PROSPECTUS
MAY 1, 1999
GOVERNMENT BOND FUND
SHARES OF THE FUND 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
RISK/RETURN SUMMARY 2
FEE TABLES 3
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS 4
MANAGEMENT 5
YOUR ACCOUNT 7
How to Contact the Fund 7
General Information 7
Buying Shares 7
Selling Shares 9
Exchange Privileges 11
OTHER INFORMATION 12
FINANCIAL HIGHLIGHTS 13
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2 RISK/RETURN SUMMARY
CONCEPTS TO UNDERSTAND GOVERNMENT BOND FUND
A DEBT OR FIXED INCOME INVESTMENT GOAL High level of income consistent with maximum credit protection
SECURITY is a security and moderate fluctuation in principal value.
such as a bond or note
that obligates the PRINCIPAL INVESTMENT STRATEGY The Fund invests under normal circumstances at
issuer to pay the least 90 percent of its total assets in a portfolio of fixed and variable rate
security owner a U.S. Government Securities, including zero coupon bonds issued or guaranteed by
specified sum of money the U.S. Treasury and mortgage-backed securities. The Fund invests in securities
at set intervals as well with maturities (or average life in the case of mortgage-backed and similar
as repay the principal securities) ranging from overnight to 30 years. The Fund seeks to moderate
amount of the security fluctuations in the price of its shares by structuring maturities of its
at its maturity investment portfolio in order to maintain a duration between 75 percent and 125
A BOND is a debt percent of the duration of the Lehman Brothers Government Bond Index
security with a
long-term maturity, PRINCIPAL RISKS OF INVESTING IN THE FUND
usually 10 years or
longer You could lose money on your investment in Government Bond Fund and Government
MATURITY means the date Bond Fund could under-perform other investments. The principal risks of
at which a debt security investing in the Fund include:
is due and payable
DURATION is a measure of o The Fund's share price, yield and total return could fluctuate in
a security's average response to bond market movements
life that reflects the o The value of most bonds could fall when interest rates rise; the longer
present value of the a bond's maturity and the lower its credit quality, the more its value
security's cash flow. typically falls
Prices of securities o The default of an issuer could leave the Fund with unpaid interest or
with longer durations principal
will fluctuate more in o The Fund may invest in mortgage-backed and other similar securities. A
response to changes in decline in interest rates may result in losses in these securities'
interest rates values and a reduction in their yields as the holders of the assets
UNITED STATES GOVERNMENT backing the securities prepay their debts
SECURITY is a debt o The sub-adviser's judgment as to the value of a bond proves to be wrong
security issued by the
United States or any of An investment in the Fund is not a deposit of a bank and is not insured or
its agencies or guaranteed by the Federal Deposit Insurance Corporation or any other
instrumentalities such governmental agency.
as the Government
National Mortgage WHO MAY WANT TO INVEST IN THE FUND
Association
You may want to purchase shares of Government Bond Fund 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
Government Bond Fund 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
PERFORMANCE INFORMATION
Performance information is not provided, as the Fund
has not had a full calendar year of operations as of
the date of this prospectus.
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FEE TABLES 3
The following tables describe the fees and expenses that you will pay if you
invest in the Fund.
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
ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from Fund assets)
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)
(1) Based on amounts incurred during the Fund's 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 the Fund to the cost of investing in other mutual funds. This
example assumes a $10,000 investment in the 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
GOVERNMENT BOND FUND $87 $273
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4
INVESTMENT STRATEGIES AND PRINCIPAL RISKS
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.
GENERALLY
There is no assurance that the Fund will achieve its investment objective, and
the 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 the
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 Fund have some risk. Among other things, the market
value of any security in which the Fund 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.
PRINCIPAL INVESTMENT RISKS
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.
The value of your investment in the 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 the Fund invests. For a 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.
TEMPORARY DEFENSIVE POSITION The Fund 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 Fund may assume a
temporary defensive position and invest without limit in these instruments. As a
result, the Fund may be unable to achieve its investment objectives.
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MANAGEMENT 5
The business of Memorial Funds (the "Trust") and Government Bond Fund is managed
under the direction of the Board of Trustees (the "Board"). The Board formulates
the general policies of the Fund and meets periodically to review the Fund's
performance, monitor investment activities and practices and discuss other
matters affecting the Fund. Additional information regarding the Trustees, as
well as executive officers, may be found in the Statement of Additional
Information ("SAI").
ADVISER
Forum Investment Advisors, LLC (the "Adviser"), Two Portland Square, Portland,
Maine 04101, serves as investment adviser to the Fund. 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. 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 Fund and the sub-advisers.
SUB-ADVISER/PORTFOLIO MANAGER
The Adviser has retained the following sub-adviser to render advisory services
and make daily investment decisions for the Fund. The day-to-day management of
the Fund is performed by a portfolio manager employed by the sub-adviser to the
Fund. The sub-adviser is registered or is exempt from registration as an
investment adviser under the Investment Advisers Act of 1940. The sub-adviser
for the 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.
OTHER SERVICE PROVIDERS
The Forum Financial Group of companies ("Forum") provides various services to
the Fund. 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 Fund's shares. The distributor acts as the agent of Memorial
Funds in connection with the offering of shares of the Fund. 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 Fund.
Forum Shareholder Services, LLC (the "Transfer Agent") is the Fund's transfer
agent.
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6
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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YOUR ACCOUNT 7
HOW TO CONTACT THE FUND GENERAL INFORMATION
WRITE TO US AT: You pay no sales charge to purchase or sell (redeem) shares of the Fund. The
Memorial Funds Fund purchases and sells shares at the net asset value per share or NAV next
P.O. Box 446 calculated after the Transfer Agent receives your transaction request in proper
Portland, ME 04112 form. If the Transfer Agent receives your transaction request in proper form
prior to 4 p.m., your transaction will be priced at that day's NAV. The Fund
TELEPHONE US TOLL-FREE AT: will not accept orders that request a particular day or price for the
(888) 263-5593 transaction or any other special conditions.
WIRE INVESTMENTS (OR ACH The Fund does not issue share certificates.
PAYMENTS) TO US AT:
BankBoston You will receive annual statements and a confirmation of each transaction. You
Boston, Massachusetts should verify the accuracy of all transactions in your account as soon as you
ABA #011000390 receive your confirmation.
FOR CREDIT TO:
Forum Shareholder The Fund reserves the right to impose minimum investment amounts and may
Services, LLC temporarily suspend (during unusual market conditions) or discontinue any
Account # 541-54171 service or privilege.
Memorial Funds
(Your Name) WHEN AND HOW NAV IS DETERMINED. The Fund calculates its NAV as of the close of
(Your Account Number) the New York Stock Exchange (normally 4:00 p.m., Eastern time) on each weekday
(Your Social Security except days when the New York Stock Exchange is closed. The time at which NAV
number or tax is calculated may be changed in case of an emergency. The Fund's NAV is
identification number) 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 Fund values securities for which market quotations are readily available at
current market value. If market quotations are not readily available, the
Fund values 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 Fund. 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.
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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).
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.
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8
MINIMUM INVESTMENTS. The Fund accepts payments in the following minimum amount:
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MINIMUM INITIAL MINIMUM ADDITIONAL
INVESTMENT INVESTMENT
$2,000 None
Management of the Fund may choose to waive the investment minimum.
ACCOUNT REQUIREMENTS
TYPE OF ACCOUNT REQUIREMENT
INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS o Joint accounts can have two or more owners
Individual accounts are owned by one person, as are (tenants)
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
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA) o Depending on state laws, you can set up a
These custodial accounts provide a way to give custodial account under the Uniform Gift to
money to a child and obtain tax benefits. You can Minors Act or the Uniform Transfers to Minors
give up $10,000 a year per child without paying Act
Federal tax gift. o The trustee must sign instructions in a
manner indicating trustee capacity
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
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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9
INVESTMENT PROCEDURES
TO OPEN AN ACCOUNT TO ADD TO YOUR ACCOUNT
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 Fund reserves the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
the Fund or its operations. This includes those from any individual or group
who, in the Fund's view, is 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 Fund accepts 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
Fund or the Transfer Agent, and the Fund may redeem shares you own in the
account (or another identically registered account in any Fund) as
reimbursement. The Fund and its agents have the right to reject or cancel any
purchase, exchange or redemption due to nonpayment.
SELLING SHARES
The Fund processes 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 Fund
has 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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10
TO SELL SHARES FROM YOUR ACCOUNT
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 form 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")
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.
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 Fund 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
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11
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 Fund may
ask you to increase your balance. If the account value is still below $2,000
after 60 days, the Fund may close your account and send you the proceeds. The
Fund 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 Fund reserves 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 Fund 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.
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 Fund reserves the right to limit exchanges. See "Investment
Procedures - Limitations on Purchases."
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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12 OTHER INFORMATION
DISTRIBUTIONS
Distributions of net investment income are declared daily and paid monthly. Any
net capital gain realized by the 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
The 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 reduce the net asset value of the Fund's 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 Fund will mail reports containing information about the Fund's 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.
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 Fund is a
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 the
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)
The 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 Fund's adviser and administrator are addressing
this matter for their systems. The Fund's other service providers have informed
the Fund that they are taking similar measures. This matter, if not corrected,
could adversely affect the services provided to the Fund or the companies in
which the Fund invests and, therefore, could lower the value of your shares.
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FINANCIAL HIGHLIGHTS 13
The following table is intended to help you understand the Fund's Institutional
shares financial performance. Total return in the table represents the rate an
investor would have earned (or lost) on an investment in the Fund (assuming the
reinvestment of all distributions). This information has been audited by KPMG
Peat Marwick LLP. The Fund's financial statements and the auditor's report are
included in the Annual Report, which is available upon request, without charge.
GOVERNMENT BOND
FUND
Year Ended
12/31/98(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value $10.00
Income From Investment Operations
Net investment income 0.39
Net gain (loss) on securities (realized and unrealized) 0.39
Total From Investment Operations 0.78
Less Distributions
From net investment income (0.39)
From capital gain (0.14)
Total Distributions (0.53)
Ending Net Asset Value $10.25
OTHER INFORMATION
Ratios to Average Net Assets:(2)
Expenses 0.73%
Expenses (gross) (3) 0.85%
Net Investment Income 5.05%
Total Return 7.96%
Portfolio Turnover Rate 113.50%
Net Assets at End of Period (in thousands) $65,676
(1) Institutional Shares of Government Bond Fund commenced operations on
March 29, 1998.
(2) Annualized.
(3) Reflects expense ratio in absence of expense reimbursements and fee
waivers.
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FOR MORE INFORMATION
The following documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performances during its
last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
The SAI provides more detailed information about the Fund 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 Fund by contacting your broker or the Fund
at:
Memorial Funds
Two Portland Square
Portland, Maine 04101
888-263-5593
You can also review the Fund's 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
Washington, D.C. 20549-6009
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.
GOVERNMENT BOND FUND
Memorial Funds
P.O. Box 446
Portland, ME 04112
888-263-5593
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Investment Company Act File No. 811-8529.
[LOGO]
MEMORIAL FUNDS
PROSPECTUS
MAY 1, 1999
CORPORATE BOND FUND
SHARES OF THE FUND 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 3
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS 4
MANAGEMENT 5
YOUR ACCOUNT 7
How to Contact the Fund 7
General Information 7
Buying Shares 7
Selling Shares 9
Exchange Privileges 11
OTHER INFORMATION 12
FINANCIAL HIGHLIGHTS 13
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2 RISK/RETURN SUMMARY
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CONCEPTS TO UNDERSTAND CORPORATE BOND FUND
A DEBT OR FIXED INCOME INVESTMENT GOAL High level of current income
SECURITY is a security consistent with capital preservation and prudent
such as a investment risk.
bond or note that
obligates the issuer to PRINCIPAL INVESTMENT Fund invests under normal
pay the security owner a circumstances at least 65 percent of its total assets
specified sum of money in corporate bonds. At least 80 percent of the Fund's
at set intervals as well total assets will be invested in securities that are
as repay the principal rated, at the time of purchase, in one of the three
amount of the security highest rating categories or are unrated and
at its maturity determined by its sub-adviser to be of comparable
A BOND is a debt quality. The Fund invests in securities with
security with a maturities (or average life in the case of mortgage-
long-term maturity, backed and similar securities) ranging from short-
usually 10 years or term (including overnight) to 30 years.The Fund seeks
longer to moderate fluctuation in the price of its shares by
MATURITY means the date structuring maturities of its investment portfolio in
at which a debt security order to maintain a duration between 75 percent and
is due and payable 125 percent of the duration of the Lehman Brothers
DURATION is a measure of Corporate Bond Index.
a security's average
LIFE that reflects the PRINCIPAL RISKS OF INVESTING IN THE FUND
present value of the
security's cash flow. You could lose money on your investment in Corporate
Prices of securities Bond Fund and Corporate Bond Fund could under-perform
with longer durations other investments. The principal risks of investing
will fluctuate more in in the Fund include:
response to changes in o The Fund's share price, yield and total return
interest rates could fluctuate in response to bond market
movements
UNITED STATES GOVERNMENT o The value of most bonds could fall when interest
SECURITY is a debt rates rise; the longer a bond's maturity and the
security issued by the lower its credit quality, the more its value
United States or any of typically falls
its agencies or o The default of an issuer could leave the Fund
instrumentalities such with unpaid interest or principal
as the Government o The Fund may invest in mortgage-backed and other
National Mortgage similar securities. A decline in interest rates
Association 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
An investment in the Fund is not a deposit of a bank and is
not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
WHO MAY WANT TO INVEST IN THE FUND
You may want to purchase shares of Corporate Bond
Fund 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
Corporate Bond Fund 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
PERFORMANCE INFORMATION
Performance information is not provided, as the Fund
has not had a full calendar year of operations as of
the date of this prospectus.
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FEE TABLES 3
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The following tables describe the fees and expenses that you will pay if you
invest in the Fund.
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
ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from Fund assets)
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)
(1) Based on amounts incurred during the Fund's 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 the Fund to the cost of investing in other mutual funds. This
example assumes a $10,000 investment in the 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
CORPORATE BOND FUND $78 $243
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4 INVESTMENT OBJECTIVES, PRINCIPAL
INVESTMENT STRATEGIES AND PRINCIPAL RISKS
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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.
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.
PRINCIPAL INVESTMENT RISKS
GENERALLY
There is no assurance that the Fund will achieve its investment objective, and
the 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 the
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 Fund have some risk. Among other things, the market
value of any security in which the Fund 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.
The value of your investment in the 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 the Fund invests. 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 a 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.
TEMPORARY DEFENSIVE POSITION The Fund 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 Fund may assume a
temporary defensive position and invest without limit in these instruments. As a
result, the Fund may be unable to achieve its investment objectives.
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MANAGEMENT 5
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The business of Memorial Funds (the "Trust") and Corporate Bond Fund is managed
under the direction of the Board of Trustees (the "Board"). The Board formulates
the general policies of the Fund and meets periodically to review the Fund's
performance, monitor investment activities and practices and discuss other
matters affecting the Fund. Additional information regarding the Trustees, as
well as executive officers, may be found in the Statement of Additional
Information ("SAI").
ADVISER
Forum Investment Advisors, LLC (the "Adviser"), Two Portland Square, Portland,
Maine 04101, serves as investment adviser to the Fund. 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. 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 0.23 percent of the average daily net assets of Corporate 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 Fund and the sub-advisers.
SUB-ADVISER/PORTFOLIO MANAGER
The Adviser has retained the following sub-adviser to render advisory services
and make daily investment decisions for the Fund. The day-to-day management of
the Fund is performed by a portfolio manager employed by the sub-adviser to the
Fund. The sub-adviser is registered or is exempt from registration as an
investment adviser under the Investment Advisers Act of 1940. The sub-adviser
for the Fund and its portfolio manager's business experience and educational
background follow:
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.
OTHER SERVICE PROVIDERS
The Forum Financial Group of companies ("Forum") provides various services to
the Fund. 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 Fund's shares. The distributor acts as the agent of Memorial
Funds in connection with the offering of shares of the Fund. 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 Fund.
Forum Shareholder Services, LLC (the "Transfer Agent") is the Fund's transfer
agent.
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6
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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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YOUR ACCOUNT 7
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HOW TO CONTACT THE FUND GENERAL INFORMATION
WRITE TO US AT: You pay no sales charge to purchase or sell (redeem) shares of the Fund. The
Memorial Funds Fund purchases and sells shares at the net asset value per share or NAV next
P.O. Box 446 calculated after the Transfer Agent receives your transaction request in proper
Portland, ME 04112 form. If the Transfer Agent receives your transaction request in proper form
prior to 4 p.m., your transaction will be priced at that day's NAV. The Fund
TELEPHONE US TOLL-FREE AT: will not accept orders that request a particular day or price for the
(888) 263-5593 transaction or any other special conditions.
WIRE INVESTMENTS (OR ACH The Fund does not issue share certificates.
PAYMENTS) TO US AT:
BankBoston You will receive annual statements and a confirmation of each transaction. You
Boston, Massachusetts should verify the accuracy of all transactions in your account as soon as you
ABA #011000390 receive your confirmation.
FOR CREDIT TO:
Forum Shareholder The Fund reserves the right to impose minimum investment amounts and may
Services, LLC temporarily suspend (during unusual market conditions) or discontinue any
Account # 541-54171 service or privilege.
Memorial Funds
(Your Name) WHEN AND HOW NAV IS DETERMINED. The Fund calculates its NAV as of the close of
(Your Account Number) the New York Stock Exchange (normally 4:00 p.m., Eastern time) on each weekday
(Your Social Security except days when the New York Stock Exchange is closed. The time at which NAV
number or tax is calculated may be changed in case of an emergency. The Fund's NAV is
identification number) 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 Fund values securities for which market quotations are readily available at
current market value. If market quotations are not readily available, the
Fund values 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 Fund. 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.
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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).
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.
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8
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MINIMUM INVESTMENTS. The Fund accepts payments in the following minimum amount:
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MINIMUM INITIAL MINIMUM ADDITIONAL
INVESTMENT INVESTMENT
$2,000 None
Management of the Fund may choose to waive the investment minimum.
ACCOUNT REQUIREMENTS
TYPE OF ACCOUNT REQUIREMENT
INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS o Joint accounts can have two or more owners
Individual accounts are owned by one person, as are (tenants)
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
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA) o Depending on state laws, you can set up a
These custodial accounts provide a way to give custodial account under the Uniform Gift to
money to a child and obtain tax benefits. You can Minors Act or the Uniform Transfers to Minors
give up $10,000 a year per child without paying Act
Federal tax gift. o The trustee must sign instructions in a
manner indicating trustee capacity
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
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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9
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INVESTMENT PROCEDURES
TO OPEN AN ACCOUNT TO ADD TO YOUR ACCOUNT
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 Fund reserves the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
the Fund or its operations. This includes those from any individual or group
who, in the Fund's view, is 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 Fund accepts 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
Fund or the Transfer Agent, and the Fund may redeem shares you own in the
account (or another identically registered account in any Fund) as
reimbursement. The Fund and its agents have the right to reject or cancel any
purchase, exchange or redemption due to nonpayment.
SELLING SHARES
The Fund processes 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 Fund
has 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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10
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TO SELL SHARES FROM YOUR ACCOUNT
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 form 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")
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.
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 Fund 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
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11
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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 Fund may
ask you to increase your balance. If the account value is still below $2,000
after 60 days, the Fund may close your account and send you the proceeds. The
Fund 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 Fund reserves 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 Fund 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.
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 Fund reserves the right to limit exchanges. See "Investment
Procedures - Limitations on Purchases."
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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12
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DISTRIBUTIONS
Distributions of net investment income are declared daily and paid monthly. Any
net capital gain realized by the 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
The 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 reduce the net asset value of the Fund's 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 Fund will mail reports containing information about the Fund's 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.
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 Fund is a
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 the
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)
The 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 Fund's adviser and administrator are addressing
this matter for their systems. The Fund's other service providers have informed
the Fund that they are taking similar measures. This matter, if not corrected,
could adversely affect the services provided to the Fund or the companies in
which the Fund invests and, therefore, could lower the value of your shares.
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FINANCIAL HIGHLIGHTS 13
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The following table is intended to help you understand the Fund's Institutional
shares financial performance. Total return in the table represents the rate an
investor would have earned (or lost) on an investment in the Fund (assuming the
reinvestment of all distributions). This information has been audited by KPMG
Peat Marwick LLP. The Fund's financial statements and the auditor's report are
included in the Annual Report, which is available upon request, without charge.
CORPORATE BOND
FUND
Year Ended
12/31/98(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value $10.00
Income From Investment Operations
Net investment income 0.43
Net gain (loss) on securities (realized and unrealized) 0.30
Total From Investment Operations 0.73
Less Distributions
From net investment income (0.43)
From capital gain (0.21)
Total Distributions (0.64)
Ending Net Asset Value $10.09
OTHER INFORMATION
Ratios to Average Net Assets:(2)
Expenses 0.63%
Expenses (gross) (3) 0.76%
Net Investment Income 5.60%
Total Return 7.50%
Portfolio Turnover Rate 377.36%
Net Assets at End of Period (in thousands) $137,338
(1) Institutional Shares of Corporate Bond Fund commenced operations on March
25, 1998.
(2) Annualized.
(3) Reflects expense ratio in absence of expense reimbursements and fee
waivers.
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FOR MORE INFORMATION
The following documents are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performances during its
last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
The SAI provides more detailed information about the Fund 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 Fund by contacting your
broker or the Fund at:
Memorial Funds
Two Portland Square
Portland, Maine 04101
888-263-5593
You can also review the Fund's 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
Washington, D.C. 20549-6009
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.
CORPORATE BOND FUND
Memorial Funds
P.O. Box 446
Portland, ME 04112
888-263-5593
Investment Company Act File No. 811-8529.
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[LOGO]
MEMORIAL FUNDS
PROSPECTUS
MAY 1, 1999
GROWTH EQUITY FUND
SHARES OF THE FUND 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 3
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS 4
MANAGEMENT 5
YOUR ACCOUNT 7
How to Contact the Fund 7
General Information 7
Buying Shares 7
Selling Shares 9
Exchange Privileges 11
OTHER INFORMATION 12
FINANCIAL HIGHLIGHTS 13
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2 RISK/RETURN SUMMARY
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CONCEPT TO UNDERSTAND GROWTH EQUITY FUND
GROWTH INVESTING INVESTMENT GOAL Long-term capital appreciation.
means to invest in
stocks of companies PRINCIPAL INVESTMENT STRATEGY The Fund uses a "growth
that have exhibited investing" style by investing under normal circumstances
faster than average at least 65 percent of its total assets in the
earnings over the securities of domestic companies that its sub-adviser
past few years and believes have superior growth potential and fundamental
are expected to characteristics that are significantly better than the
continue to show high market average and support internal earnings growth
levels of profit capability. The Fund only invests in companies that have
growth 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.
PRINCIPAL RISKS OF INVESTING IN THE FUND
You could lose money on your investment in Growth Equity
Fund and Growth Equity Fund could under-perform other
investments. The principal risks of investing in the
Fund include:
o The stock market goes down
o The stock market continues to undervalue the stocks in
the Fund's portfolio
o The sub-adviser's judgment as to the value of a stock
proves to be wrong
o The Fund's particular investment style falls out of
favor with the market
An investment in the 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.
WHO MAY WANT TO INVEST IN THE FUND
You may want to purchase shares of Growth Equity Fund
if:
o You are willing to tolerate significant changes in the
value of your investment
o You are pursuing a long-term goal
o You are willing to accept higher short-term risk
Growth Equity Fund 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 Fund has
not had a full calendar year of operations as of the
date of this prospectus.
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FEE TABLES 3
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The following tables describe the fees and expenses that you will pay if you
invest in the Fund.
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
ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from Fund assets)
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%
(1) Based on amounts incurred during the Fund's 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.
EXAMPLE
The following is a hypothetical example intended to help you compare the cost of
investing in the Fund to the cost of investing in other mutual funds. This
example assumes a $10,000 investment in the 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
GROWTH EQUITY FUND $121 $378
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4 INVESTMENT OBJECTIVES, PRINICIPAL
INVESTMENT STRATEGIES AND PRINCIPAL RISKS
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CONCEPTS TO UNDERSTAND INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term
PREFERRED STOCK is a capital appreciation. There is no assurance that the
security that has Fund will achieve this objective.
certain rights separate
from those conferred by PRINCIPAL INVESTMENT STRATEGIES The Fund seeks to
common stock. Preferred achieve its objective by investing under normal
stock seldom carries circumstances at least 65 percent of its total assets
voting rights, but pays in the common stock of domestic companies. The Fund
dividends and have only invests in companies having a minimum market
liquidation preference capitalization of $250 million at the time of purchase
over common stockholders and seeks to maintain a minimum average weighted
CONVERTIBLE SECURITY is market capitalization of $5 billion.
a security such as
preferred stock or The Fund invests in the securities of issuers that its
bonds that may be sub-adviser believes have superior growth potential
converted into a and fundamental characteristics that are significantly
specified number of better than the market average and support internal
shares of common earnings growth capability. The Fund may invest in the
stock securities of companies whose growth potential is, in
the sub-adviser's opinion, generally unrecognized or
misperceived by the market. The sub-adviser may also
look to changes in a company that involve a sharp
increase in earnings, the hiring of new management
or measures taken to close the gap between the
company's share price and takeover/asset value.
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 securities or,
if unrated, are determined by the sub-adviser to be
of comparable quality.
PRINCIPAL INVESTMENT RISKS
GENERALLY
There is no assurance that the Fund will achieve its
investment objective, and the 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 the 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 Fund have some risk. Among
other things, the market value of any security in
which the Fund 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.
Growth Equity Fund may be an appropriate investment 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 Fund holds. 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 Growth Equity Fund could fall out
of favor with the market. In other words, if investors
lose interest in "growth" stocks, then the net asset
value of Growth Equity Fund could also decrease.
TEMPORARY DEFENSIVE POSITION The Fund 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 Fund may
assume a temporary defensive position and invest
without limit in these instruments. As a result, the
Fund may be unable to achieve its investment
objectives.
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MANAGEMENT 5
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The business of Memorial Funds (the "Trust") and Growth Equity Fund is managed
under the direction of the Board of Trustees (the "Board"). The Board formulates
the general policies of the Fund and meets periodically to review the Fund's
performance, monitor investment activities and practices and discuss other
matters affecting the Fund. Additional information regarding the Trustees, as
well as executive officers, may be found in the Statement of Additional
Information ("SAI").
ADVISER
Forum Investment Advisors, LLC (the "Adviser"), Two Portland Square, Portland,
Maine 04101, serves as investment adviser to the Fund. 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. 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 Growth Equity
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 Fund and the sub-advisers.
SUB-ADVISER/PORTFOLIO MANAGER
The Adviser has retained the following sub-adviser to render advisory services
and make daily investment decisions for the Fund. The day-to-day management of
the Fund is performed by a portfolio manager employed by the sub-adviser to the
Fund. The sub-adviser is registered or is exempt from registration as an
investment adviser under the Investment Advisers Act of 1940. The sub-adviser
for the Fund and its portfolio manager's business experience and educational
background follow:
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
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.
OTHER SERVICE PROVIDERS
The Forum Financial Group of companies ("Forum") provides various services to
the Fund. 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 Fund's shares. The distributor acts as the agent of Memorial
Funds in connection with the offering of shares of the Fund. 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 Fund.
Forum Shareholder Services, LLC (the "Transfer Agent") is the Fund's transfer
agent.
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6
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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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YOUR ACCOUNT 7
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<TABLE>
<S> <C>
YOUR ACCOUNT 7
HOW TO CONTACT THE FUND GENERAL INFORMATION
WRITE TO US AT: You pay no sales charge to purchase or sell (redeem) shares of the Fund. The
Memorial Funds Fund purchases and sells shares at the net asset value per share or NAV next
P.O. Box 446 calculated after the Transfer Agent receives your transaction request in proper
Portland, ME 04112 form. If the Transfer Agent receives your transaction request in proper form
prior to 4 p.m., your transaction will be priced at that day's NAV. The Fund
TELEPHONE US TOLL-FREE AT: will not accept orders that request a particular day or price for the
(888) 263-5593 transaction or any other special conditions.
WIRE INVESTMENTS (OR ACH The Fund does not issue share certificates.
PAYMENTS) TO US AT:
BankBoston You will receive annual statements and a confirmation of each transaction. You
Boston, Massachusetts should verify the accuracy of all transactions in your account as soon as you
ABA #011000390 receive your confirmation.
FOR CREDIT TO:
Forum Shareholder The Fund reserves the right to impose minimum investment amounts and may
Services, LLC temporarily suspend (during unusual market conditions) or discontinue any
Account # 541-54171 service or privilege.
Memorial Funds
(Your Name) WHEN AND HOW NAV IS DETERMINED. The Fund calculates its NAV as of the close of
(Your Account Number) the New York Stock Exchange (normally 4:00 p.m., Eastern time) on each weekday
(Your Social Security except days when the New York Stock Exchange is closed. The time at which NAV
number or tax is calculated may be changed in case of an emergency. The Fund's NAV is
identification number) 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 Fund values securities for which market quotations are readily available at
current market value. If market quotations are not readily available, the
Fund values 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 Fund. 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.
</TABLE>
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).
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.
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8
MINIMUM INVESTMENTS. The Fund accepts payments in the following minimum amount:
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MINIMUM INITIAL MINIMUM ADDITIONAL
INVESTMENT INVESTMENT
$2,000 None
Management of the Fund may choose to waive the investment minimum.
ACCOUNT REQUIREMENTS
TYPE OF ACCOUNT REQUIREMENT
INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS o Joint accounts can have two or more owners
Individual accounts are owned by one person, as are (tenants)
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
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA) o Depending on state laws, you can set up a
These custodial accounts provide a way to give custodial account under the Uniform Gift to
money to a child and obtain tax benefits. You can Minors Act or the Uniform Transfers to Minors
give up $10,000 a year per child without paying Act
Federal tax gift. o The trustee must sign instructions in a
manner indicating trustee capacity
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
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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9
INVESTMENT PROCEDURES
TO OPEN AN ACCOUNT TO ADD TO YOUR ACCOUNT
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 Fund reserves the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
the Fund or its operations. This includes those from any individual or group
who, in the Fund's view, is 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 Fund accepts 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
Fund or the Transfer Agent, and the Fund may redeem shares you own in the
account (or another identically registered account in any Fund) as
reimbursement. The Fund and its agents have the right to reject or cancel any
purchase, exchange or redemption due to nonpayment.
SELLING SHARES
The Fund processes 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 Fund
has 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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10
TO SELL SHARES FROM YOUR ACCOUNT
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 form 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")
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.
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 Fund 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
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11
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 Fund may
ask you to increase your balance. If the account value is still below $2,000
after 60 days, the Fund may close your account and send you the proceeds. The
Fund 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 Fund reserves 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 Fund 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.
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 Fund reserves the right to limit exchanges. See "Investment
Procedures - Limitations on Purchases."
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
<PAGE>
12 OTHER INFORMATION
DISTRIBUTIONS
Distributions of net investment income are declared daily and paid monthly. Any
net capital gain realized by the 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
The 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 reduce the net asset value of the Fund's 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 Fund will mail reports containing information about the Fund's 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.
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 Fund is a
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 the
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)
The 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 Fund's adviser and administrator are addressing
this matter for their systems. The Fund's other service providers have informed
the Fund that they are taking similar measures. This matter, if not corrected,
could adversely affect the services provided to the Fund or the companies in
which the Fund invests and, therefore, could lower the value of your shares.
<PAGE>
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FINANCIAL HIGHLIGHTS 13
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The following table is intended to help you understand the Fund's Institutional
shares financial performance. Total return in the table represents the rate an
investor would have earned (or lost) on an investment in the Fund (assuming the
reinvestment of all distributions). This information has been audited by KPMG
Peat Marwick LLP. The Fund's financial statements and the auditor's report are
included in the Annual Report, which is available upon request, without charge.
GROWTH EQUITY
FUND
Year Ended
12/31/98(1)
SELECTED DATA FOR A SINGLE SHARE
Beginning Net Asset Value $10.00
Income From Investment Operations
Net investment income 0.01
Net gain (loss) on securities (realized and unrealized) 2.09
Total From Investment Operations 2.10
Less Distributions
From net investment income (0.01)
From capital gain (0.60)
Total Distributions (0.61)
Ending Net Asset Value $11.49
OTHER INFORMATION
Ratios to Average Net Assets:(2)
Expenses 1.00%
Expenses (gross) (3) 1.19%
Net Investment Income 0.16%
Total Return 20.97%
Portfolio Turnover Rate 135.38%
Net Assets at End of Period (in thousands) $26,426
(1) Institutional Shares of Growth Equity Fund commenced operations on 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:
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performances during its
last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
The SAI provides more detailed information about the Fund 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 Fund by contacting your
broker or the Fund at:
Memorial Funds
Two Portland Square
Portland, Maine 04101
888-263-5593
You can also review the Fund's 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
Washington, D.C. 20549-6009
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.
GROWTH EQUITY FUND
Memorial Funds
P.O. Box 446
Portland, ME 04112
888-263-5593
Investment Company Act File No. 811-8529.
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