Doc. #337652 v.05
Doc. #337652 v.05
File No.
33-_______
As filed with the SEC on August __, 2000
U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549FORM
N-14REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
X Pre-Effective Amendment No. Post-Effective Amendment No.
----- -----
(Check appropriate box or boxes)
STRATEVEST FUNDS
(Exact Name of Registrant as Specified in Charter)
1-800-245-0242
(Area Code and Telephone Number)
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7000
(Address of Principal Executive Offices --
Number, Street, City, State, Zip Code)
C. TODD GIBSON, ESQUIRE
FEDERATED SERVICES COMPANY
1001 LIBERTY AVENUE
PITTSBURGH, PA 15222-3779
(Name and Address of Agent for Service --
Number, Street, City, State, Zip Code)
Copies to:
BRUCE G. LETO, ESQUIRE
STRADLEY, RONON, STEVENS & YOUNG, LLP
2600 ONE COMMERCE SQUARE
PHILADELPHIA, PA 19103
Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement becomes effective
under the Securities Act of 1933, as amended.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON SEPTEMBER __, 2000,
PURSUANT TO RULE 488.
Title of Securities Being Registered - Shares of beneficial interest of
Stratevest Large Cap Core Fund
NO FILING FEE IS DUE BECAUSE REGISTRANT IS RELYING ON SECTION 24(F) OF THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
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
September __, 2000
Dear Valued Shareholder:
Enclosed is a Notice of Special Meeting of Shareholders (the
"Special Meeting"). The Special Meeting has been scheduled for November 3,
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:
the future asset size of the Stratevest Fund is
expected to be larger than the current asset size of the Forum
Portfolios, thus we expect the Reorganizations will result in
greater investment leverage and market presence;
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
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
PRELIMINARY COPY
FORUM FUNDS
INVESTORS EQUITY FUND
INVESTORS GROWTH FUND
Two Portland Square
Portland, Maine 04101
September __, 2000
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR NOVEMBER 3, 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 Shareholder
Services, LLC, Two Portland Square, Portland, Maine 04101, on November 3,
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
, 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
September __, 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..................................................................
What proposal am I voting on?......................................
How will the shareholder voting be handled?........................
COMPARISONS OF SOME IMPORTANT FEATURES...................................
How do the investment objectives, strategies and policies of the
Stratevest
Fund and the Forum Portfolios compare?.......................
What are the risks of investments in the Stratevest Fund and the
Forum Portfolios?............................................
How are the Trust and Forum Funds organized?.......................
Who manages the Stratevest Fund and the Forum Portfolios?..........
What are the fees and expenses the Stratevest Fund and the Forum
Portfolios, and what might they be after the Reorganization?.
Where can I find more financial information about the Forum Portfolios?
What are other key features of the Stratevest Fund and the Forum
Portfolios?..................................................
REASONS FOR THE REORGANIZATIONS..........................................
INFORMATION ABOUT THE REORGANIZATIONS....................................
How will the Reorganizations be carried out?.......................
Who will pay the expenses of the Reorganizations?..................
What are the tax consequences of the Reorganizations?..............
What should I know about the shares of the Stratevest Fund?........
What are the capitalizations of the Stratevest Fund and
the Forum Portfolios and what might the
capitalization be after the Reorganizations?.................
COMPARISON OF INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES.............
Are there any significant differences between the investment objectives
and strategies of the Stratevest Fund and the Forum Portfolios?
How do the fundamental investment restrictions of the Stratevest
Fund and the Forum Portfolios differ?........................
What are the risk factors associated with investments in the Stratevest
Fund and the Forum Portfolios?...............................
VOTING INFORMATION.......................................................
How many votes are necessary to approve the Plans?.................
How do I ensure my vote is accurately recorded?....................
Can I revoke my proxy?.............................................
What other matters will be voted upon at the Special Meeting?......
Who is entitled to vote?...........................................
What other solicitations will be made?.............................
Are there dissenters' rights?......................................
OTHER INFORMATION
Who are the principal holders of shares of the Forum Portfolios?...
What are the tax implications of investing in the Stratevest Fund
and the Forum Portfolios?....................................
INFORMATION ABOUT THE STRATEVEST FUND....................................
INFORMATION ABOUT THE FORUM PORTFOLIOS...................................
EXHIBITS TO THE PROSPECTUS AND PROXY STATEMENT
EXHIBIT A - FORM OF AGREEMENT AND PLAN OF REORGANIZATION........... A-1
PROSPECTUS AND PROXY STATEMENT
DATED SEPTEMBER __, 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 Shareholder
Services, LLC, Two Portland Square, Portland, Maine 04101, on November 3,
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
September ___, 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 __, 2000, which is incorporated by reference into this
Prospectus/Proxy Statement. Statements of Additional Information for the
Stratevest Fund dated September __, 2000 (relating to the Stratevest Fund's
Prospectus of the same date) and September __, 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 1-800-245-0242 or by writing to Stratevest Funds at 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7000.
A prospectus (dated October 1, 1999, as supplemented on December 21,
1999 and June 6, 2000) and a statement of additional information (dated
October 1, 1999, as supplemented on March 24, 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 Shareholder 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 ___, 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 in value to your
investment in shares of the Forum Portfolio in which you own 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 ______ ___, 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. 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 strategies that are used by the Adviser 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.
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.
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.
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 growth
characteristics of companies, both the Stratevest Fund and the Forum
Portfolios are subject to risks relating to investing for growth. There is a
risk that the earnings of these 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 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 may also adversely affect the value of these securities.
The Forum Growth Portfolio has additional risks due to its 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 nineteen 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 Dana R. Mitiguy. 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. Mitiguy has been a Senior Vice President and an Investment
Consultant of the Adviser since 1995. Mr. Mitiguy has over 16 years of
investment management and trust services experience. He earned a B.A. in
Economics from Middlebury College and attended Cannon Trust School. Mr.
Mitiguy has taken courses at Harvard University, Pace University and The New
York Institute of Finance. Mr. Mitiguy 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. 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. For the
fiscal year ended March 31, 2000, the Forum Adviser contractually agreed to
reduce their advisory and other service 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. 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
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 0.45%
Total Annual Fund Operating
Expenses 1.42% None 1.70%
Fee Waiver........................ 0.32% 2 None 0.31%5
Net Expense....................... 1.10% 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 so that total
operating expenses did not exceed 1.10%. Fee reductions may be reduced or
eliminated at any time for the period ended July 31, 2000.
3 The Stratevest Fund has not yet engaged in any activity and has 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
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 0.45%
Total Annual Fund Operating 2.65%
Expenses None 1.70%
Fee Waiver........................ 0.00% None 0.31%5
Net Expense....................... 2.65% None 1.39%
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 has not yet engaged in any activity and has 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.
<TABLE>
REORGANIZATION OF THE FORUM EQUITY PORTFOLIO AND THE FORUM GROWTH FUND
INTO THE STRATEVEST FUND
PRO FORMA FEE TABLE
AS OF MAY 31, 2000
<CAPTION>
Forum Forum Pro Forma
---------
Equity Growth Stratevest After
- -----
Portfolio Portfolio3 Fund4 Reorganizations5
--------- ---------- ---- ----------------
<S> <C> <C> <C> <C>
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......................0.32%2 0.00% None 0.31%6
Net Expense.....................1.10% 0.00% None 1.39%
</TABLE>
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 so that total
operating expenses did not exceed 1.10%. Fee reductions may be reduced or
eliminated at any time for the period ended July 31, 2000.
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 has not yet engaged in any activity and has no assets
or expenses.
5 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.
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.
Certain service providers have voluntarily undertaken 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 November 6,
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 1.36%.
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. 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.
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. 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. 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 potentially 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 historical
investment performance record of the Stratevest Fund; (vii) the anticipated
tax consequences of each Reorganization for each Forum Portfolio and its
shareholders; (viii) the fact that the costs of the Reorganizations would be
borne by the Adviser and/or other third parties; and (ix) 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 and
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.
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.
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>
Forum Funds - Forum Funds Stratevest Funds Pro Forma
Investors - Investors - Large Cap After
Equity Fund Growth Fund Core Fund Reorganizations
<S> <C> <C> <C> <C>
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 August ___, 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 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 an 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.
The Adviser also employs a similar process in selecting securities for
the investment portfolios of the Forum Equity Fund 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 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.
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. For example, 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, but its registration statement is silent 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.
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 is not authorized to enter into when-issued or delayed
delivery transactions. The Forum Growth Portfolio's registration statement
is silent on these types of transactions. While the Stratevest Fund is
authorized to lend its portfolio securities, it has no current intention to
do so.
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.
As a fundamental investment policy, the Forum Equity Portfolio may not
invest more than 15% of its 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 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 Stratevest Fund is subject to a similar non-fundamental
investment restriction. The Forum Growth Portfolio also may not sell
securities short. 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 is 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").
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 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 [_____________] 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
[__________] 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.
[__________] must receive your Proxy Card or Revocation Letter on or
before October __, 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 __________, 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 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
WHO ARE THE PRINCIPAL HOLDERS OF SHARES OF THE FORUM PORTFOLIOS?
As of the Record Date, there were ____ shares of the Forum Equity
Portfolio outstanding, and there were ____ 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 Percentage Ownership
Name and Address _______%
[TO BE INSERTED]
Forum Growth Portfolio Percentage Ownership
Name and Address ______%
[TO BE INSERTED]
The Adviser, in its capacity as a fiduciary, may also hold, as record
owner for the benefit of its trust customers, more than 5% of the outstanding
shares of the Forum Portfolios. As of the Record Date, the Adviser held, as
record owner, ___% of the outstanding shares of the Forum Equity Portfolio
and ___% of the Forum Growth Portfolio.
As of the Record Date, there were no shares of the Stratevest Fund
outstanding.
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 August ___,2000 and in the Statement of Additional Information related
to this Prospectus/Proxy Statement, which is dated September __, 2000.
Further information is contained in the Stratevest Fund's Statement of
Additional Information, dated September __, 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
1-800-245-0242. 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, 1999, as supplemented on December 21, 1999 and
June 6, 2000), its statement of additional information (dated October 1,
1999, as supplemented on March 24, 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.
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, Don L. Evans 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 November 3, 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 NO INSTRUCTIONS ARE GIVEN, SUCH SHARES WILL BE VOTED FOR PROPOSAL 1 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 Proposals. The Board of Trustees recommends voting
FOR Proposal 1.
1. 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 _______
------- ------- -------
2. PROPOSAL: To grant the proxies the authority to vote upon any
other business that may legally come before the Special Meeting
or any adjournment thereof.
FOR_______ WITHHOLD _______ ABSTAIN _______
------- ------- -------
(NOTE: Checking the box labeled 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 November 3, 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)
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, Don L. Evans 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 November 3, 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 NO INSTRUCTIONS ARE GIVEN, SUCH SHARES WILL BE VOTED FOR PROPOSAL 1 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 Proposals. The Board of Trustees
recommends voting FOR Proposal 1.
1. 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 _______
------- ------- -------
2. PROPOSAL: To grant the proxies the authority to vote upon any
other business that may legally come before the Special Meeting
or any adjournment thereof.
FOR _______ WITHHOLD _______ ABSTAIN _______
------- ------- -------
(NOTE: Checking the box labeled 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 November 3, 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)
EXHIBITS TO COMBINED
PROSPECTUS AND PROXY STATEMENT
EXHIBIT
A 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")
Doc. #337652 v.05
A-18
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:
1. 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.
2. 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.
3. CLOSING AND CLOSING DATE
The Closing Date shall be November 9, 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.
4. 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.
5. 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.
6. 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.
7. 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 ______________.
(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.
8. 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 to be held no later than , 2000 or such other
date as the parties may agree.
(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, from ________________ 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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
Doc. #337652 v.05
8
Doc. #337652 v.05
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 ___, 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 September __ 2000, relating to the
Transactions may be obtained without charge from the Trust, 5800 Corporate
Drive, Pittsburgh, Pennsylvania 15237-7000, or by calling 1-800-245-0242.
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 September __, 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>
FORUM FORUM
LARGE CAP INVESTORS INVESTORS
CORE EQUITY GROWTH PRO FORMA PRO FORMA
FUND FUND FUND ADJUSTMENTS COMBINED
---- ---- ---- ----------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in Portfolio (Notes 1
and 2)
Investments at cost $- $17,757,032 $5,239,148 $-
$22,996,180
Net unrealized appreciation - 16,667,851 15,195,591 -
31,863,442
------------------------------------------- ------------
-------------
Total investments at value - 34,424,883 20,434,739 -
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 parties - 5,798 - - 5,798
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 $- $12,569,991 $2,467,506 $-
$15,037,497
Undistributed net investment income - - 32,438 - 32,438
Accumulated net realized gain from - 5,160,180 2,750,755 (7,910,935) -
investments sold
Net unrealized appreciation from - 16,667,851 15,195,586 -
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 LOAD)) $- $14.28 $12.26 - $10.58
See Pro Forma Footnotes to Pro Forma
Financial Statements
</TABLE>
<TABLE>
STRATEVEST FUNDS
PRO FORMA STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED MAY 31, 2000
<CAPTION>
FORUM FORUM
LARGE CAP INVESTORS INVESTORS
CORE EQUITY GROWTH PRO FORMA PRO FORMA
FUND FUND FUND ADJUSTMENTS COMBINED
---- ---- ---- ----------- --------
<S> <C> <C> <C> <C> <C>
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 organization costs - 680 3,035 (3,715) -
Miscellaneous - 4,228 993 2,779 8,000
-------------------------------------------------------------
TOTAL EXPENSES - 479,105 350,915 (31,467) 798,553
Fees waived and expenses reimbursed - (107,365) (89,258) 49,346 (147,277)
---------------------------------- -------------
----------- --------------
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 Investments - 5,788,225 - 8,633,067
2,844,842
Net Change in Unrealized - (658,802) - (1,708,373)
Depreciation from Investments (1,049,571)
-------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON - 5,129,423 - 6,924,694
INVESTMENTS 1,795,271
-------------------------------------------------------------
INCREASE IN NET ASSETS RESULTING FROM $- $(17,879) $6,906,361
OPERATIONS $5,057,091 $1,867,149
=============================================================
</TABLE>
See Pro Forma Footnotes to Pro Forma
Financial Statements
[OBJECT OMITTED]
[OBJECT OMITTED]
[OBJECT OMITTED]
PRO FORMA FOOTNOTES REGARDING THE REORGANIZATION OF INVESTORS EQUITY FUND AND
INVESTORS GROWTH FUND INTO STRATEVEST LARGE CAP CORE FUND (UNAUDITED)
(CONCLUDED)
MAY 31, 2000
PRO FORMA FOOTNOTES REGARDING THE REORGANIZATION OF INVESTORS EQUITY FUND AND
INVESTORS GROWTH FUND INTO STRATEVEST LARGE CAP CORE FUND (UNAUDITED)
MAY 31, 2000
Doc. #337652 v.05
10
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. Federated
Services Company may voluntarily waive a portion of its fee and may reimburse
the Fund for expenses.
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 will be higher due to the smaller amount of
assets being transferred from Investors Growth Fund.
7
Doc. #341814 v.04
PART C
OTHER INFORMATION
Item 15. Indemnification
Indemnification is provided to officers and Trustees of the
Registrant pursuant to Section 4 of Article VII of the
Registrant's Agreement and Declaration of Trust ("Declaration of
Trust"). The Investment Advisory Contract between the Registrant
and The Stratevest Group, N.A. ("Adviser") provides that, in the
absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties under the
Investment Advisory Contract on the part of Adviser, Adviser
shall not be liable to the Registrant or to any shareholder for
any act or omission in the course of or connected in any way with
rendering services or for any losses that may be sustained in the
purchase, holding, or sale of any security. The Registrant's
officers and Trustees are covered by an Investment Trust Errors
and Omissions Policy.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be
permitted to Trustees, officers, and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust
or otherwise, the Registrant is aware that, in the opinion of the
Securities and Exchange Commission ("SEC"), such indemnification
is against public policy as expressed in the 1933 Act, and,
therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by Trustees,
officers, or controlling persons of the Registrant in connection
with the successful defense of any act, suit, or proceeding) is
asserted by such Trustees, officers, or controlling persons in
connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be
governed by the final adjudication of such issues.
Insofar as indemnification for liabilities may be permitted
pursuant to Section 17 of the Investment Company Act of 1940, as
amended (the "1940 Act"), for Trustees, officers, and controlling
persons of the Registrant by the Registrant pursuant to the
Declaration of Trust or otherwise, the Registrant is aware of the
position of the SEC as set forth in Investment Company Act
Release No. IC-11330. Therefore, the Registrant undertakes that,
in addition to complying with the applicable provisions of the
Declaration of Trust or otherwise, in the absence of a final
decision on the merits by a court or other body before which the
proceeding was brought, that an indemnification payment will not
be made unless in the absence of such a decision, a reasonable
determination based upon factual review has been made (i) by a
majority vote of a quorum of non-party Trustees who are not
"interested persons" of the Registrant or (ii) by independent
legal counsel in a written opinion that the indemnitee was not
liable for an act of willful misfeasance, bad faith, gross
negligence, or reckless disregard of duties. The Registrant
further undertakes that advancement of expenses incurred in the
defense of a proceeding (upon undertaking for repayment unless it
is ultimately determined that indemnification is appropriate)
against an officer, Trustee, or controlling person of the
Registrant will not be made absent the fulfillment of at least
one of the following conditions: (i) the indemnitee provides
security for his undertaking; (ii) the Registrant is insured
against losses arising by reason of any lawful advances; or (iii)
a majority of a quorum of disinterested non-party Trustees, or
independent legal counsel in a written opinion, makes a factual
determination that there is reason to believe the indemnitee will
be entitled to indemnification.
Item 16. Exhibits
(1) Copies of the Charter of the Registrant as now in effect.
(a) Certificate of Trust of the Registrant, dated July 7, 2000,
as filed with the Office of the Secretary of State of the
State of Delaware on July 10, 2000, is incorporated herein
by reference to the Registrant's Registration Statement on
Form N-1A, as filed electronically with the SEC on July 17,
2000. (Accession Number: 0001119381-00-000002).
(b) Agreement and Declaration of Trust of the Registrant, dated
July 7, 2000, is incorporated herein by reference to the
Registrant's Registration Statement on Form N-1A, as filed
electronically with the SEC on July 17, 2000. (Accession
Number: 0001119381-00-000002).
(2) By-Laws.
By-Laws of the Registrant, dated as of June 30, 2000, are
incorporated herein by reference to the Registrant's Registration
Statement on Form N-1A, as filed electronically with the SEC on
July 17, 2000. (Accession Number: 0001119381-00-000002).
(3) Voting Trust Agreement.
Not applicable.
(4) Copies of the agreement of acquisition, reorganization, merger,
liquidation and any amendments to it:
Form of Agreement and Plan of Reorganization is filed herewith as
Exhibit A to the Combined Prospectus/Proxy Statement.
(5) Instruments defining the rights of security holders.
The rights of security holders of the Registrant are defined in
the following sections of the Registrant's Agreement and
Declaration of Trust and By-Laws:
(a) Agreement and Declaration of Trust.
See Article III, "Shares," Section 4 and Section 6; Article
V, "Shareholders' Voting Powers and Meetings," Section 1;
and Article VI, "Net Asset Value, Distributions and
Redemptions," Section 2.
(b) By-Laws.
See Article II, "Meetings of Shareholders," Section 6 and
Section 9.
(6) Investment Advisory Contracts.
Investment Advisory Agreement, dated ___________, 2000, between
The Stratevest Group, N.A. and the Registrant, on behalf of the
Stratevest Fund, is to be filed by amendment.
(7) Underwriting or Distribution Contracts.
Distribution Agreement, dated ___________, 2000, between Edgewood
Services, Inc. and the Registrant, on behalf of each series, is
to be filed by amendment.
(8) Bonus, Profit Sharing, Pension or other similar contracts.
Not Applicable.
(9) Custodian Agreements.
Custodian Agreement, dated ___________, 2000, between Forum
Trust, LLC and the Registrant, on behalf of each series, is to be
filed by amendment.
(10) Rule 12b-1 Plan and Rule 18f-3 Plan.
(a) Distribution Plan, dated __________, 2000, of the
Registrant, on behalf of each series, is to be filed by
amendment.
(b) Mutual Funds Sales and Service Agreement, dated __________,
2000, of the Registrant, on behalf of each series, is to be
filed by amendment.
(11) Opinion of Counsel.
Legal opinion of ____________________, counsel to the Registrant,
as to the legality of the securities being registered, is to be
filed by amendment.
(12) Opinion of Counsel supporting the tax matters and consequences to
shareholders.
(a) Tax opinion of Stradley, Ronon, Stevens & Young, LLP,
special counsel to Federated Services Company, the
administrator for the Registrant, supporting the tax
matters and consequences to shareholders discussed in the
Prospectus/Proxy Statement pertaining to the Forum Equity
Portfolio, is filed electronically herewith as Exhibit No.
EX-99.(12)(a).
(b) Tax opinion of Stradley, Ronon, Stevens & Young, LLP,
special counsel to Federated Services Company, the
administrator for the Registrant, supporting the tax
matters and consequences to shareholders discussed in the
Prospectus/Proxy Statement pertaining to the Forum Growth
Portfolio, is filed electronically herewith as Exhibit No.
EX-99.(12)(b).
(13) Other material contracts.
(a) Agreement for Fund Accounting Services, Administrative
Services and Transfer Agency Services, dated _____________,
2000, between Federated Services Company and the
Registrant, on behalf of each series, is to be filed by
amendment.
(b) Shareholder Services Agreement, dated _____________ 2000,
between The Stratevest Group, N.A. and the Registrant, on
behalf of each series, is to be filed by amendment.
(14) Other opinions and consents.
(a) Consent of Deloitte & Touche, LLP, independent auditors to
the Registrant, is filed electronically herewith as Exhibit
No. EX-99.(14)(a).
(b) Consent of Deloitte & Touche, LLP, independent auditors to
Forum Funds, is filed electronically herewith as Exhibit
No. EX-99.(14)(b).
(15) Omitted financial statements.
Not Applicable.
(16) Power of Attorney.
Power-of-Attorney appointing C. Todd Gibson as attorney-in-fact
and agent, is incorporated herein by reference to the
Registrant's Registration Statement on Form N-1A, as filed
electronically with the SEC on July 17, 2000. (Accession
Number: 0001119381-00-000002).
Item 17. Undertakings
(1) The undersigned registrant agrees that, prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act of 1933, as amended
(the "1933 Act"), the reoffering prospectus will contain the
information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the
applicable form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used
until the amendment is effective, and that, in determining any
liability under the 1933 Act, each post-effective amendment shall
be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the Registrant, in the City of Pittsburgh,
Commonwealth of Pennsylvania, on the 8th day of September 2000.
STRATEVEST FUNDS
By: /s/ C. Todd Gibson
---------------------------------------
C. Todd Gibson
President
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
SIGNATURE: TITLE: DATE:
/s/ C. Todd Gibson President, on behalf September 8, 2000
of the Trust and
himself, as President
and Trustee of the
Trust
---------------------------------
C. Todd Gibson
/s/ Peter J. Germain Trustee September 8, 2000
---------------------------------
Peter J. Germain
/s/ Beth S. Broderick Treasurer, Chief September 8, 2000
Accounting Officer and
Trustee
---------------------------------
Beth S. Broderick
EXHIBIT INDEX
Sequentially
Exhibit No. Document Numbered Page
----------- -------- -------------
EX-99.(12)(a) Form of Tax Opinion of Stradley, Ronon, Stevens
& Young, LLP pertaining to the Forum Equity
Portfolio
EX-99.(12)(b) Form of Tax Opinion of Stradley, Ronon, Stevens
& Young, LLP pertaining to the Forum Growth
Portfolio
EX-99.(14)(a) Consent of Deloitte & Touche, LLP, independent
auditors to Registrant
EX-99.(14)(b) Consent of Deloitte & Touche, LLP, independent
auditors to Forum Funds
3
Doc. #341814 v.04
[EX-99.(12)(A)]
______________, 2000
Board of Trustees
Stratevest Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Board of Trustees
Forum Funds
P.O. Box 446
Portland, Maine 04112
Re: AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF THE [___]
DAY OF
[ ], 2000 (THE "PLAN"), MADE BY FORUM FUNDS, ON
--------
BEHALF
OF ITS SERIES, THE INVESTORS EQUITY FUND (THE "ACQUIRED
FUND") AND
STRATEVEST FUNDS, ON BEHALF OF ITS SERIES, THE STRATEVEST
LARGE CAP
CORE FUND (THE "ACQUIRING FUND")
------------------------------------------------------------
-
Ladies and Gentlemen:
You have requested our opinion as to certain federal income tax
consequences of the reorganization of the Acquired Fund, which will consist
of: (i) the acquisition, by the Acquiring Fund, of substantially all of the
property, assets and goodwill of the Acquired Fund, in exchange solely for
shares of beneficial interest, without par value, of the Acquiring Fund (the
"Acquiring Fund Shares"); (ii) the distribution by the Acquired Fund of the
Acquiring Fund Shares to the shareholders of the Acquired Fund; and (iii)
the subsequent dissolution of the Acquired Fund, as soon as practicable after
the closing (the "Reorganization"), all upon and subject to the terms and
conditions of the Plan.
In rendering our opinion, we have reviewed and relied upon: (a)
the Plan, dated as of the [___] day of [ ], 2000, made by Stratevest
Funds and Forum Funds; (b) the proxy materials provided to shareholders of
the Acquired Fund in connection with the Special Meeting of Shareholders of
the Acquired Fund held on the 3rd day of November, 2000; (c) certain
representations concerning the Reorganization made to us by Stratevest Funds,
on behalf of the Acquiring Fund and the Acquired Fund, in a letter dated
[___________], 2000 (the "Representation Letter"); (d) all other documents,
financial and other reports and corporate minutes which we deemed relevant or
appropriate; and (e) such statutes, regulations, rulings and decisions as we
deemed material to the rendition of this opinion. All terms used herein,
unless otherwise defined, are used as defined in the Plan.
For purposes of this opinion, we have assumed that the Acquired
Fund, on the effective date of the Reorganization, satisfies, and following
the Reorganization, the Acquiring Fund will continue to satisfy, the
requirements of subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for qualification as a regulated investment company.
Under regulations to be prescribed by the Secretary of Treasury
under Section 1276(d) of the Code, certain transfers of market discount bonds
will be excepted from the requirement that accrued market discount be
recognized on disposition of a market discount bond under Section 1276(a) of
the Code. Such regulations are to provide, in part, that accrued market
discount will not be included in income if no gain is recognized under
Section 361(a) of the Code where a bond is transferred in an exchange
qualifying as a tax-free reorganization. As of the date hereof, the
Secretary of Treasury has not issued any regulations under Section 1276 of
the Code.
Based on the foregoing, and provided the Reorganization is
carried out in accordance with the applicable laws of the State of Delaware,
the Plan and the Representation Letter, it is our opinion that:
1. The acquisition by the Acquiring Fund of substantially all
of the assets of the Acquired Fund, as provided for herein, in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Acquired Fund's liabilities, followed by the distribution by the Acquired
Fund to its shareholders of the Acquiring Fund Shares, in complete
liquidation, will qualify as a reorganization within the meaning of Section
368(a)(1) of the Code, and the Acquired Fund and the Acquiring Fund 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 Acquired Fund
upon the transfer of substantially all of its assets to the Acquiring Fund in
exchange solely for the Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Acquired Fund's liabilities pursuant to Section 361(a)
and Section 357(a) of the Code.
3. No gain or loss will be recognized by the Acquired Fund
upon the distribution of the Acquiring Fund Shares to its shareholders
pursuant to the liquidation of the Acquired Fund (in pursuance of the Plan)
under Section 361(c)(1) of the Code.
4. No gain or loss will be recognized by the Acquiring Fund
upon the receipt by it of substantially all of the assets of the Acquired
Fund in exchange solely for the Acquiring Fund Shares pursuant to Section
1032(a) of the Code.
5. The basis of the assets of the Acquired Fund received by
the Acquiring Fund will be the same as the basis of such assets to the
Acquired Fund immediately prior to the exchange pursuant to Section 362(b) of
the Code.
6. The holding period of the assets of the Acquired Fund
received by the Acquiring Fund will include the period during which such
assets were held by the Acquired Fund pursuant to Section 1223(2) of the Code.
7. No gain or loss will be recognized by the shareholders of
the Acquired Fund upon the exchange of their shares of the Acquired Fund (the
"Acquired Fund Shares") for the Acquiring Fund Shares (including fractional
shares to which they may be entitled), pursuant to Section 354(a) of the Code.
8. The basis of the Acquiring Fund Shares received by the
shareholders of the Acquired Fund (including fractional shares to which they
may be entitled) will be the same as the basis of the Acquired Fund Shares
exchanged therefor pursuant to Section 358(a)(1) of the Code.
9. The holding period of the Acquiring Fund Shares received by
the shareholders of the Acquired Fund (including fractional shares to which
they may be entitled) will include the holding period of the Acquired Fund
Shares surrendered in exchange therefor, provided that the Acquired Fund
Shares were held as a capital asset on the effective date of the
Reorganization, pursuant to Section 1223(1) of the Code.
10. The Acquiring 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 Acquired Fund 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.
Our opinion is based upon the Code, the applicable Treasury
Regulations promulgated thereunder, the present position of the Internal
Revenue Service as set forth in published revenue rulings and revenue
procedures, present administrative positions of the Internal Revenue Service,
and existing judicial decisions, all of which are subject to change either
prospectively or retroactively. We do not undertake to make any continuing
analysis of the facts or relevant law following the date of this opinion.
Our opinion is conditioned upon the performance by the Acquiring
Fund and the Acquired Fund of their undertakings in the Plan and the
Representation Letter.
This opinion is being rendered to the Acquiring Fund and the
Acquired Fund, and may be relied upon only by such funds and the shareholders
of each.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
By:
---------------------------
3
Doc. #341814 v.04
[EX-99.(12)(B)]
______________, 2000
Board of Trustees
Stratevest Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Board of Trustees
Forum Funds
P.O. Box 446
Portland, Maine 04112
Re: AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF THE [___]
DAY OF [___], 2000 (THE "PLAN"), MADE BY FORUM FUNDS, ON
BEHALF OF ITS SERIES, THE INVESTORS GROWTH FUND (THE
"ACQUIRED FUND") AND STRATEVEST FUNDS, ON BEHALF OF ITS
SERIES, THE STRATEVEST LARGE CAP CORE FUND (THE "ACQUIRING
FUND")
Ladies and Gentlemen:
You have requested our opinion as to certain federal income tax
consequences of the reorganization of the Acquired Fund, which will consist
of: (i) the acquisition, by the Acquiring Fund, of substantially all of the
property, assets and goodwill of the Acquired Fund, in exchange solely for
shares of beneficial interest, without par value, of the Acquiring Fund (the
"Acquiring Fund Shares"); (ii) the distribution by the Acquired Fund of the
Acquiring Fund Shares to the shareholders of the Acquired Fund; and (iii)
the subsequent dissolution of the Acquired Fund, as soon as practicable after
the closing (the "Reorganization"), all upon and subject to the terms and
conditions of the Plan.
In rendering our opinion, we have reviewed and relied upon: (a)
the Plan, dated as of the [___] day of [ ], 2000, made by Stratevest
Funds and Forum Funds; (b) the proxy materials provided to shareholders of
the Acquired Fund in connection with the Special Meeting of Shareholders of
the Acquired Fund held on the 3rd day of November, 2000; (c) certain
representations concerning the Reorganization made to us by Stratevest Funds,
on behalf of the Acquiring Fund and the Acquired Fund, in a letter dated
[___________], 2000 (the "Representation Letter"); (d) all other documents,
financial and other reports and corporate minutes which we deemed relevant or
appropriate; and (e) such statutes, regulations, rulings and decisions as we
deemed material to the rendition of this opinion. All terms used herein,
unless otherwise defined, are used as defined in the Plan.
For purposes of this opinion, we have assumed that the Acquired
Fund, on the effective date of the Reorganization, satisfies, and following
the Reorganization, the Acquiring Fund will continue to satisfy, the
requirements of subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for qualification as a regulated investment company.
Under regulations to be prescribed by the Secretary of Treasury
under Section 1276(d) of the Code, certain transfers of market discount bonds
will be excepted from the requirement that accrued market discount be
recognized on disposition of a market discount bond under Section 1276(a) of
the Code. Such regulations are to provide, in part, that accrued market
discount will not be included in income if no gain is recognized under
Section 361(a) of the Code where a bond is transferred in an exchange
qualifying as a tax-free reorganization. As of the date hereof, the
Secretary of Treasury has not issued any regulations under Section 1276 of
the Code.
Based on the foregoing, and provided the Reorganization is
carried out in accordance with the applicable laws of the State of Delaware,
the Plan and the Representation Letter, it is our opinion that:
1. The acquisition by the Acquiring Fund of substantially all
of the assets of the Acquired Fund, as provided for herein, in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Acquired Fund's liabilities, followed by the distribution by the Acquired
Fund to its shareholders of the Acquiring Fund Shares, in complete
liquidation, will qualify as a reorganization within the meaning of Section
368(a)(1) of the Code, and the Acquired Fund and the Acquiring Fund 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 Acquired Fund
upon the transfer of substantially all of its assets to the Acquiring Fund in
exchange solely for the Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Acquired Fund's liabilities pursuant to Section 361(a)
and Section 357(a) of the Code.
3. No gain or loss will be recognized by the Acquired Fund
upon the distribution of the Acquiring Fund Shares to its shareholders
pursuant to the liquidation of the Acquired Fund (in pursuance of the Plan)
under Section 361(c)(1) of the Code.
4. No gain or loss will be recognized by the Acquiring Fund
upon the receipt by it of substantially all of the assets of the Acquired
Fund in exchange solely for the Acquiring Fund Shares pursuant to Section
1032(a) of the Code.
5. The basis of the assets of the Acquired Fund received by
the Acquiring Fund will be the same as the basis of such assets to the
Acquired Fund immediately prior to the exchange pursuant to Section 362(b) of
the Code.
6. The holding period of the assets of the Acquired Fund
received by the Acquiring Fund will include the period during which such
assets were held by the Acquired Fund pursuant to Section 1223(2) of the Code.
7. No gain or loss will be recognized by the shareholders of
the Acquired Fund upon the exchange of their shares of the Acquired Fund (the
"Acquired Fund Shares") for the Acquiring Fund Shares (including fractional
shares to which they may be entitled), pursuant to Section 354(a) of the Code.
8. The basis of the Acquiring Fund Shares received by the
shareholders of the Acquired Fund (including fractional shares to which they
may be entitled) will be the same as the basis of the Acquired Fund Shares
exchanged therefor pursuant to Section 358(a)(1) of the Code.
9. The holding period of the Acquiring Fund Shares received by
the shareholders of the Acquired Fund (including fractional shares to which
they may be entitled) will include the holding period of the Acquired Fund
Shares surrendered in exchange therefor, provided that the Acquired Fund
Shares were held as a capital asset on the effective date of the
Reorganization, pursuant to Section 1223(1) of the Code.
10. The Acquiring 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 Acquired Fund 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.
Our opinion is based upon the Code, the applicable Treasury
Regulations promulgated thereunder, the present position of the Internal
Revenue Service as set forth in published revenue rulings and revenue
procedures, present administrative positions of the Internal Revenue Service,
and existing judicial decisions, all of which are subject to change either
prospectively or retroactively. We do not undertake to make any continuing
analysis of the facts or relevant law following the date of this opinion.
Our opinion is conditioned upon the performance by the Acquiring
Fund and the Acquired Fund of their undertakings in the Plan and the
Representation Letter.
This opinion is being rendered to the Acquiring Fund and the
Acquired Fund, and may be relied upon only by such funds and the shareholders
of each.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
By:
---------------------------
Doc. #337652 v.05
[EX-99.(14)(B)]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-14 (the "Registration Statement on Form N-14") of (i) our
report dated July 7, 2000, relating to the financial statements and financial
highlights of the Investors Equity Fund appearing in the May 31, 2000 Annual
Report to Shareholders of the Investors Equity Fund, which is also
incorporated by reference into the Registration Statement on Form N-14 and
(ii) our report dated May 12, 2000, relating to the financial statements and
financial highlights of the Investors Growth Fund appearing in the March 31,
2000 Annual Report to Shareholders of the Investors Growth Fund, which is
also incorporated by reference into the Registration Statement on Form N-14.
/s / DELOITTE & TOUCHE, LLP
Boston, Massachusetts
September 8, 2000
