IMPORTANT NOTICE: PLEASE COMPLETE THE ENCLOSED PROXY
BALLOT AND RETURN IT AS SOON AS POSSIBLE.
FORUM FUNDS
INVESTORS EQUITY FUND
INVESTORS GROWTH FUND
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
October 31, 2000
Dear Valued Shareholder:
Enclosed is a Notice of Special Meeting of Shareholders (the
"Special Meeting"). The Special Meeting has been scheduled for December 1, 2000
at 10:00 a.m. (Eastern time), at the offices of Forum Fund Services, LLC, Two
Portland Square, Portland, Maine 04101. The accompanying Prospectus/Proxy
Statement describes the proposals being presented for your consideration and
requests your prompt attention and vote via the enclosed proxy card.
The Special Meeting is critically important as shareholders of the
Investors Equity Fund (the "Forum Equity Portfolio"), a series of Forum Funds
("Forum Funds"), are being asked to consider and approve an Agreement and Plan
of Reorganization that provides for the acquisition of all of the assets and
assumption of the liabilities of the Forum Equity Portfolio in exchange for the
shares of beneficial interest of the Stratevest Large Cap Core Fund (the
"Stratevest Fund"), a series of Stratevest Funds (the "Trust"). In addition,
shareholders of the Investors Growth Fund (the "Forum Growth Portfolio"),
another series of Forum Funds, are being asked to approve an Agreement and Plan
of Reorganization that provides for the acquisition of all of the assets and
assumption of the liabilities of the Forum Growth Portfolio in exchange for the
shares of beneficial interest of the Stratevest Fund. (The Forum Equity
Portfolio and the Forum Growth Portfolio are together referred to as the "Forum
Portfolios.")
The Stratevest Fund is a newly created fund that is comparable to
the Forum Portfolios and that is managed by The Stratevest Group, N.A. (the
"Adviser"). On the date of the exchanges, you will receive shares of the
Stratevest Fund equal in value to your investment in the Forum Portfolios. As a
result of the two reorganization transactions (each a "Reorganization"),
shareholders of each Forum Portfolio will become shareholders of the Stratevest
Fund.
Each proposed Reorganization is intended to be a tax-free
reorganization, which means that you will not have a taxable gain or loss on the
exchange of your shares in the Forum Portfolio.
SHAREHOLDERS OF THE FORUM PORTFOLIOS WILL NOT BEAR ANY EXPENSES OF
THE REORGANIZATIONS. THE ADVISER AND/OR ITS AFFILIATES AND/OR SUBSIDIARIES AND
OTHER PARTIES HAVE AGREED TO PAY ALL EXPENSES OF THE REORGANIZATIONS.
THE BOARD OF TRUSTEES OF FORUM FUNDS HAS UNANIMOUSLY APPROVED EACH
REORGANIZATION AND BELIEVES THAT EACH REORGANIZATION WITH RESPECT TO THE
APPLICABLE FORUM PORTFOLIO IS IN THE BEST INTERESTS OF ITS SHAREHOLDERS. THE
BOARD OF TRUSTEES OF FORUM FUNDS RECOMMENDS THAT YOU APPROVE THE REORGANIZATION
OF THE FORUM PORTFOLIO IN WHICH YOU OWN SHARES BY VOTING YOUR PROXY.
The anticipated benefits of the Reorganizations are:
o the future asset size of the Stratevest Fund is expected to
be larger than the current asset size of the individual Forum
Portfolios, thus we expect the Reorganizations will result in
greater investment leverage and market presence;
o shareholders will be able to choose from a wider array of
additional investment options, both among other series of the
Trust and other investment companies that are managed and/or
distributed by Federated Investors, Inc. or its affiliates,
and will be able to exchange into these other investment
options without incurring any transaction costs; and
o the Reorganizations may result in certain economies of scale
and operating efficiencies, which could ultimately translate
into lower expense ratios and enhanced returns for
shareholders.
Please read the enclosed proxy materials and consider the
information provided. We encourage you to complete and mail your proxy card
promptly. No postage is necessary if you mail it in the United States.
Very truly yours,
John Y. Keffer
President
Forum Funds
FORUM FUNDS
INVESTORS EQUITY FUND
INVESTORS GROWTH FUND
Two Portland Square
Portland, Maine 04101
October 31, 2000
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR DECEMBER 1, 2000
To the Shareholders of Investors Equity Fund and Investors Growth Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Special Meeting") of the Investors Equity Fund (the "Forum Equity Portfolio")
and Investors Growth Fund (the "Forum Growth Portfolio") of Forum Funds ("Forum
Funds") will be held at the offices of Forum Fund Services, LLC, Two Portland
Square, Portland, Maine 04101, on December 1, 2000, at 10:00 a.m. (Eastern
time), to consider the following:
1. An Agreement and Plan of Reorganization (the "Equity Plan") between Forum
Funds, on behalf of the Forum Equity Portfolio, and Stratevest Funds (the
"Trust"), on behalf of its series, the Stratevest Large Cap Core Fund (the
"Stratevest Fund"), that provides for the acquisition of all of the assets
and assumption of the liabilities of the Forum Equity Portfolio in exchange
for the shares of beneficial interest of the Stratevest Fund, the
distribution of such shares to the shareholders of the Forum Equity
Portfolio, and the termination of the Forum Equity Portfolio. Only
shareholders of the Forum Equity Portfolio are being asked to vote on the
Equity Plan.
2. An Agreement and Plan of Reorganization (the "Growth Plan") between Forum
Funds, on behalf of the Forum Growth Portfolio, and the Trust, on behalf of
the Stratevest Fund, that provides for the acquisition of all of the assets
and assumption of the liabilities of the Forum Growth Portfolio in exchange
for the shares of beneficial interest of the Stratevest Fund, the
distribution of such shares to the shareholders of the Forum Growth
Portfolio, and the termination of the Forum Growth Portfolio. Only
shareholders of the Forum Growth Portfolio are being asked to vote on the
Growth Plan.
3. Any other business that properly comes before the Special Meeting.
The attached Prospectus/Proxy Statement provides more information
concerning these transactions, and a copy of a form of Agreement and Plan of
Reorganization (which is substantially identical to the Equity Plan and the
Growth Plan) is attached as Exhibit A.
Shareholders of record as of the close of business on October 13,
2000, are entitled to notice of and to vote at the Special Meeting and any
related follow-up meetings.
By Order of the Board of Trustees,
Leslie K. Klenk
Secretary
Forum Funds
October 31, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING,
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY CARD
(VOTING INSTRUCTION CARD) .
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF
THE NUMBER OF SHARES YOU OWNED ON THE
RECORD DATE.
PROSPECTUS AND PROXY STATEMENT
TABLE OF CONTENTS
PAGE
COVER PAGE............................................................Cover
SUMMARY.................................................................. 9
What proposal am I voting on?...................................... 9
How will the shareholder voting be handled?........................ 10
COMPARISONS OF SOME IMPORTANT FEATURES................................... 10
How do the investment objectives, strategies and policies of the
Stratevest Fund and the Forum Portfolios compare?............... 10
What are the risks of investments in the Stratevest Fund and the
Forum Portfolios?............................................ 12
How are the Trust and Forum Funds organized?....................... 13
Who manages the Stratevest Fund and the Forum Portfolios?.......... 13
What are the fees and expenses the Stratevest Fund and the Forum
Portfolios, and what might they be after the Reorganization?. 15
Where can I find more financial information about the Forum
Portfolios? 19
What are other key features of the Stratevest Fund and the Forum
Portfolios?.................................................. 19
REASONS FOR THE REORGANIZATIONS.......................................... 23
INFORMATION ABOUT THE REORGANIZATIONS.................................... 25
How will the Reorganizations be carried out?....................... 25
Who will pay the expenses of the Reorganizations?.................. 26
What are the tax consequences of the Reorganizations?.............. 26
What should I know about the shares of the Stratevest Fund?........ 26
What are the capitalizations of the Stratevest Fund and
the Forum Portfolios and what might the
capitalization be after the Reorganizations?................. 28
COMPARISON OF INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES............. 28
Are there any significant differences between the investment objectives
and strategies of the Stratevest Fund and the Forum Portfolios? 28
How do the fundamental investment restrictions of the Stratevest
Fund and the Forum Portfolios differ?........................ 32
What are the risk factors associated with investments in the Stratevest
Fund and the Forum Portfolios?............................... 33
VOTING INFORMATION....................................................... 34
How many votes are necessary to approve the Plans?................. 34
How do I ensure my vote is accurately recorded?.................... 35
Can I revoke my proxy?............................................. 35
Who is entitled to vote?........................................... 36
What other matters will be voted upon at the Special Meeting?...... 36
Are there dissenters' rights?......................................37
OTHER INFORMATION
Are there interested persons of the Reorganization?................ 37
Who are the principal holders of shares of the Forum Portfolios?... 37
Who are the principal holders of shares of the Stratevest Fund?.... 38
What are the tax implications of investing in the Stratevest Fund
and the Forum Portfolios?.................................... 38
INFORMATION ABOUT THE STRATEVEST FUND.................................... 39
INFORMATION ABOUT THE FORUM PORTFOLIOS................................... 39
EXHIBITS TO THE PROSPECTUS AND PROXY STATEMENT
EXHIBIT A - FORM OF AGREEMENT AND PLAN OF REORGANIZATION...........A-1
PROSPECTUS AND PROXY STATEMENT
DATED OCTOBER 31, 2000
ACQUISITION OF THE ASSETS OF THE
INVESTORS EQUITY FUND
AND
INVESTORS GROWTH FUND
EACH A SERIES OF
FORUM FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
(800) 943-6786
BY AND IN EXCHANGE FOR
SHARES OF BENEFICIAL INTEREST OF THE
STRATEVEST LARGE CAP CORE FUND
A SERIES OF
STRATEVEST FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7000
1-800-245-0242
This Prospectus/Proxy Statement solicits proxies to be voted at a Special
Meeting of Shareholders (the "Special Meeting") of the Investors Equity Fund
(the "Forum Equity Portfolio") and the Investors Growth Fund (the "Forum Growth
Portfolio"), each a series of Forum Funds ("Forum Funds"). The shareholders of
each of the Forum Equity Portfolio and the Forum Growth Portfolio (together, the
"Forum Portfolios") are being asked to approve or disapprove an Agreement and
Plan of Reorganization (each a "Plan," and together, the "Plans"). If
shareholders of a Forum Portfolio vote to approve its Plan, substantially all
the assets and liabilities of the Forum Portfolio will be acquired by and in
exchange for shares of beneficial interest of the Stratevest Large Cap Core Fund
(the "Stratevest Fund"), a series of Stratevest Funds (the "Trust").
If shareholders of a Forum Portfolio vote to approve its Plan, those
shareholders will receive shares of beneficial interest of the Stratevest Fund
equal in value to their investment in shares of the Forum Portfolio in which
they own shares. Each Forum Portfolio will then be terminated and dissolved. The
approval of the Plan relating to the Forum Equity Portfolio (the "Equity Plan"),
and the reorganization of the Forum Equity Portfolio, is not contingent on the
approval of the Plan relating to the Forum Growth Portfolio (the "Growth Plan").
Similarly, the approval of the Growth Plan, and the reorganization of the Forum
Growth Portfolio, is not contingent on the approval of the Equity Plan.
The Special Meeting will be held at the offices of Forum Fund Services,
LLC, Two Portland Square, Portland, Maine 04101, on December 1, 2000, at 10:00
a.m. (Eastern time). The Board of Trustees of Forum Funds, on behalf of the
Forum Portfolios, is soliciting these proxies. This Prospectus/Proxy Statement
will first be sent to shareholders on or about October 31, 2000.
The investment objectives of the Stratevest Fund and the Forum Growth
Portfolio are identical - to seek long-term capital appreciation. Similarly, the
Forum Equity Portfolio's investment objective is to seek capital appreciation by
investing primarily in the common stock of companies domiciled in the United
States. Differences between the Stratevest Fund and the Forum Portfolios include
(i) the size of companies in which the Stratevest Fund and the Forum Portfolios
invest, and (ii) the investment styles that are used to manage the Stratevest
Fund and the Forum Portfolios.
This Prospectus/Proxy Statement gives the information about the
proposed Reorganizations and the Stratevest Fund that you should know before
investing. You should retain it for future reference. This Prospectus/Proxy
Statement is accompanied by the Prospectus of the Stratevest Fund, dated
September 19, 2000 (Revised September 25, 2000), which is incorporated by
reference into this Prospectus/Proxy Statement. Statements of Additional
Information for the Stratevest Fund dated September 19, 2000 (relating to the
Stratevest Fund's Prospectus) and October 31, 2000 (relating to this
Prospectus/Proxy Statement), each containing additional information, have been
filed with the Securities and Exchange Commission (the "SEC") and are
incorporated by reference into this Prospectus/Proxy Statement. You may request
a free copy of the Statements of Additional Information without charge by
calling 1-888-247-4505 or by writing to Stratevest Funds at 5800 Corporate
Drive, Pittsburgh, Pennsylvania 15237-7000.
A prospectus (dated October 1, 2000) and a statement of additional
information (dated October 1, 2000), relating to the Forum Equity Portfolio, are
on file with the SEC (File Nos. 2-67052; 811-3023). A prospectus (dated August
1, 2000) and a statement of additional information (dated August 1, 2000),
relating to the Forum Growth Portfolio, are on file with the SEC (File Nos.
2-67052; 811-3023). Forum Funds' annual report, dated May 31, 2000, relating to
the Forum Equity Portfolio, along with Forum Funds' annual report, dated March
31, 2000, relating to the Forum Growth Portfolio, are also on file with the SEC.
Each of these documents is incorporated by reference into this Prospectus/Proxy
Statement. You may request a free copy of the prospectuses, the statements of
additional information, and the annual reports of the Forum Portfolios by
writing or calling Forum Fund Services, LLC, P.O. Box 446, Portland, Maine
04112, (207) 879-0001 or (800) 943-6786.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON
THE ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER U.S. GOVERNMENT AGENCY.
MUTUAL FUND SHARES INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
SUMMARY
This is only a summary of certain information contained in this
Prospectus/Proxy Statement. You should read the more complete information in the
rest of this Prospectus/Proxy Statement, including the form of Agreement and
Plan of Reorganization (attached as Exhibit A) and the Prospectus of the
Stratevest Fund, dated September 19, 2000 (Revised September 25, 2000). Forum
Funds, on behalf of each Forum Portfolio, will enter into a separate Agreement
and Plan of Reorganization (each a "Plan") that is substantially identical to
the form of Agreement and Plan of Reorganization attached hereto as Exhibit
A.
WHAT PROPOSAL AM I VOTING ON?
At a meeting held in September 2000, the Board of Trustees of Forum Funds,
on behalf of the Forum Portfolios, approved each Plan and determined to
recommend that shareholders of each Forum Portfolio vote to approve its Plan. If
the shareholders of a Forum Portfolio vote to approve its Plan, the Forum
Portfolio will transfer its assets and liabilities to the Stratevest Fund, in
exchange for an equal value of shares of beneficial interest of the Stratevest
Fund. The shares of the Stratevest Fund will then be distributed to the
shareholders of the Forum Portfolio and the Forum Portfolio will be terminated
and dissolved. (The proposed transactions are referred to in this
Prospectus/Proxy Statement as the "Reorganizations.") As a result of the
Reorganization of the Forum Portfolio in which you own shares, you will cease to
be a shareholder of that Forum Portfolio and will become a shareholder of the
Stratevest Fund. This exchange will occur on the closing date of the
Reorganization, which is the specific date on which the Reorganizations take
place. You will receive shares of the Stratevest Fund equal to the current value
of your Forum Portfolio shares.
The Stratevest Fund is a series of Stratevest Funds (the "Trust"), an
investment company that is advised by The Stratevest Group, N.A. (the
"Adviser"). The Stratevest Fund has an investment objective and investment
policies that are similar, but not identical, to those of the Forum Portfolios.
For the reasons set forth in the "Reasons for the Reorganizations" section, the
Board of Trustees of Forum Funds, on behalf of the Forum Portfolios, has
determined that each Reorganization with respect to each Forum Portfolio is in
the best interests of its shareholders. The Board of Trustees of Forum Funds has
concluded that no dilution in value would result to the shareholders of each
Forum Portfolio as a result of its Reorganization. Similarly, the Trust's Board
of Trustees has concluded that no dilution in value would result to the
shareholders of the Stratevest Fund as a result of the Reorganizations.
The Stratevest Fund and the Forum Portfolios expect to receive an opinion
from Stradley, Ronon, Stevens & Young, LLP to the effect that each
Reorganization will qualify for federal income tax purposes as a tax-free
reorganization. If so, the shareholders of each Forum Portfolio will not
recognize any gain or loss for federal income tax purposes as a result of the
exchange of their shares of the Forum Portfolio for shares of the Stratevest
Fund, and neither the Stratevest Fund nor the Forum Portfolios will recognize
any gain or loss upon the exchange of substantially all of the assets and
liabilities of each Forum Portfolio for shares of the Stratevest Fund.
THE BOARD OF TRUSTEES OF FORUM FUNDS RECOMMENDS THAT YOU
VOTE TO APPROVE THE PLANS
This Prospectus/Proxy Statement compares the key features and discusses
the material differences between the Stratevest Fund and the Forum Portfolios.
You should pay particular attention to these comparisons. You should carefully
consider the differences between the Stratevest Fund and the Forum Portfolios in
deciding whether or not to approve the Plans.
HOW WILL THE SHAREHOLDER VOTING BE HANDLED?
Shareholders who own shares of a Forum Portfolio at the close of business
on October 13, 2000 will be entitled to vote at the Special Meeting, and will be
entitled to one vote for each full share and a fractional vote for each
fractional share that they hold. Shareholders of the Forum Equity Portfolio will
vote on the approval of the Equity Plan only; shareholders of the Forum Growth
Portfolio will vote on the approval of the Growth Plan only. To approve a
Reorganization, a majority of the shares of each Forum Portfolio outstanding and
entitled to vote must be voted in favor of its respective Plan.
Please vote by proxy as soon as you receive this Prospectus/Proxy
Statement. You may place your vote by completing and signing the enclosed proxy
card and mailing it. If you vote by proxy, your votes will be officially cast at
the Special Meeting by the persons appointed as proxies.
You can revoke your proxy or change your voting instructions at any time
until the vote is taken at the Special Meeting. For more details about
shareholder voting, see the "Voting Information" section of this
Prospectus/Proxy Statement.
COMPARISONS OF SOME IMPORTANT FEATURES
HOW DO THE INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES OF THE STRATEVEST FUND
AND THE FORUM PORTFOLIOS COMPARE?
The investment objectives of the Stratevest Fund and the Forum Growth
Portfolio are identical - to seek long-term capital appreciation. Similarly, the
investment objective of the Forum Equity Portfolio is to seek capital
appreciation by investing primarily in the common stock of companies domiciled
in the United States. Although the Forum Equity Portfolio's investment objective
is worded differently, it is it all material aspects the same as that of the
Stratevest Fund. The investment objectives of the Stratevest Fund and the Forum
Portfolios are fundamental, and cannot be changed without shareholder approval.
The Stratevest Fund and the Forum Equity Portfolio are both advised by the
Adviser. The Forum Growth Portfolio is advised by Forum Investment Advisors, LLC
(the "Forum Adviser"). While the Stratevest Fund and the Forum Portfolios are
managed similarly, there are differences in the investment strategies,
investment process, and the investment policies of the Stratevest Fund and the
Forum Portfolios, which include (i) the size of the companies in which the
Stratevest Fund and the Forum Portfolios may invest, and (ii) the investment
styles that are used to manage the Stratevest Fund and the Forum Portfolios.
Under normal market conditions, the Stratevest Fund pursues its investment
objective by investing in stocks of large-cap companies, by utilizing a blended
style of investing using both a growth-based and value-based strategy. It is
expected that the Stratevest Fund will have the overall portfolio
characteristics that define it as "large cap core," which is an investment style
that has elements of both growth and value investing. At least 65% of the
Stratevest Fund's assets will be invested in large cap stocks (i.e., those with
a market capitalization over $10 billion).
Under normal market conditions, the Forum Equity Portfolio seeks to
achieve its investment goal by investing primarily in the common stock of
established growth oriented domestic companies with market capitalizations
exceeding $2 billion. The primary focus is on the core earnings power of the
company and the ability to provide above-average growth in revenues, earnings
and cash flow for a multi-year period. The Forum Equity Portfolio may invest a
significant portion of its assets in mid-cap companies.
The Forum Growth Portfolio seeks to achieve its investment objective by
primarily investing in the common stock of domestic companies with market
capitalizations of $2 billion or more and that possess above average growth
potential or that possess value not yet fully reflected in the stock's price.
The Forum Growth Portfolio may invest a significant portion of its assets in
mid-cap companies.
With respect to the Stratevest Fund, the Adviser will employ a blended
style of investing utilizing both growth- and value-based strategies, with an
emphasis on the growth-based strategy. The Adviser has employed a similar
strategy for the Forum Equity Portfolio. Currently, the Forum Equity Portfolio's
portfolio includes both growth and value companies, with an emphasis on growth
companies. The composition of the Forum Equity Portfolio's portfolio, therefore,
is consistent with the investment strategy to be employed by the Adviser for the
Stratevest Fund.
The Adviser employs a similar investment process in selecting securities
for the portfolios of the Forum Equity Portfolio and the Stratevest Fund. In
managing the assets of the Stratevest Fund and the Forum Equity Portfolio, the
Adviser identifies economic sectors and industries with a potential for above
average growth for a period of five years or more. The Adviser seeks companies
that offer secular growth driven by factors such as technological changes and
demographics, and avoids industries subject to heavy governmental regulation or
dependence on commodity pricing for growth. The Adviser also uses fundamental
research to identify companies with histories of sustained profitability and
leadership within their respective industries. The primary focus is on the core
earnings power of the company and the ability to provide above-average growth in
revenues, earnings and cash flows for a multi-year period. The Adviser monitors
the companies owned by the Forum Equity Portfolio and the Stratevest Fund to
determine if there have been any fundamental changes in the companies. The
Adviser may sell a stock (i) if there is a sustained deterioration in the
fundamentals of a company, (ii) if a more attractive investment is found, and
(iii) to maintain appropriate diversification within the portfolios of the Forum
Equity Portfolio and the Stratevest Fund.
In managing the Forum Growth Portfolio, the Forum Adviser may invest in
companies that have above-average growth potential or value not fully reflected
in their stock price. The Forum Adviser uses fundamental analysis, valuation
measures such as price/earnings ratios and price/cash flow ratios and technical
analysis to determine those companies whose shares are attractive for purchase
by the Forum Growth Portfolio. In evaluating companies for purchase, the Forum
Adviser considers the company's (i) historical growth rate and return on
capital; (ii) reported future growth rate and return on capital; (iii) financial
condition; (iv) industry and competitive position in the industry; and (v)
management quality. The Forum Adviser constantly monitors the companies owned by
the Forum Growth Portfolio to determine if there have been any fundamental
changes in the companies. The Forum Adviser may sell a stock if (i) a more
attractively priced stock is found or if funds are needed for other purposes;
(ii) the underlying company experiences negative internal developments; (iii)
the underlying company experiences a decline in financial conditions; (iv) the
underlying company experiences a significant erosion in profitability, earnings
or cash flow; (v) the security is overvalued compared to its fundamentals; or
(vi) it is oversized compared to other holdings. In summary, the Forum
Portfolios and the Stratevest Fund utilize a "blended" investment style, which
has elements of both value investing and growth investing.
For more information about the investment objectives and policies of the
Stratevest Fund and the Forum Portfolios, and the investment styles utilized by
the Adviser and the Forum Adviser in managing the Stratevest Fund and the Forum
Portfolios, please see the section "Comparison of Investment Objectives,
Strategies and Policies."
WHAT ARE THE RISKS OF INVESTMENTS IN THE STRATEVEST FUND AND THE FORUM
PORTFOLIOS?
Investments in the Stratevest Fund and the Forum Portfolios involve risks
common to most mutual funds - the net asset value and total return of the
Stratevest Fund and the Forum Portfolios will depend upon changes in the value
of their portfolio securities. There is no guarantee against losses resulting
from an investment in the Stratevest Fund or the Forum Portfolios, nor that the
Stratevest Fund or the Forum Portfolios will achieve their investment
objectives. An investment in the Stratevest Fund or the Forum Portfolios is not
by itself a complete or balanced investment program.
The Stratevest Fund and the Forum Portfolios are subject to the risks
posed by investing in stocks - the market value of securities in which the
Stratevest Fund and the Forum Portfolios invest is based upon the market's
perception of value and is not necessarily an objective measure of the
securities' value.
Because the Adviser and the Forum Adviser focus on the value and growth
characteristics of companies, both the Stratevest Fund and the Forum Portfolios
are subject to risks relating to investing for growth and risks relating to
investing for value. There is a risk that the earnings of growth-oriented
companies will not continue to grow at expected rates. There is also the risk
that the market will not recognize the intrinsic value of a value-oriented stock
for an unexpectedly long time. The judgment of either the Adviser or the Forum
Adviser as to the growth potential or value of a stock may also prove to be
wrong. A decline in investor demand for growth stocks or value stocks may also
adversely affect the value of these securities.
The Forum Growth Portfolio and the Forum Equity Portfolio have additional
risks due to their ability to investment in smaller companies. The smaller a
company's market capitalization, the greater the potential for stock price
fluctuations, increased volatility due to lower trading volume, less publicly
available information and less liquidity.
Mutual fund shares are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other U.S. government agency.
Mutual fund shares involve investment risks, including the possible loss of
principal.
For more information about the risks of the Stratevest Fund and the Forum
Portfolios, see the section "What are the risk factors associated with
investments in the Stratevest Fund and the Forum Portfolios?" under the heading
"Comparison of Investment Objectives, Strategies and Policies."
HOW ARE THE TRUST AND FORUM FUNDS ORGANIZED?
The Trust was organized as a Delaware business trust on July 10, 2000, and
is registered with the SEC. The Trust is authorized to issue an unlimited number
of shares of beneficial interest. Presently, there are six separate series of
the Trust (each a "Trust Series"), including the Stratevest Fund. The Stratevest
Fund has not had investment operations prior to the date of this
Prospectus/Proxy Statement.
Forum Funds is also organized as a Delaware business trust. Forum Funds
commenced operations on March 24, 1980, as a Maryland corporation, and was
reorganized as a Delaware business trust on January 5, 1996. Forum Funds is
authorized to issue an unlimited number of shares of beneficial interest.
Presently, there are twenty-one separate series of Forum Funds (each a "Forum
Series"), including the Forum Portfolios. The Forum Equity Portfolio and the
Forum Growth Portfolio each commenced investment operations in 1997.
The management of the business and affairs of the Stratevest Fund is the
responsibility of the Board of Trustees of the Trust. The management of the
business and affairs of the Forum Portfolios is the responsibility of the Board
of Trustees of Forum Funds. The Board of Trustees of the Trust and the Board of
Trustees of Forum Funds formulate the general policies of the Stratevest Fund
and the Forum Portfolios, respectively. The Boards of Trustees meet periodically
to review the performance, investment activity and investment practices of the
Stratevest Fund and the Forum Portfolios, as applicable. The Stratevest Fund and
the Forum Portfolios are open-end, registered management investment company
series, commonly referred to as "mutual funds."
WHO MANAGES THE STRATEVEST FUND AND THE FORUM PORTFOLIOS?
The Stratevest Group, N.A. (the "Adviser") is the investment adviser to
the Stratevest Fund and to the Forum Equity Portfolio. The Adviser is a national
banking association and is a wholly owned subsidiary of Banknorth Group, a New
England-based holding company. The Adviser and its affiliates have provided
wealth management services to individuals and institutional investors since
1966. As of May 31, 2000, the Adviser had approximately $8 billion in assets
under management. The address of the Adviser is 111 Main Street, Burlington,
Vermont.
The Adviser or Peoples Heritage Bank, its affiliate, has been the
investment adviser of the Forum Equity Portfolio since July 6, 2000, and
receives an advisory fee at an annual rate of 0.65% of the average daily net
assets of the Forum Equity Portfolio. Prior to July 6, 2000, H.M. Payson & Co.
and Peoples Heritage Bank were the investment adviser and investment
sub-adviser, respectively, for the Forum Equity Portfolio. H.M. Payson & Co. and
Peoples Heritage Bank are both located at One Portland Square, Portland, Maine
04101.
The individuals responsible for the day-to-day management of the Stratevest
Fund's and the Forum Equity Portfolio's investments are Jonathan W. White and
Robert A. Magan. Mr. White has been a Senior Vice President and an Investment
Consultant of the Adviser and/or its predecessors since 1994. Mr. White has over
25 years of investment management and trust services experience. He earned a
B.A. from Dartmouth University and an M.B.A. from the University of New
Hampshire. Mr. White is a Chartered Financial Analyst. Mr. Magan has been an
Assistant Vice President and an Investment Consultant of the Adviser and/or its
predecessors since 1996. Mr. Magan has over 8 years of investment management and
investment analysis experience. He earned a B.S. from Plymouth State College and
is a Chartered Financial Analyst.
Forum Investment Advisors, LLC, Two Portland Square, Portland, Maine
04101, is the investment adviser to the Forum Growth Portfolio (the "Forum
Adviser"). The Forum Adviser is a privately owned company controlled by John Y.
Keffer, who is Chairman of the Board of Trustees and President of Forum Funds.
As of June 30, 2000, the Forum Adviser had approximately $3.3 billion of assets
under management. The Forum Adviser has managed the Forum Growth Portfolio since
its inception.
The individual responsible for the day-to-day management of the Forum
Growth Portfolio's investments is Dawn Marie Estlow Stillings. Ms. Stillings, a
Portfolio Manager of the Forum Adviser, has been primarily responsible for the
day-to-day management of the Forum Growth Portfolio since July 1, 2000. Prior
thereto, Ms. Stillings provided back-up portfolio management services for the
Forum Growth Portfolio since its inception on December 12, 1997. Ms. Stillings
has more than twelve years of experience in the investment industry. Prior to
joining the Forum Adviser in July 1996, Ms. Stillings was a member of the
research department at H.M. Payson & Co., an investment advisory and trust
services company.
Once the Stratevest Fund commences operations, the Adviser will receive an
investment advisory fee equal on an annual basis to 0.75% of the Stratevest
Fund's average daily net assets. The Adviser may voluntarily reduce its fee or
reimburse the Stratevest Fund for certain operating expenses.
The Adviser receives an advisory fee at an annual rate of 0.65% of the
average daily net assets of the Forum Equity Portfolio. The Adviser may
voluntarily waive its fee and/or reimburse the expenses of the Forum Equity
Portfolio in order to maintain the total expense ratio of the Forum Equity
Portfolio at a certain percentage of the Portfolio's average daily net assets.
This reduction may be eliminated at any time. For the fiscal year ended May 31,
2000, the Forum Equity Portfolio was advised by H.M. Payson & Co. For its
advisory services, H.M. Payson & Co. received a fee at an annual rate of 0.65%
of the average daily net assets of the Forum Equity Portfolio. H.M. Payson & Co.
waived a portion of its fee so that it received 0.33% of the average daily net
assets of the Forum Equity Portfolio. As a result of this waiver, the total
expense ratio for the Forum Equity Portfolio for the fiscal year ended May 31,
2000 was 1.10% of the Forum Equity Portfolio's average daily net assets.
The Forum Adviser receives an advisory fee at an annual rate of 0.65% of
the average daily net assets of the Forum Growth Portfolio. The Forum Adviser
contractually agreed to reduce its advisory fees in order to maintain the Forum
Growth Portfolio's expense ratio at 1.10% or less of the Forum Growth
Portfolio's average daily net assets through July 31, 2000. For the fiscal year
ended March 31, 2000, the Forum Adviser contractually waived a portion of its
fee so that it received 0.47% of the average net assets of the Forum Growth
Portfolio. On August 1, 2000, all contractual fee waivers and reimbursements
were eliminated.
WHAT ARE THE FEES AND EXPENSES OF THE STRATEVEST FUND AND THE FORUM PORTFOLIOS
AND WHAT MIGHT THEY BE AFTER THE REORGANIZATIONS?
The following tables describe the various fees and expenses that you will
bear from an investment in a Forum Portfolio or the Stratevest Fund.
REORGANIZATION OF THE FORUM EQUITY PORTFOLIO INTO THE STRATEVEST FUND
PRO FORMA FEE TABLE
AS OF MAY 31, 2000
STRATEVEST FUND
PRO FORMA
Forum Equity STRATEVEST AFTER
- ----------- -----
PORTFOLIO Fund3 REORGANIZATION4
--------- ---------------
SHAREHOLDER FEES (FEES PAID
DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) 4.00% None 5.50%
Imposed on Purchases (as
a percentage of the
offering price)
Maximum Sales Charge (Load) None None None
Imposed on Reinvested
Dividends (as a
percentage of the amount
redeemed)
Maximum Deferred Sales 1.00%1 None None
Charge (as a percentage
of amount redeemed)
Redemption Fee None None None
Exchange Fee None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (as
percentage of average net assets at May 31, 2000):
Management Fees................... 0.65% None 0.75%
Distribution (12b-1) Fees......... None None 0.25%
Shareholder Services Fee.......... None None 0.25%
Other Expenses ................... 0.77% None 0.58%
Total Annual Fund Operating
Expenses 1.42% None 1.83%
Fee Waiver........................ None 2 None 0.37%5
Net Expense....................... 1.42% None 1.46%
1 Applicable only on purchases of $1 million or more.
2 Certain service providers voluntarily reduced their fees and/or reimbursed
certain expenses of the Forum Equity Portfolio in the amount of 0.32% so that
total operating expenses did not exceed 1.10%.
3 The Stratevest Fund did not exist as of March 31, 2000, and therefore had no
assets or expenses.
4 Pro forma amounts based on combined net assets of the Forum Equity Portfolio
and the Stratevest Fund as if the Reorganization had occurred on May 31, 2000.
5 Certain service providers for the Stratevest Fund have contractually agreed to
waive their fees for the period ending October 31, 2001. These waivers may not
be reduced or eliminated for a period of one year from the effective date of
the Reorganization and may be reduced or eliminated thereafter only with the
approval of the Board of Trustees of Stratevest Funds.
REORGANIZATION OF THE FORUM GROWTH PORTFOLIO INTO THE STRATEVEST FUND
PRO FORMA FEE TABLE
AS OF MAY 31, 2000
STRATEVEST FUND
PRO FORMA
Forum Growth STRATEVEST AFTER
----------- -----
PORTFOLIO1 Fund3 REORGANIZATION4
--------- ---------------
SHAREHOLDER FEES (FEES PAID
DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) 4.00% None 5.50%
Imposed on Purchases (as
a percentage of the
offering price)
Maximum Sales Charge (Load) None None None
Imposed on Reinvested
Dividends (as a
percentage of the amount
redeemed)
Maximum Deferred Sales 1.00%2 None None
Charge (as a percentage
of amount redeemed)
Redemption Fee None None None
Exchange Fee None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (as
percentage of average net assets at May 31, 2000):
Management Fees................... 0.65% None 0.75%
Distribution (12b-1) Fees......... None None 0.25%
Shareholder Services Fee.......... None None 0.25%
Other Expenses ................... 2.00% None 0.91%
Total Annual Fund Operating 2.65%
Expenses None 2.16%
Fee Waiver........................ 0.00% None 0.52%5
Net Expense....................... 2.65% None 1.64%
1 The expense information for the Forum Growth Portfolio has been restated to
reflect current fees as Fund assets have declined drastically since May 31,
2000. In addition, fee waivers of certain service providers have been
eliminated.
2 Applicable only on purchases of $1 million or more.
3 The Stratevest Fund did not exist as of March 31, 2000 and therefore had no
assets or expenses.
4 Pro forma amounts based on combined net assets of the Forum Growth Portfolio
and the Stratevest Fund as if the Reorganization had occurred on May 31, 2000.
5 Certain service providers for the Stratevest Fund have contractually agreed to
waive their fees for the period ending October 31, 2001. These waivers may not
be reduced or eliminated for a period of one year from the effective date of
the Reorganization and may be reduced or eliminated thereafter only with the
approval of the Board of Trustees of Stratevest Funds.
REORGANIZATION OF THE FORUM EQUITY PORTFOLIO AND THE FORUM GROWTH FUND
INTO THE STRATEVEST FUND
PRO FORMA FEE TABLE
AS OF MAY 31, 2000
STRATEVEST
FUND PRO
Forum Forum FORMA
-----
Equity Growth Stratevest AFTER
- -----
PORTFOLIO PORTFOLIO3 FUND4 REORGANIZATIONS5
--------- ---------- ---- ----------------
SHAREHOLDER FEES (FEES PAID
DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) 4.00% 4.00% None 5.50%
Imposed on Purchases (as
a percentage of the
offering price)
Maximum Sales Charge (Load) None None None None
Imposed on Reinvested
Dividends (as a
percentage of the amount
redeemed)
Maximum Deferred Sales 1.00%1 1.00%1 None None
Charge (as a percentage
of amount redeemed)
Redemption Fee None None None None
Exchange Fee None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (as
percentage of average net assets at May 31, 2000):
Management Fees.................0.65% 0.65% None 0.75%
Distribution (12b-1) Fees........None None None 0.25%4
Shareholder Services Fee.........None None None 0.25%
Other Expenses .................0.77% 2.00% None 0.45%
Total Annual Fund Operating 2.65%
Expenses 1.32% None 1.70% 5
Fee Waiver......................0.00%2 0.00% None 0.31%6
Net Expense.....................1.32% 0.00% None 1.39%
1 Applicable only on purchases of $1 million or more.
2 Certain service providers voluntarily reduced their fees and/or reimbursed
certain expenses of the Forum Equity Portfolio in the amount of 0.32% so that
total operating expenses did not exceed 1.10%.
3 The expense information for the Forum Growth Portfolio has been restated to
reflect current fees as Fund assets have declined drastically since May 31,
2000. In addition, fee waivers of certain service providers have been
eliminated.
4 The Stratevest Fund did not exist as of March 31, 2000 and therefore had no
assets or expenses.
5 Pro forma amounts based on combined net assets of the Forum Equity Portfolio,
Forum Growth Portfolio and the Stratevest Fund as if the Reorganization had
occurred on May 31, 2000.
6 Certain service providers for the Stratevest Fund have contractually agreed to
waive their fees for the period ending October 31, 2001. These waivers may not
be reduced or eliminated for a period of one year from the effective date of
the Reorganization and may be reduced or eliminated thereafter only with the
approval of the Board of Trustees of Stratevest Funds.
EXAMPLES:
The following are hypothetical examples intended to help you compare the
cost of investing in the Stratevest Fund and the Forum Portfolios. This example
assumes that you invest $10,000 in the Stratevest Fund and the Forum Portfolios
for the time periods indicated, you pay the maximum sales charge and then redeem
all of your shares at the end of those periods. The examples also assume that
your investment has a 5% annual rate of return, that the Stratevest Fund's and
the Forum Portfolios' operating expenses remain the same as stated in the above
tables and that all dividends and distributions are reinvested.
Although your actual costs may be higher or lower, under these assumptions
your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Forum Equity Portfolio $539 $831 $1,145 $2,034
Forum Growth Portfolio $656 $1,188 $1,744 $3,255
Stratevest Fund $684 $1,028 $1,395 $2,425
(After proposed
Reorganizations)
THIS IS JUST AN EXAMPLE. IT DOES NOT REPRESENT PAST OR FUTURE EXPENSES OR
RETURNS. Each of the Stratevest Fund and the Forum Portfolios pays its operating
expenses. The effects of these expenses are reflected in the net asset value and
are not directly charged to your account.
The expenses of each of the Stratevest Fund and the Forum Portfolios are
comprised of expenses attributable to the Fund or Portfolio, respectively, as
well as expenses not attributable to any particular Trust Series or Forum Funds
that are allocated among the various Trust Series or Forum Funds.
For the fiscal year ended May 31, 2000, certain service providers
voluntarily undertook to reduce a portion of their fees and/or reimburse certain
expenses of the Forum Equity Portfolio in order to limit the Forum Equity
Portfolio's expenses (excluding taxes, interest, portfolio transaction expenses
and extraordinary expenses) to 1.10% or less of the average daily net assets of
the Forum Equity Portfolio. Without such adjustments, the total annual operating
expenses for the Forum Equity Portfolio would have been 1.42%. Voluntary fee
waivers and expense reimbursements may be reduced at any time.
Certain service providers contractually undertook, through July 31, 2000,
to waive their fees and/or reimburse certain expenses of the Forum Growth
Portfolio in order to limit the Forum Growth Portfolio's expenses (excluding
taxes, interest, portfolio transaction expenses and extraordinary expenses) to
1.10% or less of the average daily net assets of the Forum Growth Portfolio.
Without such adjustments, the total annual operating expenses for the Forum
Growth Portfolio would have been 1.49%. Since May 31, 2000, the assets of the
Forum Growth Portfolio have substantially declined and contractual fee
waivers/reimbursements were eliminated on August 1, 2000. The estimated current
expenses of the Forum Growth Portfolio are 2.65% of the Forum Growth Portfolio's
average daily net assets.
Any fee reduction or expense reimbursement has the effect of increasing
the Forum Equity Portfolio's and/or the Forum Growth Portfolio's performance for
the period during which the reduction or reimbursement was in effect and may not
be recouped at a later date.
The Stratevest Fund, which has not yet engaged in any activities, will
commence operations at the Closing Date, currently scheduled for December 4,
2000, or such later date as the Trust and Forum Funds agree. For the fiscal year
ending August 31, 2001, the estimated annualized ratio of operating expenses to
average net assets for the Stratevest Fund is 1.39%.
WHERE CAN I FIND MORE FINANCIAL INFORMATION ABOUT THE FORUM PORTFOLIOS?
For the Forum Portfolios, per share income information since each Forum
Portfolio's commencement of operations is shown under the heading "Financial
Highlights" in each Forum Portfolio's current annual report to its shareholders.
The annual reports also contain a discussion of the performance during the
fiscal years ended May 31, 2000 (for the Forum Equity Portfolio) and March 31,
2000 (for the Forum Growth Portfolio). You may request a free copy of the annual
reports by calling (800) 943-6786.
WHAT ARE OTHER KEY FEATURES OF THE STRATEVEST FUND AND THE FORUM PORTFOLIOS?
ADMINISTRATIVE AND SHAREHOLDER SERVICES. Federated Services Company
("FSC") provides administrative services to the Trust, including the Stratevest
Fund, under a services agreement. The services furnished include administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Trust Series. Under the services agreement
with the Trust, FSC provides these services at the following annual rates of the
average aggregate daily net assets of the Trust: 0.150 of 1% on the first $500
million; 0.125 of 1% on the next $500 million; 0.110 of 1% on the next $1
billion; and 0.100 of 1% on assets in excess of $2 billion. After each Trust
Series' first year of operations, the administrative fee received by FSC during
any fiscal year shall be at least $75,000 per Trust Series. FSC may voluntarily
reduce its fee and reimburse the Trust for its expenses. FSC is an indirect,
wholly owned subsidiary of Federated Investors, Inc. ("Federated").
The Trust has entered into a Shareholder Services Agreement with The
Stratevest Group, N.A. (the "Shareholder Services Agent") under which each Trust
Series, including the Stratevest Fund, may make payments of up to 0.25 of 1% of
the average daily net asset value of the shares of each Trust Series to obtain
certain personal services for shareholders and the maintenance of shareholder
accounts. The Shareholder Services Agreement provides that the Shareholder
Services Agent either will perform shareholder services directly or will select
financial institutions to perform such services. Financial institutions may
receive fees based upon shares owned by such institutions' clients or customers.
The schedule of such fees and the basis upon which such fees will be paid is
determined from time to time by the Trust and the Shareholder Services Agent.
However, the Shareholder Services Agent has agreed contractually to waive 0.05%
of its fee for the period ending October 31, 2001.
The Forum Financial Group, LLC ("Forum") of companies provides
administration and distribution services to Forum Funds. As of June 30 , 2000,
Forum provided administration and distribution services to investment companies
and collective investment funds with assets of approximately $120 billion. Forum
Administrative Services, LLC ("FAdS") provides certain administrative services
to Forum Funds, including the Forum Portfolios. The services furnished by FAdS
under the administration agreement with Forum Funds include supervision of
overall management of Forum Funds, providing Forum Funds with general office
facilities and providing persons satisfactory to the Board of Trustees of Forum
Funds to serve as officers of Forum Funds. For these services, each Forum
Portfolio pays FAdS a fee which is accrued daily and paid monthly, equal, on an
annual basis, to 0.20% of the Forum Portfolio's average daily net assets.
The Forum Portfolios are not subject to shareholder service fees.
TRANSFER AGENCY AND CUSTODY SERVICES. FSC serves as the transfer agent and
dividend disbursing agent for the Trust. The Trust Series pay FSC a fee based on
the size, type, number of accounts and transactions made by shareholders, and is
estimated to be approximately $23,000 for the fiscal year ending August 31,
2001. Forum Shareholder Services, LLC ("FSS") serves as the transfer agent for
Forum Funds. For its services, FSS receives a fee equal to 0.25% of the average
daily net assets of each Forum Portfolio, an annual fee of $12,000 plus annual
shareholder account fees of $18.00 per shareholder account. With respect to the
Forum Growth Portfolio, as of the fund's fiscal year end, this expense was
approximately $75,356 before waivers and $68,568 after waivers. With respect to
the Forum Equity Portfolio, as of the fund's fiscal year end, the expense before
and after waivers was $13,443. Forum Trust, LLC serves as the custodian of the
assets of the Stratevest Fund and each Forum Portfolio. The address of Forum
Trust, LLC is Two Portland Square, Portland, Maine 04101.
DISTRIBUTION SERVICES AND RULE 12B-1 PLAN. Edgewood Services, Inc.
("Edgewood Services"), a registered broker-dealer and member of the National
Association of Securities Dealers, Inc. ("NASD"), serves as the principal
distributor of the shares of the Trust, including the Stratevest Fund. Edgewood
Services offers the shares on a continuous, best-efforts basis. Edgewood
Services is an indirect, wholly owned subsidiary of Federated.
The Trust has adopted a Rule 12b-1 distribution plan (the "Distribution
Plan") pursuant to which the Stratevest Fund may pay a fee to Edgewood Services
in an amount computed at a maximum annual rate of 0.25 of 1% of the average
daily net assets of the Stratevest Fund's shares to finance any activity which
is principally intended to result in the sale of shares subject to the
Distribution Plan. Edgewood Services has agreed to contractually waive 12b-1
fees for the period ending October 31, 2001. For more information regarding the
Distribution Plan, please refer to the Prospectus of the Stratevest Fund.
Edgewood Services, from its own assets, may pay investment professionals
supplemental fees as financial assistance for providing distribution and
administrative services with respect to the Stratevest Fund. Such assistance
will be based upon shares owned by such investment professionals' clients or
customers. If Edgewood Services pays any fees for these services, the fees will
be reimbursed by the Adviser and not the Stratevest Fund.
For sales of the shares of the Stratevest Fund, a broker/dealer will
normally receive up to 90% of the applicable sales charge. Any portion of the
sales charge which is not paid to a broker/dealer will be retained by Edgewood
Services. However, Edgewood Services will, periodically, uniformly offer to pay
to broker/dealers additional amounts in the form of cash, items of nominal value
or promotional incentives.
Forum Fund Services, LLC ("FFS"), a registered broker-dealer and member of
the NASD, is the distributor (principal underwriter) of the Forum Portfolios'
shares. FFS acts as the agent of the Forum Portfolios in connection with the
offering of the Forum Portfolios' shares. FFS 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 the Forum
Portfolios' shares. FFS receives, and may reallow to certain financial
institutions, the sales charge paid by investors in the Forum Portfolios'
shares.
The Forum Portfolios have not adopted a Rule 12b-1 plan.
PURCHASES, EXCHANGES AND REDEMPTIONS. The shares of the Stratevest Fund
and the shares of the Forum Portfolios are sold on a continuous basis at their
respective net asset values, next determined after orders are received, plus the
applicable sales charge. In the case of the Stratevest Fund, the maximum sales
charge is 5.50%, and in the case of the Forum Portfolios, the maximum sales
charge is 4.00%. Certain investors and transactions in the Stratevest Fund and
the Forum Portfolios may be subject to reduced or waived sales charges. No sales
charge will be imposed in connection with the issuance of the Stratevest Fund's
shares to the shareholders of the Forum Portfolios as a result of the
Reorganizations. For a complete description of the sales charges and the
exemptions from the sales charges, please refer to the Prospectus of the
Stratevest Fund and to the prospectuses for the Forum Portfolios, which are
incorporated by reference.
The minimum initial investment in the Stratevest Fund is $2,500, except
that the minimum initial investment is $250 for retirement plans. The minimum
subsequent investment for all investors in the Stratevest Fund is $100. The
minimum initial investment in the Forum Portfolios is $2,000, except that the
minimum initial investment is $1,000 for traditional and Roth IRA accounts, and
$250 for accounts with systematic investment plans. The minimum subsequent
investment for all investors in the Forum Portfolios is $250. The Stratevest
Fund and the Forum Portfolios reserve the right to reject any purchase request.
The Stratevest Fund and the Forum Portfolios also reserve the right to waive
minimum investment amounts and may temporarily suspend (during unusual market
conditions) or discontinue any service or privilege. Forum Portfolio
shareholders whose account value is less than the minimum investment amount for
the Stratevest Fund will not be required to meet the minimum investment amount
of the Stratevest Fund in order to participate in the Reorganization.
The purchase price of shares of each of the Stratevest Fund and the Forum
Portfolios is based on net asset value ("NAV"), plus a sales charge. The NAV per
share for each of the Stratevest Fund and the Forum Portfolios is calculated as
of the close of trading (normally 4:00 p.m., Eastern time) on the New York Stock
Exchange, Inc. (the "NYSE") on each day on which the NYSE is open for business.
The time at which NAV is calculated may change in case of an emergency. The NAV
of each of the Stratevest Fund and the Forum Portfolios is determined by taking
the market value of all securities owned by the Fund or Portfolio, as applicable
(plus all other assets, such as cash), subtracting all liabilities and then
dividing the result (net assets) by the number of shares outstanding. Purchase
orders must be placed by 4:00 p.m. (Eastern time), in order to be priced at that
day's NAV. So, for example, if the Stratevest Fund or a Forum Portfolio receives
your purchase request in proper form after 4:00 p.m., Eastern time, your
transaction will be priced at the next day's NAV, plus the applicable sales
charge. Neither the Stratevest Fund nor the Forum Portfolios can accept orders
that request a particular day or price for the transaction or any other special
conditions.
The Stratevest Fund and the Forum Portfolios each value their portfolio
securities for which market quotations are readily available at current market
value. If market quotations are not readily available, then the Stratevest Fund
and the Forum Portfolios value their portfolio securities at estimated fair
value under procedures adopted by their respective Board of Trustees.
Neither the Stratevest Fund nor the Forum Portfolios issues share
certificates. If you purchase shares directly from the Stratevest Fund or a
Forum Portfolio, you will receive monthly statements and a confirmation of each
transaction. You should verify the accuracy of all transactions in your account
as soon as you receive your confirmations.
Shares of the Stratevest Fund may be exchanged for shares of the other
Trust Series, and shares of other investment companies that are distributed by
Edgewood Services or Federated Securities Corp. (the "Federated Funds"), subject
to certain limitations, as described in the Prospectus of the Stratevest Fund.
Federated Securities Corp., a registered broker-dealer, is a wholly owned
subsidiary of Federated. It serves as the distributor of more than 100 open-end
investment companies.
Shares of the Forum Portfolios may be exchanged for shares of certain
other Forum Funds. Exchanges are subject to any initial or subsequent minimum
investment amounts of the funds into which the exchange is being made. Exchanges
are treated as a redemption and new purchase for federal income tax purposes
and, accordingly, may have tax consequences for the shareholder. With respect to
the Forum Portfolios only, exchanges are made at net asset value plus the
difference between the sales charge already paid and any applicable sales charge
on shares to be acquired in the exchange.
Redemptions of shares of the Stratevest Fund or the Forum Portfolios may
be made by telephone, by wire, by mailing a written request, or through a
systematic withdrawal program. The Stratevest Fund redeems shares at the NAV per
share next determined after the redemption request is received by the Fund or
its transfer agent. The Forum Portfolios redeem shares at the NAV (minus any
applicable charge) next calculated after the transfer agent receives the request
in proper form. A contingent deferred sales charge ("CDSC") is assessed on
redemptions of shares of each Forum Portfolio that were part of a purchase of $1
million or more. The Stratevest Fund does not assess a CDSC. For both the
Stratevest Fund and the Forum Portfolios, proceeds will ordinarily be
distributed by check within seven days after receipt of a redemption request.
If you invest through a broker or other financial institution, the
policies and fees (other than sales charges) charged by that institution may be
different than those of the Stratevest Fund or the Forum Portfolios. Financial
institutions may charge transaction fees and may set different minimum
investments or limitations on buying or selling shares. These institutions may
also provide you with certain shareholder services such as periodic account
statements and trade confirmations summarizing your investment activity. Consult
a representative of your financial institution for further information.
For a complete description of the purchase, exchange and redemption
procedures applicable to the Stratevest Fund and the Forum Portfolios, please
refer to the Prospectus of the Stratevest Fund and to the prospectuses of the
Forum Portfolios, which are incorporated by reference.
DIVIDENDS AND DISTRIBUTIONS. The Stratevest Fund and the Forum Equity
Portfolio each intends to pay a dividend (if any) at least annually representing
substantially all of its net investment income and any net realized capital
gains. The Forum Growth Portfolio intends to pay a dividend (if any) quarterly
and any net realized capital gains annually. For the Forum Growth Fund
Shareholders, the practical effect of receiving dividends annually rather than
quarterly is not substantially different with respect to the amount of any such
dividends, but you should note that you will receive dividends less frequently.
The amount of these distributions will vary and there is no guarantee the
Stratevest Fund or the Forum Portfolios will pay dividends. Normally, the
Stratevest Fund and the Forum Portfolios reinvest a shareholder's distributions
in additional shares of the Fund or Portfolio, as applicable, unless a
shareholder elects to receive distributions in cash. For federal income tax
purposes, distributions are treated the same whether they are received in cash
or reinvested. For both the Stratevest Fund and the Forum Portfolios, shares
become entitled to receive distributions on the day after the shares are issued.
For more information about the tax consequences of investments in the
Stratevest Fund or the Forum Portfolios, see "What are the tax implications of
investing in the Stratevest Fund and the Forum Portfolios" in this
Prospectus/Proxy Statement.
REASONS FOR THE REORGANIZATIONS
The Board of Trustees of Forum Funds (the "Forum Board"), on behalf of
each Forum Portfolio, has recommended the Reorganizations in order to combine
each Forum Portfolio with a larger fund that has similar (or identical, in the
case of the Forum Growth Portfolio) investment objectives and similar investment
policies. A larger fund may be expected to have a lower expense ratio because
certain costs may be spread over a larger asset base. However, variable expenses
that are based on the value of assets or the number of shareholder accounts,
such as custody and transfer agency fees, would be largely unaffected by the
Reorganizations.
The proposed Reorganizations and Plans were presented to the Forum Board
at a meeting held in September 2000. In considering the Reorganizations, the
Forum Board was advised by independent legal counsel as to its fiduciary duties
under the 1940 Act with respect to each Forum Portfolio, and the required
determinations that must be made under the 1940 Act in connection with the
Reorganization of each Forum Portfolio.
During its deliberations, the Forum Board (with the advice and assistance
of independent legal counsel) reviewed, among other things: (i) the terms and
conditions of each Plan, including those provisions that were intended to avoid
dilution of the interests of the shareholders of each Forum Portfolio; (ii) the
potential effect of each Reorganization on the shareholders of the reorganizing
Forum Portfolio; (iii) the investment advisory and other fees paid by the
Stratevest Fund, and the projected expense ratio of the Stratevest Fund as
compared to the expense ratios of the Forum Portfolios; (iv) the investment
objectives, strategies, techniques, investment risks and limitations of the
Forum Portfolios, and their relative compatibility with those of the Stratevest
Fund; (v) the potential economies of scale to be gained from combining the
assets of each Forum Portfolio into the Stratevest Fund as a result of the
Reorganizations; (vi) the anticipated tax consequences of each Reorganization
for each Forum Portfolio and its shareholders; (vii) the fact that the costs of
the Reorganizations would be borne by the Adviser and/or other third parties;
and (viii) the shareholder services and other fees applicable to the shares of
the Stratevest Fund as compared to those applicable to the shares of each Forum
Portfolio.
In considering whether to approve each proposed Reorganization, the Forum
Board considered the relatively small asset size of each Forum Portfolio, the
likelihood that the Forum Portfolios' service providers may not be able to
maintain their current fee waivers, and the fact that if a Forum Portfolio was
no longer viable, a reorganization would permit shareholders of the Forum
Portfolio to own shares in a new fund without realizing tax consequences that
would be present if the Forum Portfolio were to liquidate. In addition, the
Forum Board considered the potential for greater asset size as a result of the
Reorganizations, which may enable the Stratevest Fund to purchase portfolio
securities in greater volume, creating the potential for more favorable pricing
of the securities purchased. To the extent that these operational and economic
benefits are realized, the benefits will work to the advantage of shareholders
of each Forum Portfolio and the Stratevest Fund.
In view of the foregoing characteristics of each Forum Portfolio and the
Stratevest Fund, the Forum Board concluded that the investment objectives,
strategies, techniques and limitations of each Forum Portfolio and the
Stratevest Fund are substantially similar to, and compatible with, one another.
The Forum Board also considered that the higher net expenses of the Stratevest
Fund were comparable to the gross expenses of the Forum Portfolios, which are
subject to service provider fee waivers that may not be maintained. In this
connection, the Forum Board took note of the undertaking by the Adviser and/or
other service providers to maintain the net expense ratio of the Stratevest Fund
for at least one year following the Reorganizations, and thereafter the Adviser
and/or other service providers will not reduce their fee waivers unless the
reduction is approved by the Board of Trustees of the Trust.
The Forum Board, including a majority of the trustees of Forum Funds who
are not "interested persons" (as that term is defined in the Investment Company
Act of 1940, as amended (the "1940 Act")) of Forum Funds, concluded that the
proposed Reorganizations would be in the best interests of each Forum Portfolio
and of the shareholders of each Forum Portfolio. The Forum Board also concluded
that no dilution of value would result to the shareholders of each Forum
Portfolio from its respective Reorganization, and approved the Plans and
recommended that shareholders of each Forum Portfolio vote to approve the
Reorganization of the Forum Portfolio.
FOR THE REASONS DISCUSSED ABOVE, THE BOARD OF TRUSTEES OF FORUM FUNDS
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PLAN FOR THE FORUM PORTFOLIO IN
WHICH YOU OWN SHARES.
If a majority of the shares of a Forum Portfolio do not approve the
Portfolio's Plan, the Reorganization relating to that Forum Portfolio will not
occur, and the Forum Board will consider other possible courses of action for
the Forum Portfolio, including liquidation and dissolution.
INFORMATION ABOUT THE REORGANIZATIONS
This is only a summary of the important terms of the Plans. You should
read the form of Plan which is attached as Exhibit A. The Equity Plan and the
Growth Plan are substantially identical to the form of Plan, except for the name
of the Forum Portfolio and certain non-material differences.
HOW WILL THE REORGANIZATIONS BE CARRIED OUT?
If the shareholders of a Forum Portfolio approve the Plan, the
Reorganization with respect to that Forum Portfolio will take place after
various conditions are satisfied by Forum Funds, on behalf of the Forum
Portfolio, and the Trust, on behalf the Stratevest Fund, including the
preparation of certain documents. Forum Funds and the Trust will determine a
specific date for the actual Reorganizations to take place. This is called the
Closing Date. If the shareholders of a Forum Portfolio do not approve the Plan
relating to the Forum Portfolio, the Reorganization of the Forum Portfolio will
not take place.
If shareholders of a Forum Portfolio approve the Plan at the Special
Meeting, shares of that Forum Portfolio will no longer be offered for sale to
existing shareholders, except for the reinvestment of dividend and capital gain
distributions or through established automatic investment plans. Until the close
of business on the Closing Date, you may continue to add to your existing
account, subject to an established automatic investment plan, or buy additional
shares through the reinvestment of dividend and capital gain distributions.
If the shareholders of a Forum Portfolio approve the Plan, the Forum
Portfolio will deliver to the Stratevest Fund all of its assets, subject to its
liabilities on the Closing Date. In exchange, the Forum Portfolio will receive
full and fractional shares of beneficial interest of the Stratevest Fund that
have a value equal to the dollar value of the net assets delivered to the Forum
Portfolio in connection with the Reorganization as of 4:00 p.m., Eastern time,
on the Closing Date. The Forum Portfolio will then distribute, in complete
liquidation, pro rata to its shareholders of record, all of the Stratevest Fund
shares received by the Forum Portfolio.
The stock transfer books of the Forum Portfolio will be permanently closed
as of 4:00 p.m., Eastern time, on the Closing Date. The Forum Portfolio will
only accept requests for redemption received in proper form before 4:00 p.m.,
Eastern time, on the business day immediately preceding the Closing Date.
Requests received after that time will be considered requests to redeem shares
of the Stratevest Fund. The Forum Portfolio will then be terminated under
Delaware law. No front-end sales loads or CDSCs will be imposed in connection
with the Reorganizations.
Each Plan provides that the consummation of the Reorganization is
contingent upon, among other things: (i) approval of the Plan by the
shareholders of the Forum Portfolio to which the Plan relates; and (ii) the
receipt by the Forum Portfolio and the Stratevest Fund of a tax opinion to the
effect that the Reorganization will be tax-free to the Forum Portfolio, the
Stratevest Fund and the Forum Portfolio shareholders; and (iii) the receipt of
any necessary regulatory or exemptive orders from the Securities and Exchange
Commission or other regulator.
The Plans may be amended only by the mutual consent of the Trust and Forum
Funds in writing. The Trust and Forum Funds may also agree to terminate and
abandon a Reorganization at any time before or, to the extent permitted by law,
after the approval of shareholders of a Forum Portfolio.
WHO WILL PAY THE EXPENSES OF THE REORGANIZATIONS?
The expenses resulting from the Reorganizations will be paid by the
Adviser and/or its affiliates and/or subsidiaries and other parties.
WHAT ARE THE TAX CONSEQUENCES OF THE REORGANIZATIONS?
Each Reorganization is intended to qualify as a tax-free reorganization
for federal income tax purposes within the meaning of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended. Based on certain assumptions and
representations received from Forum Funds, on behalf of each Forum Portfolio,
and the Trust, on behalf of the Stratevest Fund, it is the opinion of Stradley
Ronon Stevens & Young, LLP, with respect to each Reorganization, that
shareholders of each Forum Portfolio will not recognize any gain or loss for
federal income tax purposes as a result of the exchange of their shares of the
Forum Portfolio for shares of the Stratevest Fund and that neither the
Stratevest Fund nor the Forum Portfolio will recognize any gain or loss upon the
exchange of substantially all of the assets of the Forum Portfolio, subject to
its liabilities, for shares of the Stratevest Fund.
You will continue to be responsible for tracking the purchase cost and
holding period of your shares and should consult your tax advisor regarding the
effect, if any, of a Reorganization in light of your individual circumstances.
You should also consult your tax advisor as to state and local tax consequences,
if any, of a Reorganization, because this discussion only relates to the federal
income tax consequences.
WHAT SHOULD I KNOW ABOUT THE SHARES OF THE STRATEVEST FUND?
While the Trust and Forum Funds are different entities, and thus, governed
by different organizational documents, the Reorganizations will not result in
material differences in shareholder rights. The shares of the Stratevest Fund
that will be distributed to shareholders of the Forum Portfolios will have the
same legal characteristics as the shares of the Forum Portfolios with respect to
such matters as voting rights, assessibility, conversion rights, and
transferability.
The Trust, under its Agreement and Declaration of Trust, and Forum Funds,
under its Trust Instrument, both have an unlimited number of authorized shares
of beneficial interest. The Boards of Trustees of the Trust and of Forum Funds
(the "Boards") may, without shareholder approval, divide the authorized shares
of the Trust and Forum Funds into an unlimited number of separate portfolios or
series ("series"). The Boards may also, without shareholder approval, divide the
series into two or more classes of shares ("classes"). Each of the Stratevest
Fund and the Forum Portfolios currently offers only one class. The Trust and
each Trust Series, as well as Forum Funds and each Forum Series, will continue
indefinitely until terminated.
Each share of each series and each class of the Trust and Forum Funds has
equal dividend, distribution, liquidation and voting rights, and fractional
shares have those rights proportionately. Each series or class bears its own
expenses related to its distribution of shares (and other expenses such as
transfer agency, shareholder service and administration expenses). Generally,
shares of a series will be voted separately by individual series except if: (1)
the 1940 Act requires shares to be voted in the aggregate and not by individual
series; (2) the 1940 Act requires a class vote; or (3) a Board determines that
the matter affects more than one series and all affected series must vote.
Delaware law does not require the Trust or Forum Funds to hold annual
meetings of shareholders, and generally, the Trust and Forum Funds will hold
shareholder meetings only when specifically required by federal or state law.
Shareholders representing 10% or more of Forum Funds' (or its respective
series') outstanding shares may, under Forum Funds' By-Laws, call meetings of
Forum Funds (or its series) for any purpose related to Forum Funds (or its
series), including, in the case of a meeting of Forum Funds, the purpose of
voting on removal of one or more Trustees. The Trust's Agreement and Declaration
of Trust does not contain any statement concerning the ability of shareholders
to call meetings, although a shareholder may be able to do so under applicable
provisions of Delaware law or the Investment Company Act of 1940, as amended.
Like Forum Funds, there are no conversion or preemptive rights in
connection with shares of the Trust. When issued, all shares will be fully paid
and non-assessable. A shareholder of a series will receive a pro rata share of
all distributions arising from that series' assets and, upon redeeming shares,
will receive the portion of the series' net assets represented by the redeemed
shares.
WHAT ARE THE CAPITALIZATIONS OF THE STRATEVEST FUND AND THE FORUM
PORTFOLIOS AND WHAT MIGHT THE CAPITALIZATION BE AFTER THE REORGANIZATIONS?
The following table(1) sets forth, as of May 31, 2000, (i) the
capitalization of the Forum Equity Portfolio, (ii) the capitalization of the
Forum Growth Portfolio, (iii) the capitalization of the Stratevest Fund, and
(iv) the pro forma capitalization of the Stratevest Fund as adjusted to give
effect to the proposed Reorganizations. The Stratevest Fund is a newly-organized
series which, as of the date of this Prospectus/Proxy Statement, has not
conducted any business (other than matters incident to its organization) and has
no shareholders. Accordingly, the capitalization of the Stratevest Fund is
likely to be different when the Reorganizations are consummated.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Stratevest
Forum Funds - Forum Funds Stratevest Funds Fund Pro
Investors - Investors - Large Cap Forma After
EQUITY FUND GROWTH FUND CORE FUND REORGANIZATIONS
Net assets.................$34,398,022 $20,446,285 $..0 $46,933,372
Net asset value per share.......$13.71 $11.77 $..0 $10.00
Shares outstanding...........2,508,360 1,736,536 ......0 4,693,337
</TABLE>
(1) Full pro forma financial statements are included in the Statement of
Additional Information to this Prospectus/Proxy Statement.
COMPARISON OF INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES
This section describes the key differences between the investment
strategies and policies of the Stratevest Fund and the Forum Portfolios, and
certain noteworthy differences between the investment restrictions of the
Stratevest Fund and the Forum Portfolios. For additional information on the
Stratevest Fund's investment policies, see the Prospectus of the Stratevest
Fund, dated September 19, 2000 (Revised September 25, 2000).
ARE THERE ANY SIGNIFICANT DIFFERENCES BETWEEN THE INVESTMENT OBJECTIVES AND
STRATEGIES OF THE STRATEVEST FUND AND THE FORUM PORTFOLIOS?
COMPARISON OF THE FORUM EQUITY PORTFOLIO AND THE STRATEVEST FUND. The
Adviser is the investment adviser to both the Forum Equity Portfolio and the
Stratevest Fund and it is anticipated that the Forum Equity Portfolio and the
Stratevest Fund will be managed similarly.
The Forum Equity Portfolio's investment objective is capital appreciation
by investing primarily in the common stock of companies domiciled in the United
States, while the Stratevest Fund's investment objective is long-term capital
appreciation. The investment objectives of the Forum Equity Portfolio and the
Stratevest Fund are fundamental and cannot be changed without shareholder
approval. Although worded differently, these objectives are not materially
different.
Although the Forum Equity Portfolio's investment objective does not
require that it will seek appreciation over the long term, the investment
process employed by the Adviser for the Forum Equity Portfolio is long term
oriented. Specifically, with respect to the Forum Equity Portfolio, the Adviser
focuses on sectors and industries with a potential for above average growth
rates for periods of five years or more, and on companies that have the ability
to provide above average growth in revenues, earnings and cash flow for a
multi-year period.
The Forum Equity Portfolio seeks to achieve its investment objective by
primarily investing in the common stock of established growth oriented domestic
companies with market capitalizations of $2 billion or more. Although the Forum
Equity Portfolio's investment parameters permit it to invest a large portion of
its assets in medium capitalization companies, the Forum Equity Portfolio
normally invests in companies with large capitalizations. The Stratevest Fund
also seeks to achieve its investment objective by investing in large-cap
companies. At least 65% of the Stratevest Fund's assets will be invested in
large-cap stocks.
With respect to the Stratevest Fund, the Adviser will employ a blended
style of investing utilizing both growth- and value-based strategies, with an
emphasis on the growth-based strategy. The Adviser has employed a similar
strategy for the Forum Equity Portfolio. Currently, the Forum Equity Portfolio's
investment portfolio includes both growth and value companies, with a current
emphasis on growth companies. The composition of the Forum Equity Portfolio's
investment portfolio, therefore, is consistent with the investment strategy to
be employed by the Adviser for the Stratevest Fund. However, the Stratevest Fund
will invest at least 65% of its assets in companies with market capitalizations
of $10 billion or more. The Forum Equity Portfolio has the ability to invest in
smaller-sized companies.
The Adviser employs a similar process in selecting securities for the
investment portfolios of the Forum Equity Fund and the Stratevest Fund, since
they are managed by the same team of investment managers. In managing the assets
of the Stratevest Fund and the Forum Equity Portfolio, the Adviser identifies
economic sectors and industries with a potential for above average growth for a
period of five years or more. The Adviser seeks companies that offer secular
growth driven by factors such as technological changes and demographics, and to
avoid industries subject to heavy governmental regulation or dependence on
commodity pricing for growth. The Adviser also uses fundamental research to
identify companies with histories of sustained profitability and leadership
within their respective industries. The primary focus is on the core earnings
power of the company and the ability to provide above-average growth in
revenues, earnings and cash flows for a multi-year period. The Adviser monitors
the companies held in the investment portfolios of the Forum Equity Portfolio
and the Stratevest Fund to determine if there have been any fundamental changes
in the companies. The Adviser may sell a stock (i) if there is a sustained
deterioration in the fundamentals of a company, (ii) if a more attractive
investment is found, and (iii) to maintain appropriate diversification within
the portfolios of the Forum Equity Portfolio and the Stratevest Fund.
COMPARISON OF THE FORUM GROWTH PORTFOLIO AND THE STRATEVEST FUND. The
Forum Adviser is the investment adviser for the Forum Growth Portfolio, and the
Adviser is the investment adviser for the Stratevest Fund. Nevertheless, the
investment objective for the Forum Growth Portfolio and the Stratevest Fund is
identical -- to seek long-term capital appreciation. Like the investment
objectives of the Forum Equity Portfolio and the Stratevest Fund, the investment
objective of the Forum Growth Portfolio is fundamental, and cannot be changed
without shareholder approval.
The Forum Growth Portfolio seeks to achieve its investment objective by
primarily investing in the common stock of domestic companies with market
capitalizations of $2 billion or more and that possess above average growth
potential or that possess value not yet fully reflected in the stock's price.
Although the Forum Growth Portfolio's investment parameters permit it to invest
a large portion of its assets in medium capitalization companies, the Forum
Growth Portfolio normally invests in companies with large capitalizations.
Similarly, the Stratevest Fund pursues its investment objective by investing in
stocks of large-cap companies and employing a blended growth-based and
value-based strategy, with an emphasis on the growth strategy. At least 65% of
the Stratevest Fund's assets will be invested in large-cap stocks.
In managing the Forum Growth Portfolio, the Forum Adviser may invest in
companies that have above-average growth potential or value not fully reflected
in their stock price. The Forum Adviser uses fundamental analysis, valuation
measures such as price/earnings ratios and price/cash flow ratios and technical
analysis to determine those companies whose shares are attractive for purchase
by the Forum Growth Portfolio. In evaluating companies for purchase, the Forum
Adviser considers the company's (i) historical growth rate and return on
capital; (ii) reported future growth rate and return on capital; (iii) financial
condition; (iv) industry and competitive position in the industry; and (v)
management quality. The Forum Adviser constantly monitors the companies in the
Forum Growth Portfolio to determine if there have been any fundamental changes
in the companies. The Forum Adviser may sell a stock if (i) a more attractively
priced stock is found or if funds are needed for other purposes; (ii) the
underlying company experiences negative internal developments; (iii) the
underlying company experiences a decline in financial conditions; (iv) the
underlying company experiences a significant erosion in profitability, earnings
or cash flow; (v) the security is overvalued compared to its fundamentals; or
(vi) it is oversized compared to other holdings.
The primary difference between the Forum Growth Portfolio and the
Stratevest Fund is the ability of the Forum Growth Portfolio to invest is
smaller-sized companies than the Stratevest Fund.
ADDITIONAL DIFFERENCES BETWEEN FORUM PORTFOLIOS AND THE STRATEVEST FUND.
While the Stratevest Fund and the Forum Portfolios may invest in a wide array of
equity securities, there are some differences between the types of equity
securities that each may acquire. Following is a summary of the differences in
the types of securities that may be purchased by each fund.
The Stratevest Fund is permitted to purchase shares of real estate
investment trusts ("REITs"), which are trusts that lease, operate and finance
commercial real estate. Each Forum Portfolio may invest in securities issued by
companies that invest in real estate or interests therein, which may include
REITs.
The Stratevest Fund and the Forum Equity Portfolio may engage in
derivative transactions, such as futures and options, but they do not have any
current intent to do so. The Forum Growth Portfolio is not permitted to invest
in options and it does not have an investment policy regarding futures
transactions.
The Stratevest Fund and the Forum Portfolios may invest in sponsored or
unsponsored American, European and/or Global Depository Receipts (collectively
"Depository Receipts"). Depository Receipts represent interests in underlying
securities issued by foreign companies. The Forum Portfolios may also invest in
other types of foreign securities, whereas the Stratevest Fund may not. The
Forum Equity Portfolio expects to limit its foreign investments to less than 10%
of its total assets, and the Forum Growth Portfolio does not intend to invest
more than 15% of its assets in foreign issuers. The Stratevest Fund is not
subject to a similar limitation.
The Forum Equity Portfolio may invest in warrants in an amount limited (at
the time of investment) to not more than 5% of the value of its net assets
(other than those that have been acquired in units or attached to other
securities). Also, no more than 2% of the Forum Equity Portfolio's net assets
(at the time of investment) may be invested in warrants that are not listed on
the New York or American Stock Exchange. The Forum Growth Portfolio may also
purchase warrants. The Forum Growth Portfolio will limit its purchases of
warrants to not more than 5% of the value of its total assets. The Forum Growth
Portfolio may also invest up to 5% of its total assets in stock rights. While
the Stratevest Fund is permitted to purchase warrants, it is not subject to an
explicit percentage limitation on such investments.
The Forum Equity Portfolio may borrow money from banks for temporary or
emergency purposes in an amount up to 33 1/3% of its total assets (as computed
immediately after borrowing.) The Forum Equity Portfolio may borrow money for
other purposes, so long as such borrowings do not exceed 5% of the Portfolio's
total assets. The purchase of securities by the Forum Equity Portfolio is
prohibited if the Forum Equity Portfolio's borrowings exceed 5% or more of the
Portfolio's total assets. The Forum Growth Portfolio may borrow money for
temporary or emergency purposes, including the meeting of redemption requests,
but not in excess of 33 1/3% of the value of the Forum Growth Portfolio's total
assets (computed immediately after the borrowing). The Stratevest Fund may
borrow money, directly or indirectly, to the maximum extent permitted under the
1940 Act, any rule or order thereunder, or any SEC staff interpretation thereof.
Although worded differently, there is no significant difference in the funds'
limitations with respect to borrowing.
The Forum Portfolios may engage in leverage transactions in order to
increase potential returns. Examples of these types of transactions include
lending portfolio securities to qualified broker-dealers and financial
institutions, and, in the case of the Forum Equity Portfolio, purchasing
securities on a when-issued, delayed delivery or forward commitment basis.
Delayed delivery transactions, including when-issued and forward commitment
transactions, are arrangements in which the Forum Equity Portfolio buys
securities for a set price, with payment and delivery set for a future time. The
Stratevest Fund and Forum Growth Portfolio are not authorized to enter into
when-issued or delayed delivery transactions. While the Stratevest Fund is
authorized to lend its portfolio securities, it has no current intention to do
so. Although the Forum Portfolios are permitted to invest in the types of
transactions described in this paragraph, they do not constitute a principal
investment strategy of either Fund.
Each of the Stratevest Fund and the Forum Portfolios is a diversified
portfolio of securities. As a "diversified" fund, 75% of each of the Stratevest
Fund's and each Forum Portfolio's total assets may not be invested in more than
5% of a single issuer's securities, or be used to purchase 10% or more of the
outstanding voting securities of a single issuer.
HOW DO THE FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE STRATEVEST FUND AND THE
FORUM PORTFOLIOS DIFFER?
The Stratevest Fund and the Forum Portfolios have adopted similar
restrictions as fundamental policies, which may not be changed without the
approval of a Majority Vote (as defined below). This section highlights the
primary differences between their restrictions. The Stratevest Fund has slightly
increased investment flexibility that will allow the Stratevest Fund to respond
to future investment opportunities. Despite this increased investment
flexibility, however, it is not anticipated that the differences in investment
restrictions will result in a material change in the level of investment risk
that is currently associated with an investment in the Forum Equity Portfolio or
the Forum Growth Portfolio.
Each of the Forum Equity Portfolio and the Forum Growth Portfolio is
subject to a fundamental investment restriction that provides that the Forum
Portfolio will not make investments for the purpose of exercising control over
management. The Stratevest Fund is not subject to a comparable investment
limitation, but does not intend to do so.
As a fundamental investment policy, the Forum Portfolios may not invest
more than 15% of their respective assets in "illiquid securities," which are
securities that cannot be disposed of within seven days at their current value.
For these purposes, "illiquid securities" include: (1) "restricted securities,"
which are securities that cannot be resold to the public without registration
under the Federal Securities laws and (2) securities of issuers having a record
(together with all predecessors) of less than three years of continuous
operation. The Forum Growth Portfolio has an equivalent non-fundamental policy.
The Stratevest Fund has a similar non-fundamental policy that states that it
will not purchase securities for which there is no readily available market, or
enter into repurchase agreements or purchase time deposits maturing in more than
seven days, if immediately after and as a result, the value of such securities
would exceed in the aggregate, 15% of the Stratevest Fund's net assets.
The Forum Growth Portfolio is subject to a fundamental investment
restriction that provides that the Forum Growth Portfolio may not purchase
securities on margin; however, the Forum Growth Portfolio may make margin
deposits in connection with any hedging instruments, which the Forum Growth
Portfolio may use as permitted by any of its other fundamental investment
policies. The Forum Equity Portfolio has a similar non-fundamental policy where
the Portfolio may not purchase securities on margin except that it may use
short-term credit for the clearance of the portfolio's transactions provided
that initial and variation margin payments in connection with futures contracts
and options on futures contracts shall not constitute purchasing securities on
margin. The Stratevest Fund is subject to a similar non-fundamental investment
restriction. The Forum Growth Portfolio also may not sell securities short. The
Forum Equity Portfolio has a similar non-fundamental policy. The Stratevest Fund
is not subject to an investment limitation pertaining to short sales.
As a matter of fundamental investment limitation, the Forum Growth
Portfolio may not purchase or write puts or calls except as permitted by any of
its other fundamental investment policies. The Stratevest Fund and the Forum
Equity Portfolio are not subject to a comparable investment restriction.
Policies or restrictions that are deemed fundamental may not be changed
without the approval of the lesser of (i) a majority of the outstanding shares
of the Stratevest Fund, the Forum Equity Portfolio or the Forum Growth
Portfolio, as applicable, or (ii) 67% or more of the shares represented at a
meeting of shareholders at which the holders of more than 50% of the outstanding
shares are represented ("Majority Vote"). You should note that non-fundamental
investment policies may be changed by the Board of Trustees of the applicable
Fund without shareholder approval.
For more information regarding the Stratevest Fund's and the Forum
Portfolios' investment restrictions, please refer to the Statement of Additional
Information to this Prospectus/Proxy Statement, for the Stratevest Fund, and to
the Forum Portfolios' current statements of additional information, which are
incorporated by reference.
WHAT ARE THE RISK FACTORS ASSOCIATED WITH INVESTMENTS IN THE STRATEVEST FUND AND
THE FORUM PORTFOLIOS?
Like all investments, an investment in the Stratevest Fund and the Forum
Portfolios involves risk.
GENERAL.
-------
The Stratevest Fund's and the Forum Portfolios' net asset values and
investment returns will fluctuate, based upon changes in the value of their
individual portfolio securities and general changes in stock valuations. The
market values of the securities in which the Stratevest Fund and the Forum
Portfolios invest are based on the market's perception of value and are not
necessarily objective measures of the securities' values. There is no assurance
that any of the Stratevest Fund, the Forum Equity Portfolio or the Forum Growth
Portfolio will achieve its investment objective. In addition, each of the
Stratevest Fund and the Forum Portfolios are subject to the risk that its
respective investment adviser may make poor investment decisions.
EQUITY SECURITIES.
-----------------
The Stratevest Fund and the Forum Portfolios invest primarily in equity
securities. Equity securities fluctuate in value as a result of various factors,
which are often unrelated to the value of the issuers of the securities. These
fluctuations may result from sustained trends or short term movements. The
Adviser and the Forum Adviser attempt to manage market risk by limiting the
amount that the Stratevest Fund and the Forum Equity Portfolio, and the Forum
Growth Portfolio, respectively, invest in each company's equity securities.
However, diversification will not protect the Stratevest Fund or the Forum
Portfolios against widespread or prolonged declines in the stock market.
Because the Adviser and the Forum Adviser focus on the growth
characteristics of companies, the Stratevest Fund and the Forum Portfolios are
subject to risks related to investing for growth. These include the risk that
the earnings of a company will not continue to grow at expected rates. These
stocks, due to their relatively high valuations, are typically more volatile
than value stocks, and the prices of growth stocks may experience larger
declines on forecasts of lower earnings, a negative fundamental development, or
an adverse market development. There is the risk that the market will not
recognize the intrinsic value of a stock - undervalue the stock - for an
unexpectedly long time, and a decline in investor demand for the stock may
adversely affect its value. Further, growth stocks may not pay dividends or may
pay lower dividends than other stocks, which means that they depend more on
price changes for returns and may be more adversely affected in a down market.
Finally, either the Adviser or the Forum Adviser may be wrong regarding its
judgment as to the growth potential of a stock.
The Forum Growth Portfolio may invest a substantial portion of its assets
in equity securities of medium-size companies and, therefore, it is subject to
additional risks associated with those securities. Historically, medium-size
securities have been more volatile in price than larger company securities,
especially over the short term. Among the reasons for the greater price
volatility are the less certain growth prospects of medium-size companies, the
lower degree of liquidity in the markets for such securities, and the greater
sensitivity of these companies to changing economic conditions.
In addition, these companies may lack depth of management, they may be
unable to generate funds necessary for growth or development, or they may be
developing or marketing new products or services for which markets are not yet
established and may never become established. While medium-size companies may
offer greater opportunities for capital growth than larger, more established
companies, they also involve greater risks and should be considered speculative.
The Stratevest Fund and the Forum Portfolios are also subject to the risks
of investing for value. Value stocks, due to their relatively low valuations,
are typically less volatile than growth stocks. Thus, the price of a value stock
may experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or a positive market development. Also, value stocks
tend to have higher dividends than growth stocks, which means that they depend
less on price changes for returns and may lag behind growth stocks in an up
market.
VOTING INFORMATION
HOW MANY VOTES ARE NECESSARY TO APPROVE THE PLAN?
This Prospectus/Proxy Statement is being furnished by the Board of
Trustees of Forum Funds in connection with the solicitation of proxies of the
Special Meeting. Solicitation of proxies will be primarily by mail. Officers and
service contractors of Forum Funds may also solicit proxies by telephone,
facsimile, Internet, or in person. The costs of solicitation will be borne by
the Adviser and/or its affiliates and/or subsidiaries and other parties.
Shareholders of the Forum Equity Portfolio will vote to approve the Equity
Plan only. Shareholders of the Forum Growth Portfolio will vote to approve the
Growth Plan only.
Each share of the Forum Equity Portfolio and the Forum Growth Portfolio is
entitled to one vote. To approve a Reorganization, a majority of the shares of
the affected Forum Portfolio outstanding and entitled to vote must be voted in
favor of the applicable Plan. For these purposes, approval of each Plan requires
the lesser of (a) 67% or more of the voting shares present at the Special
Meeting, if the holders of more than 50% of the outstanding voting shares of the
Forum Equity Portfolio or the Forum Growth Portfolio, as applicable, are present
or represented by proxy; or (b) more than 50% of the outstanding voting shares
of the applicable Forum Portfolio.
HOW DO I ENSURE MY VOTE IS ACCURATELY RECORDED?
Please use the Proxy card (the "Proxy Card") enclosed with the
Prospectus/Proxy Statement to vote on the Reorganizations relating to the Forum
Portfolio in which you own shares. You should complete the Proxy Card by:
(1) Indicating whether you vote "FOR," "AGAINST," or "ABSTAIN" from
voting on the respective Reorganization by checking the appropriate
box on the Proxy Card;
(2) Signing and dating the Proxy Card; and
(3) Returning it to Forum Shareholder Services, LLC in the enclosed
postage-paid envelope.
THE PROXY CARD IS, IN ESSENCE, A BALLOT. IF YOU SIMPLY SIGN AND DATE THE PROXY
CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED IN FAVOR OF THE
PLAN AND IN ACCORDANCE WITH THE VIEWS OF MANAGEMENT UPON ANY UNEXPECTED MATTERS
THAT COME BEFORE THE SPECIAL MEETING OR ADJOURNMENT OF THE SPECIAL MEETING.
CAN I REVOKE MY PROXY?
To change a vote after returning a Proxy Card, you must provide Forum
Shareholder Services, LLC with a "Revocation Letter" that:
(1) Identifies yourself;
(2) States that as shareholder of the Forum Equity Portfolio or the
Forum Growth Portfolio, as applicable, you revoke your prior
decisions as set forth in the previously returned Proxy Card;
(3) Indicates your approval, disapproval or abstention from voting on
the Reorganization relating to the Forum Portfolio in which you own
shares.
Forum Shareholder Services, LLC must receive your Proxy Card or Revocation
Letter on or before December 1, 2000. If you do not return your Proxy Card by
that date or you abstain from voting, you will be treated as having voted
"AGAINST" the respective Reorganization.
WHO IS ENTITLED TO VOTE?
Only shareholders of record of the Forum Equity Portfolio and the Forum
Growth Portfolio at the close of business on October 13, 2000 (the "Record
Date") are entitled to notice of and to vote at the Special Meeting and any
postponement or adjournment thereof. Shareholders holding one-third of the
outstanding shares of each of the Forum Equity Portfolio and the Forum Growth
Portfolio as of the Record Date present in person or by proxy will constitute a
quorum for the transaction of business at the Special Meeting.
For purposes of determining the presence of a quorum and counting votes on
the matters presented, shares represented by abstentions and "broker non-votes"
will be counted as present, but not as votes cast at the Special Meeting. Broker
non-votes are shares held in street name for which the broker indicates that
instructions have not been received from the beneficial owners and other persons
entitled to vote and for which the broker lacks discretionary voting authority.
IF YOU DO NOT SPECIFY A CHOICE ON THE PROXY, PROPERLY EXECUTED PROXIES
THAT ARE RETURNED IN TIME TO BE VOTED AT THE SPECIAL MEETING WILL BE VOTED "FOR"
THE APPROVAL OF THE PLAN RELATING TO THE FORUM PORTFOLIO IN WHICH YOU OWN SHARES
DESCRIBED IN THIS PROSPECTUS/PROXY STATEMENT.
WHAT OTHER MATTERS WILL BE VOTED UPON AT THE SPECIAL MEETING?
It is not anticipated that any matters other than the approval of the
Plans will be brought before the Special Meeting. Should other business be
brought before the Special Meeting, it is intended that the accompanying proxies
will be voted in accordance with the judgment of the persons named as proxies.
The approval of the Equity Plan will be voted upon by shareholders of the
Forum Equity Portfolio only, and such approval is not contingent upon the
approval of the Growth Plan by the shareholders of the Forum Growth Portfolio.
Similarly, the approval of the Growth Plan will be voted upon by shareholders of
the Forum Growth Portfolio only, and such approval is not contingent upon the
approval of the Equity Plan by the shareholders of the Forum Equity Portfolio.
If sufficient votes in favor of approving a Plan are not received by the
time scheduled for the Special Meeting, the persons named as proxies may propose
one or more adjournments of the Special Meeting for a reasonable period of time
to permit further solicitation of proxies. Any adjournment will require the
affirmative vote of a majority of the votes cast on the question in person or by
proxy at the session of the Special Meeting to be adjourned. The persons named
as proxies will vote "FOR" adjournment those proxies required to be voted "FOR"
the approval of the proposal. The persons named as proxies will vote "AGAINST"
adjournment those proxies required to be voted "AGAINST" the proposal. The costs
of any additional solicitation and of any adjourned session will be borne by the
Adviser and/or its subsidiaries and/or affiliates and other parties.
ARE THERE DISSENTERS' RIGHTS?
Shareholders of the Forum Portfolios will not be entitled to any
"dissenters' rights" since the proposed Reorganizations involve three open-end
investment companies registered under the 1940 Act. Although no dissenters'
rights may be available, you have the right to redeem your shares at net asset
value until the Closing Date. After the Closing Date, you may redeem your
Stratevest Fund shares or exchange them for shares of other Trust Series or of
certain Federated Funds, subject to the terms in the prospectus of the
respective fund.
OTHER INFORMATION
ARE THERE INTERESTED PERSONS OF THE REORGANIZATION?
John Y. Keffer will realize a financial benefit from each Reorganization
in that an affiliate of Forum will provide service to and will receive
compensation from the Trust.
Stratevest & Co. is the nominee name for the Stratevest Adviser. The
Stratevest Adviser, in its capacity as a fiduciary, holds, as record owner for
the benefit of its trust customers. The Stratevest Adviser will receive an
investment advisory fee from the Stratevest Fund into which the Forum Portfolios
will merge.
WHO ARE THE PRINCIPAL HOLDERS OF SHARES OF THE FORUM PORTFOLIOS?
As of the Record Date, there were 3,379,914.241 shares of the Forum Equity
Portfolio outstanding, and there were 523,035.725 shares of the Forum Growth
Portfolio outstanding. As of the Record Date, the officers and Trustees of Forum
Funds, as a group, beneficially owned less than 1% of the outstanding shares of
each Forum Portfolio. As of the Record Date, the following persons owned of
record or beneficially 5% or more of the outstanding shares of the Forum
Portfolios:
FORUM EQUITY PORTFOLIO
Stratevest & Co. PERCENTAGE OWNERSHIP
--------------------
P.O. Box 2499
Battleboro, VT 05303-2499 96.84%
FORUM GROWTH PORTFOLIO
Firstrust Co.
National City Bank Trust Dept. PERCENTAGE OWNERSHIP
--------------------
227 Main Street
Evansville, IN 47308 99.88%
WHO ARE THE PRINCIPAL HOLDERS OF SHARES OF THE STRATEVEST FUND?
As of the Record Date, there were 10 shares of the Stratevest Fund
outstanding. As of the Record Date, the officers and Trustees of the Stratevest
Fund, as a group, beneficially owned less than 1% of the outstanding shares of
the Stratevest Fund. As of the Record Date, the following persons owned of
record or beneficially 5% or more of the outstanding shares of the Stratevest
Fund:
Federated Administrative Services
1000 Liberty Avenue PERCENTAGE OWNERSHIP
Federated Investors Tower
Pittsburgh, PA 15222 100%
HOW DO I CONTACT THE STRATEVEST FUND AND THE FORUM PORTFOLIOS?
Write to the Forum Portfolios at: Forum Shareholder Services, LLC
P.O. Box 446
Two Portland Square
Portland, Maine 04112
Telephone the Forum Portfolios at: (800) 943-6786 (toll free)
............ (207) 879-0001
Write to the Stratevest Fund at: Federated Shareholder Services
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Telephone the Stratevest Fund at: 1-888-247-4505
WHAT ARE THE TAX IMPLICATIONS OF INVESTING IN THE STRATEVEST FUND AND THE FORUM
PORTFOLIOS?
Each of the Stratevest Fund and the Forum Portfolios generally intends to
operate in a manner such that it will not be liable for Federal income or excise
tax.
The distributions of net investment income (or short-term capital gain) by
the Stratevest Fund and the Forum Portfolios are taxable to you as ordinary
income. The distributions of net long-term capital gain by the Stratevest Fund
and the Forum Portfolios are taxable to you as long-term capital gain.
Distributions are taxable in this manner regardless of whether you receive cash
or additional shares. Distributions may also be subject to 31% backup
withholding for certain shareholders. The distributions by the Stratevest Fund
and the Forum Portfolios also may be subject to certain state and local taxes.
Non-U.S. investors may be subject to U.S. withholding and estate tax.
If you buy shares shortly before the Stratevest Fund or a Forum Portfolio
declares and pays a dividend, you may pay the full price for the shares and then
receive a portion of the price back as a taxable distribution. The sale or
exchange of shares of the Stratevest Fund or the Forum Portfolios is a taxable
transaction for federal income tax purposes.
The Stratevest Fund and the Forum Portfolios will send you information
about the income tax status of distributions paid during the year shortly after
December 31 of each year.
INFORMATION ABOUT THE STRATEVEST FUND
Information about the Stratevest Fund is included in its Prospectus, dated
September 19, 2000 (Revised September 25, 2000) and in the Statement of
Additional Information related to this Prospectus/Proxy Statement, which is
dated October 31, 2000. Further information is contained in the Stratevest
Fund's Statement of Additional Information, dated September 19, 2000. These
documents have been filed with the SEC and are incorporated by reference herein.
Copies of the Statement of Additional Information relating to this
Prospectus/Proxy Statement may be obtained without charge by writing to the
Trust or calling 1-888-247-4505. The Stratevest Fund files proxy materials,
reports and other information with the SEC in accordance with the informational
requirements of the Securities Exchange Act of 1934 and the 1940 Act. These
materials can be inspected and copied at: the SEC's Public Reference Room at 450
Fifth Street NW, Washington, DC 20549, and at the Regional Offices of the SEC
located in New York City at 7 World Trade Center, Suite 1300, New York, NY 10048
and in Chicago at 500 West Madison Street, Suite 1400, Chicago, IL 60661. Also,
copies of such material can be obtained from the SEC's Public Reference Section,
Washington, DC 20549-6009 (duplicating fee required), or from the SEC's Internet
address at http://www.sec.gov.
INFORMATION ABOUT THE FORUM PORTFOLIOS
Information about the Forum Equity Portfolio is included in its prospectus
(dated October 1, 2000), its statement of additional information (dated October
1, 2000), and in the Forum Portfolio's annual report to shareholders, dated May
31, 2000. Information about the Forum Growth Portfolio is included in its
prospectus (dated August 1, 2000), its statement of additional information
(dated August 1, 2000), and its annual report to shareholders, dated May 31,
2000. These documents have been filed with the SEC, and are incorporated by
reference into this Prospectus/Proxy Statement. You may request free copies of
these documents by writing or calling Forum Shareholder Services, LLC, at P.O.
Box 446, Portland, Maine 04112, or by calling Forum Shareholder Services, LLC at
(207) 879-0001 or (800) 943-6786. Reports and other information filed by the
Forum Portfolio can be inspected and copied at: the SEC's Public Reference Room
at 450 Fifth Street NW, Washington, DC 20549, and at the Regional Offices of the
SEC located in New York City at 7 World Trade Center, Suite 1300, New York, NY
10048 and in Chicago at 500 West Madison Street, Suite 1400, Chicago, IL 60661.
Also, copies of such material can be obtained from the SEC's Public Reference
Section, Washington, DC 20549-6009 (duplicating fee required), or from the SEC's
Internet address at http://www.sec.gov.
EXHIBITS TO COMBINED
PROSPECTUS AND PROXY STATEMENT
EXHIBIT
A Form of Agreement and Plan of Reorganization between Forum Funds, on
behalf of the Investors Equity Fund, and Stratevest Funds, on behalf of the
Stratevest Large Cap Core Value Fund (the "Stratevest Fund")
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
......AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), made as of
this ____ day of August __, 2000, by and between Stratevest Funds (the "Trust"),
a business trust created under the laws of the State of Delaware, with its
principal place of business at 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7000, and Forum Funds, a business trust created under the laws of the
State of Delaware, with its principal place of business at Two Portland Square,
Portland, Maine 04101.
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan of
Reorganization") will consist of (i) the acquisition by the Stratevest Large Cap
Core Fund series (the "Stratevest Fund") of the Trust of substantially all of
the property, assets and goodwill of the Investors _______ Fund series (the
"Forum Portfolio") of Forum Funds, and the assumption by the Stratevest Fund of
all the liabilities of the Forum Portfolio, in exchange solely for full and
fractional shares of beneficial interest, no par value, of the Stratevest Fund,
(ii) the distribution of such shares of beneficial interest of the Stratevest
Fund to the shareholders of the Forum Portfolio according to their respective
interests, and (iii) the dissolution of the Forum Portfolio as soon as
practicable after the closing (as defined in Section 3, hereinafter called the
"Closing"), all upon and subject to the terms and conditions of this Agreement
hereinafter set forth.
AGREEMENT
In order to consummate the Plan of Reorganization and in
consideration of the premises and of the covenants and agreements hereinafter
set forth, and intending to be legally bound, the parties hereto covenant and
agree as follows:
14. SALE AND TRANSFER OF ASSETS AND LIABILITIES, LIQUIDATION AND
DISSOLUTION OF THE FORUM PORTFOLIO
(a)...Subject to the terms and conditions of this Agreement, and in
reliance on the representations and warranties of the Trust herein contained,
and in consideration of the delivery by the Trust of the number of its shares of
beneficial interest of the Stratevest Fund hereinafter provided, Forum Funds, on
behalf of the Forum Portfolio, agrees that it will convey, transfer and deliver
to the Trust at the Closing provided for in Section 3 all of the then existing
liabilities and the assets of the Forum Portfolio free and clear of all liens,
encumbrances, and claims whatsoever (other than shareholders' rights of
redemption and such restrictions as might arise under the Securities Act of
1933, as amended (the "1933 Act"), with respect to privately placed or otherwise
restricted securities that the Forum Portfolio may have acquired in the ordinary
course of business), except for cash, bank deposits, or cash equivalent
securities in an estimated amount necessary (1) to discharge all of the Forum
Portfolio's liabilities on its books at the closing date (as defined in Section
3, hereinafter called the "Closing Date"), including, but not limited to, its
income dividends and capital gains distributions, if any, payable for any period
prior to, and through, the Closing Date, and excluding those liabilities and
obligations that would otherwise be discharged at a later date in the ordinary
course of business, and (2) to pay such contingent liabilities as the trustees
shall reasonably deem to exist against the Forum Portfolio, if any, at the
Closing Date, for which contingent and other appropriate liability reserves
shall be established on the books of the Forum Portfolio (hereinafter "Net
Assets"). Forum Funds, on behalf of the Forum Portfolio, shall also retain any
and all rights that it may have over and against any person that may have
accrued up to and including the close of business on the Closing Date.
(b)...Subject to the terms and conditions of this Agreement, and in
reliance on the representations and warranties of the Trust herein contained,
and in consideration of such sale, conveyance, transfer, and delivery, the Trust
agrees at the Closing to deliver to the Forum Portfolio the number of full and
fractional shares of beneficial interest of the Stratevest Fund, no par value,
determined by dividing the net asset value per share of beneficial interest of
the Forum Portfolio on the Closing Date by the net asset value per share of
beneficial interest of the Stratevest Fund on the Closing Date, and multiplying
the result by the number of outstanding shares of the Forum Portfolio on the
Closing Date. All such values shall be determined in the manner and as of the
time set forth in Section 2 hereof.
(c)...Immediately following the Closing, the Forum Portfolio shall
distribute pro rata to its shareholders of record as of the close of business on
the Closing Date the full and fractional shares of beneficial interest of the
Stratevest Fund received by the Forum Portfolio pursuant to this Section 1, and
then shall terminate and dissolve. The Forum Portfolio shall terminate and
dissolve as soon as reasonably practicable. Such termination and distribution
shall be accomplished by the establishment of accounts on the share records of
the Stratevest Fund of the type and in the amounts due such shareholders based
on their respective holdings as of the close of business on the Closing Date.
Fractional shares of beneficial interest of the Stratevest Fund shall be carried
to the third decimal place in book-entry form for the account of shareholders.
15. VALUATION
(a)...The value of the Forum Portfolio's Net Assets to be acquired
by the Stratevest Fund hereunder shall be computed as of the close of business
(which shall be deemed to be the close of the New York Stock Exchange, Inc.
("NYSE")) on the Closing Date using the valuation procedures set forth in the
Forum Portfolio's currently effective prospectus.
(b)...The net asset value of a share of beneficial interest of the
Stratevest Fund shall be $10.00 per share.
(c)...The net asset value of a share of beneficial interest of the
Forum Portfolio shall be determined to the nearest full cent as of the close of
business (which shall be deemed to be the close of the NYSE) on the Closing
Date, using the valuation procedures as set forth in the Forum Portfolio's
currently effective prospectus.
16. CLOSING AND CLOSING DATE
The Closing Date shall be December 4, 2000, or such later date as
the parties may mutually agree in writing. The Closing shall take place at the
principal office of the Trust, 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7000 at 10:00 a.m. Eastern time on the first business day following the
Closing Date. Forum Funds shall have provided for delivery, as of the Closing of
those Net Assets of the Forum Portfolio to be transferred to the Trust's
Custodian, Forum Trust, LLC, Two Portland Square, Portland, Maine 04101, for the
benefit of the Stratevest Fund. Also, Forum Funds shall deliver at the Closing a
list of names and addresses of the shareholders of record of the Forum Portfolio
and the number of full and fractional shares of beneficial interest of the Forum
Portfolio owned by each such shareholder, indicating thereon which such shares
are represented by outstanding certificates and which by book-entry accounts,
all as of the close of business on the Closing Date, certified by its transfer
agent, or by its Secretary to the best of their knowledge and belief. The Trust
shall issue and deliver a certificate or certificates evidencing the shares of
beneficial interest of the Stratevest Fund to be delivered at the Closing to the
Forum Portfolio registered in such manner as Forum Funds may request, or provide
evidence satisfactory to the Forum Portfolio that such shares of beneficial
interest of the Stratevest Fund have been registered in an open account on the
books of the Stratevest Fund in such manner as Forum Funds may request.
17. REPRESENTATIONS AND WARRANTIES BY FORUM FUNDS
Forum Funds represents and warrants to the Trust that:
(a)...Forum Funds is a business trust created under the laws of the
State of Delaware on August 29, 1995, and is validly existing and in good
standing under the laws of that state. Forum Funds, of which the Forum Portfolio
is a diversified separate series of shares, is duly registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company and all of its shares sold have been sold pursuant
to an effective registration statement filed under the 1933 Act, except for
those shares sold pursuant to the private offering exemption for the purpose of
raising the required initial capital.
(b)...Forum Funds is authorized to issue an unlimited number of
shares of beneficial interest, without par value. Each outstanding share is
fully paid, non-assessable, fully transferable and has full voting rights.
(c)...The financial statements appearing in Forum Funds' Annual
Report to Shareholders for the fiscal year ended May 31, 2000, audited by
Deloitte & Touche LLP, copies of which have been delivered to the Trust, fairly
present the financial position of the Forum Portfolio as of the date indicated,
and the results of its operations for the period indicated, in conformity with
generally accepted accounting principles applied on a consistent basis.
(d)...The books and records of the Forum Portfolio made available to
the Trust and/or its counsel are true and correct and contain no material
omissions with respect to the business and operations of the Forum Portfolio.
(e)...Forum Funds has the necessary power and authority to conduct
its business as such business is now being conducted.
(f)...Forum Funds is not a party to or obligated under any provision
of its Trust Instrument, By-laws, or any contract or any other commitment or
obligation, and is not subject to any order or decree, which would be violated
by its execution of or performance under this Agreement and Plan of
Reorganization.
(g)...Forum Funds is not under the jurisdiction of a court in a
title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").
(h)...The Forum Portfolio does not have any unamortized or unpaid
organizational fees or expenses.
(i)...The Forum Portfolio has, since its inception satisfied and
will at the Closing satisfy, and consummation of this Agreement will not cause
it to fail to satisfy, for any period, the requirements of Subchapter M of the
Code.
(j)...At the Closing, the Forum Portfolio will have good and
marketable title to all of the securities and other assets shown on the
statement of assets and liabilities referred to in Section 6(a) hereof, free and
clear of all liens or encumbrances of any nature whatsoever except such
restrictions as might arise under the 1933 Act with respect to privately placed
or otherwise restricted securities that the Forum Portfolio may have acquired in
the ordinary course of business and such imperfections of title or encumbrances
as do not materially detract from the value or use of the assets subject
thereto, or materially affect title thereto.
18. REPRESENTATIONS AND WARRANTIES BY THE TRUST
The Trust represents and warrants to Forum Funds that:
(a)...The Trust is a business trust created under the laws of the
State of Delaware on July 10, 2000, and is validly existing and in good standing
under the laws of that state. The Trust, of which the Stratevest Fund is a
diversified separate series of shares, is duly registered under the 1940 Act, as
an open-end, management investment company and all of its shares sold have been
sold pursuant to an effective registration statement filed under the 1933 Act,
except for those shares sold pursuant to the private offering exemption for the
purpose of raising the required initial capital.
(b)...The Trust is authorized to issue an unlimited number of shares
of beneficial interest, without par value. Each outstanding share is fully paid,
non-assessable, fully transferable, and has full voting rights. The shares of
beneficial interest of the Stratevest Fund to be issued pursuant to this
Agreement will be fully paid, non-assessable, fully transferable and have full
voting rights.
(c)...At the Closing, the shares of beneficial interest of the
Stratevest Fund will be eligible for offering to the public in those states of
the United States and jurisdictions in which the shares of the Forum Portfolio
are presently eligible for offering to the public, and there are a sufficient
number of such shares registered under the 1933 Act, to permit the transfers
contemplated by this Agreement to be consummated.
(d) ..The books and records of the Stratevest Fund made available to
Forum Funds and/or its counsel are true and correct and contain no material
omissions with respect to the business and operations of the Stratevest Fund.
(e)...The Trust has the necessary power and authority to conduct its
business as such business is now being conducted.
(f)...The Trust is not a party to or obligated under any provision
of its Agreement and Declaration of Trust, By-laws, or any contract or any other
commitment or obligation, and is not subject to any order or decree, which would
be violated by its execution of or performance under this Agreement.
(g)...Neither the Trust nor the Stratevest Fund is under the
jurisdiction of a court in a title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
(h) ..The Stratevest Fund shall qualify as a regulated investment
company under Part I of Subchapter M of the Code in respect of its current
taxable year.
19. REPRESENTATIONS AND WARRANTIES BY FORUM FUNDS AND THE TRUST
-----------------------------------------------------------
Forum Funds and the Trust each represents and warrants to the other
that:
(a)...The statement of assets and liabilities to be furnished by it
as of the close of business on the Closing Date for the purpose of determining
the number of shares of beneficial interest of the Stratevest Fund to be issued
pursuant to Section 1 of this Agreement will accurately reflect its Net Assets
in the case of the Forum Portfolio and its net assets in the case of the
Stratevest Fund, and outstanding shares of beneficial interest, as of such date,
in conformity with generally accepted accounting principles applied on a
consistent basis.
(b)...There are no legal, administrative or other proceedings
against, or, to its knowledge, threatened against it which would materially
affect its financial condition or its ability to consummate the transactions
contemplated by this Agreement. It is not charged with or, to the best of its
knowledge, threatened with any violation or investigation of any possible
violation of any provisions of any federal, state or local law or regulation or
administrative ruling relating to any aspect of its business.
(c)...There are no known actual or proposed deficiency assessments
with respect to any taxes payable by it.
(d)...It has duly filed all Tax (as defined below) returns and
reports (including information returns), which are required to be filed by it,
and all such returns and reports accurately state the amount of Tax owed for the
periods covered by the returns, or, in the case of information returns, the
amount and character of income required to be reported by it. It has paid all
Taxes shown to be due on such returns and reports. The amounts set up as
provisions for Taxes in its books and records as of the Closing Date will, to
the extent required by generally accepted accounting principles, be sufficient
for the payment of all Taxes of any kind, whether accrued, due, absolute,
contingent or otherwise, which were or which may be payable by it for any
periods or fiscal years prior to or including the Closing Date, including all
Taxes imposed before or after the Closing Date which are attributable to any
such period or fiscal year. No return filed by it is currently being audited by
the Internal Revenue Service or by any state or local taxing authority. As used
in this Agreement, "Tax" or "Taxes" means all federal, state, local and foreign
(whether imposed by a country or political subdivision or authority thereunder)
income, gross receipts, excise, sales, use, value added, employment, franchise,
profits, property, ad valorem or other taxes, stamp taxes and duties, fees,
assessments or charges, whether payable directly or by withholding, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority (foreign or domestic) with respect thereto.
(e)...It has full power and authority to enter into and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary action of its Board of
Trustees, and this Agreement constitutes its valid and binding obligation
enforceable in accordance with its terms.
(f) ..All information provided to Forum Funds by the Trust relating
to the Trust and The Stratevest Group, N.A. and other Trust service providers,
and by Forum Funds to the Trust relating to the Forum Portfolio and Forum
Administrative Services, LLC, and their respective affiliates, for inclusion in,
or transmittal with, the Combined Proxy Statement and Prospectus with respect to
this Agreement and Plan of Reorganization pursuant to which approval of the
Forum Portfolio's shareholders will be sought, shall not contain any untrue
statement of a material fact, or omit to state a material fact required to be
stated in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
20. COVENANTS OF FORUM FUNDS AND THE TRUST
(a)...Forum Funds and the Trust each covenant to operate their
respective businesses as presently conducted between the date hereof and the
Closing.
(b)...Forum Funds undertakes that it will not acquire the Stratevest
Fund's shares for the purpose of making distributions thereof other than to the
Forum Portfolio's shareholders.
(c)...Forum Funds and the Trust each agree that by the Closing, all
of its federal and other Tax returns and reports required by law to be filed on
or before such date shall have been filed and all federal and other Taxes shown
as due on said returns shall have either been paid or adequate liability
reserves shall have been provided for the payment of such Taxes.
(d)...Forum Funds will at the Closing provide the Trust with:
(1) A statement of the respective tax basis of all investments
to be transferred by the Forum Portfolio to the Stratevest Fund
certified by its transfer agent or the Forum Portfolio's Vice
President or Secretary to the best of their knowledge and belief.
(2) A copy of the shareholder ledger accounts for all the
shareholders of record of the Forum Portfolio as of the close of
business on the Closing Date, who are to become shareholders of the
Stratevest Fund as a result of the transfer of assets which is the
subject of this Agreement, certified by its transfer agent or the
Forum Portfolio's Vice President or Secretary to the best of their
knowledge and belief.
(e)...Forum Funds agrees to mail to each shareholder of record of
the Forum Portfolio entitled to vote at the meeting of shareholders at which
action on this Agreement is to be considered, in sufficient time to comply with
requirements as to notice thereof, a Combined Proxy Statement and Prospectus as
provided by the Trust.
(f)...The Trust will file with the United States Securities and
Exchange Commission (the "Commission") a Registration Statement on Form N-14
under the 1933 Act ("Registration Statement"), relating to the shares of
beneficial interest of the Stratevest Fund issuable hereunder, and will use its
best efforts to provide that such Registration Statement becomes effective as
promptly as practicable. At the time such Registration Statement becomes
effective, it (i) will comply in all material respects with the applicable
provisions of the 1933 Act, and the rules and regulations promulgated
thereunder; and (ii) will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. At the time the Registration Statement
becomes effective, at the time of the Forum Portfolio's shareholders' meeting,
and at the Closing, the prospectuses and statements of additional information
included in the Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
21. CONDITIONS PRECEDENT TO BE FULFILLED BY FORUM FUNDS AND THE TRUST
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The obligations of Forum Funds and the Trust to effectuate this
Agreement and the Plan of Reorganization hereunder shall be subject to the
following respective conditions:
(a)...That (1) all the representations and warranties of the other
party contained herein shall be true and correct as of the Closing with the same
effect as though made as of and at such date; (2) the other party shall have
performed all obligations required by this Agreement to be performed by it prior
to the Closing; and (3) the other party shall have delivered to such party a
certificate signed by its Secretary or equivalent officer to the foregoing
effect.
(b)...That the other party shall have delivered to such party a copy
of the resolutions approving this Agreement adopted by the other party's Board
of Trustees, certified by the Secretary or equivalent officer.
(c)...That the Commission shall not have issued an unfavorable
advisory report under Section 25(b) of the 1940 Act, nor instituted nor
threatened to institute any proceeding seeking to enjoin consummation of the
reorganization contemplated hereby under Section 25(c) of the 1940 Act, and no
other legal, administrative or other proceeding shall be instituted or
threatened which would materially affect the financial condition of either party
or would prohibit the transactions contemplated hereby.
(d)...That the adoption of this Agreement and the Plan of
Reorganization contemplated hereby shall have been approved by the holders of at
least a majority of the outstanding shares of the Forum Portfolio at a special
meeting.
(e)...That each party shall have declared a distribution or
distributions prior to the Closing Date which, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its ordinary income and all of its capital gain net income, if any, for the
period from the close of its last fiscal year to the close of business on the
Closing Date, and (ii) any undistributed ordinary income and capital gain net
income from any prior period. Capital gain net income has the meaning given such
term by Section 1222(9) of the Code.
(f)...That prior to or at the Closing, Forum Funds and the Trust
shall receive an opinion from Stradley, Ronon, Stevens & Young LLP, to the
effect that, provided the acquisition contemplated hereby is carried out in
accordance with this Agreement and in accordance with customary representations
provided by Forum Funds and the Trust in certificates delivered to officers of
the Trust:
(1) The acquisition by the Stratevest Fund of substantially
all of the assets of the Forum Portfolio, as provided for herein, in
exchange for the Stratevest Fund voting shares and the assumption by
the Stratevest Fund of the Forum Portfolio's liabilities, followed
by the distribution by the Forum Portfolio to its shareholders of
the Stratevest Fund voting shares, in complete liquidation, will
qualify as a reorganization within the meaning of Section 368(a)(1)
of the Code, and the Stratevest Fund and the Forum Portfolio will
each be a "party to the reorganization" within the meaning of
Section 368(b) of the Code;
(2) No gain or loss will be recognized by the Forum Portfolio
upon the transfer of substantially all of its assets to the
Stratevest Fund in exchange solely for voting shares of the
Stratevest Fund and the assumption by the Stratevest Fund of the
Forum Portfolio's liabilities (Section 361(a) and Section 357(a) of
the Code);
(3) No gain or loss will be recognized by the Forum Portfolio
upon the distribution of voting shares of the Stratevest Fund to its
shareholders pursuant to the liquidation of the Forum Portfolio (in
pursuance of the Plan of Reorganization) (Section 361(c)(1) of the
Code);
(4) No gain or loss will be recognized by the Stratevest Fund
upon the receipt by it of substantially all of the assets of the
Forum Portfolio in exchange solely for voting shares of the
Stratevest Fund (Section 1032(a) of the Code);
(5) The basis of the assets of the Forum Portfolio received by
the Stratevest Fund will be the same as the basis of such assets to
the Forum Portfolio immediately prior to the exchange (Section
362(b) of the Code);
(6) The holding period of the assets of the Forum Portfolio
received by the Stratevest Fund will include the period during which
such assets were held by the Forum Portfolio (Section 1223(2) of the
Code);
(7) No gain or loss will be recognized by the shareholders of
the Forum Portfolio upon the exchange of their shares in the Forum
Portfolio for voting shares of the Stratevest Fund (including
fractional shares to which they may be entitled) (Section 354(a) of
the Code);
(8) The basis of the Stratevest Fund's shares received by the
Forum Portfolio shareholders (including fractional shares to which
they may be entitled) shall be the same as the basis of the shares
of the Forum Portfolio exchanged therefor (Section 358(a)(1) of the
Code);
(9) The holding period of the Stratevest Fund's shares
received by the Forum Portfolio's shareholders (including fractional
shares to which they may be entitled) will include the holding
period of the Forum Portfolio shares surrendered in exchange
therefor, provided that the Forum Portfolio shares were held as a
capital asset on the effective date of the Reorganization (Section
1223(l) of the Code); and
(10) The Stratevest Fund will succeed to and take into account
as of the date of the transfer (as defined in Section 1.381(b)-1(b)
of the Treasury Regulations) the items of the Forum Portfolio
described in Section 381(c) of the Code, subject to the conditions
and limitations specified in Sections 381, 382, 383 and 384 of the
Code and the Treasury Regulations thereunder.
(g)...That the Trust shall have received an opinion in form and
substance satisfactory to it from Seward & Kissel LLP, counsel to Forum Funds,
to the effect that, subject in all respects to the effects of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws
now or hereafter affecting generally the enforcement of creditors' rights:
(1) Forum Funds was created as a business trust under the laws
of the State of Delaware on August 29, 1995, and is validly existing
and in good standing under the laws of the State of Delaware;
(2) Forum Funds is authorized to issue an unlimited number of
shares of beneficial interest, without par value, and assuming that
the initial shares of beneficial interest of the Forum Portfolio
were issued in accordance with the 1940 Act, and the Trust
Instrument and By-laws of Forum Funds, and that all other
outstanding shares of the Forum Portfolio were sold, issued and paid
for in accordance with the terms of the Forum Portfolio's prospectus
in effect at the time of such sales, each such outstanding share is
fully paid, non-assessable, fully transferable and has full voting
rights;
(3) Forum Funds is an open-end, investment company
of the management type registered as such under the 1940 Act;
(4) Except as disclosed in the Forum Portfolio's currently
effective prospectus, such counsel does not know of any material
suit, action, or legal or administrative proceeding pending or
threatened against Forum Funds, the unfavorable outcome of which
would materially and adversely affect Forum Funds or the Forum
Portfolio;
(5) All actions required to be taken by Forum Funds to
authorize this Agreement and to effect the Plan of Reorganization
contemplated hereby have been duly authorized by all necessary
action on the part of Forum Funds;
(6) Neither the execution, delivery nor performance of this
Agreement by Forum Funds violates any provision of its Trust
Instrument, its By-Laws, or the provisions of any agreement or other
instrument, known to such counsel to which Forum Funds is a party or
by which Forum Funds is otherwise bound; and
(7) This Agreement is the legal, valid and binding obligation
of Forum Funds and is enforceable against Forum Funds in accordance
with its terms.
In giving the opinions set forth above, this counsel may state that
it is relying on certificates of the officers of Forum Funds with regard to
matters of fact and certain certifications and written statements of
governmental officials with respect to the good standing of Forum Funds and the
Forum Portfolio.
(h)...That Forum Funds shall have received an opinion in form and
substance satisfactory to it from Stradley, Ronon, Stevens & Young LLP to the
effect that, subject in all respects to the effects of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other laws now or
hereafter affecting generally the enforcement of creditors' rights:
(1) The Trust was created as a business trust under the laws
of the State of Delaware on July 10, 2000, and is validly existing
and in good standing under the laws of the State of Delaware;
(2) The Trust is authorized to issue an unlimited number of
shares of beneficial interest, without par value, and, assuming that
the initial shares of beneficial interest of the Stratevest Fund
were issued in accordance with the 1940 Act and the Trust's
Agreement and Declaration of Trust and By-laws, and that all other
outstanding shares of the Stratevest Fund were sold, issued and paid
for in accordance with the terms of the Stratevest Fund's prospectus
in effect at the time of such sales, each such outstanding share is
fully paid, non-assessable, freely transferable and has full voting
rights;
(3) The Trust is an open-end investment company of the
management type registered as such under the 1940 Act;
(4) Except as disclosed in the Stratevest Fund's currently
effective prospectus, such counsel does not know of any material
suit, action, or legal or administrative proceeding pending or
threatened against the Trust, the unfavorable outcome of which would
materially and adversely affect the Trust or the Stratevest Fund;
(5) The shares of beneficial interest of the Stratevest Fund
to be issued pursuant to the terms of this Agreement have been duly
authorized and, when issued and delivered as provided in this
Agreement, will have been validly issued and fully paid and will be
nonassessable by the Trust or the Stratevest Fund;
(6) All actions required to be taken by the Trust to authorize
this Agreement and to effect the Plan of Reorganization contemplated
hereby have been duly authorized by all necessary action on the part
of the Trust;
(7) Neither the execution, delivery nor performance of this
Agreement by the Trust violates any provision of its Agreement and
Declaration of Trust, its Bylaws, or the provisions of any agreement
or other instrument, known to such counsel to which the Trust is a
party or by which the Trust is otherwise bound;
(8) This Agreement is the legal, valid and binding obligation
of the Trust and is enforceable against the Trust in accordance with
its terms; and
(9) The registration statement of the Trust filed with the
Commission on July 17, 2000, is, at the time of the signing of this
Agreement, effective under the 1933 Act, and, to the best knowledge
of such counsel, no stop order suspending the effectiveness of the
registration statement has been issued, and no proceedings for such
purpose have been instituted or are pending before or threatened by
the Commission under the 1933 Act, and nothing has come to its
attention that causes it to believe that at the time the
registration statement became effective, or at the time of the
signing of this Agreement, such registration statement (except for
the financial statements and other financial and statistical data
included therein, as to which counsel need express no opinion),
contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading; and such counsel knows of no
legal or government proceedings required to be described in the
registration statement or of any contract or document of a character
required to be described in the registration statement that is not
described as required.
In giving the opinions set forth above, this counsel may state that
it is relying on certificates of the officers of the Trust with regard to
matters of fact and certain certifications and written statements of
governmental officials with respect to the good standing of the Trust and the
Stratevest Fund.
(i)...That Forum Funds shall have received a certificate from the
Vice President and Secretary of the Trust to the effect that the statements
contained in the registration statement of the Trust filed with the Commission
on July 17, 2000, at the time the registration statement became effective, at
the date of the signing of this Agreement, at the Closing, and at all times
during this period did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(j)...That the Trust's Registration Statement with respect to the
shares of beneficial interest of the Stratevest Fund to be delivered to the
Forum Portfolio's shareholders in accordance with this Agreement shall have
become effective, and no stop order suspending the effectiveness of the
Registration Statement or any amendment or supplement thereto, shall have been
issued prior to the Closing or shall be in effect at the Closing, and no
proceedings for the issuance of such an order shall be pending or threatened on
that date.
(k)...That the shares of beneficial interest of the Stratevest Fund
to be delivered hereunder shall be eligible for sale by the Trust with each
state commission or agency with which such eligibility is required in order to
permit the shares lawfully to be delivered to each Forum Portfolio shareholder.
(l)...That at the Closing, Forum Funds transfers to the Stratevest
Fund aggregate Net Assets of the Forum Portfolio comprising at least 90% in fair
market value of the total net assets and 70% in fair market value of the total
gross assets recorded on the books of the Forum Portfolio on the Closing Date.
(m)...That the Forum Portfolio shall receive from the Trust a duly
executed instrument whereby the Trust on behalf of the Stratevest Fund assumes
all of the stated liabilities of the Forum Portfolio.
(n)...The Forum Portfolio and the Stratevest Fund shall have
received a letter, dated as of the Closing Date, in form and substance
reasonably satisfactory to them to the effect that on the basis of limited
procedures as agreed to by them and described in such letter (but not an
examination in accordance with generally accepted auditing standards):
(1) nothing came to their attention that caused them to
believe that the relevant unaudited pro forma financial statements
included in the Registration Statement do not comply as to form in
all material respects with the applicable accounting requirements of
Rule 11-02 of Regulation S-X or that the relevant pro forma
adjustments have not properly been applied to the historical amounts
in the compilation of those amounts;
(2) the data used in the calculation of the current and pro
forma expense ratios of the Forum Portfolio and the Stratevest Fund
appearing in the Registration Statement, including the proxy
materials, agree with the underlying accounting records of the Forum
Portfolio and the Stratevest Fund, as appropriate, or with written
estimates provided by officers of Forum Funds and the Trust, as
applicable, having responsibility for financial and reporting
matters; and
(3) the information relating to the Stratevest Fund and the
Forum Portfolio appearing in the Registration Statement that is
expressed in dollars or percentages of dollars has been obtained
from the accounting records of the Stratevest Fund or the Forum
Portfolio, as appropriate, or from schedules prepared by officers of
the Trust and Forum Funds, as applicable, having responsibility for
financial and reporting matters and such information is in agreement
with such records or schedules or with computations made therefrom.
(o)...That all required consents of other parties and all other
consents, orders, and permits of federal, state and local regulatory authorities
(including those of the Commission and of state Blue Sky securities authorities,
including any necessary "no-action" positions or exemptive orders from such
federal and state authorities) to permit consummation of the transaction
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order, or permit would not involve a risk of a material adverse
effect on the assets or properties of the Stratevest Fund or the Forum
Portfolio, provided that either party hereto may for itself waive any of such
conditions.
22. BROKERAGE FEES AND EXPENSES; OTHER AGREEMENTS
(a)...Forum Funds and the Trust each represents and warrants to the
other that there are no broker or finders' fees payable by it in connection with
the transactions provided for herein.
(b)...The expenses of entering into and carrying out the provisions
of this Agreement, including all legal and accounting expenses in connection
herewith, whether or not consummated, shall be borne exclusively by The
Stratevest Group, N.A. and/or its affiliates and/or subsidiaries and other
parties, and neither Forum Funds nor the Trust will bear any such expenses.
(c)...Any other provision of this Agreement to the contrary
notwithstanding, any liability of the Forum Portfolio under this Agreement or in
connection with the transaction contemplated herein with respect to the Forum
Portfolio, shall be discharged only out of the assets of the Forum Portfolio,
and no other series of Forum Funds shall be liable with respect thereto.
23. TERMINATION; WAIVER; ORDER
(a)...Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the Plan of Reorganization
abandoned at any time (whether before or after adoption thereof by the
shareholders of the Forum Portfolio) prior to the Closing as follows:
(1) by mutual consent of Forum Funds and the Trust;
(2) by the Trust if any condition precedent to its obligations set
forth in Section 8 has not been fulfilled or waived by the Trust;
or
(3) by Forum Funds if any condition precedent to its obligations set
forth in Section 8 has not been fulfilled or waived by Forum
Funds.
An election by Forum Funds or the Trust to terminate this Agreement
and to abandon the Plan of Reorganization shall be exercised, respectively, by
the Board of Trustees of Forum Funds or the Board of Trustees of the Trust.
(b)...In the event of termination of this Agreement pursuant to the
provisions hereof, the same shall become void and have no further effect, and
there shall not be any liability on the part of either Forum Funds or the Trust
or persons who are their trustees, officers, agents or shareholders in respect
of this Agreement.
(c)...At any time prior to the Closing, any of the terms or
conditions of this Agreement may be waived by either Forum Funds or the Trust,
respectively (whichever is entitled to the benefit thereof), by action taken by
the Board of Trustees of Forum Funds or the Board of Trustees of the Trust, if,
in the judgment of the Board of Trustees of Forum Funds or the Board of Trustees
of the Trust (as the case may be), such action or waiver will not have a
material adverse affect on the benefits intended under this Agreement to the
holders of shares of the Forum Portfolio or the Stratevest Fund, on behalf of
which such action is taken.
(d)...The respective representations, warranties and covenants
contained in Sections 4-7 hereof shall expire with, and be terminated by, the
consummation of the Plan of Reorganization, and neither Forum Funds nor the
Trust nor any of their officers, trustees, agents or shareholders shall have any
liability with respect to such representations or warranties after the Closing.
This provision shall not protect any officer, trustee, agent or shareholder of
Forum Funds or the Trust against any liability to the entity for which that
officer, trustee, agent or shareholder so acts or to its shareholders to which
that officer, trustee, agent or shareholder would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties in the conduct of such office.
(e)...If any order or orders of the Commission with respect to this
Agreement shall be issued prior to the Closing and shall impose any terms or
conditions which are determined by action of the Board of Trustees of Forum
Funds or the Board Trustees of the Trust to be acceptable, such terms and
conditions shall be binding as if a part of this Agreement without further vote
or approval of the shareholders of the Forum Portfolio, unless such terms and
conditions shall result in a change in the method of computing the number of
shares of beneficial interest of the Stratevest Fund to be issued to the Forum
Portfolio in which event, unless such terms and conditions shall have been
included in the proxy solicitation material furnished to the shareholders of the
Forum Portfolio prior to the meeting at which the transactions contemplated by
this Agreement shall have been approved, this Agreement shall not be consummated
and shall terminate unless Forum Funds shall promptly call a special meeting of
shareholders of the Forum Portfolio at which such conditions so imposed shall be
submitted for approval.
24. INDEMNIFICATION BY FORUM FUNDS AND THE FORUM PORTFOLIO
Forum Funds and the Forum Portfolio hereby agree to indemnify and
hold the Trust and the Stratevest Fund and each of them harmless from all loss,
liability and expense (including reasonable counsel fees and expenses in
connection with the contest of any claim) which the Trust or the Stratevest Fund
may incur or sustain by reason of the fact that (i) the Trust or the Stratevest
Fund shall be required to pay any corporate obligation of Forum Funds or the
Forum Portfolio, whether consisting of Tax deficiencies or otherwise, based upon
a claim or claims against Forum Funds or the Forum Portfolio which were omitted
or not fully reflected in the financial statements to be delivered to the Trust
in connection with the Closing; (ii) any representations or warranties made by
Forum Funds in Sections 4 and 6 hereof should prove to be false or erroneous in
any material respect; (iii) any covenant has been breached in any material
respect; or (iv) any claim is made alleging that (a) the Combined Proxy
Statement and Prospectus delivered to the shareholders of the Forum Portfolio in
connection with this transaction, or (b) the Registration Statement and
Prospectus on Form N-14 of which such Combined Proxy Statement and Prospectus
forms a part, included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
claim is based on written information furnished to Forum Funds by the Trust, its
investment adviser or distributor.
25. INDEMNIFICATION BY THE TRUST AND THE STRATEVEST FUND
----------------------------------------------------
The Trust and the Stratevest Fund hereby agree to indemnify and hold
Forum Funds and the Forum Portfolio harmless from all loss, liability and
expenses (including reasonable counsel fees and expenses in connection with the
contest of any claim) which Forum Funds or the Forum Portfolio may incur or
sustain by reason of the fact that (i) any representations or warranties made in
Sections 5 and 6 hereof should prove false or erroneous in any material respect,
(ii) any covenant has been breached in any material respect, or (iii) any claim
is made alleging that (a) the Combined Proxy Statement and Prospectus delivered
to the shareholders of the Forum Portfolio in connection with this transaction
or (b) the Registration Statement on Form N-14 of which such Combined Proxy
Statement and Prospectus forms a part, included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such claim is based on written information
furnished to the Trust by Forum Funds, its investment adviser or distributor.
26. NOTICE OF CLAIM OF INDEMNIFICATION
In the event that any claim is made against the Stratevest Fund in
respect of which indemnity may be sought by the Trust or the Stratevest Fund
from Forum Funds or the shareholders of the Forum Portfolio under Section 11 of
this Agreement, or, in the event that any claim is made against Forum Funds or
the Forum Portfolio in respect of which indemnity may be sought by Forum Funds
or the Forum Portfolio from the Trust or the Stratevest Fund under Section 12 of
this Agreement, then the party seeking indemnification (the "Indemnified Party")
shall, with reasonable promptness and before payment of such claim, give written
notice of such claim to the other party (the "Indemnifying Party"). If no
objection as to the validity of the claim is made in writing to the Indemnified
Party by the Indemnifying Party within thirty (30) days after giving notice
hereunder, then, the Indemnified Party may pay such claim and shall be entitled
to reimbursement therefor, pursuant to this Agreement. If, prior to the
termination of such thirty-day period, objection in writing as to the validity
of such claim is made to the Indemnified Party, the Indemnified Party shall
withhold payment thereof until the validity of the claim is established (i) to
the satisfaction of the Indemnifying Party, or (ii) by a final determination of
a court of competent jurisdiction, whereupon the Indemnified Party may pay such
claim and shall be entitled to reimbursement thereof, pursuant to this Agreement
and Plan of Reorganization, or (iii) with respect to any Tax claims, within
seven (7) calendar days following the earlier of (A) an agreement between Forum
Funds and the Trust that an indemnity amount is payable, (B) an assessment of a
Tax by a taxing authority, or (C) a "determination" as defined in Section
1313(a) the Code. For purposes of this Section 13, the term "assessment" shall
have the same meaning as used in Chapter 63 of the Code and Treasury Regulations
thereunder, or any comparable provision under the laws of the appropriate taxing
authority. In the event of any objection by the Indemnifying Party, the
Indemnifying Party shall promptly investigate the claim, and if it is not
satisfied with the validity thereof, the Indemnifying Party shall conduct the
defense against such claim. All costs and expenses incurred by the Indemnifying
Party in connection with such investigation and defense of such claim shall be
borne by it. These indemnification provisions are in addition to, and not in
limitation of, any other rights the parties may have under applicable law.
14. FINAL TAX RETURNS AND FORMS 1099 OF THE FORUM PORTFOLIO
(a)...After the Closing, Forum Funds shall or shall cause its agents
to prepare any federal, state or local Tax returns, including any Forms 1099,
required to be filed by Forum Funds with respect to the Forum Portfolio's final
taxable year ending with its complete liquidation and for any prior periods or
taxable years and shall further cause such Tax returns and Forms 1099 to be duly
filed with the appropriate taxing authorities.
(b)...Notwithstanding the provisions of Section 1 hereof, any
expenses incurred by Forum Funds (other than for payment of Taxes) in connection
with the preparation and filing of said Tax returns and Forms 1099 after the
Closing, shall be borne by the Forum Portfolio to the extent such expenses have
been accrued by the Forum Portfolio in the ordinary course without regard to the
Plan of Reorganization contemplated by this Agreement; any excess expenses shall
be borne by the investment adviser to the Stratevest Fund at the time such Tax
returns and Forms 1099 are prepared pursuant to an agreement between Forum
Advisors, LLC and The Stratevest Group, N.A. or their corporate parents.
15. ENTIRE AGREEMENT AND AMENDMENTS
This Agreement embodies the entire Agreement between the parties and
there are no agreements, understandings, restrictions, or warranties between the
parties other than those set forth herein or herein provided for. This Agreement
may be amended only by mutual consent of the parties in writing. Neither this
Agreement nor any interest herein may be assigned without the prior written
consent of the other party.
16. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all such counterparts together
shall constitute but one instrument.
17. NOTICES
Any notice, report, or demand required or permitted by any provision
of this Agreement shall be in writing and shall be deemed to have been given if
delivered or mailed, first class postage prepaid, addressed to Forum Funds at
Forum Financial Group, Two Portland Square, Portland, Maine 04101, Attention:
David I. Goldstein, Esquire, with copies to Anthony C.J. Nuland, Seward & Kissel
LLP, 1200 G Street, N.W., Suite 350, Washington, DC 20005, or to the Trust, at
5800 Corporate Drive, Pittsburgh, PA 15237-7000, Attention: C. Todd Gibson, as
the case may be.
18. GOVERNING LAW
This Agreement shall be governed by and carried out in accordance
with the internal laws of the State of Delaware.
IN WITNESS WHEREOF, Forum Funds and the Trust have each caused this
Agreement and Plan of Reorganization to be executed on its behalf by its duly
authorized officers, all as of the day and year first above written.
FORUM FUNDS, ON BEHALF OF THE
INVESTORS _________ FUND
Attest:
By: Leslie K. Klenk By: John Y. Keffer
Title: Secretary
Title:President
STRATEVEST FUNDS, ON BEHALF OF THE STRATEVEST
LARGE CAP CORE FUND
Attest:
By: By:
Title: Assistant Secretary Title: Vice President
25954 (10/00)
STATEMENT OF ADDITIONAL INFORMATION
STRATEVEST FUNDS
RELATING TO THE ACQUISITION OF THE ASSETS OF
INVESTORS EQUITY FUND AND INVESTORS GROWTH
FUND OF FORUM FUNDS
This Statement of Additional Information relates specifically to the
proposed acquisitions (the "Transactions") of the assets of the Investors Equity
Fund (the "Forum Equity Portfolio") and Investors Growth Fund (the "Forum Growth
Portfolio") of Forum Funds ("Forum Funds") by the Stratevest Large Cap Core Fund
(the "Stratevest Fund") of Stratevest Funds (the "Trust").
This Statement of Additional Information relating to the
Transactions also includes the following documents, which are attached hereto or
incorporated herein by reference:
o The Statement of Additional Information for the Stratevest Fund, dated
September 19, 2000.
o The Statement of Additional Information for the Forum
Equity Portfolio, dated October 1, 1999, as supplemented on
March 24, 2000; and the Statement of Additional Information
for the Forum Growth Portfolio, dated August 1, 2000.
o The Annual Report of the Forum Equity Portfolio, dated May 31,
2000; and the Annual Report of the Forum Growth Portfolio,
dated March 31, 2000.
o Pro forma financial statements reflecting the financial situation of the
Stratevest Fund following the Transaction as if the
Transaction had taken place on May 31, 2000, with respect to
the Forum Equity Portfolio, and pro forma financial
statements reflecting the financial situation of the
Stratevest Fund following the Transaction as if the
Transaction had taken place on May 31, 2000, with respect to
the Forum Growth Portfolio.
Much of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectus/Proxy Statement.
This Statement of Additional Information is not a Prospectus; a
Prospectus/Proxy Statement dated October 31, 2000, relating to the Transactions
may be obtained without charge from the Trust, 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-7000, or by calling 1-888-247-4505. This Statement of
Additional Information relates to, and should be read in conjunction with, such
Prospectus/Proxy Statement. The date of this Statement of Additional Information
is October 31, 2000.
PRO FORMA COMBINED FINANCIAL
INFORMATION FOR THE PERIOD ENDED MAY 31, 2000
The following unaudited pro forma combined financial information relates
to the acquisition of all the assets and liabilities of Investors Equity Fund
and Investors Growth Fund, each a series of Forum Funds, by and in exchange for
shares of beneficial interest of the Stratevest Large Cap Core Fund ("Large Cap
Core Fund"), a series of Stratevest Funds (the "Reorganizations"). The
information gives effect to the Reorganizations as if they had occurred on May
31, 2000, and consists of a statement of the pro forma combined portfolio of
investments, a statement of assets and liabilities as of May 31, 2000, and a
statement of operations for the year ended May 31, 2000. The pro forma combined
results of operations represent the level of expenses of the Large Cap Core Fund
following the Reorganizations as if the Reorganizations had been consummated on
May 31, 2000. There is no guarantee that the pro forma financial information
will accurately predict the actual results of the Reorganizations. This
unaudited information should be read in conjunction with the separate financial
statements of Investors Equity Fund and Investors Growth Fund.
[OBJECT OMITTED]
STRATEVEST FUNDS
PRO FORMA STATEMENTS OF ASSETS
AND LIABILITIES (UNAUDITED)
MAY 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FORUM FORUM
LARGE CAP INVESTORS INVESTORS
CORE EQUITY GROWTH PRO FORMA PRO FORMA
FUND FUND FUND ADJUSTMENTS COMBINED
---- ---- ---- ----------- --------
ASSETS
Investments in Portfolio
(Notes 1 and 2)
Investments at cost $- $5,239,148 $-
$17,757,032 $22,996,180
Net unrealized - 16,667,851 15,195,591 -
appreciation 31,863,442
------------------------------------- ------------
------------
Total investments at - 34,424,883 20,434,739 -
value 54,859,622
Interest, dividends and other - 27,806 37,227 - 65,033
receivables
Prepaid expense - 700 - - 700
Organization costs, net of - 1,732 7,757 - 9,489
amortization (Note 2)
--------------------------------------------------
----------- ------------
TOTAL ASSETS - 34,455,121 20,479,723 -
54,934,844
-------------------------------------------------------------
LIABILITIES
Payable to advisor - 10,312 - - 10,312
Payable to other related - 5,798 - - 5,798
parties
Accrued expenses and other - 40,989 33,438 - 74,427
liabilities
Dividends payable - - - 7,910,935 7,910,935
--------------------------------------------------
-------------------------------------------------------------
TOTAL LIABILITIES - 57,099 33,438 7,910,935 8,001,472
-------------------------------------------------------------
NET ASSETS $-
$34,398,022 $20,446,285 $(7,910,935)$46,933,372
=============================================================
COMPONENTS OF NET ASSETS
Paid in capital $- $2,467,506 $-
$12,569,991 $15,037,497
Undistributed net investment - - 32,438 - 32,438
income
Accumulated net realized gain - 5,160,180 2,750,755 -
from investments sold (7,910,935)
Net unrealized appreciation - 16,667,851 15,195,586 -
from investments 31,863,437
-------------------------------------------------------------
NET ASSETS $-
$34,398,022 $20,446,285 $(7,910,935)$46,933,372
=============================================================
SHARES OF BENEFICIAL INTEREST - 2,508,360 1,736,536 448,441 4,693,337
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE (NET
ASSETS DIVIDED BY SHARES OF $- $13.71 $11.77 - $10.00
BENEFICIAL INTEREST)
OFFERING PRICE PER SHARE
(NAV / (1 - MAXIMUM SALES $- $14.28 $12.26 - $10.58
LOAD))
See Pro Forma Footnotes to Pro
Forma Financial Statements
STRATEVEST FUNDS
PRO FORMA STATEMENTS OF
OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED MAY 31,
2000
FORUM FORUM
LARGE CAP INVESTORS INVESTORS
CORE EQUITY GROWTH PRO FORMA PRO FORMA
FUND FUND FUND ADJUSTMENTS COMBINED
---- ---- ---- ----------- --------
INVESTMENT INCOME
Interest income $- $34,883 $47,835 $- $82,718
Dividend income - 264,525 285,700 - 550,225
----------------------------------- ------------
--------------
TOTAL INVESTMENT LOSS - 299,408 333,535 - 632,943
-------------------------------------------------------------
EXPENSES
Investment advisory - 219,196 154,292 (21,488) 352,000
Administration - 67,445 47,475 (39,920) 75,000
Transfer agency - 97,749 71,824 (146,073) 23,500
Custody - 8,867 7,342 (4,716) 11,493
Accounting - 39,200 38,200 (50,648) 26,752
Audit - 14,400 15,004 (11,404) 18,000
Shareholder Service Fees - - - 117,334 117,334
Distribution fees - - - 117,334 117,334
Legal - 10,076 1,341 (5,417) 6,000
Trustees - 1,902 1,979 (881) 3,000
Reporting - 10,445 6,274 (5,719) 11,000
Pricing - 1,947 1,876 (3,823) -
Compliance - 2,970 1,280 24,890 29,140
Amortization of - 680 3,035 (3,715) -
organization costs
Miscellaneous - 4,228 993 2,779 8,000
-------------------------------------------------------------
TOTAL EXPENSES - 479,105 350,915 (31,467) 798,553
Fees waived and - (107,365) (89,258) 49,346 (147,277)
expenses reimbursed
----------------------------------- ------------
----------- --------------
NET EXPENSES - 371,740 261,657 17,879 651,276
-------------------------------------------------------------
--------------------------
NET INVESTMENT GAIN (LOSS) - (72,332) 71,878 (17,879) (18,333)
-------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net Realized Gain on - 5,788,225 2,844,842 - 8,633,067
Investments
Net Change in - (658,802) -
Unrealized Depreciation from (1,049,571) (1,708,373)
Investments
-------------------------------------------------------------
NET REALIZED AND UNREALIZED - 5,129,423 1,795,271 - 6,924,694
GAIN ON INVESTMENTS
-------------------------------------------------------------
INCREASE IN NET ASSETS $- $(17,879)
RESULTING FROM OPERATIONS $5,057,091 $1,867,149 $6,906,361
=============================================================
</TABLE>
See Pro Forma Footnotes to
Pro Forma Financial
Statements
[OBJECT OMITTED]
[OBJECT OMITTED]
[OBJECT OMITTED]
NOTE 1. GENERAL
The accompanying pro forma financial statements are presented to show the effect
of the proposed reorganizations of Investors Equity Fund and Investors Growth
Fund, each a series of Forum Funds, into Large Cap Core Fund (the "Fund"), a
series of Stratevest Funds, as if such reorganizations had taken place as of May
31, 2000, the fiscal year-end of Investors Equity Fund. Although Investors
Growth Fund's fiscal year-end was March 31, 2000, the information included for
Investors Growth Fund in the pro forma financial statements has been restated as
if Investors Growth Fund's fiscal year-end was May 31, 2000. The following notes
refer to the accompanying pro forma financial statements as if both of the
above-mentioned reorganizations of the Fund and Investors Equity Fund, and the
Fund and Investors Growth Fund, had taken place as of May 31, 2000.
Under the terms of the Agreements and Plans of Reorganization, the
reorganizations of Investors Equity Fund and Investors Growth Fund into the Fund
should be treated as tax-free business combinations and, accordingly, will be
accounted for by a method of accounting for tax-free mergers of investment
companies (sometimes referred to as the pooling without restatement method). The
acquisitions would be accomplished by an acquisition of the net assets of
Investors Equity Fund and Investors Growth Fund in exchange for shares of
beneficial interest of the Fund at net asset value. The statements of assets and
liabilities and the related statements of operations of the Fund, Investors
Equity Fund, and Investors Growth Fund have been combined as of May 31, 2000.
The Fund seeks to achieve its investment objective of long-term capital
appreciation by investing primarily in stocks of large-cap companies utilizing a
blended style of investing by using both a growth-based and value-based
strategy. It is expected that the Fund will have the overall portfolio
characteristics that define it as "large cap core," which is an investment style
that has elements of both growth and value investing. However, The Stratevest
Group, N.A., the Fund's investment adviser (the "Adviser"), will typically favor
a company's growth characteristics over its value characteristics.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements and schedules of investments of Investors Equity
Fund and Investors Growth Fund which are included in their annual reports dated
May 31, 2000 and March 31, 2000, respectively.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Stratevest Funds (the "Trust") is a Delaware business trust that is registered
as an open-end, management investment company under the Investment Company Act
of 1940, as amended (the "Act"). The Trust currently has six active investment
portfolios. Under its Trust Instrument, the Trust is authorized to issue an
unlimited number of shares of beneficial interest for each series of the Trust
without par value. The significant accounting policies consistently followed by
the Fund are as follows: SECURITY VALUATION - On each business day, the Trust
determines the net asset value per share of the Fund as of the close of the
regular trading day on the New York Stock Exchange. Securities, other than
short-term securities, for which market quotations are readily available, are
valued using the last reported sales price provided by independent pricing
services. If no sales price is reported, the mean of the last bid and asked
price is used. In the absence of readily available market quotations, securities
are valued at fair value as determined by the Trust's Board of Trustees pursuant
to the Trust's valuation procedures. Securities held by the Fund that have a
maturity of 60 days or less are valued at amortized cost, which approximates
market value.
SECURITY TRANSACTIONS AND INTEREST AND DIVIDEND INCOME - Investment transactions
are accounted for on trade date. Dividend income is recorded on the ex-dividend
date. Interest income is recorded as earned. Identified cost of investments sold
is used to determine gain or loss for both financial statements and federal
income tax purposes.
REPURCHASE AGREEMENTS - The Fund may invest in repurchase agreements. The Fund,
through its custodian, receives delivery of the underlying securities, whose
market value must always exceed the repurchase price.
DISTRIBUTIONS TO SHAREHOLDERS - Distributions of net investment income and net
capital gain, if any, are declared and paid at least annually. Distributions are
based on amounts calculated in accordance with applicable income tax
regulations, which may differ from generally accepted accounting principles.
These differences are due primarily to differing treatments of income and gain
on various investment securities held by the Fund, timing differences and
differing characterizations of distributions made by the Fund.
FEDERAL TAXES - The Fund intends to qualify each year as a regulated investment
company and distribute all of its taxable income. In addition, by distributing
in each calendar year substantially all of its net investment income, capital
gain and certain other amounts, if any, the Fund will not be subject to a
federal excise tax. Therefore, no federal income or excise tax provision is
required. EXPENSE ALLOCATION - The Trust accounts separately for the assets,
liabilities and operations of each of its series. Expenses that are directly
attributable to more than one series are allocated among the respective series
in proportion to each series' average daily net assets.
NOTE 3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser-- The investment adviser for the Fund is The Stratevest
Group, N.A. (the "Adviser"), a wholly-owned subsidiary of Banknorth Group.
Pursuant to an Investment Advisory Agreement, the Adviser receives an advisory
fee from the Fund at an annual rate of 0.75% of the Fund's average daily net
assets. Administrator - The administrator for the Fund is Federated Services
Company, a subsidiary of Federated Investors, Inc. For its services, Federated
Services Company receives a fee at an annual rate of the average aggregate daily
net assets of the Trust as specified below:
AVERAGE AGGREGATE DAILY
MAXIMUM ADMINISTRATIVE FEE NET ASSETS OF THE TRUST 0.150 of 1% on the first $500
million 0.125 of 1% on the next $500 million 0.110 of 1% on the next $1 billion
0.100 of 1% on assets in excess of $2 billion
After the Fund's first year of operations, the administrative fee received
during any fiscal year shall be at least $75,000 per series. Transfer Agent
and Dividend Disbursing Agent - Federated Services Company, through its
registered transfer agent subsidiary, Federated Shareholder Services Company,
maintains all necessary shareholder records. For its services, Federated
Shareholder Services Company receives an annual fee from the Fund of $18,000
plus shareholder account fees of $10.00 plus certain surcharges.
Other Service Provider - Forum Accounting Services, LLC ("FAcS") provides fund
accounting services to the Fund. For its services, FAcS receives an annual fee
of $45,000 per fund plus certain service charges. Forum Trust, LLC ("Forum
Trust") is custodian for the securities and cash of the Fund. For its services,
Forum Trust receives a fee from the Fund at an annual rate of 0.01% of the
Fund's average daily net assets, a yearly fee of approximately $5,000, plus
certain surcharges. NOTE 4. PRO FORMA ADJUSTMENTS The accompanying pro forma
financial statements include an adjustment to reflect a distribution of net
realized gain from Investors Equity Fund and Investors Growth Fund to their
shareholders as if the distribution had occurred prior to May 31, 2000. An
adjustment was made to shares of beneficial interest of Investors Equity Fund
and Investors Growth Fund as if the reorganizations had taken place on May 31,
2000. The number of shares were adjusted to reflect the same net asset value per
share for the combined entity as for the Fund.
Adjustments were made to expenses to reflect the expenses as they would have
appeared based on projected expenses of Investors Equity Fund and Investors
Growth Fund. Expenses for the Fund are reflected as if the reorganizations had
occurred as of June 1, 2000.
NOTE 5. SUBSEQUENT EVENTS
As of July 31, 2000, due to an in-kind redemption by a majority shareholder, net
assets of the Investors Growth Fund were reduced from the pro forma $20,446,285
to $5,360,845. As of August 1, 2000, the service providers for Investors Growth
Fund eliminated all fee waivers. Due to the decline in net assets and the
elimination of waivers, per share expenses of Investors Growth Fund have
substantially increased since May 31, 2000. Consequently, the estimated expenses
and net assets of Large Cap Core Fund reported in these pro forma financial
statements may be higher and lower, respectively, due to the smaller amount of
assets being transferred from Investors Growth Fund.
25955 (10/00)
FORUM FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF FORUM FUNDS
Revoking any such prior appointments, the undersigned appoints
David I. Goldstein, Linda J. Cohen and Leslie K. Klenk and (or, if only one
shall act, that one) proxies with power of substitution to vote all of the
shares of the Investors Equity Fund (the "Forum Portfolio"), a series of Forum
Funds, registered in the name of the undersigned at the Special Meeting of
Shareholders of the Forum Portfolio (the "Special Meeting") to be held at the
offices of Forum Fund Services, LLC, Two Portland Square, Portland, Maine 04101,
on December 1, 2000, at 10:00 a.m. (Eastern time), and at any postponement or
adjournment thereof.
The shares of beneficial interest represented by this Proxy will
be voted in accordance with the instructions given by the undersigned below. IF
THE PROXY IS RETURNED SIGNED AND NO INSTRUCTIONS ARE GIVEN, SUCH SHARES WILL BE
VOTED FOR THE PROPOSAL SET FORTH BELOW. IF ANY OTHER MATTERS PROPERLY COME
BEFORE THE SPECIAL MEETING ABOUT WHICH THE PROXIES WERE NOT AWARE PRIOR TO THE
TIME OF THE SOLICITATION, AUTHORIZATION IS GIVEN TO THE PROXIES TO VOTE IN THEIR
DISCRETION. Forum Funds has proposed the Proposal. The Board of Trustees
recommends voting FOR the Proposal.
PROPOSAL: To approve the Agreement and Plan of Reorganization (the
"Plan") between Forum Funds, on behalf of the Investors Equity Fund
(the "Forum Portfolio"), and the Stratevest Large Cap Core Fund (the
"Stratevest Fund"), a series of Stratevest Funds (the "Trust"), that
provides for the acquisition of all of the assets and assumption of
the liabilities of the Forum Portfolio in exchange for shares of
beneficial interest of the Stratevest Fund. The Stratevest Fund
shares will then be distributed proportionately to the shareholders
of the Forum Portfolio.
FOR _______ AGAINST _______ ABSTAIN _______
------- ------- ----------
(NOTE: Checking ABSTAIN will result in the shares covered by the Proxy being
treated as if they were voted AGAINST the Proposal.) Receipt is acknowledged of
the Notice and Proxy Statement for the Special Meeting to be held on December 1,
2000. PLEASE SIGN AND DATE THIS PROXY IN THE SPACE PROVIDED. Execution by
shareholders who are not individuals must be made by an authorized signatory.
Executors, administrators, trustees, guardians and others signing in a
representative capacity should give their full title as such.
AUTHORIZED SIGNATURE DATE
Printed Name (and Title if Applicable)
Authorized Signature (Joint Investor or Second Signatory) Date
Printed Name (and Title if Applicable)
A-18
FORUM FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF FORUM FUNDS
Revoking any such prior appointments, the undersigned appoints
David I. Goldstein, Linda J. Cohen and Leslie K. Klenk and (or, if only one
shall act, that one) proxies with power of substitution to vote all of the
shares of the Investors Growth Fund (the "Forum Portfolio"), a series of Forum
Funds, registered in the name of the undersigned at the Special Meeting of
Shareholders of the Forum Portfolio (the "Special Meeting") to be held at the
offices of Forum Fund Services, LLC, Two Portland Square, Portland, Maine 04101,
on December 1, 2000, at 10:00 a.m. (Eastern time), and at any postponement or
adjournment thereof.
The shares of beneficial interest represented by this Proxy will
be voted in accordance with the instructions given by the undersigned below. IF
THE PROXY IS RETURNED SIGNED AND NO INSTRUCTIONS ARE GIVEN, SUCH SHARES WILL BE
VOTED FOR THE PROPOSAL SET FORTH BELOW REGARDING THE REORGANIZATION OF THE FORUM
PORTFOLIO WITH THE STRATEVEST LARGE CAP CORE FUND. IF ANY OTHER MATTERS PROPERLY
COME BEFORE THE SPECIAL MEETING ABOUT WHICH PROXIES WERE NOT AWARE PRIOR TO THE
TIME OF THE SOLICITATION, AUTHORIZATION IS GIVEN TO THE PROXIES TO VOTE IN THEIR
DISCRETION. Forum Funds has proposed the Proposal. The Board of Trustees
recommends voting FOR the Proposal.
PROPOSAL: To approve the Agreement and Plan of Reorganization (the
"Plan") between Forum Funds, on behalf of the Investors Growth Fund
(the "Forum Portfolio"), and the Stratevest Large Cap Core Fund (the
"Stratevest Fund"), a series of Stratevest Funds (the "Trust"), that
provides for the acquisition of all of the assets and assumption of
the liabilities of the Forum Portfolio in exchange for shares of
beneficial interest of the Stratevest Fund. The Stratevest Fund
shares will then be distributed proportionately to the shareholders
of the Forum Portfolio.
FOR _______ AGAINST _______ ABSTAIN _______
------- ------- ----------
(NOTE: Checking ABSTAIN will result in the shares covered by the Proxy being
treated as if they were voted AGAINST the Proposal.) Receipt is acknowledged of
the Notice and Proxy Statement for the Special Meeting to be held on December 1,
2000. PLEASE SIGN AND DATE THIS PROXY IN THE SPACE PROVIDED. Execution by
shareholders who are not individuals must be made by an authorized signatory.
Executors, administrators, trustees, guardians and others signing in a
representative capacity should give their full title as such.
AUTHORIZED SIGNATURE DATE
Printed Name (and Title if Applicable)
Authorized Signature (Joint Investor or Second Signatory) Date
Printed Name (and Title if Applicable)
