[LOGO]
PROSPECTUS
MAY 1, 1999
Government Bond Fund
Corporate Bond Fund
Growth Equity Fund
Value Equity Fund
Institutional Shares
Shares of the Funds
are offered to
investors
without any sales
charge or Rule 12b-1
(distribution) fees.
The Securities and
Exchange Commission has
not approved or
disapproved any
Fund's shares or
determined whether
this prospectus is
accurate or
complete.
Any representation
to the contrary is a
criminal offense.
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TABLE OF CONTENTS 1
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RISK/RETURN SUMMARY 2
FEE TABLES 7
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND PRINCIPAL RISKS 9
MANAGEMENT 14
YOUR ACCOUNT 18
How to Contact the Funds 18
General Information 18
Buying Shares 19
Selling Shares 23
Exchange Privileges 26
OTHER INFORMATION 27
FINANCIAL HIGHLIGHTS 29
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2 RISK/RETURN SUMMARY
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CONCEPTS TO
UNDERSTAND
A DEBT OR FIXED INCOME GOVERNMENT BOND FUND
SECURITY is a security
such as a bond or note that INVESTMENT GOAL High level of income
obligates the issuer consistent with maximum credit protection
to pay the security owner and moderate fluctuation in principal
a specified sum of value.
money at set intervals as
well as repay the PRINCIPAL INVESTMENT STRATEGY The
principal amount of the Fund invests under normal circumstances
security at its maturity at least 90 percent of its total assets in a
A BOND is a debt security portfolio of fixed and variable rate U.S.
with a long-term Government Securities, including zero
maturity, usually 10 coupon bonds issued or guaranteed by the
years or longer U.S. Treasury and mortgage-backed
MATURITY means the date securities. The Fund invests in securities
at which a debt security with maturities (or average life in the case
is due and payable of mortgage-backed and similar securities)
DURATION is a measure of ranging from overnight to 30 years. The
a security's average life Fund seeks to moderate fluctuations in the
that reflects the present price of its shares by structuring maturities
value of the security's of its investment portfolio in order to
cash flow. Prices of maintain a duration between 75 percent
securities with longer and 125 percent of the duration of the
durations will fluctuate Lehman Brothers Government Bond Index.
more in response to
changes in interest rates
UNITED STATES
GOVERNMENT SECURITY is a
debt security issued by
the United States or any
of its agencies
or instrumentalities such as
the Government National
Mortgage Association
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CORPORATE BOND FUND
INVESTMENT GOAL High level of current income consistent with capital
preservation and prudent investment risk.
PRINCIPAL INVESTMENT STRATEGY The Fund invests under normal circumstances at
least 65 percent of its total assets in corporate bonds. At least 80 percent of
the Fund's total assets will be invested in securities that are rated, at the
time of purchase, in one of the three highest rating categories or are unrated
and determined by its sub-adviser to be of comparable quality. The Fund invests
in securities with maturities (or average life in the case of mortgage-backed
and similar securities) ranging from short-term (including overnight) to 30
years. The Fund seeks to moderate fluctuation in the price of its shares by
structuring maturities of its investment portfolio in order to maintain a
duration between 75 percent and 125 percent of the duration of the Lehman
Brothers Corporate Bond Index.
GROWTH EQUITY FUND
INVESTMENT GOAL Long-term capital CONCEPT TO UNDERSTAND
appreciation.
GROWTH INVESTING means
PRINCIPAL INVESTMENT STRATEGY The to invest in stocks of
Fund uses a "growth investing" style by companies that have
investing under normal circumstances at exhibited faster than
least 65 percent of its total assets in the average earnings over
securities of domestic companies that its the past few years and
sub-adviser believes have superior growth are expected to continue
potential and fundamental characteristics to show high levels of
that are significantly better than the market profit growth
average and support internal earnings
growth capability. The Fund only invests
in companies that have a minimum market
capitalization of $250 million at the time of
purchase, and seeks to maintain a
minimum average weighted market
capitalization of $5 billion.
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CONCEPTS TO VALUE EQUITY FUND
UNDERSTAND
INVESTMENT GOAl Long-term capital
VALUE INVESTING means to appreciation.
invest in stocks whose
prices are low relative to PRINCIPAL INVESTMENT STRATEGY The
stocks of comparable Fund uses a "value investing" style by
companies investing under normal circumstances at
PRICE/EARNINGS RATIO least 65 percent of its total assets in the
means the ratio of a equity securities of domestic companies
company's current market that its sub-adviser believes are under-
capitalization divided by priced relative to comparable securities
annual earnings per share determined by price/earnings ratios, cash
MARKET CAPITALIZATION flows or other measures. The Fund only
of a company means the value invests in companies that have a
of the company's common minimum market capitalization of $250
stock in the stock market million at the time of purchase and seeks
COMMON STOCK is to maintain a minimum average weighted
ownership shares in a market capitalization of $5 billion.
corporation that are sold
initially by the corporation
and then traded by
investors
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PRINCIPAL RISKS OF INVESTING IN THE FUNDS
BOND FUNDS. You could lose money on your investment in Government Bond Fund or
Corporate Bond Fund (collectively the "Bond Funds") and either Bond Fund could
under-perform other investments. The principal risks of investing in a Bond Fund
include:
o Each Bond Fund's share price, yield and total return could fluctuate
in response to bond market movements
o The value of most bonds could fall when interest rates rise; the
longer a bond's maturity and the lower its credit quality, the more
its value typically falls
o The default of an issuer could leave the Bond Fund with unpaid
interest or principal. This risk for Corporate Bond Fund is
potentially greater as it can invest in bonds with a lower credit
rating than Government Bond Fund
o The Bond Funds may invest in mortgage-backed and other similar
securities. A decline in interest rates may result in losses in these
securities' values and a reduction in their yields as the holders of
the assets backing the securities prepay their debts
o The sub-adviser's judgment as to the value of a bond proves to be
wrong
EQUITY FUNDS. You could lose money on your investment in Growth Equity Fund or
Value Equity Fund (collectively the "Equity Funds") and either Equity Fund could
under-perform other investments. The principal risks of investing in an Equity
Fund include:
o The stock market goes down
o The stock market continues to undervalue the stocks in an Equity
Fund's portfolio
o The sub-adviser's judgment as to the value of a stock proves to be
wrong
o An Equity Fund's particular investment style falls out of favor with
the market
An investment in any Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency
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WHO MAY WANT TO INVEST IN THE FUNDS
You may want to purchase shares of the Bond Funds if:
o You seek income and more price stability than stocks offer
o You seek capital preservation
o You are pursuing a long-term goal
The Bond Funds may NOT be appropriate for you if:
o You want an investment that pursues market trends or focuses only on
particular sectors or industries
o You are pursuing a short-term goal or investing emergency reserves
You may want to purchase shares of the Equity Funds if:
o You are willing to tolerate significant changes in the value of their
investment
o You are pursuing a long-term goal
o You are willing to accept higher short-term risk
The Equity Funds may NOT be appropriate for you if:
o You want an investment that pursues market trends or focuses only on
particular sectors or industries
o You need regular income or stability of principal
o You are pursuing a short-term goal or investing emergency reserves
PERFORMANCE INFORMATION
Performance information is not provided as the Funds have not had a full
calendar year of operations as of the date of this prospectus.
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FEE TABLES 7
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The following tables describe the fees and expenses that you will pay if you
invest in a Fund.
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SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested
Distributions None
Redemption Fee None
Exchange Fee None
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ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from Fund assets)
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GOVERNMENT BOND FUND
Advisory Fees 0.28%
Distribution (12b-1) Fees None
Other Expenses 0.57%
Shareholder Service Fees 0.12%
Miscellaneous 0.45%
TOTAL ANNUAL FUND OPERATING EXPENSES 0.85%
Fee Waiver and Expense Reimbursement(2) 0.10%
Net Expenses 0.75%(3)
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CORPORATE BOND FUND
Advisory Fees 0.29%
Distribution (12b-1) Fees None
Other Expenses 0.47%
Shareholder Service Fees 0.11%
Miscellaneous 0.36%
TOTAL ANNUAL FUND OPERATING EXPENSES 0.76%
Fee Waiver and Expense Reimbursement(2) 0.01%
Net Expenses 0.75%(3)
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GROWTH EQUITY FUND
Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.79%
Shareholder Service Fees 0.10%
Miscellaneous 0.69%
TOTAL ANNUAL FUND OPERATING EXPENSES 1.19%
Fee Waiver and Expense Reimbursement(2) 0.19%
Net Expenses 1.00%
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VALUE EQUITY FUND
Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.85%
Shareholder Service Fees 0.10%
Miscellaneous 0.75%
TOTAL ANNUAL FUND OPERATING EXPENSES 1.25%
Fee Waiver and Expense Reimbursement(2) 0.25%
Net Expenses 1.00%
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(1) Based on amounts incurred during the Funds' fiscal year ended December 31,
1998 as stated as a percentage of net assets.
(2) Based on certain contractual fee waivers and expense reimbursements
effective through April 30, 2000.
(3) Restated to reflect current fees.
EXAMPLE
The following is a hypothetical example intended to help you compare the cost of
investing in each Fund to the cost of investing in other mutual funds. This
example assumes a $10,000 investment in a Fund, a 5 percent annual return, that
the Fund's operating expenses remain the same as stated in the table above
(before waivers and reimbursements), and reinvestment of all distributions and
redemption at the end of each period. Although your actual costs may be higher
or lower, under these assumptions your costs would be:
1 YEAR 3 YEARS
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GOVERNMENT BOND FUND $87 $273
CORPORATE BOND FUND $78 $243
GROWTH EQUITY FUND $121 $378
VALUE EQUITY FUND $128 $398
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INVESTMENT OBJECTIVES, PRINCIPAL 9
INVESTMENT STRATEGIES AND PRINCIPAL RISKS
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GOVERNMENT BOND FUND
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide a high level of income
consistent with maximum credit protection and moderate fluctuation in principal
value. There is no assurance that the Fund will achieve this objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests under normal circumstances at least 90 percent of its total
assets in a portfolio of fixed and variable rate U.S. Government Securities,
including zero coupon bonds issued or guaranteed by the U.S. Treasury and
mortgage-backed securities. The Fund may invest up to 10 percent of its total
assets in "investment grade" corporate debt instruments.
The Fund may not invest more than 25 percent of its total assets in the
securities issued or guaranteed by any single agency or instrumentality of the
U.S. Government, except the U.S. Treasury, and may not invest more than 10
percent of its total assets in the securities of any other issuer.
The Fund invests in securities with maturities (or average life in the case of
mortgage-backed and similar securities) ranging from overnight to 30 years. The
Fund seeks to moderate fluctuations in the price of its shares by structuring
maturities of its investment portfolio in order to maintain a duration between
75 percent and 125 percent of the duration of the Lehman Brothers Government
Bond Index.
CORPORATE BOND FUND
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide as high a level of current
income as is consistent with capital preservation and prudent investment risk.
There is no assurance that the Fund will achieve this objective.
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PRINCIPAL INVESTMENT STRATEGIES
The Fund invests under normal circumstances at least 65 percent of its total
assets in corporate bonds. The Fund may also invest in U.S. Government
securities and mortgage-backed and other similar securities of private issuers.
At least 80 percent of the Fund's net assets will be in securities that are
rated, at the time of purchase, in one of the three highest rating categories by
a nationally recognized statistical rating organization such as Standard and
Poor's or unrated and determined by its sub-adviser to be of comparable quality.
No more than 5 percent of the Fund's total assets will be in securities rated
below investment grade. The Fund's portfolio of corporate debt instruments will
have a minimum weighted average rating of A.
The Fund invests in securities with maturities (or average life in the case of
mortgage-backed and similar securities) ranging from short-term (including
overnight) to 30 years. The Fund seeks to moderate fluctuation in the price of
its shares by structuring maturities of its investment portfolio in order to
maintain a duration between 75 percent and 125 percent of the duration of the
Lehman Brothers Corporate Bond Index.
GROWTH EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term capital appreciation. There is
no assurance that the Fund will achieve this objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to achieve its objective by investing under normal circumstances
at least 65 percent of its total assets in the common stock of domestic
companies. The Fund only invests in companies having a minimum market
capitalization of $250 million at the time of purchase, and seeks to maintain a
minimum average weighted market capitalization of $5 billion.
The Fund invests in the securities of issuers that its sub-adviser believes have
superior growth potential and fundamental characteristics that are significantly
better than the market average and support internal earnings growth capability.
The Fund may invest in the
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securities of companies whose growth CONCEPTS TO
potential is, in the sub-adviser's UNDERSTAND
opinion, generally unrecognized or
misperceived by the market. The sub- PREFERRED STOCK is a
adviser may also look to changes in a security that has certain
company that involve a sharp increase rights separate from those
in earnings, the hiring of new conferred by common
management or measures taken to stock. Preferred stock
close the gap between the company's seldom carries voting
share price and takeover/asset value. rights, but pays dividends
The Fund may also invest in preferred and have liquidation
stocks and securities convertible into preference over common
common stock. The Fund will only stockholders
purchase convertible securities that, at CONVERTIBLE SECURITY is a
the time of purchase, are investment security such as preferred
grade securities or, if unrated, are stock or bonds that may be
determined by the sub-adviser to be of converted into a specified
comparable quality. number of shares of
common stock
VALUE EQUITY FUND
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term capital appreciation. There is
no assurance that the Fund will achieve this objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to attain its objective by investing under normal circumstances
at least 65 percent of its total assets in common stocks of domestic companies.
The Fund only invests in companies having a minimum market capitalization of
$250 million at the time of purchase, and seeks to maintain a minimum average
weighted market capitalization of $5 billion.
Using a value approach, the Fund seeks to invest in stocks that are underpriced
relative to other stocks, determined by price/earnings ratios, cash flows or
other measures. The sub-adviser relies on stock selection to achieve its
results, rather than trying to time market fluctuations. In selecting stocks,
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the sub-adviser establishes valuation parameters, by using relative ratios or
target prices to evaluate companies on several levels.
The Fund may also invest in preferred stocks and securities convertible into
common stock. The Fund will only purchase convertible securities that, at the
time of purchase, are investment grade or, are unrated and determined by the
sub-adviser to be of comparable quality.
PRINCIPAL INVESTMENT RISKS
GENERALLY
There is no assurance that any Fund will achieve its investment objective, and a
Fund's net asset value and total return will fluctuate based upon changes in the
value of its portfolio securities. Upon redemption, an investment in a Fund may
be worth more or less than its original value. No Fund, by itself, provides a
complete investment program.
All investments made by the Funds have some risk. Among other things, the market
value of any security in which the Funds may invest is based upon the market's
perception of value and not necessarily the book value of an issuer or other
objective measure of the issuer's worth. Certain investments and investment
techniques, however, have additional risks, such as the potential use of
leverage by certain Funds through borrowings, securities lending, and other
investment techniques.
BOND FUNDS. The value of your investment in a Bond Fund may change in response
to changes in interest rates. An increase in interest rates typically causes a
fall in the value of the fixed income securities in which these Funds invest.
Your investment in Corporate Bond Fund is also subject to the risk that the
financial condition of an issuer of a security held by the Fund may cause it to
default or become unable to pay interest or principal due on the security. To
limit this risk, at least 80 percent of Corporate Bond Fund's investments in
corporate debt securities will be in securities rated A or better and the Fund
will maintain a minimum average rating of A. An additional risk is that issuers
will prepay fixed rate securities when interest rates fall, forcing the Fund to
invest in securities with lower interest rates than the prepaid securities. For
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a Bond Fund investing in mortgage-backed and similar securities, there is also
the risk that a decline in interest rates may result in holders of the assets
backing the securities to prepay their debts, resulting in potential losses in
these securities' value and yield. Alternatively, rising interest rates may
reduce the amount of prepayments on the assets backing these securities, causing
the Fund's average maturity to rise and increasing the Fund's potential for
losses in value.
EQUITY FUNDS. The Equity Funds may be appropriate investments if you are seeking
long-term growth in your investment, and are willing to tolerate significant
fluctuations in the value of your investment in response to changes in the
market value of the stocks the Funds hold. This type of market movement may
affect the price of the securities of a single issuer, a segment of the domestic
stock market, or the entire market. The investment style for either or both
Equity Funds could fall out of favor with the market. In other words, if
investors lose interest in "growth" stocks, then the net asset value of the
Growth Equity Fund could also decrease. Likewise, if "value" stocks decrease in
value, there could be a corresponding drop in the net asset value of the Value
Equity Fund.
TEMPORARY DEFENSIVE POSITION The Funds may hold cash or cash equivalents such as
high quality money market instruments pending investment and to retain
flexibility in meeting redemptions and paying expenses. In addition, in order to
respond to adverse market, economic or other conditions, the Funds may assume a
temporary defensive position and invest without limit in these instruments. As a
result, the Funds may be unable to achieve their investment objectives.
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14 MANAGEMENT
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The business of Memorial Funds (the "Trust") and each Fund is managed under the
direction of the Board of Trustees (the "Board"). The Board formulates the
general policies of the Funds and meets periodically to review the Funds'
performance, monitor investment activities and practices, and discuss other
matters affecting the Funds. Additional information regarding the Trustees, as
well as executive officers, may be found in the Statement of Additional
Information ("SAI").
ADVISER
Memorial Investment Advisors, Inc. (the "Adviser"), 5847 San Felipe, Suite 4545,
Houston, Texas 77057, serves as investment adviser to the Funds. Subject to the
general control of the Board, the Adviser is responsible for among other things,
developing a continuing investment program for each Fund in accordance with its
investment objective, reviewing the investment strategies and policies of each
Fund, and advising the Board on the selection of additional sub-advisers. In
addition, the Adviser receives a fee from each Fund for the "asset allocation
services" of determining the Funds' investments in its portfolios and how much
of the Fund's assets to invest in each portfolio. The Adviser has entered into
investment sub-advisory agreements with the sub-advisers to exercise investment
discretion over the assets (or a portion of assets) of each Fund. For its
services, the Adviser receives an advisory fee at an annual rate of 0.35 percent
of the average daily net assets of Value Equity Fund and Growth Equity Fund and
0.23 percent of the average daily net assets of Corporate Bond Fund and
Government Bond Fund.
INVESTMENT CONSULTANT
To assist it in carrying out its responsibilities, the Adviser has retained
Wellesley Group, Inc., 800 South Street, Waltham, Massachusetts 02154, to
provide data with which the Adviser and the Board can monitor and evaluate the
performance of the Funds and the sub-advisers.
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SUB-ADVISERS/PORTFOLIO MANAGERS
The Adviser has retained the following sub-advisers to render advisory services
and make daily investment decisions for each Fund. The day-to-day management of
each Fund is performed by a portfolio manager employed by each sub-adviser to
that Fund. Each sub-adviser is registered or is exempt from registration as an
investment adviser under the Investment Advisers Act of 1940. The sub-adviser
for each Fund and its portfolio manager's business experience and educational
background follow:
The Northern Trust Company ("NTC"), 50 South LaSalle Street, Chicago, Illinois
60675, manages the portfolio of Government Bond Fund. NTC presently manages
approximately $236 billion in assets for endowments and foundations,
corporations, public funds and insurance companies. Mr. Monty Memler, CFA, is
the Fund's portfolio manager. He is a Vice President and a senior portfolio
manager for NTC and has been a member of the NTC fixed income team since 1990.
Mr. Memler holds a Masters in Business Administration from the University of
Chicago.
Conseco Capital Management, Inc. ("CCM"), 11825 N. Pennsylvania Street, Carmel,
Indiana 46032, manages the portfolio of Corporate Bond Fund. CCM presently
manages approximately $35 billion for individuals, corporations, insurance
companies, investment companies, pension plans, trusts, estates, as well as
charitable organizations including foundations and endowments. Mr. Gregory Hahn,
CFA, is the Fund's portfolio manager. He has been a Senior Vice President of CCM
since 1989. Mr. Hahn holds a Masters in Business Administration from Indiana
University.
Davis Hamilton Jackson & Associates, L.P. ("DHJA"), Two Houston Center, 909
Fannin Street, Suite 550, Houston, Texas 77010, manages the portfolio of Growth
Equity Fund. DHJA currently manages approximately $3.5 billion for institutions
and high net worth individuals and invests primarily in domestic equity
securities. Mr. J. Patrick Clegg, CFA, is the Fund's portfolio manager. Prior to
joining DHJA as a portfolio manager, he was a Principal and Director of Research
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at Luther King Capital Management in Fort Worth, Texas from 1991 to 1996. Mr.
Clegg holds a Masters in Business Administration from the University of Texas.
Beutel, Goodman Capital Management ("BGCM"), 5847 San Felipe, Suite 4500,
Houston, Texas 77057-3011, manages the portfolio of Value Equity Fund. BGCM
currently manages approximately $1.5 billion in assets. Mr. John Philip Ferguson
is the Fund's portfolio manager. He has served as Vice President and a member of
the Investment Committee of BGCM since 1988. Mr. Ferguson received his Juris
Doctor from the University of Texas Law School.
OTHER SERVICE PROVIDERS
The Forum Financial Group of companies ("Forum") provides various services to
the Funds. As of March 31, 1999, Forum provided administration and distribution
services to investment companies and collective investment funds with assets of
approximately $53 billion.
Forum Fund Services, LLC, a registered broker-dealer and member of the National
Association of Securities Dealers, Inc., is the distributor (principal
underwriter) of the Funds' shares. The distributor acts as the agent of Memorial
Funds in connection with the offering of shares of the Funds. The distributor
may enter into arrangements with banks, broker-dealers or other financial
institutions through which investors may purchase or redeem shares and may, at
its own expense, compensate persons who provide services in connection with the
sale or expected sale of shares of the Funds.
Forum Shareholder Services, LLC (the "Transfer Agent") is the Funds' transfer
agent.
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SHAREHOLDER SERVICES PLAN
The Trust has adopted a shareholder services plan permitting the Trust to
compensate financial institutions for acting as shareholder servicing agents for
their customers. Under this plan, the Trust has entered into an agreement with
Memorial Group, Inc., a corporation of which Christopher W. Hamm, the Chairman
of the Board and President of the Trust, is the sole shareholder. Memorial
Group, Inc. performs certain shareholder services not provided by Transfer Agent
and is paid fees at an annual rate of 0.25 percent of the average daily net
assets of the shares of the Fund owned by investors for which Memorial Group,
Inc. maintains a servicing relationship.
FUND EXPENSES
The Funds pay for all of their expenses. Each Fund's expenses are comprised of
expenses attributable to the particular Fund as well as expenses not
attributable to any particular Fund that are allocated among the Funds. The
Adviser or other service providers may waive all or any portion of their fees,
which are accrued daily and paid monthly. Any waiver would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect.
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18 YOUR ACCOUNT
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HOW TO CONTACT THE GENERAL INFORMATION
FUNDS You pay no sales charge to purchase or
sell (redeem) shares of the Funds. The
Funds purchase and sell shares at the net
WRITE TO US AT: asset value per share or NAV next
Memorial Funds calculated after the Transfer Agent
P.O. Box 446 receives your transaction request in
Portland, ME 04112 proper form. If the Transfer Agent
receives your transaction request in
TELEPHONE US TOLL- proper form prior to 4 p.m., your
FREE AT: transaction will be priced at that day's
(888) 263-5593 NAV. The Funds will not accept orders
that request a particular day or price for
WIRE INVESTMENTS (OR the transaction or any other special
ACH PAYMENTS) TO US conditions.
AT:
BankBoston The Funds do not issue share
Boston, Massachusetts certificates.
ABA #011000390
FOR CREDIT TO: You will receive annual statements and a
Forum Shareholder confirmation of each transaction. You
Services, LLC should verify the accuracy of all
Account # 541-54171 transactions in your account as soon as
Memorial Funds you receive your confirmation.
(Your Name)
(Your Account Number) The Funds reserve the right to impose
(Your Social Security minimum investment amounts and may
number or tax temporarily suspend (during unusual
identification number) market conditions) or discontinue any
service or privilege.
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WHEN AND HOW NAV IS DETERMINED. Each Fund calculates its NAV as of the close of
the New York Stock Exchange (normally 4:00 p.m., Eastern time) on each weekday
except days when the New York Stock Exchange is closed. The time at which NAV is
calculated may be changed in case of an emergency. The Funds' NAV is determined
by taking the market value of all securities owned by the fund (plus all other
assets such as cash), subtracting all liabilities and then dividing the result
(net assets) by the number of shares outstanding. The Funds value securities for
which market quotations are readily available at current market value. If market
quotations are not readily available, the Funds value securities at fair value.
TRANSACTIONS THROUGH THIRD PARTIES. If you invest through a broker or other
financial institution, the policies and fees charged by that institution may be
different than those of the Funds. Banks, brokers, retirement plans and
financial advisers may charge transaction fees and may set different minimum
investments or limitations on buying or selling shares. Consult a representative
of your financial institution or retirement plan for further information.
BUYING SHARES
All investments must be in U.S. dollars and checks must be drawn on U.S. banks.
CHECKS. For individual or UGMA/UTMA accounts, the check must be made
payable to "Memorial Funds" or to one or more owners of the account
and endorsed to "Memorial Funds." For all other accounts, the check
must be made payable on its face to "Memorial Funds." No other method
of check payment is acceptable (for instance, you may not pay by
travelers check).
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ACH PAYMENT. Instruct your financial institution to make an ACH
(automated clearinghouse) payment to us. These payments typically take
two days. Your financial institution may charge you a fee for this
service.
WIRES. Instruct your financial institution to make a Federal Funds
wire payment to us. Your financial institution may charge you a fee
for this service.
MINIMUM INVESTMENTS. The Funds accept payments in the following minimum amount:
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MINIMUM INITIAL MINIMUM ADDITIONAL
INVESTMENT INVESTMENT
- ------------------------------------- ---------------------------------------
$2,000 None
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Management of the Funds may choose to waive the investment minimum.
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ACCOUNT REQUIREMENTS
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TYPE OF ACCOUNT REQUIREMENT
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INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS o Joint accounts can have two or more owners
Individual accounts are owned by one person, as are (tenenats)
sole proprietorship accounts. o Instructions must be signed by all persons required
to sign (you choose who must sign) exactly as each
name appears on the account
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GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA) o Depending on state laws, you can set up a custodial
These custodial accounts provide a way to give money account under the Uniform Gift to Minors Act or the
to a child and obtain tax benefits. You can give up Uniform Transfers to Minors Act
to $10,000 a year per child without paying Federal gift o The trustee must sign instructions in a manner
tax. indicating trustee capacity
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BUSINESS ENTITIES o For entities with officers, provide an original
or certified copy of a resolution that identifies
the authorized signers for the account
o For entities with partners or other interested
parties, provide a certified partnership agreement
or organizational document, or certified pages from
the partnership agreement or organizational
document, that identify the partners or interested
parties
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TRUSTS o The trust must be established before an account can
be opened
o Provide a certification for trust, or the pages
from the trust document that identify the trustees
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22..............................................................................
INVESTMENT PROCEDURES
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<S> <C>
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TO OPEN AN ACCOUNT TO ADD TO YOUR ACCOUNT
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BY CHECK BY CHECK
o Call or write us for an account application o Fill out an investment slip from a
o Complete the application confirmation statement OR
o Mail us your application and a check o Write a letter to us
o Write your account number on your check
o Mail us the slip (or your letter) and a check
BY WIRE BY WIRE
o Call or write us for an account application o Call to notify us of your incoming wire
o Complete the application o Instruct your bank to wire your money to us
o Call us and you will be assigned an account number
o Mail us your application
o Instruct your bank to wire your money to us
BY ACH PAYMENT
o Call or write us for an account application
o Complete the application
o Call us and you will be assigned an account number
o Mail us your application
o Make an ACH payment
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LIMITATIONS ON PURCHASES. The Funds reserve the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
the Funds or their operations. This includes those from any individual or group
who, in the Funds' view, are likely to engage in excessive trading (usually
defined as more than four exchanges out of a Fund within a calendar year).
CANCELED OR FAILED PAYMENTS. The Funds accept checks and ACH transfers at full
value subject to collection. If your payment for shares is not received or you
pay with a check or ACH transfer that does not clear, your purchase will be
canceled. You will be responsible for any losses or expenses incurred by the
Funds or the Transfer Agent, and the Funds may redeem shares you own in the
account (or another identically registered account in any Fund) as
reimbursement. The Funds and its agents have the right to reject or cancel any
purchase, exchange, or redemption due to nonpayment.
SELLING SHARES
The Funds process redemption orders promptly and you will generally receive
redemption proceeds within a week. Delays may occur in cases of very large
redemptions, excessive trading or during unusual market conditions. If the Funds
have not yet collected payment for the shares you are selling, however, it may
delay sending redemption proceeds for up to 15 calendar days.
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24..............................................................................
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TO SELL SHARES FROM YOUR ACCOUNT
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- --------------------------------------------------------------------------------
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account number
o The Fund name
o The dollar amount or number of shares you want to sell
o How and where to send your proceeds
o Obtain a signature guarantee (if required)
o Obtain other documentation (if required)
o Mail us your request and documentation
BY WIRE
o Wire requests are only available if:
o You have elected wire redemption privileges AND
o Your request is for $5,000 or more
o Call us with your request (if you have elected telephone
redemption privileges) (See "By Telephone") OR
o Mail us your request (See "By Mail")
BY TELEPHONE
o Telephone requests are only available if you have elected
telephone redemption privileges
o Call us with your request
o Provide the following information:
o Your account number
o Exact name(s) in which account is registered
o Additional forms of identification
o Your proceeds will be:
o Mailed to you OR
o Wired to you(if you have elected wire redemption privileges)
(See "By Wire")
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TELEPHONE REDEMPTION PRIVILEGES. You may only request your shares by telephone
if you elect telephone redemption privileges on your account application or a
separate form. You may be responsible for any fraudulent telephone order as long
as the Transfer Agent takes reasonable measures to verify the order.
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..............................................................................25
WIRE REDEMPTION PRIVILEGES. You may only request your shares by wire if you
elect wire redemption privileges on your account application or a separate form.
The minimum amount you may request by wire is $5,000. If you wish to make your
wire request by telephone, you must also elect telephone redemption privileges.
SIGNATURE GUARANTEE REQUIREMENTS. To protect you and the Funds against fraud,
signatures on certain requests must have a "signature guarantee." For requests
made in writing, a signature guarantee is required for any of the following:
o Redemption of over $50,000 worth of shares
o Change the record name or address of your account
o Redeem from your account if you have changed the address or account
registration within the last 30 days
o Sending proceeds to any person, address, brokerage firm or bank
account not on record
o Sending proceeds to an account with a different registration (name or
ownership) from yours
o Changes to distribution, telephone requests or exchange option or any
other election in connection with your account
A signature guarantee verifies the authenticity of your signature. You can
obtain one from most banking institutions or securities brokers, but not from a
notary public.
SMALL ACCOUNTS. If the value of your account falls below $2,000, the Funds may
ask you to increase your balance. If the account value is still below $2,000
after 60 days, the Funds may close your account and send you the proceeds. The
Funds will not close your account if it falls below these amounts solely as a
result of a reduction in your account's market value.
REDEMPTION IN KIND. The Funds reserve the right to make redemptions "in kind" --
payment of redemption proceeds in portfolio securities rather than cash -- if
the amount requested is large enough to affect Funds operations (for example, if
it represents more than 1 percent of the fund's assets).
LOST ACCOUNTS. The Transfer Agent will consider your account "lost" if
correspondence to your address of record is returned as undeliverable, unless
the Transfer Agent determines your new address.
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26..............................................................................
When an account is "lost," all distributions on the account will be reinvested
in additional shares of the Fund. In addition, the amount of any outstanding
(unpaid for six months or more) checks for distributions that have been returned
to the Transfer Agent will be reinvested and the checks will be canceled.
EXCHANGE PRIVILEGES
You may sell your Fund shares and buy Institutional Shares of any other Fund,
also known as an exchange, by telephone or in writing. You may also exchange
Fund shares for Institutional class shares of Daily Assets Treasury Fund (a
series of the Forum Funds).
Because exchanges are treated as a sale and purchase, they may have tax
consequences.
REQUIREMENTS. Exchanges may be made only between identically registered accounts
(name(s), address and taxpayer ID number). There is currently no limit on
exchanges, but the Funds reserve the right to limit exchanges. See "Investment
Procedures - Limitations on Purchases."
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HOW TO EXCHANGE
- --------------------------------------------------------------------------------
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account number
o The names of the funds from which you are exchanging into and out of
o The dollar amount or number of shares you want to sell (and exchange)
o If opening a new account, complete an account application if you are
requesting different shareholder privileges
o Mail us your request and documentation
BY TELEPHONE
o Telephone exchanges are only available if you have elected telephone
redemption privileges
o Call us with your request
o Provide the following information:
o Your account number
o Exact name(s) in which account is registered
o Additional form of identification
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OTHER INFORMATION 27
................................................................................
DISTRIBUTIONS
Distributions of net investment income are declared daily and paid monthly by
the Bond Funds and are declared and paid quarterly by the Equity Funds. Any net
capital gain realized by a Fund will be distributed at least annually.
All distributions are reinvested in additional shares, unless you elect to
receive distributions in cash. For Federal income tax purposes, distributions
are treated the same whether they are received in cash or reinvested. Shares
become entitled to receive distributions on the day after the shares are issued.
TAXES
Each Fund intends to operate in a manner so that it will not be liable for
Federal income or excise tax.
Distributions of net investment income or short-term capital gain are taxable to
you as ordinary income. Distributions of long-term capital gain are taxable to
you as long-term capital gain regardless of how long you have held your shares.
Distributions may also be subject to state and local taxes.
Distributions of capital gain and the Equity Fund's distribution of net
investment income reduce the net asset value of the Funds' shares by the amount
of the distribution. If you purchase shares prior to these distributions, you
are taxed on the distribution even though the distribution represents a return
of your investment.
The sale or exchange of Fund shares is a taxable transaction for Federal income
tax purposes.
The Funds will mail reports containing information about the Funds'
distributions during the year to you after December 31 of each year.
Consult your tax adviser about the Federal, state and local tax consequences in
your particular circumstances.
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28..............................................................................
ORGANIZATION
Memorial Funds is a Delaware business trust that is registered with the SEC as
an open-end, management investment company (a "mutual fund"). The Funds are
series of Memorial Funds. It is not intended that meetings of shareholders be
held except when required by Federal or Delaware law. All shareholders of each
Fund are entitled to vote at shareholders' meetings unless a matter is
determined to affect only a specific Fund (such as approval of an advisory
agreement for a Fund). From time to time, large shareholders may control a Fund
or Memorial Funds.
CORE AND GATEWAY(R)
Each Fund may seek to achieve its investment objective by investing all of its
assets in shares of another diversified, open-end management investment company
that have corresponding investment objectives and investment policies to those
of the Fund.
YEAR 2000
Certain computer systems may not process date-related information properly on
and after January 1, 2000. The Funds' adviser and administrator are addressing
this matter for their systems. The Funds' other service providers have informed
the Funds that they are taking similar measures. This matter, if not corrected,
could adversely affect the services provided to the Funds or the companies in
which the Funds invest and, therefore, could lower the value of your shares.
<PAGE>
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FINANCIAL HIGHLIGHTS 29
................................................................................
The following table is intended to help you understand the Funds' Institutional
shares financial performance. Total return in the table represents the rate an
investor would have earned (or lost) on an investment in a Fund (assuming the
reinvestment of all distributions). This information has been audited by KPMG
Peat Marwick LLP. The Funds' financial statements and the auditor's report are
included in the Annual Report, which is available upon request, without charge.
................................................................................
GOVERNMENT CORPORATE GROWTH VALUE
BOND BOND EQUITY EQUITY
FUND FUND FUND FUND
Year Ended
12/31/98(1) 12/31/98(1) 12/31/98(1) 12/31/98(1)
................................................................................
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset
Value $10.00 $10.00 $10.00 $10.00
Income From Investment
Operations
Net investment income 0.39 0.43 0.01 0.03
Net gain (loss) on
securities (realized and 0.39 0.30 2.09 (0.81)
unrealized)
Total From Investment
Operations 0.78 0.73 2.10 (0.78)
Less Distributions
From net investment
income (0.39) (0.43) (0.01) (0.03)
From capital gain (0.14) (0.21) (0.60) -
Total Distributions (0.53) (0.64) (0.61) (0.03)
Ending Net Asset Value $10.25 $10.09 $11.49 $9.19
................................................................................
OTHER INFORMATION
Ratios to Average Net
Assets:(2)
Expenses 0.73% 0.63% 1.00% 1.00%
Expenses (gross) (3) 0.85% 0.76% 1.19% 1.25%
Net Investment Income 5.05% 5.60% 0.16% 0.59%
Total Return 7.96% 7.50% 20.97% (7.76%)
Portfolio Turnover Rate 113.50% 377.36% 135.38% 36.95%
Net Assets at End of
Period (in thousands) $65,676 $137,338 $26,426 $30,670
................................................................................
(1) Institutional Shares of the Funds commenced operations on the following
dates: Government Bond Fund - March 29, 1998; Corporate Bond Fund - March
25, 1998; Growth Equity Fund - March 29, 1998 and Value Equity Fund - March
29, 1998.
(2) Annualized.
(3) Reflects expense ratio in absence of expense reimbursements and fee waivers.
<PAGE>
FOR MORE INFORMATION
The following documents are available free upon request:
GOVERNMENT
ANNUAL/SEMI-ANNUAL REPORTS BOND FUND
Additional information about the Funds' investments is CORPORATE BOND
available in the Funds' annual and semi-annual reports to FUND
shareholders. In each Fund's annual report, you will find a GROWTH EQUITY
discussion of the market conditions and investment strategies FUND
that significantly affected the Fund's performances during VALUE EQUITY
their last fiscal year. FUND
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
The SAI provides more detailed information about the Funds
and is incorporated by reference into this Prospectus.
You can get free copies of both reports and the SAI, request
other information and discuss your questions about the Funds
by contacting your broker or the Funds at:
Memorial Funds
Two Portland Square
Portland, Maine 04101
888-263-5593
You can also review the Funds' reports and SAIs at the Public
Reference Room of the Securities and Exchange Commission.
You can get copies, for a fee, by writing to the following:
Public Reference Room
Securities and Exchange Commission Memorial Funds
Washington, D.C. 20549-6009 P.O. Box 446
Portland, ME
04112
888-263-5593
Information on the hours of operation of the Public Reference
Room may be obtained by calling the Commission at 1-800-
SEC-0330. Free copies of the reports and SAIs are available
from the Commission's Internet website at
http://www.sec.gov.
Investment Company Act File No. 811-8529.
