did under the
Current Agreements.
Under the terms of the Current Agreements, MIA manages the investment
and reinvestment of the assets of each Fund. Under the Current Agreements, MIA
places orders for the purchase and sale of each Fund's investments directly with
brokers and attempts to obtain quality execution at favorable prices. In
effecting securities transactions on behalf of each Fund, the Current Agreements
require MIA to comply with the policies set from time to time by the Board as
well as the limitations imposed by the Trust's Agreement and Declaration of
Trust and the Trust's registration statement filed with the United States
Securities and Exchange Commission, the limitations in the 1940 Act, and in the
Internal Revenue Code of 1986, as amended, in respect of regulated investment
companies and the investment objectives, policies and restrictions of each Fund.
The Current Agreements permit MIA to perform investment advisory services for
other entities other than the Trust and each Fund.
MIA furnishes, at its own expense, all services, facilities and
personnel necessary in connection with managing each Fund's investments and
effecting portfolio transactions for each Fund. MIA also furnishes to the Board,
which has overall responsibility for the business and affairs of the Trust,
periodic reports concerning the performance and operation of each Fund. Under
the Current Agreements, MIA is also responsible for maintaining records relating
to the advisory services rendered to each Fund as required to be maintained by
the Trust pursuant to applicable law, including records pertaining to each
Fund's transactions.
At MIA's own expense, it may carry out any of its obligations under the
Current Agreements by employing, subject to MIA's supervision, one or more
investment sub-advisers that are registered pursuant to the Investment Advisers
Act of 1940, as amended. A sub-adviser's employment must be evidenced by a
separate agreement approved by the Board and if required, by each Fund's
shareholders.
The Current Agreements provide that MIA shall not be liable to the
Trust for any error of judgment or mistake of law, or in any event whatsoever,
except for willful misfeasance, bad faith or gross negligence in the performance
of its duties under the Agreement or by reason of MIA's reckless disregard if
its obligations under the agreement.
The Current Agreements provide that neither the Trustees of the Trust
nor the shareholders of a Fund shall be liable for any obligations of the Trust
or of a Fund under the Agreements. Under the Current Agreements and in
connection with asserting any rights or claims under the Agreements, MIA agrees
to look only to the assets and property of a Fund to which such rights and
claims may relate and not to the Trustees of the Trust or the shareholders of a
Fund.
If the New Agreement is approved by each Fund's shareholders, the New
Agreement will be effective for two years and thereafter for successive twelve
month periods, provided that such continuance is specifically approved at least
annually (i) by the Board or by the vote of a majority of the outstanding voting
securities of the Fund, and, in either case (ii) by a majority of the Trustees
who are not parties to the Current Agreements or interested persons of any such
party (other than as Trustees of the Trust). The Current Agreements are
terminable with respect to a Fund, without penalty, by the Board or by a vote of
either (a) 67% or more of the shares of the Fund present at the Meeting or
represented by proxy if the holders of more than 50% of the outstanding shares
are present or represented by proxy at the Meeting or (b) more than 50% of the
outstanding shares of the Fund on 60 days' written notice to MIA or by MIA on 60
days' written notice to the Trust. Each Current Agreement also provides for
automatic termination in the event of their assignment. The Current Agreements
may only be amended or modified with respect to a Fund by a written agreement
that is properly authorized and executed by the Trust and MIA, and if required
by law, by vote of a majority of the outstanding voting securities of a Fund.
5
ADVISORY FEES
Under the Current Agreements, with respect to Daily Assets Treasury
Fund, Daily Assets Cash Fund and Daily Assets Government Fund, MIA receives an
advisory fee at an annual rate of 0.06% for the first $200 million in combined
assets of the Funds, 0.04% of the next $300 million in assets, and 0.03% of the
remaining assets. Under the Current Agreements, with respect to the Daily Assets
Government Obligations Fund, MIA receives an advisory fee at an annual rate of
0.05% of the daily net assets of the Fund. Pursuant to the Current Agreements,
MIA was paid the following advisory fees (excluding waivers) for the fiscal year
ended August 31, 2005:
- ------------------------------------------------------------ ---------------------------------------------------------
FUND FEE
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Daily Assets Treasury Fund $ 44,636
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Daily Assets Government Fund $465,725
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Daily Assets Cash Fund $132,398
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Daily Assets Government Obligations Fund $ 9,101
- ------------------------------------------------------------ ---------------------------------------------------------
INFORMATION ABOUT MIA (PRIOR TO THE SALE)
MIA is a Delaware limited liability company that is wholly owned by
Forum Trust. Its principal place of business is located at Two Portland Square,
First Floor, Portland, Maine 04101. Forum Trust is a privately owned company
controlled by John Y. Keffer, a Trustee of the Trust.
MIA's corporate manager is Forum Holdings Corp. I and John Y. Keffer, a
Trustee of the Trust, is its President. Forum Holdings Corp. I maintains its
principal office at Two Portland Square, First Floor, Portland, Maine 04101.
Set forth below is information about the principal executive officer
and other officers of MIA, each of whom may be contacted at Monarch Investment
Advisors, LLC, Two Portland Square, First Floor, Portland, Maine 04101:
- ------------------------------------------------------------ ---------------------------------------------------------
NAME (OFFICE) PRINCIPAL OCCUPATION
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
John Y. Keffer (Chairman) President, Forum Trust, LLC (a non-depository trust
company)
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Carl A. Bright (President and Treasurer) President, Foreside Fund Services, LLC
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Erica B. Olson (Asst. Secretary) Asst. Secretary of MIA
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Nanette K. Chern (Chief Compliance Officer) Corporate Counsel and Chief Compliance Officer,
Foreside Fund Services, LLC
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Jack J. Singer (Executive Director, Vice President, Executive Director, Vice President, Secretary and
Secretary and Assistant Treasurer) Assistant Treasurer of MIA
- ------------------------------------------------------------ ---------------------------------------------------------
Mr. Bright is also Principal Financial Officer of the Trust.
INFORMATION ABOUT MIA (AFTER THE SALE)
MIA will continue to be organized as a Delaware limited liability company,
but will maintain its principal place of business at 812 N. Linden Dr., Beverly
Hills, CA 90210. Anthony R. Fischer, Jr. and Jack J. Singer will each own 50% of
the Proposed Adviser after the Sale. The Proposed Adviser will not have a
corporate manager; instead, the functions of the corporate manager will be
performed by a board of directors. Set forth below is information about the
anticipated directors, the principal executive officers and other officers of
the Proposed Adviser, each of whom may be contacted at Monarch Investment
Advisors, LLC, 812 N. Linden Dr., Beverly Hills, CA 90210:
6
- ------------------------------------------------------------ ---------------------------------------------------------
NAME (OFFICE) PRINCIPAL OCCUPATION
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Jack J. Singer (Director, Co-Chairman, Chief Executive Executive Director, Vice President, Secretary and
Officer, Chief Compliance Officer and Secretary) Assistant Treasurer of MIA
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Anthony R. Fischer, Jr. (Director, Co-Chairman, Portfolio Manager, Monarch Funds,
President, Treasurer and Portfolio Manager)
- ------------------------------------------------------------ ---------------------------------------------------------
OTHER MATTERS
No other matters are expected to be presented at the Meeting other than
the Proposal. If any other matter properly comes before the Meeting, the shares
represented by proxies will be voted with respect thereto in the discretion of
the person or persons voting the proxies.
It is anticipated that, following the Meeting, none of the Funds will
hold any meetings of shareholders except as required by Federal or Massachusetts
state law. Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent shareholder meeting should send proposals to the
Secretary of the Trust, David M. Whitaker, in care of Citigroup Fund Services,
LLC, Two Portland Square, Fourth Floor, Portland, Maine 04101.
As of the Record Date, the Trustees and officers of the Trust, as a
group, owned beneficially less than 1% of the outstanding shares of each Fund.
As of the Record Date, the following shareholders beneficially owned more than
5% of the outstanding shares of a Fund:
- ------------------------------- --------------------------------------- --------------------- -----------
% OF
FUND NAME AND ADDRESS SHARES FUND
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Cash Fund Calhoun Co. 39,277,594.11 11.05%
c/o Comerica Bank
Lafayette St., Mail Code 3455
Detroit, MI 48226
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Cash Fund Netflix.com Inc. 21,854,407.27 6.15%
970 University Ave.
Los Gatos, CA 95030-1620
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Government Fund Capital Title Group Inc. 300,000,000 13.96%
Comerica Bank California
2321 Rosecrans Ave., Suite 500
El Segundo, CA 90245
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Government Fund GMAC Residential Holding Corp. 300,000,000 13.96%
Comerica Bank California
2321 Rosecrans Ave., Suite 500
El Segundo, CA 90245
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Government Fund Nations Holding Group 300,000,000 13.96%
Comerica Bank California
2321 Rosecrans Ave., Suite 500
El Segundo, CA 90245
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Government Fund North American Asset Development Co. 300,000,000 13.96%
Comerica Bank California
2321 Rosecrans Ave., Suite 500
El Segundo, CA 90245
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Government Fund Old Republic Title Company 225,000,000 10.47%
Comerica Bank California
2321 Rosecrans Ave., Suite 500
El Segundo, CA 90245
- ------------------------------- --------------------------------------- --------------------- -----------
7
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Government Fund Placer Title Company 150,000,000 6.98%
Comerica Bank California
2321 Rosecrans Ave., Suite 500
El Segundo, Ca 90245
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Government Customer Funds under Management 11,019,565.87 62.18%
Obligations Fund HM Payson Co. Custody Account
P.O. Box 31 Portland, ME 04112
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Government Trust Funds under Management 6,434,844.5 36.31%
Obligations Fund HM Payson Co. Trust Account
P.O. Box 31 Portland, ME 04112
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Treasury Fund Robert F. Driver Co., Inc. 7,440,998.07 10.75%
Trust Account
1620 Fifth Ave.
San Diego, CA 92101
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Treasury Fund Quadramed Corporation 4,926,162.84 7.12%
12110 Sunset Hills Rd., Suite 600
Reston, VA 20190-3224
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Treasury Fund Hamilton Technology Ventures LP 3,954,249.14 5.71%
12526 High Bluff Dr., Suite 260
San Diego, CA 92130
- ------------------------------- --------------------------------------- --------------------- -----------
- ------------------------------- --------------------------------------- --------------------- -----------
Daily Assets Treasury Fund Adams Plumbing Heating Inc. 3,796,233.28 5.49%
PO Box 126
Adams, MA 01220
- ------------------------------- --------------------------------------- --------------------- -----------
ADDITIONAL INFORMATION
OFFICERS OF THE TRUST
Set forth below is information about each officer of the Trust, each of
whom may be contacted at Monarch Funds, Two Portland Square, Fourth Floor,
Portland, Maine 04101:
- ---------------------------------------- --------------------------------------
NAME POSITION WITH THE TRUST
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
Simon D. Collier President
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
Sara M. Morris Vice President
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
Beth P. Hanson Vice President/Assistant Secretary
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
Carl A. Bright Principal Financial Officer
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
Trudance Bakke Treasurer
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
David M. Whitaker Secretary
- ---------------------------------------- --------------------------------------
OTHER FUND SERVICE PROVIDERS
Citigroup serves as each Fund's administrator, transfer agent and fund
accountant. Forum Trust serves as each Fund's custodian (the "Custodian"). The
Custodian is controlled by John Y. Keffer, a Trustee of the Trust. Currently,
the Custodian is an affiliate of MIA. After the Sale, the Custodian may not be
deemed to be an affiliate of MIA. Comerica Bank and its affiliates, where Mr.
Singer formerly worked, provide certain subcustody, shareholder service,
administrative and other services for the Funds. Foreside Fund Services, LLC
("FFS"), located at Two Portland Square, First Floor, Portland, ME 04101, serves
as each Fund's principal underwriter. Pursuant to a Compliance Services
Agreement with the Trust, FFS also provides the Trust with a President,
Principal Financial Officer and Chief Compliance Officer as well as with certain
other compliance services. The Trust's President and Principal Financial Officer
are also principals of the Distributor.
8
The service providers listed above will continue to provide the
services referenced above regardless of whether a Fund's shareholders approve
the Proposal.
Each Fund paid the Custodian the following fees (subsequent to fee
waivers) for the period from September 1, 2004 to August 31, 2005:
- --------------------- --------------------- --------------------- -----------------------
Daily Assets
Daily Assets Daily Assets Daily Assets Cash Government
Treasury Fund Government Fund Fund Obligations Fund
- --------------------- --------------------- --------------------- -----------------------
- --------------------- --------------------- --------------------- -----------------------
$3,240 $33,473 $9,555 $455
- --------------------- --------------------- --------------------- -----------------------
REPORTS TO SHAREHOLDERS
EACH FUND WILL FURNISH, UPON REQUEST AND WITHOUT CHARGE, TO EACH PERSON
TO WHOM THIS PROXY STATEMENT IS DELIVERED A COPY OF THE FUND'S LATEST ANNUAL
REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED AUGUST 31, 2004 AND SEMI-ANNUAL
REPORT FOR THE PERIOD ENDED FEBRUARY 28, 2005. TO REQUEST A COPY, PLEASE CALL
THE FUNDS' TRANSFER AGENT, CITIGROUP FUND SERVICES, LLC, TWO PORTLAND SQUARE,
FOURTH FLOOR, PORTLAND, MAINE 04101, AT (800) 754-8757.
By Order of the Board of Trustees,
/s/ David M. Whitaker
David M. Whitaker
Secretary
9
EXHIBIT A
FORM OF
MONARCH FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the __ day of ______, 2005 between Monarch Funds (the
"Trust"), a business trust organized under the laws of the Commonwealth of
Massachusetts with its principal place of business at Two Portland Square,
Portland, Maine 04101, and Monarch Investment Advisors, LLC (the "Adviser"), a
corporation organized under the laws of State of Massachusetts with its
principal place of business at 812 N. Linden Dr., Beverly Hills, CA 90210.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "Act") as an open-end management investment company and
is authorized to issue interests (as defined in the Trust's Trust Instrument) in
separate series; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for the series listed in Appendix A hereto (each a "Fund," and
collectively the "Funds"), and the Adviser is willing to provide those services
on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument and Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the Act, as may be
supplemented from time to time, all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board").
The Trust is currently authorized to issue four series of interests and the
Board is authorized to issue interests in any number of additional series. The
Trust has delivered to the Adviser copies of the Trust's Trust Instrument and
Registration Statement and will from time to time furnish the Adviser with any
amendments thereof.
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs the Adviser, subject to the direction and
supervision of the Board, to manage the investment and reinvestment of the
assets in each Fund and, without limiting the generality of the foregoing, to
provide other services specified in Section 3 hereof.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in each Fund. To carry out such
decisions, the Adviser is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, at the risk of and in the name of the Trust, to
place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities for the
Funds, the Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in each Fund since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Funds and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in
A-1
the Funds' holdings, the industries in which they engage, or the economic,
social or political conditions prevailing in each country in which the Funds
maintain investments. The Adviser will also furnish the Board with such
statistical and analytical information with respect to securities in the Funds
as the Adviser may believe appropriate or as the Board reasonably may request.
(c) In making purchases and sales of securities for the Funds, the
Adviser will follow and comply with the policies set from time to time by the
Board as well as the limitations imposed by the Trust's Trust Instrument and
Registration Statement under the Act, the limitations in the Act and in the
Internal Revenue Code of 1986, as amended, in respect of regulated investment
companies and the investment objectives, policies and restrictions of the Funds.
(d) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly qualified to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(e) The Adviser shall either monitor the performance of brokers,
dealers and other persons who introduce or execute purchases, sales and other
transactions of securities and other investment assets of the Funds or select an
introducing broker who shall, as part of its transaction charges, monitor such
performance. Such persons may be affiliated with the Adviser, any investment
subadviser or other affiliates of the Trust to the extent permitted by the Act.
(f) The Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust, which are in possession
of the Adviser, shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Adviser's normal business hours. Upon the reasonable request of
the Trust, copies of any such books and records shall be provided promptly by
the Adviser to the Trust or the Trust's authorized representatives.
SECTION 4. DELEGATION OF THE ADVISER'S DUTIES
The Adviser may carry out any of its obligations under this Agreement
by entering into a contract with a person(s) who (i) is registered as an
investment adviser pursuant to the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), or who is exempt from registration thereunder or (ii) is
under the control of, and is supervised by, the Adviser ("Controlled Person")
with respect to any investment advisory functions performed by such Controlled
Person. The Adviser may not delegate any of its obligations under this Agreement
unless it has instituted appropriate procedures for the supervision of the
Controlled Person's activities.
SECTION 5. EXPENSES
The Trust hereby confirms that the Trust shall be responsible and shall
assume the obligation for payment of all the Trust's expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the Trust's custodian and
transfer agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of the Trust's formation and maintaining its existence; costs of
preparing the Trust's registration statement, account application forms and
interestholder reports and delivering them to existing and prospective
interestholders; costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts and of calculating the net
asset value of interests in the Trust; costs of reproduction, stationery and
supplies; compensation of the Trust's trustees, officers and employees and the
costs of other personnel performing services for the Trust; costs of Trust
meetings; registration fees and related expenses for registration with the
Commission and the securities regulatory authorities of other countries in which
A-2
the Trust's interests are sold; state securities law registration fees and
related expenses; and fees and out-of-pocket expenses payable to Foreside Fund
Services, LLC under any placement agent, management or similar agreement.
SECTION 6. STANDARD OF CARE
(a) The Adviser shall give the Trust the benefit of its best judgment
and efforts in rendering its services to the Trust and shall not be liable for
error of judgment or mistake of law, for any loss arising out of any investment,
or in any event whatsoever, provided that nothing herein shall be deemed to
protect, or purport to protect, the Adviser against any liability to the Trust
or to the security holders of the Trust to which it would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of reckless disregard of its
obligations and duties hereunder. No provision of this Agreement shall be
construed to protect any Trustee or officer of the Trust, or the Adviser, from
liability in violation of Sections 17(h), 17(i) or 36(b) of the Act.
(b) The Adviser shall not be held responsible for any loss incurred by
reason of any act or omission of any dealer, broker or custodian; provided that
such loss is not the result of the Adviser's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or the result of
the Adviser's reckless disregard of its obligations and duties hereunder.
(c) This Section shall survive the termination of this Agreement and
shall be binding upon the Trust's and the Adviser's successors and personal
representatives.
SECTION 7. COMPENSATION
For the services provided by the Adviser pursuant to this Agreement,
the Trust shall pay the Adviser an advisory fee as set forth in Appendix B.
SECTION 8. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each Fund on
date referenced above.
(b) This Agreement shall remain in effect with respect to a Fund for a
period of two years from the date of its effectiveness and shall continue in
effect for successive twelve-month periods (computed from each anniversary date
of the approval) with respect to the Fund; provided that such continuance is
specifically approved at least annually (i) by the Board or by the vote of a
majority of the outstanding voting interests of the Fund, and, in either case,
(ii) by a majority of the Trust's trustees who are not parties to this Agreement
or interested persons of any such party (other than as trustees of the Trust);
provided further, however, that if this Agreement or the continuation of this
Agreement is not approved as to a Fund, the Adviser may continue to render to
that Fund the services described herein in the manner and to the extent
permitted by the Act and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Adviser or (ii) by the Adviser on 60 days' written notice to the
Trust. This agreement shall terminate upon assignment.
SECTION 9. ACTIVITIES OF THE ADVISER
(a) Except to the extent necessary to perform its obligations
hereunder, nothing herein shall be deemed to limit or restrict the Adviser's
right, or the right of any of the Adviser's officers, directors or employees who
may also be a trustee, officer or employee of the Trust, or persons otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
A-3
(b) The Adviser represents that it is currently registered, and will
during the entire period this Agreement is in effect be registered, as an
investment adviser under the Advisers Act.
SECTION 10. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of each Fund shall
not be liable for any obligations of the Trust or of the Funds under this
Agreement, and the Adviser agrees that, in asserting any rights or claims under
this Agreement, it shall look only to the assets and property of the Trust or
the Fund to which the Adviser's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the interestholders of
the Funds.
SECTION 11. NOTICE
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given,
if to the Trust, at:
Two Portland Square
Portland, Maine 04101
Attention: Secretary
if to the Adviser at:
SECTION 12. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting interests of the Funds thereby affected. No amendment to this
Agreement or the termination of this Agreement with respect to a Fund shall
effect this Agreement as it pertains to any other Fund.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Delaware.
(f) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
A-4
[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]
A-5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
MONARCH FUNDS
--------------------------
[NAME]
[TITLE]
MONARCH INVESTMENT ADVISORS, LLC
------------------------
[NAME]
[TITLE]
A-6
MONARCH FUNDS
INVESTMENT ADVISORY AGREEMENT
APPENDIX A
FUNDS OF THE TRUST
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Government Obligations Fund
MONARCH FUNDS
INVESTMENT ADVISORY AGREEMENT
APPENDIX B
FEE SCHEDULE
FEE AS A % OF THE
ANNUAL AVERAGE DAILY
FUNDS OF THE TRUST NET ASSETS OF THE FUNDS COMBINED
Daily Assets Treasury Fund, 0.06% for the first $200 million in assets,
Daily Assets Government Cash Fund 0.04% of the next $300 million in assets,
and Daily Assets Cash Fund and 0.03% of the remaining assets.
Daily Assets Government Obligations Fund 0.05%
MONARCH FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY
(FOR SHAREHOLDERS OF DAILY ASSETS TREASURY FUND ONLY)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints David M.
Whitaker, Leslie K. Klenk and Edward C. Lawrence (or, if only one shall act,
that one) proxies with the power of substitution to vote all of the shares of
Daily Assets Treasury Fund (the "Fund"), a series of Monarch Funds (the
"Trust"), registered in the name of the undersigned at the Special Meeting of
Shareholders of the Fund to be held at the offices of Citigroup Fund Services,
LLC, Two Portland Square, Fourth Floor, Portland, Maine 04101, on November 1,
2005, at 2:00 p.m. (Eastern time), and at any postponements or adjournments
thereof.
The shares of beneficial interest represented by this Proxy will be voted in
accordance with the instructions given by the undersigned below. IF NO CHOICE IS
SPECIFIED ON THE PROXY, PROPERLY EXECUTED PROXIES THAT ARE RETURNED IN TIME TO
BE VOTED AT THE MEETING WILL BE VOTED "FOR" THE APPROVAL OF THE PROPOSAL SET
FORTH BELOW. The Trust has proposed this Proposal. The Board of Trustees
recommends voting "FOR" the Proposal.
PROPOSAL
To approve the new investment advisory agreement between the
Trust and Monarch Investment Advisors, LLC with respect to
Daily Assets Treasury Fund.
FOR _____ AGAINST _____ ABSTAIN _____
(NOTE: Checking the box labeled "Abstain" will result in the shares covered by
the Proxy being treated as if they were voted "Against" a Proposal.) Receipt is
acknowledged of the Notice and Proxy Statement for the Special Meeting of
Shareholders to be held on November 1, 2005. PLEASE SIGN AND DATE THIS PROXY IN
THE SPACE PROVIDED AND RETURN IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED.
Execution by shareholders who are not individuals must be made by an authorized
signatory. Executors, administrators, trustees, guardians and others signing in
a representative capacity should give their full title as such.
________________________________ ____________________
Authorized Signature Date
________________________________
Printed Name (and Title if Applicable)
_________________________________ ____________________
Authorized Signature Date
(Joint Investor or Second Signatory)
_________________________________
Printed Name (and Title if Applicable)
MONARCH FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY
(FOR SHAREHOLDERS OF DAILY ASSETS GOVERNMENT FUND ONLY)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints David M.
Whitaker, Leslie K. Klenk and Edward C. Lawrence (or, if only one shall act,
that one) proxies with the power of substitution to vote all of the shares of
Daily Assets Government Fund (the "Fund"), a series of Monarch Funds (the
"Trust"), registered in the name of the undersigned at the Special Meeting of
Shareholders of the Fund to be held at the offices of Citigroup Fund Services,
LLC, Two Portland Square, Fourth Floor, Portland, Maine 04101, on November 1,
2005, at 2:00 p.m. (Eastern time), and at any postponements or adjournments
thereof.
The shares of beneficial interest represented by this Proxy will be voted in
accordance with the instructions given by the undersigned below. IF NO CHOICE IS
SPECIFIED ON THE PROXY, PROPERLY EXECUTED PROXIES THAT ARE RETURNED IN TIME TO
BE VOTED AT THE MEETING WILL BE VOTED "FOR" THE APPROVAL OF THE PROPOSAL SET
FORTH BELOW. The Trust has proposed this Proposal. The Board of Trustees
recommends voting "FOR" the Proposal.
PROPOSAL
To approve the new investment advisory agreement between the
Trust and Monarch Investment Advisors, LLC with respect to
Daily Assets Government Fund.
FOR _____ AGAINST _____ ABSTAIN _____
(NOTE: Checking the box labeled "Abstain" will result in the shares covered by
the Proxy being treated as if they were voted "Against" a Proposal.) Receipt is
acknowledged of the Notice and Proxy Statement for the Special Meeting of
Shareholders to be held on November 1, 2005. PLEASE SIGN AND DATE THIS PROXY IN
THE SPACE PROVIDED AND RETURN IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED.
Execution by shareholders who are not individuals must be made by an authorized
signatory. Executors, administrators, trustees, guardians and others signing in
a representative capacity should give their full title as such.
________________________________ ____________________
Authorized Signature Date
________________________________
Printed Name (and Title if Applicable)
_________________________________ ____________________
Authorized Signature Date
(Joint Investor or Second Signatory)
_________________________________
Printed Name (and Title if Applicable)
MONARCH FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY
(FOR SHAREHOLDERS OF DAILY ASSETS GOVERNMENT OBLIGATIONS FUND ONLY)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints David M.
Whitaker, Leslie K. Klenk and Edward C. Lawrence (or, if only one shall act,
that one) proxies with the power of substitution to vote all of the shares of
Daily Assets Government Obligations Fund (the "Fund"), a series of Monarch Funds
(the "Trust"), registered in the name of the undersigned at the Special Meeting
of Shareholders of the Fund to be held at the offices of Citigroup Fund
Services, LLC, Two Portland Square, Fourth Floor, Portland, Maine 04101, on
November 1, 2005, at 2:00 p.m. (Eastern time), and at any postponements or
adjournments thereof.
The shares of beneficial interest represented by this Proxy will be voted in
accordance with the instructions given by the undersigned below. IF NO CHOICE IS
SPECIFIED ON THE PROXY, PROPERLY EXECUTED PROXIES THAT ARE RETURNED IN TIME TO
BE VOTED AT THE MEETING WILL BE VOTED "FOR" THE APPROVAL OF THE PROPOSAL SET
FORTH BELOW. The Trust has proposed this Proposal. The Board of Trustees
recommends voting "FOR" the Proposal.
PROPOSAL
To approve the new investment advisory agreement between the
Trust and Monarch Investment Advisors, LLC with respect to
Daily Assets Government Obligations Fund.
FOR _____ AGAINST _____ ABSTAIN _____
(NOTE: Checking the box labeled "Abstain" will result in the shares covered by
the Proxy being treated as if they were voted "Against" a Proposal.) Receipt is
acknowledged of the Notice and Proxy Statement for the Special Meeting of
Shareholders to be held on November 1, 2005. PLEASE SIGN AND DATE THIS PROXY IN
THE SPACE PROVIDED AND RETURN IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED.
Execution by shareholders who are not individuals must be made by an authorized
signatory. Executors, administrators, trustees, guardians and others signing in
a representative capacity should give their full title as such.
________________________________ ____________________
Authorized Signature Date
________________________________
Printed Name (and Title if Applicable)
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Authorized Signature Date
(Joint Investor or Second Signatory)
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Printed Name (and Title if Applicable)
MONARCH FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY
(FOR SHAREHOLDERS OF DAILY ASSETS CASH FUND ONLY)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints David M.
Whitaker, Leslie K. Klenk and Edward C. Lawrence (or, if only one shall act,
that one) proxies with the power of substitution to vote all of the shares of
Daily Assets Cash Fund (the "Fund"), a series of Monarch Funds (the "Trust"),
registered in the name of the undersigned at the Special Meeting of Shareholders
of the Fund to be held at the offices of Citigroup Fund Services, LLC, Two
Portland Square, Fourth Floor, Portland, Maine 04101, on November 1, 2005, at
2:00 p.m. (Eastern time), and at any postponements or adjournments thereof.
The shares of beneficial interest represented by this Proxy will be voted in
accordance with the instructions given by the undersigned below. IF NO CHOICE IS
SPECIFIED ON THE PROXY, PROPERLY EXECUTED PROXIES THAT ARE RETURNED IN TIME TO
BE VOTED AT THE MEETING WILL BE VOTED "FOR" THE APPROVAL OF THE PROPOSAL SET
FORTH BELOW. The Trust has proposed this Proposal. The Board of Trustees
recommends voting "FOR" the Proposal.
PROPOSAL
To approve the new investment advisory agreement between the
Trust and Monarch Investment Advisors, LLC with respect to
Daily Assets Cash Fund.
FOR _____ AGAINST _____ ABSTAIN _____
(NOTE: Checking the box labeled "Abstain" will result in the shares covered by
the Proxy being treated as if they were voted "Against" a Proposal.) Receipt is
acknowledged of the Notice and Proxy Statement for the Special Meeting of
Shareholders to be held on November 1, 2005. PLEASE SIGN AND DATE THIS PROXY IN
THE SPACE PROVIDED AND RETURN IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED.
Execution by shareholders who are not individuals must be made by an authorized
signatory. Executors, administrators, trustees, guardians and others signing in
a representative capacity should give their full title as such.
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Authorized Signature Date
________________________________
Printed Name (and Title if Applicable)
_________________________________ ____________________
Authorized Signature Date
(Joint Investor or Second Signatory)
_________________________________
Printed Name (and Title if Applicable)