FORUM FUNDS INC, 485APOS, 1996-05-09

FORUM FUNDS INC
485APOS, 1996-05-09

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<PAGE>

As filed with the Securities and Exchange Commission on May 9, 1996

File No. 2-67052
File No. 811-3023

- - --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 34

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 34
-----------------------------------------------------

FORUM FUNDS
(Formerly Forum Funds, Inc.)
(Exact Name of Registrant as Specified in its Charter)

Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code: 207-879-1900
-----------------------------------------------------

David I. Goldstein, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
(Name and Address of Agent for Service)

Copies of Communications to:
Anthony C.J. Nuland, Esq.
Seward & Kissel
1200 G Street, N.W.
Washington, D.C. 20005
-----------------------------------------------------

It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485, paragraph (b)
-----
on [ ] pursuant to Rule 485, paragraph (b)
-----
60 days after filing pursuant to Rule 485, paragraph (a)(i)
-----
on [ ] pursuant to Rule 485, paragraph (a)(i)
-----
X 75 days after filing pursuant to Rule 485, paragraph (a)(ii)
-----
on [ ] pursuant to Rule 485, paragraph (a)(ii)
-----

this post-effective amendment designates a new effective date for
----- a previously filed post-effective amendment

Registrant has registered an indefinite number of shares of beneficial interest
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Accordingly, no fee is payable herewith. Registrant filed
a Rule 24f-2 notice for the most recent fiscal year on May 28, 1995.
<PAGE>

CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))

PART A
(Prospectus offering Shares of Daily Assets Treasury Fund, Daily Assets
Government Fund and Daily Assets Cash Fund)

FORM N-1A LOCATION IN PROSPECTUS
ITEM NO. (CAPTION)
- - --------- ----------------------
Item 1. Cover Page: Cover Page

Item 2. Synopsis: Prospectus Summary

Item 3. Condensed Financial
Information: Prospectus Summary; Financial
Highlights

Item 4. General Description
of Registrant: Prospectus Summary; Investment
Objective and Policies; Other
Information; Certain Risk Factors
(if included in Prospectus)

Item 5. Management of the Fund: Prospectus Summary; Management

Item 6. Capital Stock and
Other Securities Investment Objective and Policies;
Dividends and Tax Matters; Other
Information - The Trust and its
Shares

Item 7. Purchase of Securities
Being Offered: Purchases and Redemptions of
Shares; Other Information -
Determination of Net Asset Value;
Management

Item 8. Redemption or Repurchase
of Shares: Purchases and Redemptions of Shares

Item 9. Pending Legal Proceedings Not Applicable

-i-
<PAGE>

PART B
(SAI offering Shares of Daily Assets Treasury Fund, Daily Assets
Government Fund and Daily Assets Cash Fund)

LOCATION IN STATEMENT
FORM N-1A OF ADDITIONAL INFORMATION
ITEM NO. (CAPTION)
- - --------- -------------------------
Item 10. Cover Page: Cover Page

Item 11. Table of Contents: Cover Page

Item 12. General Information and History: Management; Other Information

Item 13. Investment Objectives and
Policies: Investment Policies; Investment
Limitations

Item 14. Management of the Registrant: Management

Item 15. Control Persons and
Principal Holders of
Securities: Other Information

Item 16. Investment Advisory
and Other Services: Management; Other Information -
Custodian, Counsel, Auditors

Item 17. Brokerage Allocation
and Other Practices: Portfolio Transactions

Item 18. Capital Stock and
Other Securities: Determination of Net Asset Value

Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered: Determination of Net Asset Value;
Additional Purchase and Redemption
Information

Item 20. Tax Status: Taxation

Item 21. Underwriters: Management

Item 22. Calculation of
Performance Data: Performance Data

Item 23. Financial Statements: Financial Statements

-ii-
<PAGE>

CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))

PART A
(Prospectus offering Shares of Sportsfund)

FORM N-1A LOCATION IN PROSPECTUS
ITEM NO. (CAPTION)
- - --------- ----------------------

Item 1. Cover Page: Cover Page

Item 2. Synopsis: Prospectus Summary

Item 3. Condensed Financial
Information: Not Applicable

Item 4. General Description
of Registrant: Prospectus Summary; Investment
Objective and Policies; Other
Information; Certain Risk Factors
(if included in Prospectus)

Item 5. Management of the Fund: Prospectus Summary; Management

Item 6. Capital Stock and
Other Securities Investment Objective, Policies and
Risk Factors; Distributions and Tax
Matters; Other Information - The
Trust and its Shares

Item 7. Purchase of Securities
Being Offered: Purchases and Redemptions of
Shares; Other Information -
Determination of Net Asset Value;
Management

Item 8. Redemption or Repurchase
of Shares: Purchases and Redemptions of Shares

Item 9. Pending Legal Proceedings Not Applicable

-iii-
<PAGE>

PART B
(SAI offering Shares of Sportsfund)

LOCATION IN STATEMENT
FORM N-1A OF ADDITIONAL INFORMATION
ITEM NO. (CAPTION)
- - --------- -------------------------

Item 10. Cover Page: Cover Page

Item 11. Table of Contents: Cover Page

Item 12. General Information and History: Management; Other Information

Item 13. Investment Objectives and
Policies: Investment Policies; Investment
Limitations

Item 14. Management of the Registrant: Management

Item 15. Control Persons and
Principal Holders of
Securities: Not Applicable

Item 16. Investment Advisory
and Other Services: Management; Other Information -
Custodian, Counsel, Auditors

Item 17. Brokerage Allocation
and Other Practices: Portfolio Transactions

Item 18. Capital Stock and
Other Securities: Determination of Net Asset Value

Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered: Determination of Net Asset Value;
Additional Purchase and Redemption
Information

Item 20. Tax Status: Taxation

Item 21. Underwriters: Management

Item 22. Calculation of
Performance Data: Performance Data

Item 23. Financial Statements: Not Applicable

-iv-

<PAGE>

FORUM FUNDS

DAILY ASSETS TREASURY FUND

DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
INSTITUTIONAL SHARES

Account Information and
Shareholder Servicing:
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
(207) 879-0001

PROSPECTUS

JULY [ ], 1996

- - --------------------------------------------------------------------------------

This Prospectus offers shares of Daily Assets Treasury Fund, Daily Assets
Government Fund and Daily Assets Cash Fund (each a "Fund"), which are
diversified portfolios of Forum Funds (the "Trust"), an open-end, management
investment company. Each Fund seeks to provide its shareholders with high
current income to the extent consistent with the preservation of capital and the
maintenance of liquidity.

DAILY ASSETS TREASURY FUND invests primarily in obligations issued or
guaranteed by the United States Treasury or by certain agencies and
instrumentalities of the United States Government with a view toward providing
income that is generally considered exempt from state and local income taxes.
DAILY ASSETS GOVERNMENT FUND invests primarily in obligations of the U.S.
Government, its agencies and instrumentalities, and in repurchase agreements
backed by these obligations.
DAILY ASSETS CASH FUND invests in a broad spectrum of high-quality money
market instruments.

EACH FUND CURRENTLY SEEKS TO ACHIEVE ITS OBJECTIVE BY INVESTING ALL OF ITS
INVESTABLE ASSETS IN A SEPARATE PORTFOLIO OF A REGISTERED, OPEN-END MANAGEMENT
INVESTMENT COMPANY WITH AN IDENTICAL INVESTMENT OBJECTIVE. SEE "PROSPECTUS
SUMMARY" AND "OTHER INFORMATION - FUND STRUCTURE."

Shares of the Fund are offered to investors at a price equal to the next
determined net asset value without any sales charge.

This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated July [ ], 1996, as may be amended from time to
time (the "SAI"), which contains more detailed information about the Trust and
the Funds and which is incorporated into this Prospectus by reference. The SAI
is available without charge by contacting the Trust at the address listed above.

Investors should read this Prospectus and retain it for future reference.

THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.

<PAGE>

FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>

1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUNDS

THE FUNDS. Each Fund seeks to achieve its investment objective by investing all
of its investable assets in Treasury Portfolio, Government Cash Portfolio and
Cash Portfolio (each a "Portfolio" and collectively the "Portfolios"), separate
series of Core Trust (Delaware) ("Core Trust"), itself a registered open-end
management investment company. Accordingly, the investment experience of each
Fund will correspond directly with the investment experience of its
corresponding Portfolio. See "Other Information - Fund Structure." This
prospectus offers shares of the Institutional class of each Fund ("Institutional
Shares").

MANAGEMENT. Forum Financial Services, Inc. ("Forum") supervises the overall
management of the Funds and the Portfolios and is the distributor of the Funds'
shares. Forum Advisors, Inc. ("Forum Advisors") is the investment adviser of
Treasury Portfolio and provides professional management of that Portfolio's
investments. Linden Asset Management, Inc. ( "Linden") is the investment
adviser of Government Cash Portfolio and Cash Portfolio and provides
professional management of those Portfolios' investments. Forum Advisors and
Linden provide certain subadvisory assistance for the Portfolio's they do not
directly advise. The Trust's transfer agent, dividend disbursing agent and
shareholder servicing agent (the "Transfer Agent") is Forum Financial Corp. See
"Management."

SHAREHOLDER SERVICING. The Trust has adopted a Shareholder Service Plan
relating to Institutional Shares of each Fund under which Forum is compensated
for various shareholder servicing activities. See "Management - Shareholder
Servicing."

PURCHASES AND REDEMPTIONS. Institutional Shares may be purchased and redeemed
Monday through Friday except on customary national business holidays, Good
Fridays and other days that the Federal Reserve Bank of San Francisco is closed
("Fund Business Days"). Shares of the Funds are offered without a sales charge
and may be redeemed without charge at the next determined net asset value. The
minimum initial investment is $10,000 ($2,000 for IRAs, $2,500 for exchanges)
and the minimum subsequent investment is $500. Shareholders may elect to have
redemptions of over $5,000 redeemed by bank wire to a designated bank account.
See "Purchases and Redemptions of Shares."

EXCHANGE PROGRAM. Shareholders of a Fund may exchange their shares without
charge for shares of the other Funds and for the shares of certain other funds
See "Purchases and Redemptions of Shares - Exchanges."

DIVIDENDS. Dividends of net investment income are declared daily and paid
monthly by each Fund and are reinvested in Fund shares unless a shareholder
elects to have them paid in cash. See "Dividends and Tax Matters."

INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Funds
invest in money market instruments, all securities involve some level of
investment risk.

EXPENSES OF INVESTING IN THE FUNDS

The purpose of the following table is to assist investors in understanding the
various expenses that an investor in a Fund will bear directly or indirectly.
The table reflects the combined expenses of the Funds and their corresponding
Portfolio. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares.

<PAGE>

ANNUAL FUND OPERATING EXPENSES(1)(2)
(as a percentage of average net assets, after applicable expense reimbursements)

Daily Assets Daily Assets
Treasury Government Daily Assets
Fund Fund Fund
---- ---- ----
Management Fees(3) 0.15% 0.13% 0.13%
Rule 12b-1 Fees None None None
Other Expenses(after reimbursements) 0.35% 0.42% 0.42%
---- ---- ----
Total Fund Operating Expenses 0.50% 0.55% 0.55%

(1) For a further description of the various expenses incurred in the operation
of the Funds and the Portfolios, see "Management." Expenses for each Fund are
based on annualized estimated expenses for the fiscal year ending August 31,
1996. Absent estimated expense reimbursements, "Other Expenses" for each of
Daily Assets Treasury Fund, Daily Assets Government Fund and Daily Assets Cash
Fund would be 0.60%, 0.46% and 0.55%, respectively, and "Total Fund Operating
Expenses "would be 0.75%, 0.59% and 0.68%, respectively.

(2) Each Fund's expenses include the Fund's pro rata portion of all operating
expenses of the corresponding Portfolio, which will be borne indirectly by Fund
shareholders. The Trust's board of trustees believes that the aggregate per
share expenses of each Fund and its respective Portfolio will be approximately
equal to the expenses the Fund would incur if its assets were invested directly
in money market securities.

(3) Management Fees include all administration fees and investment advisory
fees incurred by the Funds and the Portfolios; as long as its assets are
invested in a Portfolio, a Fund pays no investment advisory fees directly.

EXAMPLE

Following is a hypothetical example that indicates the dollar amount of expenses
that an investor in a Fund would pay assuming (i) the investment of all of the
Fund's assets in the Portfolio, (ii) a $1,000 investment in the Fund, (iii) a 5%
annual return, (iv) the reinvestment of all dividends and distributions and (v)
redemption at the end of each period:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- -------
Daily Assets Treasury Fund $5 $16 $28 $63
Daily Assets Government Fund $6 $18 $32 $71
Daily Assets Cash Fund $6 $18 $32 $71

The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Fund's projected returns; rather, it is required by government
regulation. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS
THAN INDICATED.

<PAGE>

2. FINANCIAL HIGHLIGHTS

The following information represents selected data for a single share
outstanding of Daily Assets Treasury Fund. As of July 1, 1996, Daily Assets
Government Fund and Daily Assets Cash Fund had not commenced operations. This
information has been audited in connection with an audit of the Fund's financial
statements by [ ], independent auditors. The financial
statements and independent auditors' report thereon for the fiscal year ended
March 31, 1996 are incorporated by reference into the SAI. The Fund's annual
report to shareholders may be obtained from the Trust without charge.

<TABLE>
<CAPTION>
Daily Assets Treasury Fund
Year Ended March 31,
1996 1995 1994 1993(1)
---- ---- ---- ----
<S> <C> <C> <C> <C>

Beginning Net Asset Value per Share $1.00 $1.00 $1.00 $1.00
Net Investment Income 0.04 0.03 0.02
Dividends from Net Investment Income (0.04) (0.03) (0.02)
Ending Net Asset Value per Share $1.00 $1.00 $1.00 $1.00
Ratios to Average Net Assets:
Expenses (2) 0.37% 0.33% 0.22%(3)
Net Investment Income 4.45% 2.82% 2.92%(3)
Gross Expenses (2) 1.10% 1.17% 2.43%(3)
Total Return 4.45% 2.83% 3.13%(3)
Net Assets at the End of Period (000's Omitted) $36,329 $26,505 $4,687

</TABLE>

(1) The Fund commenced operations on July 1, 1992.
(2) During the periods various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects the
expense ratio in the absence of any waivers and reimbursements.
(3) Annualized.

<PAGE>

3. INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

The investment objective of each Fund is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity. Each Fund currently seeks to achieve its investment objective by
investing all of its investable assets in its corresponding Portfolio, which has
the same investment objective. There can be no assurance that any Fund or
Portfolio will achieve its investment objective.

INVESTMENT POLICIES

The Portfolios invest only in high quality, short-term money market instruments
that are determined by an Adviser, pursuant to procedures adopted by the Core
Trust Board, to be eligible for purchase and to present minimal credit risks.
High quality instruments include those that (i) are rated (or, if unrated, are
issued by an issuer with comparable outstanding short-term debt that is rated)
in the highest rating category by two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO has issued a rating, by that
NRSRO or (ii) are otherwise unrated and determined by the Adviser to be of
comparable quality. A description of the rating categories of certain NRSROs,
such as Standard & Poor's and Moody's Investors Service, Inc., is contained in
the SAI.

Each Portfolio invests only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated under Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act")) and maintains a dollar-weighted
average portfolio maturity of 90 days or less. Except to the limited extent
permitted by Rule 2a-7 and except for U.S. Government Securities, each Portfolio
will not invest more than 5% of its total assets in the securities of any one
issuer. As used herein, "U.S. Government Securities" means obligations issued
or guaranteed as to principal and interest by the United States Government, its
agencies or instrumentalities.

Although each Portfolio only invests in high quality money market instruments,
an investment in a Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities, can change in value when
there is a change in interest rates, the issuer's actual or perceived
creditworthiness or the issuer's ability to meet its obligations.

TREASURY PORTFOLIO

Treasury Portfolio seeks to attain its investment objective by investing
primarily in obligations issued or guaranteed as to principal and interest by
the United States Treasury (U.S. Treasury Securities"). Under normal market
conditions, the Portfolio will invest at least 65% of its total assets in U.S.
Treasury Securities, such as Treasury bills and notes. The Portfolio may also
invest in other U.S. Government Securities. The Portfolio invests with a view
toward providing income that is generally considered exempt from state and local
income taxes. The Portfolio will purchase a U.S. Government Security that

<PAGE>

is not backed by the full faith and credit of the U.S. Government only if that
security has a remaining maturity of thirteen months or less.

Among the U.S. Government securities in which the Portfolio may invest are
obligations of the Farm Credit System, Farm Credit System Financial Assistance
Corporation, Federal Financing Bank, Federal Home Loan Banks, General Services
Administration, Student Loan Marketing Association, and Tennessee Valley
Authority. See "Investment Policies - Government Cash Portfolio." Income on
these obligations and the obligations of certain other agencies and
instrumentalities is generally not subject to state and local income taxes by
Federal law. In addition, the income received by Fund shareholders that is
attributable to these investments will also be exempt in most states from state
and local income taxes. Shareholders should determine through consultation with
their own tax advisors whether and to what extent dividends payable by the Fund
from interest received with respect to its investments will be considered to be
exempt from state and local income taxes in the shareholder's state.
Shareholders similarly should determine whether the capital gain and other
income, if any, payable by the Fund will be subject to state and local income
taxes in the shareholder's state. See "Dividend and Tax Matters."

U.S. GOVERNMENT ZERO COUPON SECURITIES. The Portfolio may invest in separately
traded principal and interest components of securities issued or guaranteed by
the U.S. Treasury under the Treasury's Separate Trading of Registered Interest
and Principal of Securities ("STRIPS") program. Zero coupon securities are sold
at original issue discount and pay no interest to holders prior to maturity.
Because of this, zero coupon securities may be subject to greater fluctuation of
market value than the other securities in which the Portfolio may invest. See
"Dividends and Tax Matters - Taxes."

GOVERNMENT CASH PORTFOLIO

Government Cash Portfolio seeks to attain its investment objective by investing
primarily in U.S. Government Securities and in repurchase agreements backed by
U.S. Government Securities. The U.S. Government Securities in which the
Portfolio may invest include securities issued by the U.S. Treasury and
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities that are backed by the full faith and credit of the U.S.
Government, such as those guaranteed by the Small Business Administration. In
addition, the U.S. Government Securities in which the Portfolio may invest
include securities supported primarily or solely by the creditworthiness of the
issuer, such as securities of the Federal National Mortgage Association. There
is no guarantee that the U.S. Government will support securities not backed

<PAGE>

by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than full faith and credit securities.

CASH PORTFOLIO

Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments. The Portfolio may invest in (i)
obligations of domestic financial institutions, (ii) U.S. Government Securities
(see "Investment Policies - Government Cash Portfolio") and (iii) corporate debt
obligations of domestic issuers.

Financial institution obligations include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of banks (including savings
banks and savings associations) and their foreign branches. The Portfolio
limits its investments in bank obligations to banks which at the time of
investment have total assets in excess of one billion dollars. Certificates of
deposit represent an institution's obligation to repay funds deposited with it
that earn a specified interest rate over a given period. Bank notes are debt
obligations of a bank. Bankers' acceptances are negotiable obligations of a
bank to pay a draft which has been drawn by a customer and are usually backed by
goods in international trade. Time deposits are non-negotiable deposits with a
banking institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.

Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" without registration under
the Securities Act of 1933. These "restricted securities" are restricted as to
disposition under the Federal securities laws in that any sale of these
securities may not be made absent registration under the Securities Act of 1933
or an appropriate exemption therefrom.

ADDITIONAL INVESTMENT POLICIES

The Portfolio's yields will tend to fluctuate inversely with prevailing market
interest rates. For instance, in periods of falling market interest rates, the
Portfolio's yields will tend to be somewhat higher than those rates. Although
the Portfolio invests in high quality money market instruments, an investment in
the Fund is subject to risk even if all securities in the Portfolio's portfolio
are paid in full at maturity. All money market instruments, including U.S.
Government Securities, can change in value when interest rates, the issuer's
actual or perceived creditworthiness or the issuer's ability to meet its
obligations change.

Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, may not be changed without approval of the
holders of a majority of the Fund's or Portfolio's, as applicable, outstanding
voting securities (as defined in the 1940 Act). Except as otherwise indicated
herein or in the SAI, investment policies of a Fund or a Portfolio may be
changed by the applicable board of trustees without shareholder approval. Each
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 Portfolio's total assets. Borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's total
assets. Each Portfolio is permitted to hold cash in any amount pending
investment in securities and may invest in other investment companies that
intend to comply with Rule 2a-7 and have substantially similar investment
objectives and policies. A further description of the Funds' and the
Portfolios' investment policies is contained in the SAI.

REPURCHASE AGREEMENTS. Each of Government Cash Portfolio and Cash Portfolio may
seek additional income by entering into repurchase agreements. Repurchase
agreements are transactions in which a Portfolio purchases a security and
simultaneously commits to resell that security to the seller at an agreed-upon
price on an agreed-upon future date, normally one to seven days later. The
resale price reflects a market rate of interest that is not related to the
coupon rate or maturity of the purchased security. Core Trust holds the
underlying collateral, which is maintained at not less than 100% of the
repurchase price. Repurchase agreements involve certain risks not associated
with direct investment in securities. The Portfolios, however, intend to enter
into repurchase agreements only with sellers which Linden believes present
minimal credit risks in accordance with guidelines established by the Core Trust
Board. In the event that a seller defaulted on its repurchase obligation,
however, a Portfolio might suffer a loss.

LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more
than 10% of its net assets in illiquid securities, including repurchase
agreements not entitling the Portfolio to payment of principal within seven
days. There may not be an active secondary market for securities held by a
Portfolio. The value of securities that have a limited market tend to

<PAGE>

fluctuate more than those that have an active market. For this reason, a
Portfolio could suffer a loss with respect to an instrument. The Adviser
monitors the liquidity of the Portfolios' investments, but there can be no
guarantee that an active secondary market will exist.

WHEN-ISSUED SECURITIES. In order to assure itself of being able to obtain
securities at prices which the Adviser believes might not be available at a
future time, each Portfolio may purchase securities on a when-issued or delayed
delivery basis. Securities so purchased are subject to market price fluctuation
and no interest on the securities accrues to a Portfolio until delivery and
payment take place. Accordingly, the value of the securities on the delivery
date may be more or less than the purchase price. Commitments for when-issued
or delayed delivery transactions will be entered into only when a Portfolio has
the intention of actually acquiring the securities. Failure by the other party
to deliver a security purchased by a Portfolio may result in a loss or missed
opportunity to make an alternative investment.

VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Portfolios
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the
index or market rate upon which the interest rate adjustments are based. Those
securities with ultimate maturities of greater than 397 days may be purchased
only pursuant to Rule 2a-7. Under that Rule, only those long-term instruments
that have demand features which comply with certain requirements and certain
U.S. Government Securities may be purchased. Similar to fixed rate debt
instruments, variable and floating rate instruments are subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness.

No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
short-term market rates (these prohibited securities are often referred to as
"derivative" securities). All variable and floating rate securities purchased
by a Portfolio will have an interest rate that is adjusted based on a single
short-term rate or index, such as the Prime Rate.

FORWARD COMMITMENT SECURITIES. The Portfolios may purchase securities on a
when-issued or delayed delivery basis (forward commitments). When these
transactions are negotiated, the price or yield is fixed at the time the
commitment is made, but delivery and payment for the securities take place at a
later date. Securities so purchased are subject to market price fluctuation
from the time of purchase, but no interest on the securities accrues to the
Portfolio until delivery and payment take place. Accordingly, the value of the
securities on the delivery date may be more or less than the purchase price.
Forward commitments will be entered into only when the Portfolio has the
intention of actually acquiring the securities, but the Portfolio may sell the
securities before the settlement date if deemed advisable.

FINANCIAL INSTITUTION GUIDELINES. Government Cash Portfolio invest only in
instruments which, if held directly by a bank or bank holding company organized
under the laws of the United States or any state thereof, would be assigned to a
risk-

<PAGE>

weight category of no more than 20% under the current risk based capital
guidelines adopted by the Federal bank regulators. In addition, these
Portfolios limit their investments to those permissible for Federally chartered
credit unions under applicable provisions of the Federal Credit Union Act and
the applicable rules and regulations of the National Credit Union
Administration. Government Cash Portfolio limits its investments to investments
that are legally permissible for Federally chartered savings associations
without limit as to percentage and to investments that permit Fund shares to
qualify as liquid assets and as short-term liquid assets.

4. MANAGEMENT

The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction the Core Trust Board. The
board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The Core Trust Board
performs similar functions for the Portfolios and Core Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust.

MANAGER AND DISTRIBUTOR

Subject to the supervision of the Board, Forum supervises the overall management
of the Trust and acts as distributor of the Trust's shares. Forum, Forum
Advisors and the Transfer Agent are members of the Forum Financial Group of
companies and together provide a full range of services to the investment
company and financial services industry. As of the date hereof, Forum acted as
manager and distributor of registered investment companies and collective trust
funds with assets of approximately $14 billion. Forum is a registered broker-
dealer and investment adviser and is a member of the National Association of
Securities Dealers, Inc. As of the date of this Prospectus, Forum, Forum
Advisors and the Transfer Agent were controlled by John Y. Keffer, President and
Chairman of the Trust.

Forum supervises all aspects of the Funds' operations, including the receipt of
services for which the Trust is obligated to pay, provides the Trust with
general office facilities and certain persons to serve as officers and provides,
at the Trust's expense, the services of persons necessary to perform such
supervisory, administrative and clerical functions as are needed to operate the
Trust effectively. Those officers, as well as certain employees and Trustees of
the Trust, may be directors, officers or employees of (and persons providing
services to the Trust may include) Forum and its affiliates. For these services
and facilities, Forum receives a fee at an annual rate of 0.10% of the daily net
assets of each Fund. Forum also serves as administrator of Core Trust and
provides administrative services for each Portfolio that are similar to those
provided to the Funds. For its administrative services to the Portfolios, Forum
receives a fee at an annual rate of 0.05% of the daily net assets of each
Portfolio. In addition, as distributor of each Fund Forum acts as the agent of
the Trust in connection with the offering of shares of the Funds.

ADVISERS

Subject to the general supervision of the Core Trust Board, Forum Advisors makes
investment decisions for Treasury Portfolio and monitors that Portfolio's
investments and Linden makes investment decisions for Government Cash Portfolio
and Cash Portfolio and monitors those Portfolios' investments. Forum Advisors,
which is located at Two Portland Square, Portland, Maine 04101, provides
investment advisory services to five other mutual funds. Linden, which is
located at 812 N. Linden Drive, Beverly Hills, California 90210, is controlled
by Anthony R. Fischer, Jr., who is its sole stockholder, director, and officer,
and provides investment advisory services to one other portfolio of Core Trust.
Forum Advisors and Linden act as investment advisers to the Portfolios that they
do not manage on a daily basis and from time to time may

<PAGE>

provide each other with assistance regarding the other's advisory
responsibilities. These services may include management of part of or all of
the Portfolios' investment portfolios.

For its services, Forum Advisors receives an advisory fee at an annual rate of
0.05% of Treasury Portfolio's average daily net assets. For its services,
Linden receives from Government Cash Portfolio and Cash Portfolio an advisory
fee based upon the total average daily net assets of those Portfolios and the
other portfolio of Core Trust that Linden advises ("Total Portfolio Assets").
Linden's fee is calculated at an annual rate on a cumulative basis as follows:
0.05% of the first $200 million of Total Portfolio Assets, 0.03% of the next
$300 million of Total Portfolio Assets, and 0.02% of the remaining Total
Portfolio Assets. A Funds' expenses include the Fund's pro rata portion of the
advisory fee paid by the corresponding Portfolio. To the extent Forum Advisors
or Linden has delegated its responsibilities to the other, Forum Advisors or
Linden pays its advisory fee accrued for such period of time to the other.
Currently, it is anticipated that the Adviser will delegate responsibility for
portfolio management infrequently to Forum Advisors.

SHAREHOLDER SERVICING

Shareholder inquiries and communications concerning the Funds may be directed to
the Transfer Agent. The Transfer Agent acts as the Fund's transfer agent and
dividend disbursing agent. The Transfer Agent maintains an account for each
shareholder of the Fund (unless such accounts are maintained by sub-transfer
agents or processing agents) and performs other transfer agency and shareholder
related functions. For its services, the Transfer Agent is paid a transfer
agent fee at an annual rate of 0.25% of the average daily net assets of each
Fund attributable to Institutional Shares plus $12,000 per year and certain
account and additional class charges and is reimbursed for certain expenses
incurred on behalf of the Funds.

The Transfer Agent is authorized to subcontract any or all of its functions to
one or more qualified sub-transfer agents or processing agents, which may be its
affiliates, who agree to comply with the terms of the Transfer Agent's agreement
with the Trust. The Transfer Agent may pay those agents for their services, but
no such payment will increase the Transfer Agent's compensation from the Trust.
In addition, the Transfer Agent performs portfolio accounting services for the
Fund, including determination of the Fund's net asset value per share, pursuant
to a separate agreement with the Trust and is paid a separate fee for these
services.

EXPENSES OF THE TRUST

The Fund's expenses comprise Trust expenses attributable to the Fund, which are
charged to the Fund, and expenses not attributable to a particular fund of the
Trust, which are allocated among the Fund and all other funds of the Trust in
proportion to their average net assets. Subject to any obligations of Forum or
Forum Advisors to reimburse the Trust for excess expenses, the Trust pays for
all of its expenses. Each service provider may elect to waive (or continue to
waive) all or any portion of its fees, which are accrued daily and paid monthly,
and may reimburse a Fund for certain expenses. Any such waivers or
reimbursements would have the effect of increasing a Fund's performance for the
period during which the waiver was in effect and would not be recouped at a
later date.

5. PURCHASES AND REDEMPTIONS OF SHARES

GENERAL INFORMATION

All transactions in Fund shares are effected through the Transfer Agent, which
accepts orders for purchases and redemptions from shareholders of record and new
investors. Shareholders of record will receive from the Trust periodic
statements listing all account activity during the statement period. The Trust
reserves the right in the future to modify, limit or terminate any shareholder
privilege in the future upon appropriate notice to shareholders and may charge a
fee for certain shareholder services, although no such fees are currently
contemplated.

<PAGE>

PURCHASES. Fund shares are sold at a price equal to their net asset value on
all weekdays except customary national business holidays and Good Friday ("Fund
Business Day"). Fund shares are issued immediately following the next
determination of net asset value made after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by the Transfer Agent. An investor's funds will not be
accepted or invested by the Fund during the period before the Fund's receipt of
Federal Funds. Daily Assets Treasury Fund's net asset value is calculated at
12:00 p.m., Eastern time, and Daily Assets Government Fund's and Daily Assets
Cash Fund's net asset value is calculated at 2:00 p.m., Eastern time. Fund
shares become entitled to receive dividends on the day the shares are issued.

The Fund reserves the right to reject any subscription for the purchase of Fund
shares. Stock certificates are issued only to shareholders of record upon their
written request and no certificates are issued for fractional shares.

REDEMPTIONS. Fund shares may be redeemed without charge at their net asset
value on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following acceptance by the
Transfer Agent of the redemption order in proper form (and any supporting
documentation which the Transfer Agent may require). Shares redeemed are not
entitled to receive dividends declared on or after the day on which the
redemption becomes effective.

Normally, redemption proceeds are paid immediately following, but in no event
later than seven days following, acceptance of a redemption order. Proceeds of
redemption requests (and exchanges), however, will not be paid unless any check
used for investment has been cleared by the shareholder's bank, which may take
up to 15 calendar days. This delay may be avoided by investing through wire
transfers. Unless otherwise indicated, redemption proceeds normally are paid by
check mailed to the shareholder's record address. The right of redemption may
not be suspended nor the payment dates postponed except when the New York Stock
Exchange is closed (or when trading thereon is restricted) for any reason other
than its customary weekend or holiday closings or under any emergency or other
circumstance as determined by the SEC.

Proceeds of redemptions normally are paid in cash. However, payments may be
made wholly or partially in portfolio securities if the Board determines that
payment in cash would be detrimental to the best interests of the Fund. The
Trust will only effect a redemption in portfolio securities if the particular
shareholder is redeeming more than $250,000 or 1% of the Fund's total net
assets, whichever is less, during any 90-day period.

The Trust employs reasonable procedures to ensure that telephone orders are
genuine (which include recording certain transactions and the use of shareholder
security codes) and, if it does not, may be liable for any losses due to
unauthorized or fraudulent telephone instructions. Shareholders should verify
the accuracy of telephone instructions immediately upon receipt of confirmation
statements. During times of drastic economic or market changes, telephone
redemption and exchange privileges may be difficult to implement. In the event
that a shareholder is unable to reach the Transfer Agent by telephone, requests
may be mailed or hand-delivered to the Transfer Agent.

PURCHASE AND REDEMPTION PROCEDURES

Investors may obtain the account application necessary to open an account by
writing the Transfer Agent at the address on the cover page of this prospectus.
For those shareholder services not referenced on the account application and to
change information on a shareholder's account (such as addresses), investors or
existing shareholders should request an optional services form from the Transfer
Agent.

INITIAL PURCHASE OF SHARES

There is a $10,000 minimum for initial investments in the Fund ($2,000 for
individual retirement accounts, $2,500 for exchanges).

BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to the address on the cover page of this
Prospectus. Checks are accepted at full value subject to collection. Payment
by a check drawn on any member of the Federal Reserve System can normally be
converted into Federal Funds within two business days after receipt of the
check. Checks drawn on some non-member banks may take longer.

<PAGE>

BY BANK WIRE. To make an initial investment in the Fund using the wire system
for transmittal of money among banks, an investor should first telephone the
Trust at (207) 879-0001 to obtain an account number. The investor should then
instruct a member commercial bank to wire the investor's money immediately to:

First National Bank of Boston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Financial Corp.
Account #: 541-54171

Re: [Name of Fund]
Account #:
Account Name:

The investor should then promptly complete and mail the account application.
Any investor planning to wire funds should instruct a bank early in the day so
the wire transfer can be accomplished the same day.

THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain brokers, banks or other financial institutions ("Processing
Organizations"), including affiliates of the Transfer Agent. Processing
Organizations may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
the Fund. The Trust is not responsible for the failure of any institution to
promptly forward these requests.

Investors who purchase or redeem shares in this manner will be subject to the
procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in the Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Customers who purchase Fund shares
through a Processing Organization may or may not be the shareholder of record
and, subject to their institution's and the Fund's procedures, may have Fund
shares transferred into their name. Certain Processing Organizations may enter
purchase orders with payment to follow. Certain states permit shares to be
purchased and redeemed only through registered broker-dealers, including Forum.

The Trust may confirm purchases and redemptions of a Processing Organization's
customers directly to the Processing Organization, which in turn will provide
its customers with such confirmations and periodic statements as may be required
by law or agreed to between the Processing Organization and its customers.

SUBSEQUENT PURCHASES OF SHARES

There is a $500 minimum for subsequent purchases. Subsequent purchases may be
made by mailing a check, by sending a bank wire or through a financial
institution as indicated above. Shareholders using the wire system for purchase
should first telephone the Trust at (207) 879-0001 to notify it of the wire
transfer. All payments should clearly indicate the shareholder's name and
account number.

Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to the Transfer Agent.

REDEMPTION OF SHARES
<PAGE>

Shareholders that wish to redeem shares by telephone or by check or receive
redemption proceeds by bank wire must elect these options by properly completing
the appropriate sections of their account application. These privileges may not
be available until several weeks after a shareholder's application is received.
Shares for which certificates have been issued may not be redeemed by telephone
or check.

BY MAIL. Shareholders may make a redemption in any amount by sending a written
request to the Transfer Agent accompanied by any stock certificate that may have
been issued to the shareholder. All written requests for redemption must be
signed by the shareholder with signature guaranteed and all certificates
submitted for redemption must be endorsed by the shareholder with signature
guaranteed.

BY TELEPHONE. A shareholder that has elected telephone redemption privileges
may make a telephone redemption request by calling the Transfer Agent at (207)
879-0001 and providing the shareholder's account number, the exact name in which
the shareholder's shares are registered and the shareholder's social security or
taxpayer identification number. In response to the telephone redemption
instruction, the Fund will mail a check to the shareholder's record address or,
if the shareholder has elected wire redemption privileges, wire the proceeds.

BY BANK WIRE. For redemptions of more than $5,000, a shareholder that has
elected wire redemption privileges may request the Fund to transmit the
redemption proceeds by Federal Funds wire to a bank account designated on the
shareholder's account application. To request bank wire redemptions by
telephone, the shareholder also must have elected the telephone redemption
privilege. Redemption proceeds are transmitted by wire on the day the
redemption request in proper form is received by the Transfer Agent.

AUTOMATIC REDEMPTIONS. Shareholders may redeem Fund shares at regular,
preselected intervals by authorizing the automatic redemption of shares from
their Fund account. Redemption proceeds will be sent either by check or by
automatic transfer to a designated bank account maintained with a United States
banking institution which is an Automated Clearing House member. Under this
program, shareholders may authorize the redemption of shares in amounts of $250
or more from their account monthly or quarterly. Shareholders may terminate
their automatic redemptions or change the amount to be redeemed at any time by
written notification to the Transfer Agent.

SIGNATURE GUARANTEES. A signature guarantee is required for any written
redemption request and for any endorsement on a stock certificate. In addition,
a signature guarantee is required for instructions to change a shareholder's
record name or address, designated bank account for wire redemptions or
automatic investment or redemption, dividend election, telephone redemption or
exchange option election or any other option election in connection with the
shareholder's account. Signature guarantees may be provided by any eligible
institution acceptable to the Transfer Agent, including a bank, a broker, a
dealer, a national securities exchange, a credit union, or a savings association
that is authorized to guarantee signatures. Whenever a signature guarantee is
required, the signature of each person required to sign for the account must be
guaranteed.

EXCHANGES

Shareholders may exchange their shares for Institutional Shares of the other
Funds, shares of any other fund of the Trust or any other mutual fund managed
by Forum that participates with the Fund in the exchange program (currently,
Sound Shore Fund, Inc.). Exchanges are subject to the fees charged by, and the
restrictions listed in the prospectus for, and the fund into which a shareholder
is exchanging, including minimum investment requirements. The minimum amount
required to open an account in the Fund through an exchange from another fund is
$2,500. The Fund does not charge for exchanges, and there is currently no limit
on the number of exchanges a shareholder may make, but the Fund reserves the
right to limit excessive exchanges by any shareholder. See "Additional Purchase
And Redemption Information" in the SAI.

Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in the
Fund through an exchange if the shareholder requests any shareholder privilege
not associated with the new account. Shareholders may only exchange into a fund
if that fund's shares may legally be sold in the shareholder's state of
residence.

The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Accordingly, a
shareholder may realize a capital gain or loss with respect to the shares
redeemed. Redemptions and purchases are effected at the respective net asset
values of the two funds as next determined following receipt of proper
instructions and all necessary supporting documents by the fund whose shares are
being exchanged.

<PAGE>

If a shareholder exchanges into a fund that imposes a sales charge, that
shareholder is required to pay the difference between that fund's sales charge
and any sales charge the shareholder has previously paid in connection with the
shares being exchanged. For example, if a shareholder paid a 2% sales charge in
connection with the purchase of the shares of a fund and then exchanged those
shares into another fund with a 3% sales charge, that shareholder would pay an
additional 1% sales charge on the exchange. Shares acquired through the
reinvestment of dividends and distributions are deemed to have been acquired
with a sales charge rate equal to that paid on the shares on which the dividend
or distribution was paid. The exchange privilege may be modified materially or
terminated by the Trust at any time upon 60 days' notice to shareholders.

BY MAIL. Exchanges may be accomplished by written instructions to the Transfer
Agent accompanied by any stock certificate that may have been issued to the
shareholder. All written requests for exchanges must be signed by the
shareholder (a signature guaranteed is not required) and all certificates
submitted for exchange must be endorsed by the shareholder with signature
guaranteed.

BY TELEPHONE. Exchanges may be accomplished by telephone by any shareholder
that has elected telephone exchange privileges by calling the Transfer Agent at
(207) 879-0001 and providing the shareholder's account number, the exact name in
which the shareholder's shares are registered and the shareholder's social
security or taxpayer identification number.

INDIVIDUAL RETIREMENT ACCOUNTS

The Funds may be a suitable investment vehicle for part or all of the assets
held in individual retirement accounts ("IRAs"). The minimum initial investment
for IRAs is $2,000, and the minimum subsequent investment is $500. Individuals
may make tax-deductible IRA contributions of up to a maximum of $2,000 annually.
However, this deduction will be reduced if the individual or, in the case of a
married individual filing jointly either the individual or the individual's
spouse, is an active participant in an employer-sponsored retirement plan and
has adjusted gross income above certain levels.

6. DIVIDENDS AND TAX MATTERS

DIVIDENDS

Dividends of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Net
capital gain realized by a Fund, if any, will be distributed annually. Fund
shares become entitled to receive dividends on the day the shares are issued.
Shares redeemed are not entitled to receive dividends declared on or after the
day on which the redemption becomes effective.

Shareholders may choose to have all dividends reinvested in additional shares of
the Fund or received in cash. In addition, shareholders may have dividends of
net capital gain reinvested in additional shares of the Fund and dividends of
net investment income paid in cash. All dividends are treated in the same
manner for Federal income tax purposes whether received in cash or reinvested in
shares of the Fund.

All dividends will be reinvested at the Fund's net asset value as of the payment
date of the dividend. All dividends are reinvested unless another option is
selected. All dividends not reinvested will be paid to the shareholder in cash
and may be paid more than seven days following the date on which dividends would
otherwise be reinvested.

TAXES

TAX STATUS OF THE FUNDS. Each Fund intends to qualify or continue to qualify to
be taxed as a "regulated investment company" under the Internal Revenue Code of
1986. Accordingly, each Fund will not be liable for Federal income taxes on the
net investment income and capital gain distributed to its shareholders. Because
the Funds intend to distribute all of their net investment income and net
capital gain each year, the Funds should also avoid Federal excise taxes.

<PAGE>

Dividends paid by each Fund out of its net investment income (including realized
net short-term capital gain) are taxable to the shareholders of the Fund as
ordinary income. Distributions of net long-term capital gain, if any, realized
by a Fund are taxable to shareholders as long-term capital gain, regardless of
the length of time the Fund shares were held by the shareholder at the time of
distribution.

THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio or losses have been realized by the Portfolio.

STATE AND LOCAL. Daily Assets Treasury Fund's investment policies are
structured to provide shareholders, to the extent permissible by Federal and
state law, with income that is exempt or excluded from income taxation at the
state and local level. Many states (by statute, judicial decision or
administrative action) do not tax dividends from a regulated investment company
that are attributable to interest on obligations of the U.S. Treasury and
certain U.S. Government agencies and instrumentalities if the interest on those
obligations would not be taxable to a shareholder that held the obligation
directly. As a result, substantially all dividends paid by this Fund to
shareholders residing in certain states will be exempt or excluded from state
income taxes. A portion of the dividends paid by Daily Assets Government Fund
and Daily Assets Cash Fund to shareholders may be exempt or excluded from state
income taxes, but these Funds are not managed to provide any specific amount of
state tax-free income to shareholders.

Shortly after the close of each year, a statement is sent to each shareholder of
the Funds advising the shareholder of the portions of total dividends paid into
the shareholder's account that is derived from each type of obligation in which
the Funds have invested. These portions are determined for the entire year and
on a monthly basis and, thus, are an annual or monthly average, rather than a
day-by-day determination for each shareholder.

GENERAL. Each Fund may be required by Federal law to withhold 31% of reportable
payments (which may include taxable dividends, capital gain distributions and
redemption proceeds) paid to individuals and certain other non-corporate
shareholders. Withholding is not required if a shareholder certifies that the
shareholder's social security or tax identification number provided to a Fund is
correct and that the shareholder is not subject to backup withholding.

Zero coupon securities are sold at original issue discount and pay no interest
to holders prior to maturity, but the Fund must include a portion of the
original issue discount of the security as income. Because Daily Assets
Treasury Fund distributes all of its net investment income, the Fund may have to
sell portfolio securities to distribute imputed income, which may occur at a
time when Forum Advisors would not have chosen to sell such securities and which
may result in a taxable gain or loss.

Reports containing appropriate information with respect to the Federal income
tax status of dividends and distributions paid during the year by the Funds will
be mailed to shareholders shortly after the close of each year.

The foregoing is only a summary of some of the important Federal and state tax
considerations generally affecting the Fund and its shareholders. There may be
other Federal, state or local tax considerations applicable to a particular
investor. Prospective investors are urged to consult their tax advisors.

7. OTHER INFORMATION

PERFORMANCE INFORMATION

The performance of Institutional Shares of a Fund may be quoted in advertising
in terms of yield or total return. All performance information is based on
historical results, may vary, is not intended to indicate future performance
and, unless otherwise indicated, is net of all expenses. A Fund's yield is a
way of showing the rate of income earned by the Fund as a percentage of the
Fund's share price. Yield is calculated by dividing the net investment income
of a Fund for a seven day period by the average number of shares entitled to
receive dividends and expressing the result as an annualized percentage rate
based on the Fund's share price at the beginning of the

<PAGE>

seven day period. Performance information may in part be based upon the
performance of the Portfolio in which a Fund invests.

The Funds' advertisements may also reference ratings and rankings among similar
funds by independent evaluators such as Morningstar, Lipper Analytical Services,
Inc. or IBC/Donoghue, Inc. In addition, the performance of the Funds may be
compared to recognized indices of market performance. The comparative material
found in a Fund's advertisements, sales literature, or reports to shareholders
may contain performance rankings. This material is not to be considered
representative or indicative of future performance.

BANKING LAW MATTERS

Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a Participating
Organization or perform sub-transfer agent or similar services for the Trust and
its shareholders. If a bank or bank affiliate were prohibited from performing
all or a part of the foregoing services, its shareholder customers would be
permitted to remain shareholders of the Trust and alternative means for
continuing to service them would be sought.

DETERMINATION OF NET ASSET VALUE

The Trust determines the net asset value per share of Daily Assets Treasury Fund
as of 12:00 p.m., eastern time, and of Daily Assets Government Fund and Daily
Assets Cash Fund as of 2:00 p.m., eastern time, on each Fund Business Day by
dividing the value of the Fund's net assets (I.E., the value of its portfolio
securities and other assets less its liabilities) by the number of the Fund's
shares outstanding at the time the determination is made.

In order to more easily maintain a stable net asset value per share, each
Portfolio's portfolio securities are valued at their amortized cost
(acquisition cost adjusted for amortization of premium or accretion of discount)
in accordance with Rule 2a-7. The Portfolios will only value their portfolio
securities using this method if the Board and the Core Trust Board believes that
it fairly reflects the market-based net asset value per share. The Funds' other
assets, if any, are valued at fair value by or under the direction of the Board.

THE TRUST AND ITS SHARES

<PAGE>

The Trust is registered with the SEC as an open-end management investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust's succeeded to the
assets and liabilities of Forum Funds, Inc. The Board has the authority to
issue an unlimited number of shares of beneficial interest of separate series
with no par value per share and to create classes of shares within each series.
There are currently ten series of the Trust.

[Controlling Shareholders to be added by (b) amendment]. From time to time this
or other shareholders may own a large percentage of shares of the Fund.
Accordingly, these shareholders may be able to greatly affect (if not determine)
the outcome of any shareholder vote.

Shares issued by the Trust have no conversion, subscription or preemptive
rights. Voting rights are not cumulative and the shares of each series or class
of the Trust will be voted separately except when an aggregate vote is required
by law. Separate votes are taken by each class of a Fund if a matter affects
just that class. The Trust is not required to hold annual meetings of
shareholders, and it is anticipated that shareholder meetings will be held only
when specifically required by law. Shareholders have available procedures for
requiring the Trustees to call a meeting and for removing Trustees.

FUND STRUCTURE

OTHER CLASSES OF SHARES. In addition to Institutional Shares, each Fund
currently has one other class of shares authorized, Investor Shares. Investor
Shares are offered to the general public and have an investment minimum of
[$5,000]. Investor Shares incur greater expenses than Institutional Shares.
Except for certain differences, each share of each class represents an
undivided, proportionate interest in a Fund. Each share of each Fund is
entitled to participate equally in dividends and other distributions and the
proceeds of any liquidation of that Fund except that, due to the differing
expenses borne by the various classes, the amount of dividends and other
distribution will differ among the classes.

CORE TRUST STRUCTURE. Each Fund invests all of its assets in its corresponding
Portfolio of Core Trust, a business trust organized under the laws of the State
of Delaware in September 1994 and registered under the 1940 Act as an open-end
management investment company. Accordingly, a Portfolio directly acquires its
own securities and its corresponding Fund acquires an indirect interest in those
securities. The assets of each Portfolio belong only to, and the liabilities of
the Portfolio are borne solely by, the Portfolio and no other portfolio of Core
Trust. Upon liquidation of a Portfolio, investors in the Portfolio would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.

THE PORTFOLIOS. The investment objective and fundamental investment policies of
the Funds and the Portfolios can be changed only with shareholder approval. See
"Prospectus Summary," "Investment Objective and Policies," and "Management" for
a description of the Portfolio's investment objective, policies, restrictions,
management, and expenses. A Fund's investment in a Portfolio is in the form of
a non-transferable beneficial interest. As of the date of this Prospectus,
Daily Assets Treasury Fund is the only investor that has invested all of its
assets in Treasury Portfolio. There are other investors in Government Cash
Portfolio and Cash Portfolio. All investors in a Portfolio invest on the same
terms and conditions as the Funds and will pay a proportionate share of the
Portfolio's expenses.

The Portfolios normally will not hold meetings of investors except as required
by the 1940 Act. Each investor in a Portfolio will be entitled to vote in
proportion to the relative value of its interest in the Portfolio. On most
issues subject to a vote of investors, as required by the 1940 Act and other
applicable law, a Fund will solicit proxies from shareholders of the Fund and
will vote its interest in a Portfolio in proportion to the votes cast by its
shareholders. There can be no assurance that any issue that receives a majority
of the votes cast by a Fund's shareholders will receive a majority of votes cast
by all investors in the Portfolio.

CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Portfolio
may be affected by the actions of other large investors in the Portfolio, if
any. If a large investor other than a Fund redeemed its interest in a
Portfolio, the Portfolio's remaining investors (including the Fund) might, as a
result, experience higher pro rata operating expenses, thereby producing lower
returns. A Fund may withdraw its entire investment from a Portfolio at any
time, if the Board determines that it is in the best interests of the Fund and
its shareholders to do so. The Fund might withdraw, for example, if other
investors in the Portfolio, by a vote of shareholders, changed the investment
objective or policies of the Portfolio in a manner not acceptable to the Board
or not permissible by the Fund. A withdrawal could result in a distribution in
kind of portfolio securities (as opposed to a cash distribution) by the
Portfolio. That distribution could result in a less diversified portfolio of
investments for the Fund, resulting in increased risk, and could affect
adversely the liquidity of the Fund's portfolio. If the Fund decided to convert
those securities to cash, it usually would incur transaction costs. If the Fund
withdrew its investment from the Portfolio, the Board would consider what action
might be taken, including the management of the Fund's assets in accordance with
its investment objective and policies by Forum Advisors or the

<PAGE>

investment of all of the Fund's investable assets in another pooled investment
entity having substantially the same investment objective as the Fund. Forum
has only one year of experience in managing funds that utilize its "Core and
Gateway " structure.

ADDITIONAL INFORMATION. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio investors may contact
Forum at 207-879-1900. If an investor invests through a financial institution,
the investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.

<PAGE>

FORUM FUNDS

DAILY ASSETS TREASURY FUND

DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND

Account Information and
Shareholder Servicing: Distributor:
Forum Financial Corp. Forum Financial Services, Inc.
P.O. Box 446 Two Portland Square
Portland, Maine 04112 Portland, Maine 04101
(207) 879-0001 (207) 879-1900

- - --------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

July [ ], 1996

This Statement of Additional Information supplements the Prospectus offering
Institutional Shares and Investor Shares of Daily Assets Treasury Fund, Daily
Assets Government Fund and Daily Assets Cash Fund, three portfolios of the
Trust, and should be read only in conjunction with the applicable Prospectus, a
copy of which may be obtained by an investor without charge by contacting the
Trust's Distributor at the address listed above.

TABLE OF CONTENTS
Page
----

1. General. . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Investment Policies. . . . . . . . . . . . . . . . . . . . .
3. Investment Limitations . . . . . . . . . . . . . . . . . . .
4. Investment by Financial Institutions . . . . . . . . . . . .
5. Performance Data . . . . . . . . . . . . . . . . . . . . . .
6. Management . . . . . . . . . . . . . . . . . . . . . . . . .
7. Determination of Net Asset Value . . . . . . . . . . . . . .
8. Portfolio Transactions . . . . . . . . . . . . . . . . . . .
9. Additional Purchase and Redemption Information . . . . . . .
10. Taxation . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Other Information. . . . . . . . . . . . . . . . . . . . . .
12. Financial statements . . . . . . . . . . . . . . . . . . . .
Appendix A - Description of Securities Ratings . . . . . . .

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.

<PAGE>

1. GENERAL

THE TRUST. The Trust is registered with the SEC as an open-end, management
investment company and was organized as a business trust under the laws of the
State of Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded
to the assets and liabilities of Forum Funds, Inc. Forum Funds, Inc. was
incorporated on March 24, 1980 and assumed the name of Forum Funds, Inc. on
March 16, 1987. The Board has the authority to issue an unlimited number of
shares of beneficial interest of separate series with no par value per share and
to create separate classes of shares within each series. There are currently
ten series of the Trust as follows:

International Fund
Payson Value Fund
Payson Balanced Fund.
Investors Bond Fund
TaxSavers Bond Fund
Maine Municial Bond Fund
New Hampshire Bond Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets Cash Fund

DEFINITIONS. As used in this Statement of Additional Information, the following
terms shall have the meanings listed:

"Advisers" means Forum Advisors and Linden.

"FFC" means Forum Financial Corp.

"Forum" means Forum Financial Services, Inc.

"Forum Advisors" means Forum Advisors, Inc.

"Fund" means Daily Assets Treasury Fund, Daily Assets Governemnt Fund or Daily
Assets Cash Fund.

"Fund Business Day" shall have the meaning ascribed thereto in the Prospectuses
of the Funds.

"Linden" means Linden Asset Management, Inc.

"NRSRO" means a nationally recognized statistical rating organization.

<PAGE>

"Portfolio" means the Treasury Portfolio, Government Cash Portfolio or Cash
Portfolio, portfolios of Core Trust.

"SAI" means this Statement of Additional Information.

"SEC" means the U.S. Securities and Exchange Commission.

"Trust" means Forum Funds, a Delaware business trust.

"U.S. Government Securities" means obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.

"1940 Act" means the Investment Company Act of 1940, as amended.

2. INVESTMENT POLICIES

Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio of Core Trust.
Following is information pertaining to the investment policies of each
Portfolio, which supplements the investment policy information contained in the
Funds' Prospectus.

Each Fund has a fundamental investment policy that allows it to invest all of
its investable assets in its corresponding Portfolio. All other investment
policies of each Fund and its corresponding Portfolio are identical. Therefore,
although this and the following sections discuss the investment policies of the
Portfolios (and the responsibilities of the Core Trust Board), it applies
equally to the Funds (and the Board). Information with respect to Daily Assets
Treasury Fund for periods prior to December 5, 1995 (for instance, investment
advisory fees paid), the date that Fund invested in Treasury Portfolio, reflects
information with respect to the Fund and the Fund's direct investment in
securities.

Debt securities with longer maturities tend to produce higher yields and are
generally subject to greater price movements than obligations with shorter
maturities. An increase in interest rates will generally reduce the market
value of portfolio investments, and a decline in interest rates will generally
increase the value of portfolio investments.

Each Portfolio invests at least 95% of its total assets in securities in the
highest rating category (as determined pursuant to Rule 2a-7 under the 1940
Act).

Government Cash Portfolio and Cash Portfolio currently are prohibited from
purchasing any security issued by the Federal Home Loan Mortgage Corporation.
This does not prohibit the Portfolios from entering into repurchase agreements
collateralized with securities issued by the Federal Home Loan Mortgage
Corporation.

Except for U.S. Government Securities (as defined in the Prospectus) and to the
limited extent otherwise permitted by Rule 2a-7 under the 1940 Act, the
Portfolios may not invest more than five percent of their total assets in (i)
the securities of any one issuer or (ii) securities that are rated (or are
issued by an issuer with comparable outstanding short-term debt that is rated)
in the second highest rating category or are unrated and determined by the
Advisers to be of comparable quality.

RATINGS AS INVESTMENT CRITERIA. Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Corporation ("S&P") and other NRSROs are private services that
provide ratings of the credit quality of debt obligations. A description of the

<PAGE>

higher quality ratings assigned to debt securities by several NRSROs is included
in Appendix A to this SAI. The Portfolios use these ratings in determining
whether to purchase, sell or hold a security. It should be emphasized, however,
that ratings are general and are not absolute standards of quality.
Consequently, securities with the same maturity, interest rate and rating may
have different market prices. Subsequent to its purchase by a Portfolio, an
issue of securities may cease to be rated or its rating may be reduced. An
Adviser, and in certain cases the Core Trust Board, will consider such an event
in determining whether the Portfolio should continue to hold the obligation.
Credit ratings attempt to evaluate the safety of principal and interest payments
and do not evaluate the risks of fluctuations in market value. Also, rating
agencies may fail to make timely changes in credit ratings in response to
developments and events, so that an issuer's current financial condition may be
better or worse than the rating indicates.

SMALL BUSINESS ADMINISTRATION SECURITIES. Each Portfolio (other than Treasury
Portfolio) may purchase securities issued by the Small Business Administration
("SBA"). SBA securities are variable rate securities that carry the full faith
and credit of the United States Government, and generally have an interest rate
that resets monthly or quarterly based on a spread to the Prime rate. SBA
securities generally have maturities at issue of up to 25 years. No Portfolio
may purchase an SBA Security if, immediately after the purchase, (i) the
Portfolio would have more than 15% of its net assets invested in SBA securities
or (ii) either the unamortized premium or unaccreted discount on SBA Securities
held by the Portfolio divided by the sum of the premium or discount securities'
par amount, respetively, would exceed 2.5% (0.025).

MORTGAGE BACKED SECURITIES

The Portfolios (other than treasury Portfolio) may purchase adjustable rate
mortgage backed or other asset backed securities (such as SBA securities) that
are U.S. Government Securities or, in the case of Treasury Cash Portfolio, that
are U.S. Treasury Securities. These securities directly or indirectly represent
a participation in, or are secured by and payable from, adjustable rate mortgage
or other loans which may be secured by real estate or other assets. Unlike
traditional debt instruments, payments on these securities include both interest
and a partial payment of principal. Prepayments of the principal of underlying
loans may shorten the effective maturities of these securities. Some adjustable
rate U.S. Government Securities (or the underlying loans) are subject to caps or
floors that limit the maximum change in interest rate during a specified period
or over the life of the security.

Adjustable rate mortgage backed securities ("MBSs") are securities that have
interest rates that are reset at periodic intervals, usually by reference to
some interest rate index or market interest rate. Government Cash Portfolio and
Cash Portfolio will only invest in adjustable rate MBSs that are U.S. Government
Securities. MBSs represent an interest in a pool of mortgages made by lenders
such as commercial banks, savings associations, mortgage bankers and mortgage
brokers and may be issued by governmental or government-related entities or by
non-governmental entities such as commercial banks, savings associations,
mortgage bankers and other secondary market issuers.

<PAGE>

Interests in pools of MBSs differ from other forms of debt securities which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. In contrast, MBSs
provide periodic payments which consist of interest and, in most cases,
principal. In effect, these payments are a "pass-through" of the periodic
payments and optional prepayments made by the individual borrowers on their
mortgage loans, net of any fees paid to the issuer or guarantor of such
securities. Additional payments to holders of MBSs are caused by prepayments
resulting from the sale of the underlying property or the refinancing or
foreclosure of the underlying mortgage loans. Such prepayments may
significantly shorten the effective maturities of MBSs, and occur more often
during periods of declining interest rates.

Although the rate adjustment feature of MBSs may act as a buffer to reduce sharp
changes in the value of MBSs, these securities are still subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rate is reset only periodically, changes
in the interest rate on MBSs may lag behind changes in prevailing market
interest rates. Also, some MBSs (or the underlying mortgages) are subject to
caps or floors that limit the maximum change in interest rate during a specified
period or over the life of the security.

During periods of declining interest rates, income to the Portfolios derived
from mortgages which are not prepaid will decrease as the coupon rate resets
along with the decline in interest rates in contrast to the income on fixed-rate
mortgages, which will remain constant. At times, some of the MBSs in which the
Portfolios will invest will have higher-than-market interest rates, and will
therefore be purchased at a premium above their par value. Unscheduled
prepayments, which are made at par, will cause the Portfolios to suffer a loss
equal to the unamortized premium, if any.

During periods of rising interest rates, changes in the coupon rates of the
mortgages underlying the Portfolios' investments may lag behind changes in
market interest rates. This may result in a slightly lower value until the
coupons reset to market rates. Many MBSs in the Portfolios' portfolios will
have "caps" that limit the maximum amount by which the interest rate paid by the
borrower may change at each reset date or over the life of the loan and
fluctuation in interest rates above these levels could cause these securities to
"cap out" and to behave more like fixed-rate debt securities.

The Portfolios may purchase collateralized mortgage obligations ("CMOs"), which
are collateralized by MBSs or by pools of conventional mortgages. CMOs are
typically structured with a number of classes or series that have different
maturities and are generally retired in sequence. Each class of bonds receives
periodic interest payments according to the coupon rate on the bonds. However,
all monthly principal payments and any prepayments from the collateral pool are
paid first to the "Class 1" bondholders. The principal payments are such that
the Class 1 bonds will be completely repaid no later than, for example, five
years after the offering date. Thereafter, all payments of principal are
allocated to the next most senior class of bonds until that class of bonds has
been fully repaid. Although full payoff of each class of bonds is contractually
required by a certain date, any or all classes of bonds may be paid off sooner
than expected because of an acceleration in pre-payments of the obligations
comprising the collateral pool.

Since the inception of the mortgage-related pass-through security in 1970, the
market for these securities has expanded considerably. The size of the primary
issuance market and active participation in the secondary market by securities
dealers and many types of investors make government and government-related pass-
through pools highly liquid.

Governmental or private entities may create new types of MBSs in response to
changes in the market or changes in government regulation of such securities.
As new types of these securities are developed and offered to investors, the
Adviser may, consistent with the investment objective and policies of a
Portfolio, consider making investments in such new types of securities.

WHEN-ISSUED SECURITIES AND DELAYED DELIVERY

<PAGE>

SECURITIES. Each Portfolio may purchase securities on a when-issued or delayed
delivery basis. In those cases, the purchase price and the interest rate
payable on the securities are fixed on the transaction date and delivery and
payment may take place a month or more after the date of the transaction. At
the time a Portfolio makes the commitment to purchase securities on a when-
issued or delayed delivery basis, the Portfolio will record the transactions as
a purchase and thereafter reflect the value each day of such securities in
determining its net asset value. If a Portfolio chooses to dispose of the right
to acquire a when-issued security prior to its acquisition, it could, as with
the disposition of any other portfolio obligation, incur a gain or loss due to
market fluctuation. Failure of an issuer to deliver the security may result in
the Portfolio incurring a loss or missing an opportunity to make an alternative
investment. When a Portfolio agrees to purchase a security on a when-issued or
delayed delivery basis, its custodian will set aside and maintain in a
segregated account cash, U.S. Government Securities or other liquid, high-grade
debt securities with a market value at all times at least equal to the amount of
its commitment.

ILLIQUID SECURITIES. Each Portfolio may invest up to 10% of its net assets in
illiquid securities. The term "illiquid securities" for this purpose means
repurchase agreements not entitling the holder to payment of principal within
seven days and securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market.

The Core Trust Board has ultimate responsibility for determining whether
specific securities are liquid or illiquid. The Core Trust Board has delegated
the function of making day-to-day determinations of liquidity to the Advisers
and, with respect to certain types of restricted securities which may be deemed
to be liquid, has adopted guidelines to be followed by the Advisers. The
Advisers take into account a number of factors in reaching liquidity decisions,
including but not limited to (1) the frequency of trades and quotations for the
security; (2) the number of dealers willing to purchase or sell the security and
the number of other potential buyers; (3) the willingness of dealers to
undertake to make a market in the security; (4) the nature of the marketplace
trades, including the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer; (5) whether the security is
registered; and (6) if the security is not traded in the United States, whether
it can be freely traded in a liquid foreign securities market. The Advisers
monitor the liquidity of the securities in each Portfolio's portfolio and report
periodically to the Core Trust Board.

Certificates of deposit and fixed time deposits that carry an early withdrawal
penalty or mature in greater than seven days are treated by the Portfolio as
illiquid securities if there is no readily available market for the instrument.

LENDING OF PORTFOLIO SECURITIES AND SECURITIES LENDING. In order to obtain
additional income, the Portfolios may from time to time lend securities from
their portfolio to brokers, dealers and financial institutions. Securities
loans must be callable at any time and must be continuously secured by
collateral from the borrower in the form of cash or U.S. Government Securities.
The Portfolios receive fees in respect of securities loans from the borrower or
interest from investing the cash collateral. The Portfolios may pay fees to
arrange the loans. As a fundamental policy, Treasury

<PAGE>

Portfolio, and as a nonfundamental policy, Government Cash Portfolio and Cash
Portfolio, may not lend portfolio securities in an amount greater than 33 1/3%
of the value of their total assets. The Portfolios intend to enter securities
loans only with those companies that the Advisers, under the general supervision
of the Core Trust Board, believes present minimal credit risks.

In connection with entering into repurchase agreements and securities loans, the
Portfolios require continual maintenance by the Trust's custodian of the market
value of the underlying collateral in amounts equal to, or in excess of, the
repurchase price plus the transaction costs (including loss of interest) that
the Portfolios could expect to incur upon liquidation of the collateral if the
counterparty defaults. The Portfolios' use of securities lending entails
certain risks not associated with direct investments in securities. For
instance, in the event that bankruptcy or similar proceedings were commenced
against a counterparty in these transactions or a counterparty defaulted on its
obligations, a Portfolio might suffer a loss. Failure by the other party to
deliver a security purchased by a Portfolio may result in a missed opportunity
to make an alternative investment. The Advisers monitor the creditworthiness of
counterparties to these transactions under the Core Trust Board's general
supervision and pursuant to specific Core Trust Board adopted procedures.and
intend to enter into these transactions only when they believe the
counterparties present minimal credit risks and the income to be earned from the
transaction justifies the attendant risks.

VARIABLE AND FLOATING RATE SECURITIES. The yield of variable and floating rate
securities varies in relation to changes in specific money market rates, such as
the Prime Rate. A "variable" interest rate adjusts at predetermined intervals
(for example, daily, weekly or monthly), while a "floating" interest rate
adjusts whenever a specified benchmark rate (such as the bank prime lending
rate) changes. These changes are reflected in adjustments to the yields of the
variable and floating rate securities, and different securities may have
different adjustment rates. Accordingly, as interest rates increase or
decrease, the capital appreciation or depreciation may be less on these
obligations than for fixed rate obligations. To the extent that the Portfolios
invest in long-term variable or floating rate securities, the Advisers believe
that the Portfolios may be able to take advantage of the higher yield that is
usually paid on long-term securities.

Cash Portfolio also may purchase variable and floating rate master notes of
corporations, which are unsecured obligations redeemable upon notice that permit
investment of fluctuating amounts at varying rates of interest pursuant to
direct arrangement with the issuer of the instrument. These obligations include
master demand notes that permit investment of fluctuating amounts at varying
rates of interest pursuant to direct arrangement with the issuer of the
instrument. The issuer of these obligations often has the right, after a given
period, to prepay their outstanding principal amount of the obligations upon a
specified number of days' notice. These obligations generally are not traded,
nor generally is there an established secondary market for these obligations.
To the extent a demand note does not have a seven day or shorter demand feature
and there is no readily available market for the obligation, it is treated as an
illiquid security.

No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on two interest
rates or indexes, on an interest rate or index that materially lags short-term
market rates. All variable and floating rate securities purchased by a
Portfolio have an interest rate that is adjusted based on a single short-term
rate or index, such as the Prime Rate.

INVESTMENT COMPANY SECURITIES. In connection with managing their cash
positions, the Portfolios may invest in the securities of other investment
companies within the limits proscribed by the 1940 Act. Under normal
circumstances, each Portfolio intends to invest less than 5% of the value of its
net assets in the securities of other investment companies. In addition to a
Portfolio's expenses (including the various fees), as a shareholder in another
investment company, a Portfolio would bear its pro rata portion of the other
investment company's expenses (including fees).

<PAGE>

ZERO-COUPON SECURITIES. All zero-coupon securities in which the Portfolios
invest will have a maturity of less than 13 months.

3. INVESTMENT LIMITATIONS

Fundamental investment limitations of a Fund or of a Portfolio cannot be changed
without the affirmative vote of the lesser of (i) more than 50% of the
outstanding interests of the respective Fund or Portfolio or (ii) 67% of the
shares of the Fund or Portfolio present or represented at an interestholders
meeting at which the holders of more than 50% of the outstanding interests of
the Fund or Portfolio are present or represented.

Except as required by the 1940 Act, if a percentage restriction on investment or
utilization of assets is adhered to at the time an investment is made, a later
change in percentage resulting from a change in the market values of a
Portfolio's assets, the change in status of a security or purchases and
redemptions of shares will not be considered a violation of the limitation.

Each Fund has adopted the same fundamental and nonfundamental investment
limitations as its corresponding Portfolio. In addition the Portfolios and the
Funds have adopted a fundamental policy which provides that, notwithstanding any
other investment policy or restriction (whether fundamental), the Portfolio or
Fund, as applicable, may invest all of its assets in the securities of a single
pooled investment fund having substantially the same investment objectives,
policies and restrictions as the Fund or Portfolio, as applicable.

DAILY ASSETS TREASURY FUND/TREASURY PORTFOLIO. Treasury Portfolio has adopted
the following fundamental investment limitations which are in addition to those
contained in Daily Assets Treasury Fund's Prospectus and which may not be
changed without shareholder approval. The Portfolio may not:

(1) With respect to 75% of its assets, purchase securities, other than U.S.
Government Securities, of any one issuer if more than 5% of the value of
the Portfolio's total assets would at the time of purchase be invested in
any one issuer.

(2) Purchase securities, other than U.S. Government Securities, if more than
25% of the value of the Portfolio's total assets would be invested in
securities of issuers conducting their principal business activity in the
same industry, provided that consumer finance companies and industrial
finance companies are considered to be separate industries and that there
is no limit on the purchase of the securities of domestic commercial banks.

(3) Act as an underwriter of securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities, the
Portfolio may be deemed to be an underwriter for purposes of the Securities
Act of 1933.

(4) Purchase or sell real estate or any interest therein, except that the
Portfolio may invest in debt obligations secured by real estate or
interests therein or issued by companies that invest in real estate or
interests therein.

(5) Purchase or sell physical commodities or contracts relating to physical
commodities, provided that currencies and currency-related contracts will
not be deemed to be physical commodities.

(6) Borrow money, except for temporary or emergency purposes (including the
meeting of redemption requests). Total borrowings may not exceed 33 1/3%
of the Portfolio's total assets and borrowing for purposes other than
meeting redemptions may not exceed 5% of the value of each the Portfolio's
total

<PAGE>

assets. Outstanding borrowings in excess of 5% of the value of the
Portfolio's total assets must be repaid before any subsequent investments
are made by the Portfolio.

(7) Issue senior securities except pursuant to Section 18 of the 1940 Act and
except that the Portfolio may borrow money subject to investment
limitations specified in the Portfolio's Prospectus.

(8) Make loans, except that the Portfolio may (i) purchase debt securities
which are otherwise permissible investments, (ii) enter into repurchase
agreements and (iii) lend portfolio securities.

(a) Purchase securities having voting rights, except the Portfolio may invest
in securities of other investment companies to the extent permitted by the
1940 Act.

(b) Purchase securities on margin, or make short sales of securities, except
for the use of short-term credit necessary for the clearance of purchases
and sales of portfolio securities.

(c) Invest in securities (other than fully-collateralized debt obligations)
issued by companies that have conducted continuous operations for less than
three years, including the operations of predecessors, unless guaranteed as
to principal and interest by an issuer in whose securities the Portfolio
could invest.

(d) Invest in or hold securities of any issuer if officers and Trustees of the
Trust or the Adviser, individually owning beneficially more than 1/2 of 1%
of the securities of the issuer, in the aggregate own more than 5% of the
issuer's securities.

(e) Invest in interests in oil or gas or interests in other mineral exploration
or development programs.

(9) Purchase or sell real property (including limited partnership interests,
but excluding readily marketable interests in real estate investment
trusts or readily marketable securities of companies which invest in real
estate.)

(10) Pledge, mortgage or hypothecate its assets, except to secure permitted
indebtedness. Collateralized loans of securities are not deemed to be
pledges or hypothecations for this purpose.

(11) Write put and call options.

(12) Invest for the purpose of exercising control over any person.

(13) Purchase restricted securities.

DAILY ASSETS GOVERNMENT FUND, DAILY ASSETS CASH FUND/GOVERNMENT CASH PORTFOLIO,
CASH PORTFOLIO. Government Cash Portfolio and Cash Portfolio have adopted the
following fundamental investment limitations which are in addition to those
contained in the Daily Assets Government Fund's and Daily Assets Cash Fund's
Prospectus and which may not be changed without shareholder approval. Each of
these Portfolios may not:

(1) With respect to 75% of its assets, purchase a security other than a U.S.
Government Security if, as a result, more than 5% of the Portfolio's total
assets would be invested in the securities of a single issuer.

(2) Purchase securities if, immediately after the purchase, more than 25% of
the value of the Portfolio's total assets would be invested in the
securities of issuers having their principal business activities in the
same industry; provided, however, that there is no limit on investments in
U.S. Government Securities.

(3) Underwrite securities of other issuers, except to the extent that the
Portfolio may be considered to be acting as an underwriter in connection
with the disposition of portfolio securities.

<PAGE>

(5) Purchase or sell physical commodities or contracts relating to physical
commodities, provided that currencies and currency-related contracts will
not be deemed to be physical commodities.

(6) Borrow money, except for temporary or emergency purposes (including the
meeting of redemption requests) and except for entering into reverse
repurchase agreements, provided that borrowings do not exceed 33 1/3% of
the value of the Portfolio's total assets.

(7) Issue senior securities except as appropriate to evidence indebtedness that
the Portfolio is permitted to incur, and provided that the Portfolio may
issue shares of additional series or classes that the Trustees may
establish.

(8) Make loans except for loans of portfolio securities, through the use of
repurchase agreements, and through the purchase of debt securities that are
otherwise permitted investments.

(9) With respect to Government Cash Portfolio, purchase or hold any security
that (i) a Federally chartered savings association may not invest in, sell,
redeem, hold or otherwise deal pursuant to law or regulation, without limit
as to percentage of the association's assets and (ii) pursuant to 12 C.F.R.
Section 566.1 would cause shares of the Portfolio not to be deemed to be
short term liquid assets when owned by Federally chartered savings
associations.

For purposes of limitation (2): (i) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (ii)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.

Government Cash Portfolio and Cash Portfolio have adopted the following
nonfundamental investment limitations that may be changed by the Core Trust
Board without shareholder approval. Each Portfolio may not:

(a) With respect to 100% of its assets, purchase a security other than a U.S.
Government Security if, as a result, more than 5% of the Portfolio's total
assets would be invested in the securities of a single issuer, unless the
investment is permitted by Rule 2a-7 under the 1940 Act.

(b) Purchase securities for investment while any borrowing equaling 5% or more
of the Portfolio's total assets is outstanding; and if at any time the
Portfolio's borrowings exceed the Portfolio's investment limitations due to
a decline in net assets, such borrowings will be promptly (within three
days) reduced to the extent necessary to comply with the limitations.
Borrowing for purposes other than meeting redemption requests will not
exceed 5% of the value of the Portfolio's total assets.

(c) Purchase securities that have voting rights, except the Portfolio may
invest in securities of other investment companies to the extent permitted
by the 1940 Act.

<PAGE>

(d) Purchase securities on margin, or make short sales of securities, except
for the use of short-term credit necessary for the clearance of purchases
and sales of portfolio securities.

(e) Invest in securities (other than fully-collateralized debt obligations)
issued by companies that have conducted continuous operations for less than
three years, including the operations of predecessors (unless guaranteed as
to principal and interest by an issuer in whose securities the Portfolio
could invest), if as a result, more than 5% of the value of the Portfolio's
total assets would be so invested.

(f) Invest in or hold securities of any issuer other than the Portfolio if, to
the Portfolio's knowledge, those Trustees and officers of the Trust or the
Portfolio's investment adviser, individually owning beneficially more than
1/2 of 1% of the securities of the issuer, in the aggregate own more than
5% of the issuer's securities.

(g) Invest in oil, gas or other mineral exploration or development programs, or
leases, or in real estate limited partnerships; provided that the Portfolio
may invest in securities issued by companies engaged in such activities.

(h) Acquire securities or invest in repurchase agreements with respect to any
securities if, as a result, more than 10% of the Portfolio's net assets
(taken at current value) would be invested in repurchase agreements not
entitling the holder to payment of principal within seven days and in
securities that are illiquid by virtue of legal or contractual restrictions
on resale or the absence of a readily available market.

4. INVESTMENTS BY FINANCIAL INSTITUTIONS

INVESTMENT BY SHAREHOLDERS THAT ARE BANKS - DAILY ASSETS GOVERNMENT FUND.
Government Cash Portfolio invests only in instruments which, if held directly by
a bank or bank holding company organized under the laws of the United States or
any state thereof, would be assigned to a risk-weight category of no more than
20% under the current risk based capital guidelines adopted by the Federal bank
regulators (the "Guidelines"). In the event that the Guidelines are revised,
the Portfolio's portfolio will be modified accordingly, including by disposing
of portfolio securities or other instruments that no longer qualify under the
Guidelines. In addition, the Portfolio does not intend

<PAGE>

to hold in its portfolio any securities or instruments that would be subject to
restriction as to amount held by a National bank under Title 12, Section 24
(Seventh) of the United States Code. If the Portfolio's portfolio includes any
instruments that would be subject to a restriction as to amount held by a
National bank, investment in the Portfolio may be limited.

The Guidelines provide that shares of an investment fund are generally assigned
to the risk-weight category applicable to the highest risk-weighted security or
instrument that the fund is permitted to hold. Accordingly, Portfolio shares
should qualify for a 20% risk weighting under the Guidelines. The Guidelines
also provide that, in the case of an investment fund whose shares should qualify
for a risk weighting below 100% due to limitations on the assets which it is
permitted to hold, bank examiners may review the treatment of the shares to
ensure that they have been assigned an appropriate risk-weight. In this
connection, the Guidelines provide that, regardless of the composition of an
investment fund's assets, shares of a fund may be assigned to the 100% risk-
weight category if it is determined that the fund engages in activities that
appear to be speculative in nature or has any other characteristics that are
inconsistent with a lower risk weighting. The Adviser has no reason to believe
that such a determination would be made with respect to the Portfolio. Their
are various subjective criteria for making this determination and, therefore, it
is not possible to provide any assurance as to how Portfolio shares will be
evaluated by bank examiners.

Before acquiring Fund shares, prospective investors that are banks or bank
holding companies, particularly those that are organized under the laws of any
country other than the United States or of any state, territory or other
political subdivision of the United States, and prospective investors that are
U.S. branches and agencies of foreign banks or Edge Corporations, should consult
all applicable laws, regulations and policies, as well as appropriate regulatory
bodies, to confirm that an investment in Fund Shares is permissible and in
compliance with any applicable investment or other limits.

Fund Shares held by National banks are generally required to be revalued
periodically and reported at the lower of cost or market value. Such shares may
also be subject to special regulatory reporting, accounting and tax treatment.
In addition, a bank may be required to obtain specific approval from its board
of directors before acquiring Fund shares, and thereafter may be required to
review its investment in a Fund for the purpose of verifying compliance with
applicable Federal banking laws, regulations and policies.

National banks generally must review their holdings of shares of a Fund at least
quarterly to ensure compliance with established bank policies and legal
requirements. Upon request, the Portfolios will make available to the Funds
investors information relating to the size and composition of their portfolio
for the purpose of providing Fund shareholders with this information.

INVESTMENT BY SHAREHOLDERS THAT ARE CREDIT UNIONS - DAILY ASSETS GOVERNMENT
FUND. Government Cash Portfolio limits its investments to investments that are
legally permissible for Federally chartered credit unions under applicable
provisions of the Federal Credit Union Act (including 12 U.S.C. Section 1757(7),
(8) and (15)) and the applicable rules and regulations of the National Credit
Union Administration (including 12 C.F.R. Part 703, Investment and Deposit
Activities), as such statutes and rules and regulations may be amended. The
Portfolio limits its investments to U.S. Government Securities (including
Treasury STRIPS) and repurchase agreements fully collateralized by U.S.
Government Securities. Certain U.S. Government Securities owned by Government
Cash Portfolio may be mortgage or asset backed, but, except to reduce interest
rate risk, no such security will be (i) a stripped mortgage backed security
("SMBS"), (ii) a collateralized mortgage obligation ("CMO") or real estate
mortgage investment conduit ("REMIC") that meets any of the tests outlined in 12
C.F.R. Section 703.5(g) or (iii) a residual interest in a CMO or REMIC. In
order to reduce interest rate risk Government Cash Portfolio may purchase a
SMBS, CMO, REMIC or residual interest in a CMO or REMIC but only in accordance
with 12 C.F.R. Section 703.5(i). Government Cash Portfolio has no current
intention to make any such investment. Each Portfolio also may invest in
reverse repurchase agreements in accordance with 12 C.F.R. 703.4(e) to the
extent otherwise permitted hereunder and in the Prospectus.

INVESTMENTS BY SHAREHOLDERS THAT ARE SAVINGS ASSOCIATIONS - GOVERNMENT CASH
PORTFOLIO. Government Cash Portfolio limits its investments to investments that
are legally permissible for Federally chartered savings

<PAGE>

associations without limit as to percentage under applicable provisions of the
Home Owners' Loan Act (including 12 U.S.C. Section 1464) and the applicable
rules and regulations of the Office of Thrift Supervision, as such statutes and
rules and regulations may be amended. In addition, the Portfolio limits its
investments to investments that are permissible for an open-end investment
company to hold and would permit shares of the investment company to qualify as
liquid assets under 12 C.F.R. Section 566.1(g) and as short-term liquid assets
under 12 C.F.R. Section 566.1(h). These policies may be amended only by
approval of the Portfolio's and Fund's shareholders, as applicable.

5. PERFORMANCE DATA

YIELD INFORMATION. Each Fund may provide current annualized and effective
annualized yield quotations for each class based on its daily dividends. These
quotations may from time to time be used in advertisements, shareholder reports
or other communications to shareholders. All performance information supplied
by a Fund is historical and is not intended to indicate future returns.

In performance advertising the Funds may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC/Donoghue, Inc. or CDA/Wiesenberger or
other companies which track the investment performance of investment companies
("Fund Tracking Companies"). The Funds may also compare any of their
performance information with the performance of recognized stock, bond and other
indexes. The Funds may also refer in such materials to mutual fund performance
rankings and other data published by Fund Tracking Companies. Performance
advertising may also refer to discussions of a Fund and comparative mutual fund
data and ratings reported in independent periodicals, such as newspapers and
financial magazines.

Any current yield quotation of a class of a Fund which is used in such a manner
as to be subject to the provisions of Rule 482(d) under the Securities Act of
1933, as amended, shall consist of an annualized historical yield, carried at
least to the nearest hundredth of one percent, based on a specific seven-
calendar-day period and shall be calculated by dividing the net change during
the seven-day period in the value of an account having a balance of one share at
the beginning of the period by the value of the account at the beginning of the
period, and multiplying the quotient by 365/7. For this purpose, the net change
in account value would reflect the value of additional shares purchased with
dividends declared on the original share and dividends declared on both the
original share and any such additional shares, but would not reflect any
realized gains or losses from the sale of securities or any unrealized
appreciation or depreciation on portfolio securities. In addition, any
effective annualized yield quotation used by a Fund shall be calculated by
compounding the current yield quotation for such period by adding 1 to the
product, raising the sum to a power equal to 365/7, and subtracting 1 from the
result.

Although published yield information is useful to investors in reviewing a
class' performance, investors should be aware that each Fund's yield fluctuates
from day to day and that the class' yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Fund's shares. Also, Participating Organizations (as that term is used in
the Prospectus) may charge their customers direct fees in connection with an
investment in a Fund, which will have the effect of reducing the class' net
yield to those shareholders. The yields of a class are not fixed or guaranteed,
and an investment in the Fund is not insured or guaranteed. Accordingly, yield
information may not necessarily be used to compare shares of the Fund with
investment alternatives which, like money market instruments or bank accounts,
may provide a fixed rate of interest. Also, it may not be appropriate directly
to compare a Fund's yield information to similar information of investment
alternatives which are insured or guaranteed.

<PAGE>

Income calculated for the purpose of determining a class' yield differs from
income as determined for other accounting purposes. Because of the different
accounting methods used, and because of the compounding assumed in yield
calculations, the yield quoted for a class may differ from the rate of
distribution the class paid over the same period or the rate of income reported
in the Fund's financial statements.

For the seven day period ended March 31, 1996, the annualized yields of each of
the classes of the Funds that were then operating were as follows:

Current Yield Effective Yield
------------- ---------------

Daily Assets Treasury Fund
Institutional Shares % %
Investor Shares NA NA

Daily Assets Government Fund
Institutional Shares NA NA
Investor Shares NA NA

Daily Assets Cash Fund
Institutional Shares NA NA
Investor Shares NA NA

OTHER PERFORMANCE AND SALES LITERATURE MATTERS. Total returns quoted in sales
literature reflect all aspects of a Fund's return, including the effect of
reinvesting dividends and capital gain distributions. Average annual returns
generally are calculated by determining the growth or decline in value of a
hypothetical historical investment in a Fund over a stated period, and then
calculating the annually compounded percentage rate that would have produced the
same result if the rate of growth or decline in value had been constant over the
period. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that the performance is not
constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Funds.

Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment, over such periods
according to the following formula:

P(1+T) to the nth power = ERV

Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 payment made at the
beginning of the applicable period.

OTHER ADVERTISING MATTERS. The Funds may advertise other forms of performance.
For example, average annual and cumulative total returns may be quoted as a
percentage or as a dollar amount, and may be calculated for a single investment,
a series of investments, and/or a series of redemptions over any time period.
Total returns may be broken down into their components of income and capital
(including capital gains and changes in share price) in order to illustrate the
relationship of se factors and their contributions to total return. Any
performance information may be presented numerically or in a table, graph or
similar illustration.

A Fund may also include various information in their advertisements.
Information included in the Fund's advertisements may include, but is not
limited to (i) portfolio holdings and portfolio allocation as of certain dates,
such as portfolio diversification by instrument type, by instrument or by
maturity, (ii) descriptions of the portfolio

<PAGE>

managers of the Funds or the Portfolios and the portfolio management staff of
the Adviser or Forum Advisors or summaries of the views of the portfolio
managers with respect to the financial markets, (iii) the results of a
hypothetical investment in a Fund over a given number of years, including the
amount that the investment would be at the end of the period, (iv) the effects
of earning Federally and, if applicable, state tax-exempt income from the Fund
or investing in a tax-deferred account, such as an individual retirement account
and (v) the net asset value, net assets or number of shareholders of a Fund as
of one or more dates.

In connection with its advertisements a Fund may provide "shareholders letters"
which serve to provide shareholders or investors an introduction into the
Fund's, the Portfolio's, the Trust's, Core Trust's or any of the Trust's of
Core Trust's service provider's policies or business practices.

6. MANAGEMENT

The trustees and officers of the Trust and their principal occupations during
the past five years are set forth below. Each Trustee who is an "interested
person" (as defined by the 1940 Act) of the Trust is indicated by an asterisk.

John Y. Keffer,* Chairman and President (age 53)

President and Director, Forum Financial Services, Inc. (a registered
broker-dealer), Forum Financial Corp. (a registered transfer agent) and
Forum Advisors, Inc. (a registered investment adviser). Mr. Keffer is a
Trustee and/or officer of various registered investment companies for which
Forum Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is Two Portland Square, Portland, Maine 04101.

Costas Azariadis, Trustee (age 52)

Professor of Economics, University of California, Los Angeles, since July
1992. Prior thereto, Dr. Azariadis was Professor of Economics at the
University of Pennsylvania. His address is Department of Economics,
University of California, Los Angeles, 405 Hilgard Avenue, Los Angeles,
California 90024.

James C. Cheng, Trustee (age 53)

Managing Director, Forum Financial Services, Inc. since September 1991.
President of Technology Marketing Associates (a marketing consulting
company) since September 1991. Prior thereto, Mr. Cheng was President and
Chief Executive Officer of Network Dynamics, Incorporated (a software
development company). His address is 27 Temple Street, Belmont,
Massachusetts 02178.

J. Michael Parish, Trustee (age 52)

Partner at the law firm of Winthrop Stimson Putnam & Roberts since 1989.
Prior thereto, he was a partner at LeBoeuf, Lamb, Leiby & MacRae, a law
firm of which he was a member from 1974 to 1989. His address is 40 Wall
Street, New York, New York 10005.

Mark D. Kaplan, Vice President, Assistant Treasurer and Assistant Secretary (age
40)

Managing Director at Forum Financial Services, Inc. since September 1995.
Prior thereto, Mr. Kaplan was Managing Director and Director of Research at
H.M. Payson & Co. His address is Two Portland Square, Portland, Maine
04101.

<PAGE>

Michael D. Martins, Treasurer (age 30)

Director of Fund Accounting at Forum Financial Corp. since June 1995.
Prior thereto, he served as a manager in the New York City office of
Deloitte & Touche LLP, where he was employed for over five years. His
address is Two Portland Square, Portland, Maine 04101.

David I. Goldstein, Secretary (age 34)

Counsel, Forum Financial Services, Inc., with which he has been associated
since 1991. Prior thereto, Mr. Goldstein was associated with the law firm
of Kirkpatrick & Lockhart. Mr. Goldstein is also Secretary or Assistant
Secretary of various registered investment companies for which Forum
Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is Two Portland Square, Portland, Maine 04101.

Dana A. Lukens, Assistant Secretary (age 34)

Assistant Counsel, Forum Financial Services, Inc., with which he has been
associated since August 1995. Prior thereto, Mr. Lukens was associated
with the law firm of Testa, Hurwitz & Thibeault. Mr. Lukens is also
Assistant Secretary of various registered investment companies for which
Forum Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is Two Portland Square, Portland, Maine

M. Paige Miles, Assistant Secretary (age 26).

Fund Administrator, Forum Financial Services, Inc., with which she has been
associated since 1995. Ms. Miles was employed from 1992 as a Senior Fund
Accountant with First Data Corporation in Boston, Massachusetts. Prior
thereto she was a student at Montana State University Her address is Two
Portland Square, Portland, Maine 04101.

TRUSTEES AND OFFICERS OF CORE TRUST. The Trustees and officers of Core Trust
and their principal occupations during the past five years are set forth below.
Each of the Trustees of the Trust is also a Trustee of Core Trust and several
officers of the Trust serve as officers of Core Trust . Each Trustee who is an
"interested person" (as defined by the 1940 Act) of Core Trust is indicated by
an asterisk. Accordingly, for background information pertaining to the trustees
and these officers, see "Trustees and Officers of the Trust" above.

John Y. Keffer,* Chairman and President.

Costas Azariadis, Trustee.

James C. Cheng, Trustee.

J. Michael Parish, Trustee.

Michael D. Martins, Treasurer

David I. Goldstein, Secretary

<PAGE>

Renee A. Walker, Assistant Secretary (age 25).

Fund Administrator, Forum Financial Services, Inc., with which she has been
associated since 1994. Prior thereto, Ms. Walker was an administrator at
Longwood Partners (the manager of a hedge fund partnership) for a year.
After graduating for college, from 1991 to 1993 Ms. Walker was a sales
representative assistant at PaineWebber Incorporated (a broker-dealer).
Her address is Two Portland Square, Portland, Maine 04101.

Sara M. Clark, Vice President, Assistant Secretary and Assistant Treasurer (age
32).

Managing Director, Forum Financial Services, Inc., with which she has been
associated since 1994. Prior thereto, from 1991 to 1994 Ms. Clark was
Controller of Wright Express Corporation (a national credit card company)
and for six years prior thereto was employed at Deloitte & Touche LLP as an
accountant. Ms. Clark is also an officer of various registered investment
companies for which Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. Her address is Two Portland Square,
Portland, Maine 04101.

Thomas G. Sheehan, Vice President and Assistant Secretary (age 41)

Counsel, Forum Financial Services, Inc. since October, 1993. Prior
thereto, Mr. Sheehan was a Special Counsel in the Division of Investment
Management of the U.S. Securities and Exchange Commission in Washington,
D.C. His address is Two Portland Square, Portland, Maine 04101.

TRUSTEE COMPENSATION. Each Trustee of the Trust (other than John Y. Keffer, who
is an interested person of the Trust) is paid $1,000 for each Board meeting
attended (whether in person or by electronic communication) plus $100 per active
portfolio of the Trust and is paid $1,000 for each committee meeting attended on
a date when a Board meeting is not held. To the extent a meeting relates to
only certain portfolios of the Trust, Trustees are paid the $100 fee only with
respect to those portfolios. Trustees are also reimbursed for travel and
related expenses incurred in attending meetings of the Board. No officer of the
Trust is compensated by the Trust.

The following table provides the aggregate compensation paid to each Trustee.
The Trust has not adopted any form of retirement plan covering Trustees or
officers. Information is presented for the fiscal year ended March 31, 1996.

Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
-------- ------------ -------- ---------- ------------

Mr. Keffer $4,000 None None $4,000
Mr. Azariadis None None None None
Mr. Cheng $4,000 None None $4,000
Mr. Parish None None None None

COMBINED TABLE FOR CORE

Each of the Trustees of the Trust is also a Trustee of Core Trust. Each Trustee
of Core Trust (other than John Y. Keffer, who is an interested person of Core
Trust) is paid $1,000 for each Core Trust Board meeting attended (whether in
person or by electronic communication) plus $100 per active portfolio of Core
Trust and is paid $1,000 for each committee meeting attended on a date when a
Core Trust Board meeting is not held. To the extent a meeting relates to only
certain portfolios of Core Trust, trustees are paid the $100 fee only with
respect to those

<PAGE>

portfolios. Core Trust trustees are also reimbursed for travel and related
expenses incurred in attending meetings of the Core Trust Board.

INVESTMENT ADVISERS - FORUM ADVISORS, INC. Forum Advisors, Inc., the
Portfolio's investment adviser, furnishes at its own expense all services,
facilities and personnel necessary in connection with managing the Portfolio's
investments and effecting portfolio transactions for the Portfolio, pursuant to
an investment advisory agreement between the Adviser and Core (the "Advisory
Agreement"). The Advisory Agreement provides, with respect to the Portfolio,
for an initial term of one year from its effective date and for its continuance
in effect for successive twelve-month periods thereafter, provided the agreement
is specifically approved at least annually by the Core Trust Board or by vote of
the shareholders of the Portfolio, and in either case by a majority of the
Trustees who are not parties to the Advisory Agreement or interested persons of
any such party.

The Advisory Agreement is terminable without penalty by Core with respect to the
Portfolio on 60 days' written notice when authorized either by vote of the
Portfolio's shareholders or by a vote of a majority of the Core Trust Board, or
by the Adviser on not more than 60 days' nor less than 30 days' written notice,
and will automatically terminate in the event of its assignment. The Advisory
Agreement also provides that, with respect to the Portfolio, the Adviser shall
not be liable for any error of judgment or mistake of law or for any act or
omission in the performance of its duties to the Portfolio, except for willful
misfeasance, bad faith or gross negligence in the performance of the Adviser's
duties or by reason of reckless disregard of its obligations and duties under
the Advisory Agreement. The Advisory Agreement provides that the Adviser may
render services to others.

For its services under the Investment Advisory Agreement, Forum receives with
respect to the Portfolio a fee at an annual rate of 0.05% of the average daily
net assets of the Portfolio. Prior to January 15, 1996 Forum acted as the
Fund's investment adviser under an investment advisory agreement between Forum
Funds, Inc. and

<PAGE>

Forum. Under this investment advisory agreement, Forum received a fee at an
annual ratio of 0.20% of the average daily net assets of the Fund.

Fees payable under this advisory agreement with respect to the Fund during the
past three fiscal years of the Fund are outlined in the following table:

FISCAL YEAR ENDED GROSS FEE WAIVED FEE NET FEE

March 31, 1996
March 31, 1995 $59,382 $59,382 $0
March 31, 1994 $51,098 $51,098 $0

In addition to receiving its advisory fee from the Portfolio, the Adviser may
also act and be compensated as investment manager for its clients with respect
to assets which are invested in the Portfolio. In some instances the Adviser
may elect to credit against any investment management fee received from a client
who is also a shareholder in the Portfolio an amount equal to all or a portion
of the fees received by the Adviser or any affiliate of the Adviser from the
Portfolio with respect to the client's assets invested in the Portfolio.

The Adviser has agreed to reimburse Core Trust for certain of the Portfolio's
operating expenses (exclusive of interest, taxes, brokerage, fees and
organization expenses, all to the extent permitted by applicable state law or
regulation) which in any year exceed the limits prescribed by any state in which
the Portfolio's shares are qualified for sale. The Adviser believes that
currently the most restrictive expense ratio limitation imposed by any state is
2-1/2% of the first $30 million of the Portfolio's average net assets, 2% of the
next $70 million of its average net assets and 1-1/2% of its average net assets
in excess of $100 million. For the purpose of this obligation to reimburse
expenses, the Portfolio's annual expenses are estimated and accrued daily, and
any appropriate estimated payments will be made by the Adviser monthly.

Subject to the above obligations to reimburse Core Trust for its excess
expenses, Core Trust and the Trust have confirmed their respective obligations
to pay all their other, respective expenses, including: interest charges,
taxes, brokerage fees and commissions; certain insurance premiums; fees,
interest charges and expenses of the custodian, transfer agent and dividend
disbursing agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of forming the corporation and maintaining corporate existence;
costs of preparing and printing the Trust's prospectuses, statements of
additional information, account application forms and shareholder reports and
delivering them to existing and prospective shareholders; costs of maintaining
books of original entry for portfolio and fund accounting and other required
books and accounts and of calculating the net asset value of shares of Core
Trust and the Trust; costs of reproduction, stationery and supplies;
compensation of Trustees, officers and employees of Core and costs of other
personnel performing services for Core Trust and the Trust who are not officers
of an Adviser, the manager and distributor or their respective affiliates; costs
of corporate meetings; Securities and Exchange Commission registration fees and
related expenses; state securities laws registration fees and related expenses;
and fees payable to the Adviser under the Investment Advisory Agreement.

INVESTMENT ADVISERS - LINDEN ASSET MANAGEMENT, INC. The Subadviser serves as an
investment subadviser to the Portfolio under an Investment Subadvisory Agreement
with the Adviser and Core Trust. Pursuant to the Investment Subadvisory
Agreement, from time to time the Subadviser provides the Adviser with assistance
regarding certain of the Adviser's responsibilities to the Portfolios, including
management of all or part of the Portfolios' investment portfolios. The
Investment Subadvisory Agreement will remain in effect with respect to the
Portfolio for a period of 24 months and will continue in effect thereafter only
if its continuance is specifically approved at least annually by the Core Trust
Board or by vote of the Portfolio's shareholders, and in either case, by a
majority of the Trustees of Core Trust who are not parties to the Investment
Subadvisory Agreement or interested persons of any such party at

<PAGE>

a meeting called for the purpose of voting on the Investment Advisory Agreement.
To the extent and for the period of time the Adviser has delegated its
responsibilities to the Subadviser, the Adviser pays the advisory fee for such
period to the Subadviser.

The Investment Subadvisory Agreement is terminable with respect to the Portfolio
without penalty by Core Trust on 60 days' written notice when authorized either
by vote of the Portfolio's shareholders or by vote of a majority of the Core
Trust Board, or by the Subadviser on 60 days' written notice, and will
automatically terminate in the event of its assignment. The Investment
Subadvisory Agreement also provides that, with respect to the Portfolio, the
Subadviser shall not be liable for any error of judgment or mistake of law or
for any act or omission in the performance of its duties to the Portfolio,
except for willful misfeasance, bad faith or gross negligence in the performance
of the Subadvisers' duties or by reason of reckless disregard of the
Subadvisers' obligations and duties under the Investment Subadvisory Agreement.

Fees payable under Linden's investment advisory agreement with respect to Daily
Assets Government Fund and Daily Assets Cash Fund during the past three fiscal
years of Core Trust (and prior to September 1, 1995 the funds which ultimately
converted into these funds) are outlined in the following table:

FISCAL YEAR ENDED GROSS FEE WAIVED FEE NET FEE

August 31, 1995
August 31, 1994
August 31, 1993

INVESTMENT ADVISORY SERVICES TO THE FUNDS. The Trust has retained the Adviser
as investment adviser to the Funds under arrangements and an agreement
substantially similar to the arrangements and agreement described above with
respect to the Portfolios and the Adviser. Linden has not been retained as an
advisor or subadvisor by the Trust or Forum with respect to the Funds. No fee
is payable for investment advisory services under these agreements as long as a
Fund is invested in the Portfolio or a similar investment.

FORUM AND DISTRIBUTOR

Forum was incorporated under the laws of the State of Delaware on February 7,
1986 and supervises the overall management of the Trust (which includes, among
other responsibilities, negotiation of contracts and fees with, and monitoring
of performance and billing of, the transfer agent and custodian and arranging
for maintenance of books and records of the Trust), provides the Trust with
general office facilities and serves as distributor of shares of the Portfolio
pursuant to a management and distribution agreement between Forum and the Trust
(the "Trust Management and Distribution Agreement"). The Trust Management and
Distribution Agreement provides, with respect to each Fund, for an initial term
of one year from its effective date and for its continuance in effect for
successive twelve-month periods thereafter, provided the agreement is
specifically approved at least annually by the Board or by the shareholders of
the Fund, and in either case by a majority of the Trustees who are not parties
to the Trust Management and Distribution Agreement or interested persons of any
such party.

The Trust Management and Distribution Agreement terminates automatically if it
is assigned and may be terminated without penalty with respect to each Fund by
vote of the Fund's shareholders or by either party on not more than 60 days' nor
less than 30 days' written notice. The Trust Management and Distribution
Agreement also provides that Forum shall not be liable for any error of judgment
or mistake of law or for any act or omission in the administration or management
of the Trust, except for willful misfeasance, bad faith or gross negligence in
the performance of Forum's duties or by reason of reckless disregard of its
obligations and duties under the Trust Management and Distribution Agreement.

Forum also supervises the overall management of Core Trust (which includes,
among other responsibilities, negotiation of contracts and fees with, and
monitoring of performance and billing of, the custodian and arranging for
maintenance of books and records of Core Trust) and provides Core Trust with
general office facilities pursuant to a management agreement between Forum and
the Trust (the "Core Trust Management Agreement"). The Core

<PAGE>

Trust Management Agreement provides, with respect to the Portfolio, for an
initial term of one year from its effective date and for its continuance in
effect for successive twelve-month periods thereafter, provided the agreement is
specifically approved at least annually by the Core Trust Board or by the
shareholders of the Portfolio, and in either case by a majority of the Trustees
who are not parties to the Core Trust Management Agreement or interested persons
of any such party.

The Core Trust Management Agreement terminates automatically if it is assigned
and may be terminated without penalty with respect to the Portfolio by vote of
the Portfolio's shareholders or by either party on not more than 60 days' nor
less than 30 days' written notice. The Core Trust Management Agreement also
provides that Forum shall not be liable for any error of judgment or mistake of
law or for any act or omission in the administration or management of Core
Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of Forum's duties or by reason of reckless disregard of its
obligations and duties under the Core Trust Management Agreement.

For its services under the Trust Management and Distribution Agreement and the
Core Trust Management Agreement, Forum receives with respect to each of the
Funds and Portfolio a fee at an annual rate of 0.10% of the average daily net
assets of each Fund and the Portfolio, respectively. Fees payable under the
Trust Management and Distribution Agreement with respect to each Fund during
the past three fiscal years, if applicable, outlined in the following table:

FISCAL YEAR ENDED
MARCH 31 GROSS FEE WAIVED FEE NET FEE
- - -------- --------- ---------- -------

1996
1995 $89,073 $89,073 $0
1994 $76,647 $76,647 $0

For the fiscal years ended March 31, 1995, 1994 and 1993, the Core Trust
Management Agreement with respect to the Portfolio was not in effect.

Forum provides persons satisfactory to the Board to serve as officers of the
Trust. Similarly, at the request of the Core Trust Board, Forum provides
persons satisfactory to the Core Trust Board to serve as officers of Core Trust.
Those officers, as well as certain other employees and Trustees of the Trust,
may be Trustees, officers or employees of (and persons providing services to the
Trust may include) Forum, its affiliates or affiliates of the Adviser.

Forum acts as sole placement agent for interests in the Portfolios and receives
no compensation for those services from the portfolios.

TRANSFER AGENT

Forum Financial Corp. acts as transfer agent of the Trust pursuant to a
transfer agency agreement (the "Transfer Agency Agreement"). The Transfer
Agency Agreement provides, with respect to the Funds, for an initial term of
one year from its effective date and for its continuance in effect for
successive twelve-month periods thereafter, provided that the agreement is
specifically approved at least annually by the Board or by a vote of the
shareholders of each Fund, and in either case by a majority of the Trustees who
are not parties to the Transfer Agency Agreement or interested persons of any
such party at a meeting called for the purpose of voting on the Transfer
Agency Agreement.

<PAGE>

Among the responsibilities of the Transfer Agent as agent for the Trust are:
(1) answering customer inquiries regarding account status and history, the
manner in which purchases and redemptions of shares of each Fund may be
effected and certain other matters pertaining to each Fund; (2) assisting
shareholders in initiating and changing account designations and addresses; (3)
providing necessary personnel and facilities to establish and maintain
shareholder accounts and records, assisting in processing purchase and
redemption transactions and receiving wired funds; (4) transmitting and
receiving funds in connection with customer orders to purchase or redeem shares;
(5) verifying shareholder signatures in connection with changes in the
registration of shareholder accounts; (6) furnishing periodic statements and
confirmations of purchases and redemptions; (7) arranging for the transmission
of proxy statements, annual reports, prospectuses and other communications from
the Trust to its shareholders; (8) arranging for the receipt, tabulation and
transmission to the Trust of proxies executed by shareholders with respect to
meetings of shareholders of the Trust; and (9) providing such other related
services as the Trust or a shareholder may reasonably request.

The Transfer Agent or any sub-transfer agent or processing agent may also act
and receive compensation as custodian, investment manager, nominee, agent or
fiduciary for its customers or clients who are shareholders of a Fund with
respect to assets invested in that Fund. The Transfer Agent or any sub-
transfer agent or other processing agent may elect to credit against the fees
payable to it by its clients or customers all or a portion of any fee received
from the Trust or from the Transfer Agent with respect to assets of those
customers or clients invested in the Portfolio. The Transfer Agent, Forum or
sub-transfer agents or processing agents retained by the Transfer Agent may be
Processing Organizations (as defined in the Prospectus) and, in the case of
sub-transfer agents or processing agents, may also be affiliated persons of
the Transfer Agent or Forum.

For its services under the Transfer Agent Agreement, Forum receives with respect
to its transfer agency services a fee at an annual rate of 0.25% of the average
daily net assets of the Portfolio. Fees payable under the Transfer Agent
Agreement with respect to the Portfolio are outlined in the following table:

FISCAL YEAR ENDED
MARCH 31 GROSS FEE WAIVED FEE NET FEE
- - -------- --------- ---------- -------

1996
1995 $74,227 $62,206 $0
1994 $63,873 $63,873 $0

Pursuant to the Portfolio Accounting Agreement, the Transfer Agent also provides
the Portfolio with portfolio accounting, including the calculation of the
Portfolio' net asset value. For these services, the Transfer Agent receives
with respect to the Portfolio an annual fee ranging from $36,000 to $60,000
depending upon the amount and type of the Portfolio's portfolio transactions and
positions.

7. DETERMINATION OF NET ASSET VALUE

The Funds do not determine net asset value on the following holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Veterans' Day, Thanksgiving and Christmas.
The net asset value of each Portfolio is determined as of 2:00 P.M., Eastern
time ("Valuation Time"), on all weekdays, except Federal holidays, Good Friday
and other days that the Federal reserve bank of San Francisco is closed
("Business Day"). Purchases and redemptions are effected at the time of the
next determination of net asset value following the receipt of any purchase or
redemption order.

Pursuant to the rules of the SEC, both the Board and the Core Trust Board have
established procedures to stabilize each Fund's and each Portfolio's, as
applicable, net asset value at $1.00 per share. These procedures include a
review of the extent of any deviation of net asset value per share as a result
of fluctuating interest rates, based on available market rates, from each Fund's
and Portfolio's, as applicable, $1.00 amortized cost price per share. Should
that deviation exceed 1/2 of 1%, the Board and the Core

<PAGE>

Trust Board, respectively, will consider whether any action should be initiated
to eliminate or reduce material dilution or other unfair results to
shareholders. Such action may include redemption of shares in kind, selling
portfolio securities prior to maturity, reducing or withholding dividends and
utilizing a net asset value per share as determined by using available market
quotations.

In determining the approximate market value of portfolio investments, the
Portfolios may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried at their face value.

Each investor in a Portfolio, including the Funds, may add to or reduce its
investment in that Portfolio on each Fund Business day. The Portfolios maintain
the same business days as do the Funds. As of the close of regular trading on
any Fund Business Day, the value of a Fund's beneficial interest in a Portfolio
is determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents the Fund's share of the
aggregate beneficial interests in the Portfolio. Any additions or reductions,
which are to be effected as of the close of the Fund Business Day, are then
effected. The Fund's percentage of the aggregate beneficial interests in the
Portfolio are then recomputed as the percentage equal to the fraction (i) the
numerator of which is the value of the Fund's investment in the Portfolio as of
the close of the Fund Business Day plus or minus, as the case may be, the amount
of net additions to or reductions from the Fund's investment in the Portfolio
effected as of that time, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of the close of the Fund Business Day plus or
minus, as the case may be, the amount of net additions to or reductions from the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage determined is then applied to determine the value of the Fund's
interest in the Portfolio as of the close of the next Fund Business Day.

8. PORTFOLIO TRANSACTIONS

Purchases and sales of portfolio securities for the Portfolio usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
There usually are no brokerage commissions paid for such purchases. Although
Core Trust does not anticipate that the Portfolio will pay any amounts of
commission, in the event the Portfolio pays brokerage commissions or other
transaction-related compensation, the payments may be made to broker-dealers who
pay expenses of the Portfolio that it would otherwise be obligated to pay
itself. Any transaction for which the Portfolio pays transaction-related
compensation will be effected at the best price and execution available, taking
into account the amount of any payments made on behalf of the Portfolio by the
broker-dealer effecting the transaction. Purchases from underwriters of
portfolio securities include a commission or concession paid by the issuer to
the underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked prices.

For the fiscal years ended March 31, 1994, 1995 and 1996, no brokerage fees were
paid by Daily Assets Treasury Fund (during the period the Funds invested
directly in securities) or Treasury Portfolio.

Allocations of transactions to dealers and the frequency of transactions are
determined for each Portfolio by the Advisers in their best judgment and in a
manner deemed to be in the best interest of shareholders of that Portfolio
rather than by any formula. The primary consideration is prompt execution of
orders in an effective manner and at the most favorable price available to the
Portfolio.

<PAGE>

Investment decisions for the Portfolios will be made independently from those
for any other account or investment company that is or may in the future become
managed an Adviser or their respective affiliates. If, however, a Portfolio and
other investment companies or accounts managed by an Adviser are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by a Portfolio or the size of the position obtainable for the
Portfolio. In addition, when purchases or sales of the same security for a
Portfolio and for other investment companies managed by an Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.

No portfolio transactions are executed with Forum Advisors, Linden or any of
their affiliates.

9. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares of the Funds are sold on a continuous basis by the distributor without
any sales charge.

In addition to the situations described in the Prospectus under "Purchases and
Redemptions of Shares," the Trust may redeem shares involuntarily to reimburse
a Fund for any loss sustained by reason of the failure of a shareholder to
make full payment for shares purchased by the shareholder or to collect any
charge relating to transactions effected for the benefit of a shareholder which
is applicable to a Fund's shares as provided in the Prospectus from time to
time.

The Trust has filed a formal election with the Securities and Exchange
Commission pursuant to which the Funds will only effect a redemption in
portfolio securities if a shareholder is redeeming more than $250,000 or 1% of
the Fund's total net assets, whichever is less, during any 90-day period.

The Funds may wire proceeds of redemptions to shareholders that have elected
wire redemption privileges only if the wired amount is greater than $5,000. In
addition, the Fund will only wire redemption proceeds to financial institutions
located in the United States.

By use of the telephone redemption or exchange privilege, the shareholder
authorizes the Transfer Agent to act upon the instruction of any person
representing himself to either be, or to have the authority to act on behalf of,
the investor and believed by the Transfer Agent to be genuine. The records of
the Transfer Agent of such instructions are binding.

EXCHANGE PRIVILEGE

The exchange privilege permits shareholders of the Funds to exchange their
shares for shares of any Participating Fund, which includes (i) all other funds
of the Trust and (ii) any other mutual fund for which Forum or its affiliates
act as investment adviser, manager or distributor and which participates in the
Trust's exchange privilege program. The Trust (and Federal tax law) treats an
exchange as a redemption of the shares owned and the purchase of the shares of
the Fund being acquired.

Exchange transactions are made on the basis of relative net asset values per
share at the time of the exchange transaction plus any applicable sales charge
of the Participating Fund whose shares are acquired. Exchanges are accomplished
by (i) a redemption of the shares of the Fund exchanged at the next
determination of that fund's of net asset value after the exchange order in
proper form (including any necessary supporting documents by the Fund whose
shares are being exchanged) is accepted by the Transfer Agent and (ii) a
purchase of the shares of the Fund

<PAGE>

acquired at the next determination of that fund's net asset value after (or
occurring simultaneously with) the time of redemption.

Shares of any Participating Fund may be exchanged without a sales charge for
shares of any Participating Fund that are offered without a sales charge.
Shares of any Participating Fund purchased with a sales charge may be exchanged
without a sales charge for shares of any other Participating Fund otherwise sold
with the same sales charge. If the Participating Fund whose shares are
purchased in the exchange transaction imposes a higher sales charge than was
paid originally on the exchanged shares, the shareholder will be responsible for
the difference between the two sales charges. Shareholders are entitled to any
reduced sales charges of the Participating Fund into which they are exchanging
to the extent those reduced sales charges would be applicable to that
shareholder's purchase of shares.

The Funds do not charge for the exchange privilege and there is currently no
limit on the number of exchanges a shareholder may make, but each Fund reserves
the right to limit excessive exchanges by any shareholder. A pattern of
frequent exchanges may be deemed by Forum to be contrary to the best interests
of the Fund's other shareholders and, at the discretion of Forum, may be
limited by that Fund's refusal to accept additional exchanges from the
investor.

The terms of the exchange privilege are subject to change, and the privilege may
be terminated by any Participating Fund or the Trust. However the privilege
will not be terminated, and no material change that restricts the availability
of the privilege to shareholders will be implemented, without 60 days' advance
notice to shareholders. No notice need be given of an amendment whose only
material effect is to reduce amount of sales charge required to be paid on the
exchange and no notice need be given if redemptions of shares of a Fund are
suspended or a Fund temporarily delays or ceases the sale of its shares.

INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT

The Funds offer an individual retirement plan (the "IRA") for individuals who
wish to use shares of a Fund as a medium for funding individual retirement
savings. Under the IRA, distributions of net investment income and capital gain
will be automatically reinvested in the IRA established for the investor. The
Funds' custodian furnishes custodial services to the IRAs for a service fee.
Shareholders wishing to use a Fund's IRA should contact the Transfer Agent for
further details and information.

10. TAXATION

Qualification as a regulated investment company under the Internal Revenue Code
of 1986 does not involve governmental supervision of management or investment
practices or policies. Investors should consult their own counsel for a
complete understanding of the requirements the Funds must meet to qualify for
such treatment. The information set forth in the Prospectus and the following
discussion relate solely to Federal income taxes on dividends and distributions
by each Fund and assume that the Funds qualify as regulated investment
companies. Investors should consult their own counsel for further details and
for the application of state and local tax laws to the investor's particular
situation.

The Funds expect to derive substantially all of their gross income (exclusive
of capital gain) from sources other than dividends. Accordingly, it is
expected that none of the Funds' dividends or distributions will qualify for
the dividends-received deduction for corporations.

<PAGE>

If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term capital loss to the extent of any long-term
capital gain distribution received on those shares.

Any capital gain distribution received by a shareholder reduces the net asset
value of his shares by the amount of the distribution. To the extent that
capital gain was accrued by a Fund before the shareholder purchased his
shares, the distribution would be in effect a return of capital to that
shareholder. All capital gain distributions, including those that operate as a
return of capital, are taxable to the shareholder receiving them as described
above regardless of the length of time he may have held his shares prior to the
distribution.

11. OTHER INFORMATION

CUSTODIAN

Pursuant to a Custodian Agreement with Core Trust, The First National Bank of
Boston, 100 Federal Street, Boston, Massachusetts 02106, acts as the custodian
of the Portfolio's assets. The custodian's responsibilities include
safeguarding and controlling the Portfolio' cash and securities, determining
income and collecting interest on Fund investments. Core Trust pays the
custodian a fee at an annual rate of 0.025% of the Portfolio's average daily
assets.

Pursuant to a Custodian Agreement with the Funds, Imperial Trust Company, a
subsidiary of Imperial Bank, acts as the custodian of the Daily assets
Government Fund and Daily Assets Cash Fund's assets. The custodian's
responsibilities include safeguarding and controlling the Funds' cash and
securities, determining income and collecting interest on Fund investments.
The Funds pay the custodian a fee at an annual rate of [ ]% of the Fund's
average daily assets.

COUNSEL

Legal matters in connection with the issuance of shares of stock of the Trust
are passed upon by Seward & Kissel, One Battery Park Plaza, New York, New York
10004.

AUDITORS

[ ], independent auditors, act as auditors for the Trust.

The Trust and its Shares

The Trust is a business trust organized under Delaware law. Delaware law
provides that shareholders shall be entitled to the same limitations of
personal liability extended to stockholders of private corporations for profit.
The securities regulators of some states, however, have indicated that they and
the courts in their state may decline to apply Delaware law on this point.

The Trust Instrument contains an express disclaimer of shareholder liability for
the debts, liabilities, obligations, and expenses of the Trust and requires that
a disclaimer be given in each contract entered into or executed by the Trust or
the Trustees. The Trust Instrument provides for indemnification out of each
series' property of any shareholder or former shareholder held personally liable
for the obligations of the series. The Trust Instrument also provides that each
series shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the series and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which Delaware law does not
apply, no contractual limitation of liability was in effect and the portfolio is
unable to meet its obligations. Forum believes that, in view of the above,
there is no risk of personal liability to shareholders.

<PAGE>

protected against any liability to which he would otherwise by subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.

The Board is required to call a meeting of shareholders for the purpose of
voting upon the removal of any trustee when so requested in writing by the
shareholders of record holding at least 10% of the Trust's outstanding shares.

Each series capital consists of shares of beneficial interest. Shares are fully
paid and nonassessable, except as set forth above with respect to Trustee and
shareholder liability. Shareholders representing 10% or more of the Trust or a
series may, as set forth in the Trust Instrument, call meetings of the Trust or
series for any purpose related to the Trust or series, as the case may be,
including, in the case of a meeting of the entire Trust, the purpose of voting
on removal of one or more Trustees. The Trust or any series may be terminated
upon the sale of its assets to, or merger with, another open-end management
investment company or series thereof, or upon liquidation and distribution of
its assets. Generally such terminations must be approved by the vote of the
holders of a majority of the outstanding shares of the Trust or the series;
however, the Trustees may, without prior shareholder approval, change the form
of organization of the Trust by merger, consolidation or incorporation. If not
so terminated or reorganized, the Trust and its series will continue
indefinitely. Under the Trust Instrument, the Trustees may, without shareholder
vote, cause the Trust to merge or consolidate into one or more trusts,
partnerships or corporations or cause the Trust to merge or consolidate into one
or more trusts, partnerships or corporations or cause the Trust to be
incorporated under Delaware law, so long as the surviving entity is an open-end
management investment company that will succeed to or assume the Trust's
registration statement.

SHAREHOLDINGS

As of [ ], 1996, the officers and Trustees of the Trust as a group owned less
than 1% of the outstanding shares of the Funds. Also as of that date, the
shareholders listed below owned more than 5% of a Fund. Shareholders owning
25% or more of the shares of a Fund or of the Trust as a whole may be deemed
to be controlling persons. By reason of their substantial holdings of shares,
these persons may be able to require the Trust to hold a shareholder meeting to
vote on certain issues and may be able to determine the outcome of any
shareholder vote. As noted, certain of these shareholders are known to the
Trust to hold their shares of record only and have no beneficial interest,
including the right to vote, in the shares.

PERCENTAGE OF
FUND
SHAREHOLDER SHARES OWNED
- - ----------- -------------

<PAGE>

FUND STRUCTURE

CORE AND GATEWAY. The Funds may seek to achieve their objective by investing
all of their investable assets in a separate portfolio of a registered, open-
end management investment company with substantially the same investment
objective and policies as the Fund. This "Core and Gateway" fund structure is
an arrangement whereby one or more investment companies or other collective
investment vehicles that share investment objectives _ but offer their shares
through distinct distribution channels _ pool their assets by investing in a
single investment company having substantially the same investment objective and
policies (a "Core Portfolio"). This means that the only investment securities
that will be held by a Fund will be the Fund's interest in the Core Portfolio.
This structure would permit other collective investment vehicles to invest
collectively in a Core Portfolio, allowing for greater economies of scale in
managing operations of the single Core Portfolio. In the event a Fund
invested all of its assets in a Core Portfolio, its methods of operation and
shareholder services would not be materially affected by its investment in a
corresponding Core Portfolio, except that the assets of the Fund may be managed
as part of a larger pool. If a Fund invested all of its assets in a Core
Portfolio, it would hold only investment securities issued by the Core
Portfolio; the Core Portfolio would directly invest in individual securities of
other issuers. The Fund would otherwise continue its normal operation. The
Board would retain the right to withdraw the Fund's investments from the Core
Portfolio at any time; the Fund would then resume investing directly in
individual securities of other issuers or could re-invest all of its assets in
another Core Portfolio.

The Board will authorize investing the Funds' assets in a Core Portfolio only
if it first determines that pooling is in the best interests of a Fund and its
shareholders. In determining whether to invest in a Core Portfolio, the Board
will consider, among other things, the opportunity to reduce costs and achieve
operational efficiencies. The Board will not authorize investment in a Core
Portfolio if it would materially increase costs to a Fund's shareholders,
unless, of course, there were perceived to be a corresponding increase in
benefits to shareholders.

FUND SHAREHOLDERS' VOTING RIGHTS. A Core Portfolio normally will not hold
meetings of its investors except as required under the 1940 Act. As a
shareholder in a Core Portfolio, a Fund would be entitled to vote in
proportion to its relative interest in the Core Portfolio. On any issue, a
Fund will vote its shares in a Core Portfolio in proportion to the votes cast by
its shareholders. If there are other investors in a Core Portfolio, there can
be no assurance that any issue that receives a majority of the votes cast by the
Fund's shareholders will receive a majority of votes cast by all Core Portfolio
shareholders. Generally, a Fund will hold a meeting of its shareholders to
obtain instructions on how to vote its interest in a Core Portfolio when the
Core Portfolio is conducting a meeting of its shareholders. However, subject to
applicable statutory and regulatory requirements, a Fund will not seek
instructions from its shareholders with respect to (i) any proposal relating to
a Core Portfolio that, if made with respect to the Fund, would not require the
vote of Fund shareholders, or (ii) any proposal relating to the Core Portfolio
that is identical to a proposal previously approved by the Fund's shareholders.

<PAGE>

In addition to a vote to remove a director or trustee or change a fundamental
policy, examples of matters that will require approval of shareholders of a Core
Portfolio include, subject to applicable statutory and regulatory requirements:
the election of directors or trustees; approval of an investment advisory
contract; the dissolution of a Core Portfolio; certain amendments of the
organizational documents for the Core Portfolio; a merger, consolidation or sale
of substantially all of a Core Portfolio's assets; or any additional matters
required or authorized by the charter or trust instrument and by-Laws of a Core
Portfolio or any registration statement of a Core Portfolio, or as the directors
or trustees of the Core Portfolio may consider desirable. The board of directors
or trustees of a Core Portfolio will typically reserve the power to change
nonfundamental policies without prior shareholder approval.

CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Core
Portfolio may be affected by the actions of other large investors in the Core
Portfolio, if any. For example, if the Core Portfolio had a large investor
other than the Fund that redeemed its interest in the Core Portfolio, the Core
Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from the Core Portfolio at any time,
if the Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if other investors
in the Core Portfolio, by a vote of shareholders, changed the investment
objective or policies of the Core Portfolio in a manner not acceptable to the
Board. A withdrawal could result in a distribution in kind of portfolio
securities (as opposed to a cash distribution) by the Core Portfolio. That
distribution could result in a less diversified portfolio of investments for the
Fund and could affect adversely the liquidity of the Fund's portfolio. If the
Fund decided to convert those securities to cash, it usually would incur
transaction costs. If a Fund withdrew its investment from the Core Portfolio,
the Board would consider what action might be taken, including the management of
the Fund's assets in accordance with its investment objective and policies by
the Adviser or the investment of all of the Fund's investable assets in another
pooled investment entity having substantially the same investment objective as
the Fund.

12. FINANCIAL STATEMENTS

The audited Schedule of Investments, Statement of Assets and Liabilities,
Statement of Operations, Statement of Changes in Net Assets, notes thereto and
Financial Highlights of Daily Assets Treasury Fund for the fiscal year ended
March 31, 1996 and the Independent Auditors' Report thereon (included in the
Annual Report to Shareholders), which are delivered along with this SAI, are
incorporated herein by reference.

As Daily Assets Government Fund and Daily Assets Cash Fund had not as of the
date hereof commenced operations, no financial statements are available.

<PAGE>

APPENDIX A - DESCRIPTION OF SECURITIES RATINGS

1. CORPORATE BONDS

MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")

Bonds which are rated Aaa are judged by Moody's to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the Portfolioamentally strong position of such issues.

Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.

Note: Those bonds in the Aa and A groups which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa1 and A1.

STANDARD AND POOR'S CORPORATION ("S&P")

Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.

Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt rated in higher rated
categories.

Note: The ratings for AA and A may be modified by the addition of a plus (+) or
minus (-) sign to show the relative standing within the rating category.

FITCH INVESTORS SERVICE, INC. ("FITCH")

AAA Bonds are considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.

AA Bonds are considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, shorter-term debt of these issuers is generally rate F-1+.
<PAGE>

A Bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA categories.

2. COMMERCIAL PAPER

MOODY'S INVESTORS SERVICE, INC.

Moody's two highest ratings for short-term debt, including commercial paper, are
Prime-1 and Prime-2. Both are judged investment grade, to indicate the relative
repayment ability of rated issuers.

Issuers rated Prime-1 have a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics:

-- Leading market positions in well-established industries.
-- High rates of return on funds employed.
-- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
-- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
-- Well-established access to a range of financial markets and assured
sources of alternate liquidity.

Issuers rated Prime-2 by Moody's have a strong ability for repayment of senior
short-term debt obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

STANDARD AND POOR'S CORPORATION

S&P's two highest commercial paper ratings are A and B. Issues assigned an A
rating are regarded as having the greatest capacity for timely payment. Issues
in this category are delineated with the numbers 1, 2 and 3 to indicate the
relative degree of safety. An A-1 designation indicates that the degree of
safety regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign designation. The capacity for timely payment on issues
with an A-2 designation is strong. However, the relative degree of safety is
not as high as for issues designated A-1. A-3 issues have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations. Issues rated B are regarded as having only an adequate capacity
for timely payment. However, such capacity may be damaged by changing
conditions or short-term adversities.

FITCH INVESTORS SERVICE, INC.

Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.

F-1+. Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

F-1. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
<PAGE>

F-2. Issues assigned this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1 ratings.

<PAGE>

SPORTSFUND-TM- SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
ACCOUNT INFORMATION AND DATED MAY 9, 1996
SHAREHOLDER SERVICING:

Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
(800)[800 Number]
[email protected]

PROSPECTUS
JULY [ ], 1996

This Prospectus offers shares of Sportsfund-TM- (the "Fund"), a diversified
series of Forum Funds (the "Trust"), an open-end, management investment company.

Sportsfund-TM- seeks to achieve long-term capital appreciation by investing
primarily in equity securities of companies which foster and promote sports
investments.

Shares of the Fund are offered to investors at a price equal to the next
determined net asset value plus a maximum sales charge of 4.0% of the total
public offering price (4.17% of the net amount invested).

This Prospectus sets forth concisely the information concerning the Fund and the
Trust that a prospective investor should know before investing. The Trust has
filed with the Securities and Exchange Commission a Statement of Additional
Information dated July [ ], 1996, as may be amended from time to time (the
"SAI"), which contains more detailed information about the Fund and the Trust
and which is incorporated into this Prospectus by reference. The SAI is
available without charge by contacting the Trust at the address listed above.

Investors should read this Prospectus and retain it for future reference.

TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Prospectus Summary. . . . . . . . . . . . . 2 4. Purchases And Redemptions
2. Investment Objective, Policies of Shares. . . . . . . . . . . 9
and Risk Factors. . . . . . . . . . . . . 4 5. Distributions and Tax Matters. . 14
3. Management. . . . . . . . . . . . . . . . . 7 6. Other Information. . . . . . . . 15
</TABLE>

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY OTHER FEDERAL AGENCY.
SHARES OF THE FUND ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF OR ENDORSED OR
GUARANTEED BY ANY BANK OR ANY AFFILIATE OF A BANK.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUND

FUND OBJECTIVE AND POLICIES

The investment objective of the Fund is to seek long-term capital
appreciation. The Fund invests primarily in the equity securities of companies
that, in the view of the Fund's investment advisers, foster and promote
competitive, participatory, and recreational sporting activities, and the
social, health, and cultural benefits they provide ("sports investments").
See "Investment Objective, Policies and Risk Factors." In making investments
for the Fund, the investment advisers consider the nature and size of a
company's sports-related activities as well as the general operations of the
company as they relate to sports, sporting events and the benefits of sports
to people and society.

FUND MANAGEMENT

The Fund's investment adviser is Westwood Ventures, Ltd. ("Westwood").
Westwood, which is located at 450 Seventh Avenue, Suite 3304, New York, New York
10123, was organized for the sole purpose of sponsoring and advising the Fund.
Subject to Westwood's general oversight, Forum Advisors, Inc. ("Forum Advisors"
and with Westwood, the "Advisers") acts as investment subadviser to the Fund and
is responsible for the day to day investment decisions of the Fund . Forum
Administrative Services, Inc. ("Forum Administrative") supervises the overall
management of the Fund and Forum Financial Services, Inc. ("Forum Financial") is
the distributor of shares of the Fund. See "Management."

PURCHASES AND REDEMPTIONS

Shares of the Fund are offered at the next-determined net asset value per share
plus any applicable sales charge. The minimum initial investment is $1,000
and the minimum subsequent investment is $100. Shares may be redeemed without
charge. See "Purchases and Redemptions of Shares."

EXCHANGE PROGRAM

Shareholders of the Fund may exchange their shares without charge for the shares
of certain other funds of the Trust, including certain money market funds. See
"Purchases and Redemptions of Shares - Exchanges."

DISTRIBUTIONS

Distributions of the Fund's net investment income are declared annually by the
Fund. The Fund's net capital gain, if any, is also distributed annually. All
distributions are reinvested in Fund shares unless a shareholder elects to have
them paid in cash. See "Distributions and Tax Matters."

CERTAIN RISK FACTORS

THERE CAN BE NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE
AND THE FUND SHOULD NOT BE CONSIDERED AS A COMPLETE INVESTMENT PROGRAM. The
Fund's net asset value will fluctuate as the value of the Fund's portfolio
securities changes. Because of the focus of the Fund, an investment in the Fund
may be more volatile than an investment in other mutual funds that do not focus
their investments in a similar manner. Moreover, the value of the shares of the
Fund will be especially susceptible to factors influencing entertainment and
sports industries. See "Investment Objective, Policies and Risk Factors."
Although Forum Advisors manages several other mutual funds, currently it does
not manage any other equity funds. The Adviser manages no other mutual funds
and was created for the purpose of sponsoring and advising the Fund. See
"Management."

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<PAGE>

EXPENSES OF INVESTING IN THE FUND

The purpose of the table below is to assist investors in understanding the
expenses that an investor in the Fund will bear directly or indirectly.

SHAREHOLDER TRANSACTION EXPENSES

Maximum sales charge imposed on purchases
(as a percentage of public offering price) 4.00%

ANNUAL OPERATING EXPENSES(1)
(as a percentage of average daily net assets)

Investment Advisory Fees (after estimated fee waivers)(2) 1.25%
Rule 12b-1 Fees None
Other Expenses (estimated) 0.75%
-----
Total Operating Expenses 2.00%

(1) For a further description of the various expenses incurred in the operation
of the Fund, see "Management."

(2) Investment Advisory Fees reflect the investment advisory fee payable to
Westwood of 1.50% and an estimated fee waiver of 0.25%. Westwood has agreed to
waive its fee to the extent Total Operating Expenses exceed 2.00% for the first
two years of the Fund's operations. Other Expenses for the Fund are based on
estimated amounts for the Fund's first fiscal year of operations ending March
31, 1997. Absent the estimated voluntary fee waiver by Westwood, the Total
Operating Expenses would be 2.25%.

EXAMPLE

The following is a hypothetical example that indicates the dollar amount of
expenses that an investor would pay, assuming a $1,000 investment in the Fund, a
5% annual return and reinvestment of all dividends and distributions.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$59 $100 $143 $263

The example is based on the expenses listed in the "Annual Operating Expenses"
table. The 5% annual return is not predictive of and does not represent the
Fund's projected returns; rather, it is required by government regulation. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS THAN INDICATED.

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<PAGE>

2. INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS

INVESTMENT OBJECTIVE

The investment objective of the Fund is to seek long-term capital appreciation.
There can be no assurance that the Fund will achieve its investment objective.

INVESTMENT POLICIES

The Fund pursues its objective by investing primarily (normally 65% of the
Fund's total assets) in the equity securities of companies that, in the view
of the Fund's investment Advisers, foster and promote competitive,
participatory, and recreational sporting activities, and the social, health,
and cultural benefits they provide ("sports investments"). In making
investments for the Fund, the Advisers consider the nature and size of a
company's sports related activities as well as the general operations of the
company as they relate to sporting events, competitive, participatory, and
recreational sports, and the benefits from those activities to people and
society. Among the factors considered by the Advisers are a company's
investment in sports related activities both within and outside its normal
business operations, and sponsorship and investment in, or financial support
of, sports related activities that may provide few tangible benefits to the
company, but in all cases nurture sports and recreation and the benefits
derived therefrom.

In order to adhere to its philosophy, the Fund has developed the following
criteria for the selection of organizations in which it invests. The Fund
recognizes that as a matter of practice, evaluation of any specific company in
the context of these criteria will involve subjective judgment by the
Advisers. Given these considerations, the Fund seeks to invest in companies
which nurture and advance sports: (1) as sponsors, advertisers, or financial
supporters of sport or exhibition events or facilities, (2) through
investments in or support of sports related franchises, (3) through ownership
or operation of sport or exhibition events or facilities, (4) as conduits of
information on, or programming of sporting activities, and (5) as
manufacturers, distributors, wholesalers, or retailers of sporting equipment
or clothing. Examples of companies meeting one or more of the criteria may
include Olympic sponsor Coca Cola, Inc., sports franchise owners Comcast Corp.
and Walt Disney Company, and sports equipment manufacturers Nike Inc., and
Calloway Golf Co. Though securities of these companies may satisfy the Fund's
philosophy, they may or may not be in the Fund's portfolio at any time.

-4-

<PAGE>

The Fund will invest primarily in equity securities (common stocks, securities
convertible into common stocks or, subject to certain limitations, rights or
warrants to subscribe for or purchase common stocks). The Fund may also
invest in convertible debt securities and preferred stocks of companies that
are sports investments or other companies when, in the opinion of the
Advisers, such investments are warranted to achieve the Fund's investment
objective. Subject to Westwood's general oversight, Forum Advisors is
responsible for the day to day investment decisions of the Fund. In choosing
securities for the Fund's portfolio Forum Advisors attempts to identify
companies whose securities have strong potential for either near- or long-term
capital appreciation. Within identified companies, Forum Advisors seeks to
limit the risk of depreciation and price volatility.

The Fund's investment objective and certain investment limitations described in
the SAI may not be changed without approval of the holders of a majority of the
Fund's outstanding voting securities. A majority of the Fund's outstanding
voting securities means the lesser of 67% of the shares of the Fund present or
represented at a shareholders meeting at which the holders of more than 50% of
the shares are present or represented, or more than 50% of the total outstanding
shares of the Fund. Except as otherwise indicated, investment policies of the
Fund are not fundamental and may be changed by the Board of Trustees of the
Trust (the "Board") without shareholder approval. The Fund 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 Fund's total assets. Borrowing
for purposes other than meeting redemption requests will not exceed 5% of the
value of the Fund's total assets. A further description of the Fund's
investment policies is contained in the SAI.

COMMON AND PREFERRED STOCKS AND THEIR RISKS. Common stockholders are the owners
of the company issuing the stock and, accordingly, vote on various corporate
governance matters such as mergers. They are not creditors of the company, but
rather, upon liquidation of the company, are entitled to their pro rata share of
the company's assets after creditors (including fixed income security holders)
and, if applicable, preferred stockholders are paid. Preferred stock is a class
of stock having a preference over common stock as to dividends and, in the
alternative, as to the recovery of investment. A preferred stockholder is a
shareholder in the company and not a creditor of the company as is a holder of
the company's fixed income securities. Dividends paid to common and preferred
stockholders are distributions of the earnings of the company and not interest
payments, which are expenses of the company. Equity securities owned by the
Fund may be traded in the over-the-counter market or on a securities exchange
and may not be traded every day or in the volume typical of securities traded on
a major U.S. national securities exchange. As a result, disposition by the Fund
of a portfolio security to meet redemptions by interest holders or otherwise may
require the Fund to sell these securities at a discount from market prices, to
sell during periods when disposition is not desirable, or to make many small
sales over a lengthy period of time. The market value of all securities,
including equity securities, is based upon the market's perception of value and
not necessarily the book value of an issuer or other objective measure of a
company's worth.

-5-
<PAGE>

WARRANTS. The Fund may invest in warrants, which are options to purchase an
equity security at a specified price (usually representing a premium over the
applicable market value of the underlying equity security at the time of the
warrant's issuance) and usually during a specified period of time. Their prices
do not necessarily move parallel to the prices of the underlying securities.
Warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer. The Fund may not invest more than 5% of
its net assets (at the time of investment) in warrants (other than those that
have been acquired with or attached to other securities).

CONVERTIBLE SECURITIES. The Fund may invest in convertible debt and convertible
preferred stock, which may be rated by a nationally recognized statistical
rating organization ("NRSRO") or may be unrated. Convertible securities are
fixed income securities that may be converted at a stated price within a
specific amount of time into a specified number of shares of common stock. A
convertible security entitles the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to nonconvertible debt securities in
that they ordinarily provide a stream of income with generally higher yields
than those of common stocks of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinate to comparable nonconvertible securities. In general,
the value of a convertible security is the higher of its investment value (its
value as a fixed income security) and its conversion value (the value of the
underlying shares of common stock if the security is converted). The investment
value of a convertible security is influenced by changes in interest rates, with
investment value declining as interest rates increase and increasing as interest
rates decline. The credit standing of the issuer and other factors also may
have an effect on the convertible security's investment value. The conversion
value of a convertible security is determined by the market price of the
underlying common stock.

SMALL COMPANY INVESTMENTS AND THEIR RISKS. The Fund may invest in securities of
small or unseasoned companies. These companies may be in a relatively early
stage of development or may produce goods and services which have favorable
prospects for growth due to increasing demand or developing markets.
Frequently, such companies have a small management group and single product or
product line expertise. An investment in these companies may offer a greater
opportunity for capital appreciation than an investment in larger more
established entities. Investments in smaller companies, however, generally
involve greater risks than investments in larger companies due to the small size
of the issuer and the fact that the issuer may have limited product lines,
access to financial markets and management depth. In addition, many of the
securities of smaller companies trade less frequently and in lower volumes than
securities issued by larger firms. The result is that the short-term price
volatility of small company securities is greater than the short-term price
volatility of the securities of larger, more established companies that are
widely held. The securities of small companies may also be more sensitive to
market changes generally than the securities of large companies. While
securities issued by smaller companies historically have experienced greater
market appreciation than the securities of larger entities, there is no
assurance that they will continue to do so or that the Fund will be successful
in identifying companies whose securities will appreciate.

ILLIQUID AND RESTRICTED SECURITIES. The Fund may not invest more than 15% of
its net assets in illiquid securities. Illiquid securities are securities that
cannot be disposed of within seven days in the ordinary course of business at
approximately the amount at which the Fund has valued the securities and
include, among other things, repurchase agreements not entitling the holder to
payment within seven days and "restricted securities," other than those
determined to be liquid pursuant to guidelines established by the Board.
Limitations on resale may have an adverse effect on the marketability of
restricted securities, and the Fund might also have to register restricted
securities in order to dispose of them, resulting in expense and delay. The
Fund might not be able to dispose of illiquid or restricted securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions. There can be no assurance that a liquid market will exist for any
security at any particular time.

-6-
<PAGE>

securities are not illiquid securities under guidelines adopted by the Board.
These guidelines take into account trading activity in the securities and the
availability of reliable pricing information, among other factors. If there is
a lack of trading interest in a particular Rule 144A security, the Fund's
holdings of that security may be illiquid.

DIVERSIFICATION. The Fund is diversified, which means that with respect to 75%
of the Fund's total assets, (i) the Fund may not own the securities of any one
issuer (other than a U.S. Government security) with a value of more than 5% of
the Fund's total assets and (ii) the Fund may not own more than 10% of the
voting securities of any one issuer. In addition, no more than 25% of the total
assets of the Fund may be invested in the securities of any one issuer. Due to
the potentially limited availability of companies engaged in sports related
activities, the Advisers anticipate that the Fund may maintain one or more
positions that exceed 5% of the Fund's total assets. Accordingly, the Fund may
present greater risks than other diversified funds. The Fund will be subject to
a greater risk of loss if the market value of a company in which the Fund
invests a substantial amount of its assets declines.

PORTFOLIO TURNOVER. The frequency of portfolio transactions of the Fund (the
portfolio turnover rate) will vary from year to year depending on market
conditions. High portfolio turnover and short-term trading involve
correspondingly greater commission expenses and transaction costs. The Advisers
weigh the anticipated benefits of short-term investments against these
consequences. The Fund's portfolio turnover rate is expected to be under 100%
for its first year of operations.

RISK FACTORS

Because of the focus of the Fund, an investment in the Fund
may be more volatile than an investment in other mutual funds that do not
focus their investments in a similar manner. Moreover, the value of the
shares of the Fund will be especially susceptible to factors influencing
entertainment and sports industries. THE FUND SHOULD NOT BE CONSIDERED AS A
COMPLETE INVESTMENT PROGRAM. Companies that engage in sports related
activities may be primarily engaged in different industries, but sports
related activities may be the primary business of some of the companies in
which the Fund invests. As a fundamental policy, the Fund will not purchase
securities if, immediately after the purchase, more than 25% of the value of
the Fund's total assets would be invested in the securities of issuers having
their principal business activities in the same industry. The policy of the
Fund to invest primarily in sports investments entails more risk than if the
Fund were to invest in the greater diversity of companies that are not engaged
in sports-related activities. The securities in which the Fund invests may be
affected more greatly than the securities market in general during downturns
in the economy due to the fact that public spending on sports related
activities is not required, but is generally a leisure or entertainment
activity. In addition, the Advisers may be required to make or maintain
investments in companies that they may not otherwise have made or maintained
due to the limited amount of sports investments whose securities are publicly
traded. As a result, the Fund's net asset value may fluctuate more widely
than the value of shares of another mutual fund investing in a broader range
of securities.

3. MANAGEMENT

The business of the Trust is managed under the direction of the Board of
Trustees. The Board formulates the general policies of the Fund and meets
periodically to review the results of the Fund, monitor investment activities
and practices and discuss other matters affecting the Fund and the Trust.

THE ADVISERS

Westwood serves as the investment adviser of the Fund. Subject to the general
supervision of the Board, Westwood is responsible for making investment
decisions for the Fund. Westwood was organized in 1996 to sponsor and manage
the Fund and is currently controlled by its two principal sponsors, Gary Miller,
its President, Adam Zalta, its Executive Vice President. For its services,
Westwood receives an advisory fee at an annual rate of 1.50% of the Fund's
average daily net assets. Westwood has, however, agreed to waive its advisory
fee for the first two years of the Fund's operation to the extent the Fund's
expense ratio exceeds 2.00% of the Fund's average annual daily net

-7-
<PAGE>

assets. Westwood was organized under the laws of the State of New York in 1996
and is registered with the SEC as an investment adviser. Currently, the Fund is
the only mutual fund advised by Westwood, which has no prior mutual fund or
other investment advisory experience.

To assist it in carrying out its obligations to the Fund, Westwood has entered
into an investment subadvisory agreement among the Trust, Westwood and Forum
Advisors. Forum Advisors is registered with the SEC as an investment adviser
and, in addition to the Fund, provides investment advice to five other bond and
money market mutual funds. Pursuant to its agreement, Forum Advisors makes
investment decisions for the Fund and continuously reviews, supervises and
administers the Fund's investment program with respect to that portion, if any,
of the Fund's portfolio that Westwood believes should be invested using Forum
Advisors as investment subadviser. Currently, Forum Advisors manages the entire
portfolio of the Fund and has since the Fund's inception. Westwood supervises
the performance of Forum Advisors, including Forum Advisors' adherence to the
Fund's investment objective and policies and pays Forum Advisors a fee for its
services at the rate of 0.50% of the Fund's average daily net assets. Forum
Advisors' fee is subject to a minimum payment from Westwood of $25,000 per
year.

Mark D. Kaplan, CFA, a Managing Director of Forum Advisors since 1995, is
primarily responsible for the day to day management of the Fund's portfolio and
has been since the Fund's inception. Prior to his association with Forum
Advisor, for eight years Mr. Kaplan was associated with H.M. Payson & Co., a
registered broker dealer and investment adviser providing services to mutual
funds, institutions, individuals, and endowments. At H.M. Payson Mr. Kaplan was
a portfolio manager for an equity mutual fund and private accounts. He also
served as the firm's Director of Investment Research responsible for guiding
management of all the company's accounts which totaled in excess of $500
million, and managing a staff of research analysts/portfolio managers. Mr.
Kaplan was a principal of the firm and member of its executive committee.

MANAGER AND DISTRIBUTOR

Subject to the supervision of the Board, Forum Administrative supervises the
overall management of the Fund. Forum Administrative, Forum Advisors, Forum
Financial and the Fund's transfer agent are members of the Forum Financial Group
of companies and together provide a full range of services to the investment
company and financial services industry. As of the date hereof Forum
Administrative and Forum Financial acted as manager of registered investment
companies and collective trust funds with assets of approximately $15 billion.
As of the date of this Prospectus, each of the Forum Financial Group of
Companies were controlled by John Y. Keffer, President and Chairman of the
Trust.

Under its management agreement with the Trust, Forum Administrative supervises
all aspects of the Fund's operations, including the receipt of services for
which the Trust is obligated to pay, provides the Trust with general office
facilities and provides, at the Trust's expense, the services of persons
necessary to perform such supervisory, administrative and clerical functions as
are needed to effectively operate the Trust. Those officers, as well as certain
other employees and Trustees of the Trust, may be directors, officers or
employees of (and persons providing services to the Trust may include) Forum
Administrative and its affiliates. For these services and facilities, Forum
receives with respect to the Fund a management fee at an annual rate of 0.15% of
the first $50 million of the Fund's average daily net assets, 0.10% of the next
$50 million of the Fund's average daily net assets and 0.05% of the remaining
average daily net assets of the Fund.

Forum Financial acts as the distributor of the shares of the Fund and pursuant
to a distribution agreement with the Trust receives, and may reallow to certain
financial institutions, the sales charge paid by the purchasers of the Fund's
shares. See "Purchases and Redemptions of Shares - Sales Charges." Forum
Financial, whose address is Two Portland Square, Portland, Maine 04101, is a
registered broker-dealer and investment adviser and is a member of the National
Association of Securities Dealers, Inc.

SHAREHOLDER SERVICING

Shareholder inquiries and communications concerning the Fund may be directed to
Forum Financial Corp. (the "Transfer Agent.") The Transfer Agent acts as the
Fund's transfer agent and dividend disbursing agent and maintains an account for
each shareholder of the Fund (unless such accounts are maintained by sub-
transfer agents

-8-
<PAGE>

or processing agents) and performs other transfer agency and shareholder related
functions. For these services, the Transfer Agent receives a fee of $24,000
per year plus certain account charges and is reimbursed for its various out-of-
pocket costs related to the Fund. The Transfer Agent is authorized to
subcontract any or all of its functions to one or more qualified sub-transfer
agents or processing agents, which may be processing organizations (as described
under "Purchases and Redemptions of Shares - Purchases and Redemptions Through
Financial Institutions") or its affiliates. The Transfer Agent may pay those
agents for their services, but no such payment will increase the Transfer
Agent's compensation from the Trust. In addition, the Transfer Agent performs
portfolio accounting services for the Fund, including determination of the
Fund's net asset value per share, pursuant to a separate agreement with the
Trust.

EXPENSES OF THE TRUST

The Fund's expenses comprise Trust expenses attributable to the Fund which are
charged to the Fund, and expenses not attributable to a particular fund of the
Trust which are allocated among the Fund and all other funds of the Trust in
proportion to their average net assets. The Fund is obligated to pay for all of
its expenses, although Westwood has agreed to waive its fee as described above
and to reimburse the Fund for certain operating expenses which in any year
exceed the limits prescribed by any state in which the Fund's shares are
qualified for sale. Subject to these obligations, the Fund pays for all of its
expenses. For an estimate of the each Fund's expenses for the current fiscal
year, see "Highlights - Expenses of Investing in the Fund." These expenses
include: interest charges; taxes; brokerage fees and commissions; certain
insurance premiums; applicable fees and expenses under the Trust's contracts
with the Advisers, Forum Administrative, the Transfer Agent and any custodian;
fees of pricing, interest, dividend, credit and other reporting services; costs
of membership in trade associations; auditing, legal and compliance expenses;
costs of preparing and printing the Fund's Trust's prospectuses, statements of
additional information and shareholder reports and delivering them to existing
shareholders; compensation of certain of the Trust's trustees, officers and
employees and other personnel performing services for the Trust; and
registration fees and related expenses.

Westwood and any other service provider to the Fund, in their sole discretion,
may waive all or any portion of their respective fees, which are accrued daily
and paid monthly. All such waivers, which could be discontinued at any time
except as otherwise noted, have the effect of increasing the Fund's performance
for the period during which the waiver was in effect and will not be recouped at
a later date.

4. PURCHASES AND REDEMPTIONS OF SHARES

GENERAL INFORMATION

Investments in the Fund may be made either by an investor directly or through
certain brokers and financial institutions of which the investor is a customer.
All transactions in Fund shares are effected through the Transfer Agent, which
accepts orders for purchases and redemptions from shareholders of record and new
investors. Shareholders of record will receive from the Trust periodic
statements listing all account activity during the statement period. The Trust
reserves the right in the future to modify, limit or terminate any shareholder
privilege upon appropriate notice to shareholders and to charge a fee for
certain shareholder services, although no such fees are currently contemplated.

PURCHASES. Fund shares are sold at a price equal to their net asset value plus
any applicable sales charge on all weekdays except customary national business
holidays and Good Friday ("Fund Business Day"). Fund shares are issued
immediately following the next determination of net asset value made after an
order for the shares in proper form is accepted by the Transfer Agent. The
Fund's net asset value is calculated at 4:00 p.m., Eastern time on each Fund
Business Day. Fund shares become entitled to receive dividends on the next Fund
Business Day after the acceptance of an order. The Fund reserves the right to
reject any subscription for the purchase of its shares. Stock certificates are
issued only to shareholders of record upon their written request and no
certificates are issued for fractional shares.

-9-
<PAGE>

REDEMPTIONS. Fund shares may be redeemed without charge at their net asset value
on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following acceptance by the
Transfer Agent of the redemption order in proper form (and any supporting
documentation which the Transfer Agent may require). Shares redeemed are not
entitled to receive dividends declared after the day on which the redemption
becomes effective.

Proceeds of redemptions normally are paid in cash. However, payments may be made
wholly or partially in portfolio securities if the Board determines that
payment in cash would be detrimental to the best interests of the Fund. The
Trust will only effect a redemption in portfolio securities if the particular
shareholder is redeeming more than $250,000 or 1% of the Fund's total net
assets, whichever is less, during any 90-day period.

The Trust employs reasonable procedures to insure that telephone orders are
genuine (which include recording certain transactions and the use of shareholder
security codes) and, if it does not, may be liable for any losses due to
unauthorized or fraudulent telephone instructions. Shareholders should verify
the accuracy of telephone instructions immediately upon receipt of confirmation
statements. During times of drastic economic or market changes, telephone
redemption and exchange privileges may be difficult to implement. In the event
that a shareholder is unable to reach the Transfer Agent by telephone, requests
may be mailed or hand-delivered to the Transfer Agent.

Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon not less than 60 days' written notice, all shares in
any Fund account with an aggregate net asset value of less than $1,000. The
Trust will not redeem accounts that fall below that amount solely as a result of
a reduction in net asset value.

PURCHASE AND REDEMPTION PROCEDURES

The following purchase and redemption procedures and shareholder services apply
to investors who invest in the Fund directly. These investors may obtain the
account application necessary to open an account by writing the Transfer Agent
at the address on the cover page of this prospectus. For those shareholder
services not referenced on the account application and to change information on
a shareholder's account (such as addresses), investors or existing shareholders
should request an optional services form from the Transfer Agent.

INITIAL PURCHASE OF SHARES

There is a $1,000 minimum for initial investments in the Fund.

BY MAIL. Investors may send a check made payable to Forum Funds along with a
completed account application to the Fund at the address on the cover page of
this Prospectus. Checks are accepted at full value subject to collection. If a
check does not clear, the purchase order will be canceled and the investor will
be liable for any losses or fees incurred by the Trust, the Transfer Agent or
Forum Financial.

BY BANK WIRE. To make an initial investment in the Fund using the wire system
for transmittal of money among banks, an investor should first telephone the
Trust at (800) [800 Number] to obtain an account number. The investor should
then instruct a member commercial bank to wire the investor's money immediately
to:

First National Bank of Boston

-10-
<PAGE>

Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Financial Corp.
Account #: 541-54171
Re: Sportsfund-TM-
Account #:_________________________
Account Name:______________________

The investor should then promptly complete and mail the account
application. Any investor planning to wire funds should instruct a bank early in
the day so the wire transfer can be accomplished the same day.

SUBSEQUENT PURCHASES OF SHARES

There is a $100 minimum for subsequent purchases. Subsequent purchases may be
made by mailing a check or by sending a bank wire as indicated above.
Shareholders using the wire system for purchase should first telephone the Trust
at (800) [800 Number] to notify it of the wire transfer. All payments should
clearly indicate the shareholder's name and account number.

REDEMPTION OF SHARES

Shareholders that wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several weeks after a shareholder's application is received.
Shares for which certificates have been issued may not be redeemed by telephone.

BY TELEPHONE. A shareholder that has elected telephone redemption privileges may
make a telephone redemption request by calling the Transfer Agent at (207) 879-
0001 and providing the shareholder's account number, the exact name in which the
shareholder's shares are registered and the shareholder's social security or
taxpayer identification number. In response to the telephone redemption
instruction, the Fund will mail a check to the shareholder's record address or,
if the shareholder has elected wire redemption privileges, wire the proceeds.

BY BANK WIRE. For redemptions of more than $5,000, a shareholder that has
elected wire redemption privileges may request the Fund to transmit the
redemption proceeds by Federal Funds wire to a bank account designated on the
shareholder's account application. To request bank wire redemptions by
telephone, the shareholder also must have elected the telephone redemption
privilege. Redemption proceeds are transmitted by wire on the day after the
redemption request in proper form is received by the Transfer Agent.

-11-
<PAGE>

SIGNATURE GUARANTEES. A signature guarantee is required for any written
redemption request and for any endorsement on a stock certificate. In addition,
a signature guarantee also is required for instructions to change a
shareholder's record name or address, designated bank account for wire
redemptions or automatic investment or redemption, dividend election, telephone
redemption or exchange option election or any other option election in
connection with the shareholder's account. Signature guarantees may be provided
by any eligible institution, including a bank, a broker, a dealer, a national
securities exchange, a credit union, or a savings association that is authorized
to guarantee signatures, acceptable to the Transfer Agent. Whenever a signature
guarantee is required, the signature of each person required to sign for the
account must be guaranteed.

EXCHANGES

Fund shareholders are entitled to exchange their shares for shares of any other
fund of the Trust or any other fund that participates in the exchange program
and whose shares are eligible for sale in the shareholder's state of residence.
Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in the
Fund through an exchange if the shareholder requests any shareholder privilege
not associated with the existing account. Exchanges are subject to the fees
charged by, and the restrictions listed in the prospectus for, the fund into
which a shareholder is exchanging, including minimum investment requirements.
The Fund does not charge for exchanges and there is currently no limit on the
number of exchanges a shareholder may make.

The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Redemptions and
purchases are effected at the respective net asset values of the two funds as
next determined following receipt of proper instructions and all necessary
supporting documents by the fund whose shares are being exchanged.

BY MAIL. Exchanges may be accomplished by written instructions to the Transfer
Agent accompanied by any stock certificate that may have been issued to the
shareholder. All written requests for exchanges must be signed by the
shareholder (a signature guarantee is not required) and all certificates
submitted for exchange must be endorsed by the shareholder with signature
guaranteed.

BY TELEPHONE. Exchanges may be accomplished by telephone by any shareholder that
has elected telephone exchange privileges by calling the Transfer Agent at
(207) 879-0001 and providing the shareholder's account number, the exact name in
which the shareholder's shares are registered and the shareholder's social
security or taxpayer identification number.

PURCHASES AND REDEMPTIONS THROUGH FINANCIAL INSTITUTIONS

Shares may be purchased and redeemed through certain brokers, banks and other
financial institutions ("Processing Organizations"), including affiliates of the
Transfer Agent. Processing Organizations may receive as a dealer's reallowance a
portion of the sales charge paid by their customers who purchase Fund shares. In
addition, Processing Organizations may charge their customers a fee for their
services and are responsible for promptly transmitting purchase, redemption and
other requests to the Fund. The Trust is not responsible for the failure of any
institution to promptly forward these requests.

-12-
<PAGE>

Investors who purchase shares will be subject to the procedures of their
Processing Organization, which may include charges, limitations, investment
minimums, cutoff times and restrictions in addition to, or different from, those
applicable to shareholders who invest in the Fund directly. These investors
should acquaint themselves with their institution's procedures and should read
this Prospectus in conjunction with any materials and information provided by
their institution. Customers who purchase Fund shares through a Processing
Organization may or may not be the shareholder of record and, subject to their
institution's and the Fund's procedures, may have Fund shares transferred into
their name. There is typically a three day settlement period for purchases and
redemptions through broker-dealers. Certain other Processing Organizations may
enter purchase orders with payment to follow.

Certain shareholder services may not be available to shareholders who have
purchased shares through a Processing Organization. These shareholders should
contact their Processing Organization for further information. The Trust may
confirm purchases and redemptions of a Processing Organization's customers
directly to the Processing Organization, which in turn will provide its
customers with such confirmations and periodic statements as may be required by
law or agreed to between the Processing Organization and its customers.

SALES CHARGES

The public offering price for shares of the Fund is the sum of the net asset
value of the shares being purchased plus any applicable sales charge. No sales
charge is assessed on the reinvestment of dividends or other distributions. The
sales charge is assessed as follows (net asset value percentages are rounded to
the nearest one-hundredth percent):

Sales Charge As A
Percentage of
-------------
Public Net
Offering Asset Dealers'
Amount of Purchase Price Value* Reallowance
------------------ ----- ------ -----------
less than $50,000 4.00% 4.17% 3.50%
$50,000 but less than $100,000 3.50 3.63 3.10
$100,000 but less than $250,000 3.00 3.09 2.70
$250,000 but less than $500,000 2.50 2.56 2.25
$500,000 but less than $1,000,000 1.50 1.52 1.30
$1,000,000 and up 0.50 0.50 0.40

*Rounded to the nearest one-hundredth percent.

Forum's commission is the sales charge shown above less any applicable discount
reallowed to selected brokers and dealers (including banks and bank affiliates
purchasing shares as principal or agent). Normally, Forum will reallow
discounts to selected brokers and dealers in the amounts indicated in the table
above. From time to time, however, Forum may elect to reallow the entire sales
charge to selected brokers or dealers for all sales with respect to which orders
are placed with Forum during a particular period. The dealers' reallowance may
be changed from time to time.

No sales charge will be assessed on purchases made for investment purposes by:
(a) any bank, trust, savings association or similar institution with whom Forum
has entered into a share purchase agreement acting on behalf of the
institution's fiduciary customer accounts or any account maintained by its trust
department; (b) any registered investment adviser with whom Forum has entered
into a share purchase agreement and which is acting on behalf of its fiduciary
customer accounts; (c) trustees and officers of the Trust; directors, officers,
owners, and full-time employees of the Advisers, any of their affiliates or any
organization with which Forum has entered into a selected dealer or processing
agent agreement; the spouse, sibling, direct ancestor or direct descendent
(collectively, "relatives") of any such person; any trust for the benefit of any
such person or relative; or the estate of any such person or relative; and (d)
any person who has, within the preceding 90 days, redeemed Fund shares (but only
on purchases in amounts not exceeding the redeemed amounts) and completes a
reinstatement form upon investment. Any shares so purchased may not be resold
except to the Fund.

-13-
<PAGE>

REDUCED SALES CHARGES

For an investor to qualify for one of the following types of reduced sales
charges, the investor must notify the Transfer Agent at the time of purchase.
Reduced sales charges may be modified or terminated at any time and are subject
to confirmation of an investor's holdings.

RIGHTS OF ACCUMULATION. An investor's purchase of additional shares of the Fund
may qualify for rights of accumulation ("ROA") wherein the applicable sales
charge will be based on the total of the investor's current purchase and the net
asset value (at the end of the previous Fund Business Day) of all Fund shares
held by the investor. For example, if an investor owned shares of the Fund worth
$400,000 at the then current net asset value and purchased shares of the Fund
worth an additional $50,000, the sales charge for the $50,000 purchase would be
at the 2.50% rate applicable to a single $450,000 purchase, rather than at the
4.00% rate. To qualify for ROA on a purchase, the investor must inform the
Transfer Agent and supply sufficient information to verify that each purchase
qualifies for the privilege or discount.

LETTER OF INTENT. Investors may also obtain reduced sales charges based on
cumulative purchases by means of a written Letter of Intent ("LOI"), which
expresses the investor's intention to invest $100,000 or more within a period of
13 months in shares of the Fund. Each purchase of shares under a LOI will be
made at the public offering price applicable at the time of the purchase to a
single transaction of the dollar amount indicated in the LOI.

An LOI is not a binding obligation upon the investor to purchase the full amount
indicated. Shares purchased with the first 5% of the amount indicated in the LOI
will be held subject to a registered pledge (while remaining registered in the
name of the investor) to secure payment of the higher sales charge applicable to
the shares actually purchased if the full amount indicated is not purchased
within 13 months. Pledged shares will be involuntarily redeemed to pay the
additional sales charge, if necessary. When the full amount indicated has been
purchased, the shares will be released from pledge. Share certificates are not
issued for shares purchased under an LOI. Investors wishing to enter into an LOI
can obtain a form of LOI from their broker or financial institution or by
contacting the Transfer Agent.

5. DISTRIBUTIONS AND TAX MATTERS

DISTRIBUTIONS

Distributions of the Fund's net investment income are declared and paid
annually. Distributions of net capital gain, if any, realized by the Fund also
are distributed annually.

Shareholders may have all distributions reinvested in additional shares of the
Fund or received in cash. In addition, shareholders may have distributions of
net capital gain reinvested in additional shares of the Fund and distributions
of net investment income paid in cash. All distributions are treated in the same
manner for Federal income tax purposes whether received in cash or reinvested in
shares of the Fund.

All distributions will be reinvested at the Fund's net asset value as of the
payment date of the distribution. All distributions are reinvested unless
another option is selected. All distributions not reinvested will be paid to
the shareholder in cash and may be paid more than seven days following the date
on which distributions would otherwise be reinvested.

TAXES

FEDERAL TAXES. The Fund intends to qualify for each fiscal year to be taxed as a
"regulated investment company" under the Internal Revenue Code of 1986. As such,
the Fund will not be liable for Federal income taxes on the net investment
income and net capital gain distributed to its shareholders. Because the Fund
intends to distribute all of its net investment income and net capital gain each
year, the Fund should avoid all Federal income and excise taxes.

-14-
<PAGE>

Distributions paid by the Fund out of its taxable net investment income
(including any realized net short-term capital gain) are taxable to shareholders
as ordinary income for Federal tax purposes. Distributions by the Fund of
realized net long-term capital gain, if any, are taxable to shareholders as
long-term capital gain, regardless of the length of time the shareholder may
have held shares in the Fund. If Fund shares are sold at a loss after being
held for six months or less, the loss will be disallowed to the extent of any
exempt-interest dividends received on those shares and will be treated as long-
term capital loss to the extent of any long-term capital gain distribution
received on those shares.

Any distribution received by a shareholder reduces the net asset value of the
shareholder's shares by the amount of the distribution. To the extent that any
income or capital gain was accrued by the Fund before the shareholder purchased
shares, the distribution would be in effect a return of capital to the
shareholder. For Federal income tax purposes, however, capital gain
distributions, including those that operate as a return of capital, are taxable
to the shareholder receiving them.

It is expected that a substantial portion of the distributions from net
investment income to shareholders will qualify for the dividends received
deduction for corporations. The amount of such dividends eligible for the
dividends received deduction is limited to the amount of dividends from domestic
corporations received during the Fund's fiscal year.

OTHER TAX MATTERS. The Fund may be required by Federal law to withhold 31% of
reportable payments (which may include taxable dividends, capital gain
distributions and redemption proceeds) paid to individuals and certain other
non-corporate shareholders. Withholding is not required if a shareholder
certifies that the shareholder's social security or tax identification number
provided to the Fund is correct and that the shareholder is not subject to
backup withholding.

6. OTHER INFORMATION

PERFORMANCE INFORMATION

The Fund's performance may be quoted in advertising in terms of total return or
yield. Both types are based on historical results and are not intended to
indicate future performance. Total return refers to the average annual
compounded rates of return over some representative period that would equate an
initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment, after giving effect to the reinvestment of
all distributions and deductions of expenses during the period. The Fund also
may advertise its total return over different periods of time on a before-tax or
after-tax basis or by means of aggregate, average, year by year, or other types
of total return figures. Because average annual returns tend to smooth out
variations in the Fund's returns, shareholders should recognize that they are
not the same as actual year-by-year results. The Fund's yield is a way of
showing the rate of income earned by the Fund as a percentage of the Fund's
share price. Yield is calculated by dividing the net investment income of the
Fund for the stated period by the average number of shares entitled to receive
distributions and expressing the result as an annualized percentage rate based
on the Fund's share price at the end of the period

The Fund's advertisements may reference ratings and rankings among similar funds
by independent evaluators such as Morningstar or Lipper Analytical Services,
Inc. In addition, the performance of the Fund may be compared to recognized
indices of market performance. The comparative material found in the Fund's
advertisements, sales literature or reports to shareholders may contain
performance ratings. These are not to be considered representative or indicative
of future performance.

-15-
<PAGE>

BANKING LAW MATTERS

Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and in the view of Forum would permit a bank or bank affiliate to serve
as a Processing Organization or perform sub-transfer agent or similar services
for the Trust and its shareholders. If a bank or bank affiliate were prohibited
from performing all or a part of the foregoing services, its shareholder
customers would be permitted to remain shareholders of the Trust and alternative
means for continuing to service them would be sought. It is not expected that
shareholders would suffer adverse financial consequences as a result of any
changes in bank or bank affiliate service arrangements.

DETERMINATION OF NET ASSET VALUE

The Trust determines the net asset value per share of the Fund as of 4:00 p.m.,
Eastern time, on each Fund Business Day by dividing the value of the Fund's net
assets (I.E., the value of its portfolio securities and other assets less its
liabilities) by the number of the Fund's shares outstanding at the time the
determination is made. Securities owned by the Fund for which market quotations
are readily available are valued at current market value, or, in their absence,
at fair value as determined by the Board. The Fund does not determine net asset
value on the following holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Veterans' Day, Thanksgiving and Christmas.

THE TRUST AND ITS SHARES

The Trust was originally incorporated in Maryland on March 24, 1980 and assumed
the name of Forum Funds, Inc. on March 16, 1987. On January 5, 1996, Forum
Funds, Inc. was reorganized as a Delaware business trust. The Trust has an
unlimited number of authorized shares of beneficial interest. The Board may,
without shareholder approval, divide the authorized shares into an unlimited
number of separate portfolios or series (such as the Fund) and may in the future
divide portfolios or series into two or more classes of shares (such as Investor
and Institutional Shares). Currently the authorized shares of the Trust are
divided into 11 separate series.

Each share of each fund of the Trust and each class of shares has equal
dividend, distribution, liquidation and voting rights, and fractional shares
have those rights proportionately, except that expenses related to the
distribution of the shares of each class (and certain other expenses such as
transfer agency and administration expenses) are borne solely by those shares
and each class votes separately with respect to the provisions of any Rule 12b-1
plan which pertain to the class and other matters for which separate class
voting is appropriate under applicable law. Generally, shares will be voted in
the aggregate without reference to a particular portfolio or class, except if
the matter affects only one portfolio or class or voting by portfolio or class
is required by law, in which case shares will be voted separately by portfolio
or class, as appropriate. Delaware law does not require the Trust to hold annual
meetings of shareholders, and it is anticipated that shareholder meetings will
be held only when specifically required by Federal or state law. Shareholders
have available certain procedures for the removal of Trustees. There are no
conversion or preemptive rights in connection with shares of the Trust. All
shares when issued in accordance with the terms of the offering will be fully
paid and nonassessable. Shares are redeemable at net asset value, at the option
of the shareholders, subject to any contingent deferred sales charge that may
apply. A shareholder in a portfolio is entitled to the shareholder's pro rata
share of all dividends and distributions arising from that portfolio's assets
and, upon redeeming shares, will receive the portion of the portfolio's net
assets represented by the redeemed shares.

Upon the commencement of the Fund's operations, Westwood will own all
outstanding shares of the Fund and may be deemed to control the Fund. From time
to time, certain shareholders may own a large percentage of the shares of the
Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of a shareholder vote.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE STATEMENT OF
ADDITIONAL INFORMATION AND THE FUND'S OFFICIAL SALES LITERATURE IN CONNECTION
WITH THE OFFERING OF THE FUND'S SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED

-16-
<PAGE>

UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT
LAWFULLY BE MADE.

-17-
<PAGE>

SPORTSFUND-TM- SUBJECT TO COMPLETION
DATED MAY 9, 1996

<TABLE>

Account Information and
Investment Adviser: Shareholder Servicing: Distributor:
Westwood Ventures, Ltd. Forum Financial Corp. Forum Financial Services, Inc.
450 Seventh Avenue, Suite 3304 P.O. Box 446 Two Portland Square
New York, New York 10123 Portland, Maine 04112 Portland, Maine 04101
(800)[800 Number] (207) 879-1900
[email protected]

</TABLE>

STATEMENT OF ADDITIONAL INFORMATION
July [ ], 1996

Forum Funds (the "Trust") is a registered open-end investment company. This
Statement of Additional Information supplements the Prospectus offering shares
of the Sportsfund (the "Fund") and should be read only in conjunction with the
Prospectus, a copy of which may be obtained by an investor without charge by
contacting the Trust's Distributor at the address listed above.

TABLE OF CONTENTS
Page
----

1. Investment Policies. . . . . . . . . . . . . . . . . . . . .
2. Investment Limitations . . . . . . . . . . . . . . . . . . .
3. Performance Data . . . . . . . . . . . . . . . . . . . . . .
4. Management . . . . . . . . . . . . . . . . . . . . . . . . .
5. Determination of Net Asset Value . . . . . . . . . . . . . .
6. Portfolio Transactions . . . . . . . . . . . . . . . . . . .
7. Additional Purchase and Redemption Information . . . . . . .
8. Taxation . . . . . . . . . . . . . . . . . . . . . . . . .
9. Other Information. . . . . . . . . . . . . . . . . . . . . .

Appendix A - Description of Securities Ratings

<PAGE>

1. INVESTMENT POLICIES

The following discussion is intended to supplement the disclosure in the
Prospectus concerning the Fund's investments, investment techniques and
strategies and the risks associated therewith. The Fund may not make any
investment or employ any investment technique or strategy not referenced in the
Prospectus.

RATINGS AS INVESTMENT CRITERIA

Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P") and other nationally recognized statistical rating organizations
("NRSROs") are private services that provide ratings of the credit quality of
debt obligations, including convertible securities. A description of the range
of ratings assigned to various types of bonds and other securities by several
NRSROs is included in Appendix A to this Statement of Additional Information.
The Fund may use these ratings to determine whether to purchase, sell or hold a
security. However, ratings are general and are not absolute standards of
quality. Consequently, securities with the same maturity, interest rate and
rating may have different market prices. If an issue of securities ceases to be
rated or if its rating is reduced after it is purchased by the fund, the
investment adviser of the Fund will determine whether the Fund should continue
to hold the obligation. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not evaluate the risks of fluctuations in
market value. Also, rating agencies may fail to make timely changes in credit
ratings. An issuer's current financial condition may be better or worse than a
rating indicates.

The Fund may retain securities whose rating has been lowered below the lowest
permissible rating category (or that are unrated and determined by the
investment adviser to be of comparable quality) if the investment adviser
determines that retaining such security is in the best interests of the Fund.
COMMON AND PREFERRED STOCKS AND THEIR RISKS. Common stockholders are the owners
of the company issuing the stock and, accordingly, vote on various corporate
governance matters such as mergers. They are not creditors of the company, but
rather, upon liquidation of the company, are entitled to their pro rata share of
the company's assets after creditors (including fixed income security holders)
and, if applicable, preferred stockholders are paid. Preferred stock is a class
of stock having a preference over common stock as to dividends and, in the
alternative, as to the recovery of investment. A preferred stockholder is a
shareholder in the company and not a creditor of the company as is a holder of
the company's fixed income securities. Dividends paid to common and preferred
stockholders are distributions of the earnings of the company and not interest
payments, which are expenses of the company. Equity securities owned by the
Fund may be traded in the over-the-counter market or on a securities exchange
and may not be traded every day or in the volume typical of securities traded on
a major U.S. national securities exchange. As a result, disposition by the Fund
of a portfolio security to meet redemptions by interest holders or otherwise may
require the Fund to sell these securities at a discount from market prices, to
sell during periods when disposition is not desirable, or to make many small
sales over a lengthy period of time. The market value of all securities,
including equity securities, is based upon the market's perception of value and
not necessarily the book value of an issuer or other objective measure of a
company's worth.

A domestic institutional market has developed for certain securities that are
not registered under the Securities Act of 1933 (the "1933 Act"). Institutional
investors depend on an efficient institutional market in which the unregistered
security can be readily resold or on the issuer's ability to honor a demand for
repayment of the unregistered security. A security's contractual or legal
restrictions on resale to the general public or to certain institutions may not
be indicative of the liquidity of the security. If such securities are eligible
for purchase by institutional buyers in accordance with Rule 144A under the 1933
Act, the Advisers may determine that such securities are not illiquid securities
under guidelines adopted by the Board. These guidelines take into account
trading activity in the securities and the availability of reliable pricing
information, among other factors. If there is a lack of trading interest in a
particular Rule 144A security, the Fund's holdings of that security may be
illiquid.

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS

The Fund may purchase securities offered on a "when-issued" basis and may
purchase or sell securities on a "forward commitment" basis. When such
transactions are negotiated, the price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Normally, the settlement date occurs
within two months after the transaction, but delayed settlements beyond two
months may be negotiated. During the period between a commitment and
settlement, no payment is made for the securities purchased by the purchaser
and, thus, no interest accrues to the purchaser from the transaction. At the
time the fund makes the commitment to purchase securities on a when-issued or
delayed delivery basis, the Fund will record the transaction as a purchase and
thereafter reflect the value each day of such securities in determining its net
asset value.

The use of when-issued transactions and forward commitments enables the Fund to
hedge against anticipated changes in interest rates and prices. For instance,
in periods of rising interest rates and falling bond prices, the fund might sell
securities which it owned on a forward commitment basis to limit its exposure to
falling prices. In periods of falling interest rates and rising bond prices,
the fund might sell a security and purchase the same or a similar security on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields. However, if the investment adviser to the fund
were to forecast incorrectly the direction of interest rate movements, the Fund
might be required to complete such when-issued or forward commitment
transactions at prices inferior to the current market values.

When-issued securities and forward commitments may be sold prior to the
settlement date, but the Fund enters into when-issued and forward commitment
transactions only with the intention of actually receiving or delivering the
securities, as the case may be. If the fund, however, chooses to dispose of the
right to acquire a when-issued security prior to its acquisition or to dispose
of its right to deliver or receive against a forward commitment, it can incur a
gain or loss. When-issued securities may include bonds purchased on a "when, as
and if issued" basis under which the issuance of the securities depends upon the
occurrence of a subsequent event. Any significant commitment of the fund's
assets to the purchase of securities on a "when, as and if issued" basis may
increase the volatility of its net asset value.

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<PAGE>

The Fund will establish and maintain with its custodian a separate account with
cash, U.S. Government Securities (as defined in the Prospectus) and other liquid
high-grade debt securities in an amount at least equal to its commitments to
purchase securities on a when-issued or delayed delivery basis.

ILLIQUID SECURITIES

The Fund may invest up to 15% of its net assets in illiquid securities. The
term "illiquid securities" for this purpose means securities that cannot be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Fund has valued the securities and
includes, among other things, purchased over-the-counter (OTC) options and
repurchase agreements maturing in more than seven days.

The Trust's Board of Directors ("Board") has the ultimate responsibility for
determining whether specific securities are liquid or illiquid. The Board has
delegated the function of making day-to-day determinations of liquidity to the
investment adviser of the Fund, pursuant to guidelines approved by the Board.
The investment adviser takes into account a number of factors in reaching
liquidity decisions, including but not limited to: (1) the frequency of trades
and quotations for the security; (2) the number of dealers willing to purchase
or sell the security and the number of other potential buyers; (3) the
willingness of dealers to undertake to make a market in the security; and (4)
the nature of the marketplace trades, including the time needed to dispose of
the security, the method of soliciting offers and the mechanics of the transfer.
The investment adviser monitors the liquidity of the securities in the Fund's
portfolio and reports periodically on such decisions to the Board.

CONVERTIBLE SECURITIES

The Fund may invest in convertible securities. A convertible security is a
bond, debenture, note, preferred stock or other security that may be converted
into or exchanged for a prescribed amount of common stock of the same or a
different issuer within a particular period of time at a specified price or
formula. A convertible security entitles the holder to receive interest paid or
accrued on debt or the dividend paid on preferred stock until the convertible
security matures or is redeemed, converted or exchanged. Before conversion,
convertible securities have characteristics similar to nonconvertible debt
securities in that they ordinarily provide a stable stream of income with
generally higher yields than those of common stocks of the same or similar
issuers. Convertible securities rank senior to common stock in a corporation's
capital structure but are usually subordinated to comparable nonconvertible
securities. Although no securities investment is without some risk, investment
in convertible securities generally entails less risk than in the issuer's
common stock. However, the extent to which such risk is reduced depends in
large measure upon the degree to which the convertible security sells above its
value as a fixed income security. Convertible securities have unique investment
characteristics in that they generally (1) have higher yields than common
stocks, but lower yields than comparable non-convertible securities, (2) are
less subject to fluctuation in value than the underlying stocks since they have
fixed income characteristics and (3) provide the potential for capital
appreciation if the market price of the underlying common stock increases.

The value of a convertible security is a function of its "investment value"
(determined by its yield comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors also may have an effect on the
convertible security's investment value. The conversion value of a convertible
security is determined by the market price of the underlying common stock. If
the conversion value is low relative to the investment value, the price of the
convertible security is governed principally by its investment value and
generally the conversion value decreases as the convertible security approaches
maturity. To the extent the market price of the underlying common stock
approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. In addition,
a convertible security generally will sell at a premium over its conversion
value determined by the extent to which investors place value on the right to
acquire the underlying common stock while holding a fixed income security.

A convertible security may be subject to redemption at the option of the issuer
at a price established in the convertible security's governing instrument. If a
convertible security held by the Fund is called for redemption, the

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<PAGE>

Fund will be required to permit the issuer to redeem the security, convert it
into the underlying common stock or sell it to a third party.

FUTURES CONTRACTS AND OPTIONS

The Fund may in the future seek to hedge against a decline in the value of
securities it owns or an increase in the price of securities which it plans to
purchase through the writing and purchase of exchange-traded and over-the-
counter options and the purchase and sale of futures contracts and options on
those futures contracts. The Fund may buy or sell futures contracts on Treasury
bills, Treasury bonds and other financial instruments. The Fund may write
covered options and buy options on the futures contracts in which it may invest.

If the adviser anticipates that interest rates will rise, the fund may sell
futures contracts as a hedge against a decrease in the value of the Fund's
portfolio securities. Conversely, if the adviser anticipates a decline in
interest rates, the fund may purchase futures contracts to protect itself
against an increase in the price of the debt securities that the Fund might wish
to purchase.

In addition, the Fund may write (sell) covered put and call options and may buy
put and call options on debt securities and bond indices. An option is covered
if, so long as the Fund is obligated under the option, it owns an offsetting
position in the underlying security, currency or futures contract or maintains
cash, U.S. Government Securities or other liquid, high-grade debt securities in
a segregated account with a value at all times sufficient to cover the Fund's
obligation under the option.

The Fund's use of options and futures contracts would subject the Fund to
certain investment risks and transaction costs to which they might not otherwise
be subject. These risks include: (1) dependence on the adviser's ability to
predict movements in the prices of individual securities and fluctuations in the
general securities markets; (2) imperfect correlation between movements in the
prices of options, futures contracts or related options and movements in the
price of the securities hedged or used for cover; (3) the fact that skills and
techniques needed to trade these instruments are different from those needed to
select the other securities in which the Fund invests; (4) lack of assurance
that a liquid secondary market will exist for any particular instrument at any
particular time; and (5) the possible need to defer closing out of certain
options, futures contracts and related options to avoid adverse tax
consequences. Other risks include the inability of the Fund, as the writer of
covered call options, to benefit from the appreciation of the underlying
securities above the exercise price and the possible loss of the entire premium
paid for options purchased by the Fund. In addition, options and futures
contracts do not pay interest, but may produce taxable capital gains.

The Fund will not hedge more than [ ] of its total assets by selling futures
contracts, buying put options and writing call options. In addition, the Fund
will not buy futures contracts or write put options whose underlying value
exceeds [ ] of the Fund's total assets and will not purchase call options if the
value of purchased call options would exceed [ ] of the Fund's total assets.
The fund will not enter into futures contracts and options thereon if
immediately thereafter more than [ ] of the value of the Fund's total assets
would be invested in these options or committed to margin on futures contracts.

The fund will only invest in futures and options contracts after providing
notice to its shareholders, filing a notice of eligibility (if required) and
otherwise complying with the requirements of the Commodity Futures Trading
Commission ("CFTC"). The CFTC's rules provide that the Fund is permitted to
purchase futures or options contracts subject to CFTC jurisdiction only (1) for
bona fide hedging purposes within the meaning of the rules of the CFTC;
provided, however, that in the alternative with respect to each long position in
a futures or options contract entered into by the fund, the underlying commodity
value of such contract at all times does not exceed the sum of cash, short-term
United States debt obligations or other United States dollar denominated short-
term money market instruments set aside for this purpose by the Fund, cash
proceeds from existing Fund investments due in 30 days and accrued profit on the
contract held with a futures commissions merchant; and (2) subject to certain
limitations.

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<PAGE>

REPURCHASE AGREEMENTS

The Fund may seek additional income by entering into repurchase agreements.
Repurchase agreements are transactions in which the fund purchases a security
and simultaneously commits to resell that security to the seller at an agreed-
upon price on an agreed-upon future date, normally one to seven days later. The
resale price reflects a market rate of interest that is not related to the
coupon rate or maturity of the purchased security. The Trust's custodian
maintains possession of the underlying collateral, which is maintained at not
less than 100% of the repurchase price, and which consists of the types of
securities in which the Fund may invest directly.

LENDING OF PORTFOLIO SECURITIES

The Fund may from time to time lend securities from its portfolio to brokers,
dealers and other financial institutions. Securities loans must be continuously
secured by cash or U.S. Government Securities with a market value, determined
daily, at least equal to the value of the Fund's securities loaned, including
accrued interest. The Fund receives interest in respect of securities loans
from the borrower or from investing cash collateral. The Fund may pay fees to
arrange the loans. The Fund will, as the fundamental policy, limit securities
lending to not more than 10% of the value of its total assets.

TEMPORARY DEFENSIVE POSITION

When the fund assumes a temporary defensive position it may invest in (i) short-
term U.S. Government Securities, (ii) certificates of deposit, bankers'
acceptances and interest-bearing savings deposits of commercial banks doing
business in the United States that have, at the time of investment, total assets
in excess of one billion dollars and that are insured by the Federal Deposit
Insurance Corporation, (iii) commercial paper of prime quality rated Prime-2 or
higher by Moody's or A-2 or higher by S&P or, if not rated, determined by the
adviser to be of comparable quality, (iv) repurchase agreements covering any of
the securities in which the Fund may invest directly and (v) money market mutual
funds.

The Fund may invest in the securities of other investment companies within the
limits proscribed by the 1940 Act. Under normal circumstances, the Fund intends
to invest less than 5% of the value of its net assets in the securities of other
investment companies. In addition to the Fund's expenses (including the various
fees), as a shareholder in another investment company, the fund would bear its
pro rata portion of the other investment company's expenses (including fees).

2. INVESTMENT LIMITATIONS

The Fund has adopted the following fundamental investment limitations which are
in addition to those contained in the Fund's Prospectus and which may not be
changed without shareholder approval. The Fund may not:

(1) Borrow money, except for temporary or emergency purposes (including
the meeting of redemption requests) and except for entering into
reverse repurchase agreements, and provided that borrowings do not
exceed 33 1/3% of the Fund's total assets (computed immediately after
the borrowing).

(2) Purchase securities, other than U.S. Government Securities, if,
immediately after each purchase, more than 25% of the Fund's total
assets taken at market value would be invested in securities of
issuers conducting their principal business activity in the same
industry.

(3) Purchase securities, other than U.S. Government Securities, of any one
issuer, if (a) more than 5% of the Fund's total assets taken at market
value would at the time of purchase be invested in the securities of
that issuer, or (b) such purchase would at the time of purchase cause
the Fund to hold more than 10% of the outstanding voting securities of
that issuer. Up to 50% of the Fund's total assets may be invested
without regard to this limitation.

5
<PAGE>

(4) Act as an underwriter of securities of other issuers, except to the
extent that, in connection with the disposition of portfolio
securities, the Fund may be deemed to be an underwriter for purposes
of the Securities Act of 1933.

(5) Make loans to other persons except for loans of portfolio securities
and except through the use of repurchase agreements and through the
purchase of commercial paper or debt securities which are otherwise
permissible investments.

(6) Purchase or sell real estate or any interest therein, except that the
Fund may invest in securities issued or guaranteed by corporate or
governmental entities secured by real estate or interests therein,
such as mortgage pass-throughs and collateralized mortgage
obligations, or issued by companies that invest in real estate or
interests therein.

(7) Purchase or sell physical commodities or contracts relating to
physical commodities, provided that currencies and currency-related
contracts will not be deemed to be physical commodities.

(8) Issue senior securities except pursuant to Section 18 of the
Investment Company Act of 1940 ("1940 Act") and except that the Fund
may borrow money subject to investment limitations specified in the
Fund's Prospectus.

(9) Invest in interests in oil or gas or interests in other mineral
exploration or development programs.

In addition, the Fund has adopted a fundamental investment policy which provides
that notwithstanding any other investment policy or restriction (whether or not
fundamental), the Fund may seek to achieve its investment objective by holding,
as its only investment securities, the securities of another investment company
having substantially the same investment objective and policies as the Fund.

The Fund has adopted the following nonfundamental investment limitations that
may be changed by the Board without shareholder approval. The Fund may not:

(a) Pledge, mortgage or hypothecate its assets, except to secure permitted
indebtedness. The deposit in escrow of securities in connection with
the writing of put and call options, collateralized loans of
securities and collateral arrangements with respect to margin for
futures contracts are not deemed to be pledges or hypothecations for
this purpose.

(b) Invest in securities of another registered investment company, except
in connection with a merger, consolidation, acquisition or
reorganization; and except that the Fund may invest in money market
funds and privately-issued mortgage related securities to the extent
permitted by the 1940 Act.

(c) Purchase securities on margin, or make short sales of securities,
except for the use of short-term credit necessary for the clearance of
purchases and sales of portfolio securities, but the Fund may make
margin deposits in connection with permitted transactions in options,
futures contracts and options on futures contracts.

(d) Invest in securities (other than fully-collateralized debt
obligations) issued by companies that have conducted continuous
operations for less than three years, including the operations of
predecessors, unless guaranteed as to principal and interest by an
issuer in whose securities the Fund could invest, if as a result, more
than 5% of the value of the Fund's total assets would be so invested.

(e) Invest in or hold securities of any issuer if officers and directors
of the Trust or the Fund's investment adviser, individually owning
beneficially more than 1/2 of 1% of the securities of the issuer, in
the aggregate own more than 5% of the issuer's securities.

6
<PAGE>

(f) Purchase securities for investment while any borrowing equaling 5% or
more of the Fund's total assets is outstanding or borrow for purposes
other than meeting redemptions in an amount exceeding 5% of the value
of the Fund's total assets.

(g) Acquire securities or invest in repurchase agreements with respect to
any securities if, as a result, more than (i) 15% of the Fund's net
assets (taken at current value) would be invested in repurchase
agreements not entitling the holder to payment of principal within
seven days and in securities which are not readily marketable,
including securities that are illiquid by virtue of restrictions on
the sale of such securities to the public without registration under
the Securities Act of 1933 ("Restricted Securities") or (ii) 10% of
the Fund's total assets would be invested in Restricted Securities.

(h) Purchase or sell real property leases (including limited partnership
interests, but excluding readily marketable interests in real estate
investment trusts or readily marketable securities of companies which
invest in real estate.)

Except as required by the 1940 Act, if any percentage restriction on investment
or utilization of assets is adhered to at the time an investment is made, a
later change in percentage resulting from a change in the market values of the
Fund's assets or purchases and redemptions of shares will not be considered a
violation of the limitation.

No more than 25% of the Fund's total assets may be invested in the securities of
one issuer. However, this limitation does not apply to securities of an issuer
payable solely from the proceeds of U.S. Government Securities.

3. PERFORMANCE DATA

The Fund may quote performance in various ways. All performance information
supplied by the Fund in advertising is historical and is not intended to
indicate future returns. The Fund's net asset value, yield and total return
fluctuate in response to market conditions and other factors, and the value of
Fund shares when redeemed may be more or less than their original cost.

In performance advertising the Fund may compare any of its performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC/Donoghue, Inc., CDA/Wiesenberger or other
companies which track the investment performance of investment companies ("Fund
Tracking Companies"). The Fund may also compare any of its performance
information with the performance of recognized stock, bond and other indexes,
including but not limited to the Salomon Brothers Bond Index, the Shearson
Lehman Bond Index, the Standard & Poor's 500 Composite Stock Price Index, the
Dow Jones Industrial Average, and changes in the Consumer Price Index as
published by the U.S. Department of Commerce. The Fund may refer to general
market performances over past time periods such as those published by Ibbotson
Associates (for instance, its "Stocks, Bonds, Bills and Inflation Yearbook").
In addition, the Fund may refer in such materials to mutual fund performance
rankings and other data published by Fund Tracking Companies. Performance
advertising may also refer to discussions of the Fund and comparative mutual
fund data and ratings reported in independent periodicals, such as newspapers
and financial magazines.

For example, the Fund may advertise the historical advantages, based on assumed
investments made on particular dates, in long term corporate bonds or in the S&P
500 Composite Stock Index against U.S. Treasury bills, as published by the
companies listed above.

YIELD CALCULATIONS

Yields for the Fund used in advertising are computed by dividing the Fund's
interest income for a given 30 days or one-month period, net of expenses, by the
average number of shares entitled to receive distributions during the period,
dividing this figure by the Fund's net asset value per share at the end of the
period and annualizing the result (assuming compounding of income) in order to
arrive at an annual percentage rate. Capital gain and loss generally are
excluded from these calculations.

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<PAGE>

Income calculated for the purpose of determining the Fund's yield differs from
income as determined for other accounting purposes. Because of the different
accounting methods used, and because of the compounding assumed in yield
calculations, the yield quoted for the Fund may differ from the rate of
distribution the Fund paid over the same period or the rate of income reported
in the Fund's financial statements.

Although published yield information is useful to investors in reviewing the
Fund's performance, investors should be aware that the Fund's yield for any
given period is not an indication or representation by the Fund of future yields
or rates of return on the Fund's shares. Also, Processing Organizations may
charge their customers direct fees in connection with an investment in the Fund,
which will have the effect of reducing the Fund's net yield to those
shareholders. The yields of the Fund are not fixed or guaranteed, and an
investment in the Fund is not insured or guaranteed. Accordingly, yield
information may not necessarily be used to compare shares of the Fund with
investment alternatives which, like money market instruments or bank accounts,
may provide a fixed rate of interest. Also, it may not be appropriate to
compare the Fund's yield information directly to similar information regarding
investment alternatives which are insured or guaranteed.

TOTAL RETURN CALCULATIONS

The Fund may advertise total return. Total returns quoted in advertising
reflect all aspects of the Fund's return, including the effect of reinvesting
dividends and capital gain distributions and any change in the Fund's net asset
value per share over the period. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in the Fund over a stated period, and then calculating the annually
compounded percentage rate that would have produced the same result if the rate
of growth or decline in value had been constant over the period. While average
annual returns are a convenient means of comparing investment alternatives,
investors should realize that the performance is not constant over time but
changes from year to year, and that average annual returns represent averaged
figures as opposed to the actual year-to-year performance of the Fund.

Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment over a given period
according to the following formula:

P(1+T) to the nth power = ERV

Where:

P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value.

ERV is the value, at the end of the applicable period, of a hypothetical $1,000
payment made at the beginning of the applicable period.

In addition to average annual returns, the Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Total returns may be broken down into their components
of income and capital (including capital gain and changes in share price) in
order to illustrate the relationship of these factors and their contributions to
total return. Total returns, yields and other performance information may be
quoted numerically or in a table, graph or similar illustration.

Period total return is calculated according to the following formula:

8
<PAGE>

PT = (ERV/P-1)

Where:

PT = period total return.
The other definitions are the same as in
average annual total return above.

4. MANAGEMENT

John Y. Keffer,* Chairman and President (age 53)

Costas Azariadis, Trustee (age 52)

James C. Cheng, Trustee (age 53)

President of Technology Marketing Associates (a marketing consulting
company) since September 1991. Prior thereto, Mr. Cheng was President and
Chief Executive Officer of Network Dynamics, Incorporated (a software
development company). His address is 27 Temple Street, Belmont,
Massachusetts 02178.

J. Michael Parish, Trustee (age 52)

Mark D. Kaplan, Vice President, Assistant Treasurer and Assistant Secretary (age
40)

Michael D. Martins, Treasurer (age 30)

David I. Goldstein, Secretary (age 34)

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<PAGE>

Dana A. Lukens, Assistant Secretary (age 34)

M. Paige Miles, Assistant Secretary (age 26).

John Y. Keffer is an interested person of the Trust as that term is defined in
the 1940 Act.

ADVISER

The Fund's investment adviser, Westwood Ventures, Ltd. (the "Adviser") furnishes
at its own expense all services, facilities and personnel necessary in
connection with managing the Fund's investments and effecting portfolio
transactions for the Fund, pursuant to an Investment Advisory Agreement with the
Trust. The Investment Advisory Agreement provides for an initial term of two
years from its effective date with respect to the Fund and for its continuance
in effect for successive twelve-month periods thereafter, provided the agreement
is specifically approved at least annually by the Board or by vote of the
shareholders of the Fund, and in either case by a majority of the directors who
are not parties to the Investment Advisory Agreement or interested persons of
any such party.

The Investment Advisory Agreement is terminable without penalty by the Trust
with respect to the Fund on 60 days' written notice when authorized either by
vote of its shareholders or by a vote of a majority of the Board, or by the
Adviser on not more than 60 days' nor less than 30 days' written notice, and
will automatically terminate in the event of its assignment. The Investment
Advisory Agreement also provides that, with respect to the Fund, the Adviser
shall not be liable for any error of judgment or mistake of law or for any act
or omission in the performance of its duties to the Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of the Adviser's
duties or by reason of reckless disregard of its obligations and duties under
the Investment Advisory Agreement. The Investment Advisory Agreement provides
that the Adviser may render services to others.

For services under its Investment Advisory Agreement, the Adviser receives an
advisory fee at an annual rate of 1.50% of the Fund's average daily net assets.
Such fees are accrued daily and paid monthly. Fees payable under the Advisory
Agreement with respect to the Fund are outlined in the following table:

FISCAL YEAR ENDED
GROSS FEE WAIVED FEE NET FEE
--------- ---------- -------

In addition to receiving its advisory fee from the Fund, the Adviser may also
act and be compensated as investment manager for its clients with respect to
assets which are invested in the Fund. In some instances the Adviser may elect
to credit against any investment management fee received from a client who is
also a shareholder in the Fund

10
<PAGE>

an amount equal to all or a portion of the fees received by the Adviser or any
affiliate of the Adviser from the Fund with respect to the client's assets
invested in the Fund.

The Adviser has agreed to reimburse the Trust for certain of the Fund's
operating expenses which in any year exceed the limits prescribed by any state
in which the fund's shares are qualified for sale. The Trust may elect not to
qualify its shares for sale in every state.

The manager and distributor believe that currently the most restrictive expense
ratio limitation imposed by any state is 2-1/2% of the first $30 million of the
Fund's average net assets, 2% of the next $70 million of its average net assets
and 1-1/2% of its average net assets in excess of $100 million. For the purpose
of this obligation to reimburse expenses, the Fund's annual expenses are
estimated and accrued daily, and any appropriate estimated payments will be made
by the Adviser or the manager and distributor monthly.

Subject to the above obligations to reimburse the Trust for its excess expenses,
the Trust has confirmed its obligation to pay all its other expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the custodian, transfer agent
and dividend disbursing agent; telecommunications expenses; auditing, legal and
compliance expenses; costs of forming the corporation and maintaining corporate
existence; costs of preparing and printing the Trust's prospectuses, statements
of additional information, account application forms and shareholder reports and
delivering them to existing and prospective shareholders; costs of maintaining
books of original entry for portfolio and fund accounting and other required
books and accounts and of calculating the net asset value of shares of the
Trust; costs of reproduction, stationery and supplies; compensation of
directors, officers and employees of the Trust and costs of other personnel
performing services for the Trust who are not officers of the Adviser, the
manager and distributor or their respective affiliates; costs of corporate
meetings; Securities and Exchange Commission registration fees and related
expenses; state securities laws registration fees and related expenses; and fees
payable to the Adviser under the Investment Advisory Agreements.

SUBADVISER

MANAGER AND DISTRIBUTOR

Forum Administrative Services, Inc. (the "Manager") was incorporated under the
laws of the State of Delaware on December 29, 1995 and supervises the overall
management of the Fund (which includes, among other responsibilities,
negotiation of contracts and fees with, and monitoring of performance and
billing of, the transfer agent and custodian and arranging for maintenance of
books and records of the Fund), provides the Fund with general office facilities
and serves as distributor of shares of the Fund pursuant to a management
agreement between the Manager and the Fund (the "Management Agreement"). The
Management Agreement provides, for an initial term of two years from its
effective date and for its continuance in effect for successive twelve-month
periods thereafter, provided the agreement is specifically approved at least
annually by the Board or, with respect to the fund, by the shareholders of that
Fund, and in either case by a majority of the directors who are not parties to
the Management Agreement or interested persons of any such party and do not have
any direct or indirect financial interest in the Distribution Plan or in any
agreement related to the Distribution Plan.

The Management Agreement terminates automatically if it is assigned and may be
terminated without penalty with respect to the fund by vote of that Fund's
shareholders or by either party on not more than 60 days' nor less than 30

11
<PAGE>

days' written notice. The Management Agreement also provides that the Manager
shall not be liable for any error of judgment or mistake of law or for any act
or omission in the administration or management of the Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of the Manager's
duties or by reason of reckless disregard of its obligations and duties under
the Management Agreement.

Forum Financial Services, Inc. ("FFSI") (the "Distributor"), an affiliate of
Forum Administrative Services, acts as distributor of the Fund's shares pursuant
to a distribution services agreement (the "Distribution Services Agreement")
and, pursuant thereto, receives, and may reallow to certain financial
institutions, the sales charge paid by the purchasers of the Fund's shares

The Manager provides persons satisfactory to the Board to serve as officers of
the Fund. Those officers, as well as certain other employees and Directors of
the Fund, may be directors, officers or employees of (and persons providing
services to the Fund may include) the Manager, its affiliates or certain
affiliates of the Adviser.

For its services under the Management Agreement, the manager receives a fee at
the annual rate of [ %] of the average daily net assets of the Fund.

TRANSFER AGENT

Forum Financial Corp. (the "Transfer Agent") acts as transfer agent of the Trust
pursuant to a transfer agency agreement (the "Transfer Agency Agreement"). The
Transfer Agency Agreement provides for an initial term of two years from its
effective date and for its continuance in effect for successive twelve-month
periods thereafter, provided that the agreement is specifically approved at
least annually by the Board or, by a vote of the shareholders of the Fund, and
in either case by a majority of the directors who are not parties to the
Transfer Agency Agreement or interested persons of any such party at a meeting
called for the purpose of voting on the Transfer Agency Agreement.

Among the responsibilities of the Transfer Agent as agent for the Trust are:
(1) answering customer inquiries regarding account status and history, the
manner in which purchases and redemptions of shares of the Fund may be effected
and certain other matters pertaining to the Fund; (2) assisting shareholders in
initiating and changing account designations and addresses; (3) providing
necessary personnel and facilities to establish and maintain shareholder
accounts and records, assisting in processing purchase and redemption
transactions and receiving wired funds; (4) transmitting and receiving funds in
connection with customer orders to purchase or redeem shares; (5) verifying
shareholder signatures in connection with changes in the registration of
shareholder accounts; (6) furnishing periodic statements and confirmations of
purchases and redemptions; (7) arranging for the transmission of proxy
statements, annual reports, prospectuses and other communications from the Trust
to its shareholders; (8) arranging for the receipt, tabulation and transmission
to the Trust of proxies executed by shareholders with respect to meetings of
shareholders of the Trust; and (9) providing such other related services as the
Trust or a shareholder may reasonably request. For these services, the Transfer
Agent receives a fee of $24,000 per year plus certain account charges and is
reimbursed for its various out-of-pocket costs related to the Fund.

The Transfer Agent is authorized to subcontract any or all of its functions to
one or more qualified sub-transfer agents or processing agents, which may be
processing organizations (as defined in the Prospectus) or its affiliates. The
Transfer Agent may pay those agents for their services, but no such payment will
increase the Transfer Agent's compensation from the Trust. In addition, the
Transfer Agent performs portfolio accounting services for the Fund, including
determination of the Fund's net asset value per share, pursuant to a separate
agreement with the Trust.

The Transfer Agent or any sub-transfer agent or processing agent may also act
and receive compensation as custodian, investment manager, nominee, agent or
fiduciary for its customers or clients who are shareholders of the Fund with
respect to assets invested in the Fund. The Transfer Agent or any sub-transfer
agent or other processing agent may elect to credit against the fees payable to
it by its clients or customers all or a portion of any fee received from the
Trust or from the Transfer Agent with respect to assets of those customers or
clients invested in the Fund. The Transfer Agent, the Manager or sub-transfer
agents or processing agents retained by the Transfer Agent may be Processing
Organizations (as defined in the Prospectus) and, in the case of sub-transfer
agents or processing agents, may also be affiliated persons of the Transfer
Agent or the Manager.

12
<PAGE>

Pursuant to the fund Accounting Agreement, the Transfer Agent also provides the
Fund with portfolio accounting, including the calculation of the Fund's net
asset value. For these services, the Transfer Agent receives an annual fee
ranging from $36,000 to $60,000 depending upon the amount and type of the Fund's
portfolio transactions and positions.

5. DETERMINATION OF NET ASSET VALUE

The Fund does not determine net asset value on the following holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Veterans' Day, Thanksgiving and Christmas.
Purchases and redemptions are effected at the time of the next determination of
net asset value following the receipt of any purchase or redemption order.

6. PORTFOLIO TRANSACTIONS

Purchases and sales of portfolio securities for the Fund usually are principal
transactions. Portfolio securities for the Fund are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
There usually are no brokerage commissions paid for such purchases. Purchases
from underwriters of portfolio securities include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers serving as
market makers include the spread between the bid and asked prices.

The Fund may effect purchases and sales through brokers who charge commissions.
Allocations of transactions to brokers and dealers and the frequency of
transactions are determined by the Adviser in its best judgment and in a manner
deemed to be in the best interest of shareholders of the Fund rather than by any
formula. The primary consideration is prompt execution of orders in an
effective manner and at the most favorable price available to the Fund.

The Fund may not always pay the lowest commission or spread available. Rather,
in determining the amount of commission, including certain dealer spreads, paid
in connection with Fund transactions, the Advisers take into account such
factors as size of the order, difficulty of execution, efficiency of the
executing broker's facilities (including the services described below) and any
risk assumed by the executing broker. The Adviser may also take into account
payments made by brokers effecting transactions for the Fund (i) to the Fund or
(ii) to other persons on behalf of the Fund for services provided to it for
which it would be obligated to pay.

In addition, the Adviser may give consideration to research services furnished
by brokers to the Adviser for its use and may cause the fund to pay these
brokers a higher amount of commission than may be charged by other brokers.
Such research and analysis may be used by the Adviser in connection with
services to clients other than the Fund, and the Adviser's fee is not reduced by
reason of the Adviser's receipt of the research services.

Investment decisions for the Fund will be made independently from those for any
other account or investment company that is or may in the future become managed
by the Adviser or its affiliates. If, however, the Fund and other investment
companies or accounts managed by the Adviser are contemporaneously engaged in
the purchase or sale of the same security, the transactions may be averaged as
to price and allocated equitably to each account. In some cases, this policy
might adversely affect the price paid or received by the Fund or the size of the
position obtainable for the Fund. In addition, when purchases or sales of the
same security for the Fund and for other investment companies and accounts
managed by the Adviser occur contemporaneously, the purchase or sale orders may
be aggregated in order to obtain any price advantages available to large
denomination purchases or sales.

No portfolio transactions are executed with the Adviser, the Manager or any of
their affiliates.

7. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares of the Fund are sold on a continuous basis by the distributor.

Set forth below is an example of the method of computing the offering price of
the Fund's shares. The example assumes a purchase of shares of common stock
aggregating less than $100,000 subject to the schedule of sales charges set
forth in the Prospectuses at a price based on the net asset value per share of
the Fund.

13
<PAGE>

Net Asset Value Per Share $ $

Sales Charge, [ ]% of offering
price ([ ]% of net asset value
per share) $ $

Offering to Public $ $

In addition to the situations described in the Prospectus under "Purchases and
Redemptions of Shares," the Trust may redeem shares involuntarily, from time to
time, to reimburse a portfolio for any loss sustained by reason of the failure
of a shareholder to make full payment for shares purchased by the shareholder or
to collect any charge relating to transactions effected for the benefit of a
shareholder which is applicable to the Fund's shares as provided in the
Prospectus.

The Trust has filed a formal election with the Securities and Exchange
Commission pursuant to which the Fund will only effect a redemption in portfolio
securities if a shareholder is redeeming more than $250,000 or 1% of the Fund's
total net assets, whichever is less, during any 90-day period.

The Fund may wire proceeds of redemptions to shareholders that have elected wire
redemption privileges only if the wired amount is greater than $5,000. In
addition, the Fund will only wire redemption proceeds to financial institutions
located in the United States.

By use of telephone redemption and exchange privileges, the shareholder
authorizes the Transfer Agent to act upon the instruction of any person
representing himself either to be, or to have the authority to act on behalf of,
the investor and believed by the Transfer Agent to be genuine. The records of
the Transfer Agent of such instructions are binding. Proceeds of an exchange
transaction may be invested in another Participating Fund account in the name of
the shareholder.

EXCHANGE PRIVILEGE

The exchange privilege permits shareholders of the Fund to exchange their shares
for shares of any other fund of the Trust or shares of certain other portfolios
of investment companies which retain the Manager or its affiliates as investment
adviser or distributor and which participate in the Trust's exchange privilege
program ("Participating Fund"). For Federal income tax purposes, exchange
transactions are treated as sales on which a purchaser will realize a capital
gain or loss depending on whether the value of the shares redeemed is more or
less than his basis in such shares at the time of the transaction.

Exchange transactions will be made on the basis of relative net asset values per
share at the time of the exchange transaction plus any sales charge applicable
to the Participating Fund whose shares are being acquired. Shares of any
Participating Fund may be redeemed and the proceeds used to purchase, without a
sales charge, shares of any other Participating Fund that are offered without a
sales charge. Shares of any Participating Fund purchased with a sales charge
may be redeemed and the proceeds used to purchase, without a sales charge,
shares of any other Participating Fund otherwise sold with the same sales
charge. If the Participating Fund purchased in the exchange transaction imposes
a higher sales charge than was paid originally on the exchanged shares, the
shareholder will be responsible for the difference between the two sales
charges. Shares acquired through the reinvestment of dividends and
distributions are deemed to have been acquired with a sales charge rate equal to
that paid on the shares on which the dividend or distribution was paid.

The terms of the exchange privilege are subject to change, and the privilege may
be terminated by any of the Participating Funds or the Trust. However the
privilege will not be terminated, and no material change that restricts the
availability of the privilege to shareholders will be implemented, without
reasonable advance notice to shareholders.

INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT

14
<PAGE>

The Fund offers an individual retirement plan (the "IRA") for individuals who
wish to use shares of the Fund as a medium for funding individual retirement
savings. Under the IRA, distributions of net investment income and capital gain
will be automatically reinvested in the IRA established for the investor. The
Fund's custodian furnishes custodial services to the IRAs for a service fee.
Shareholders wishing to use the Fund's IRA should contact the Transfer Agent for
further details and information.

8. TAXATION

Qualification as a regulated investment company under the Internal Revenue Code
of 1986 does not involve governmental supervision of management or investment
practices or policies. Investors should consult their own counsel for a
complete understanding of the requirements the Funds must meet to qualify for
such treatment. The information set forth in the Prospectus and the following
discussion relate solely to Federal income taxes on dividends and distributions
by the fund and assume that the Fund qualifies as a regulated investment
company. Investors should consult their own counsel for further details and for
the application of state and local tax laws to the investor's particular
situation.

The Fund expects to derive substantially all of its gross income (exclusive of
capital gain) from sources other than dividends. Accordingly, it is expected
that most of the Fund's dividends or distributions will not qualify for the
dividends-received deduction for corporations.

Certain listed options and regulated futures contracts are considered "section
1256 contracts" for Federal income tax purposes. Section 1256 contracts held by
the Fund at the end of each taxable year will be "marked to market" and treated
for Federal income tax purposes as though sold for fair market value on the last
business day of such taxable year. Gain or loss realized by the Fund on section
1256 contracts generally will be considered 60% long-term and 40% short-term
capital gain or loss. The Fund can elect to exempt its section 1256 contracts
which are part of a "mixed straddle" from the application of section 1256.

With respect to equity or over-the-counter put and call options, gain or loss
realized by the Fund upon the lapse or sale of such options held by the Fund
will be either long-term or short-term capital gain or loss depending upon the
Fund's holding period with respect to such option. However, gain or loss
realized upon the lapse or closing out of such options that are written by the
Fund will be treated as short-term capital gain or loss. In general, if the
Fund exercises an option, or if an option that the Fund has written is
exercised, gain or loss on the option will not be separately recognized but the
premium received or paid will be included in the calculation of gain or loss
upon disposition of the property underlying the option.

9. OTHER INFORMATION

CUSTODIAN

Pursuant to a Custodian Agreement, The First National Bank of Boston, 100
Federal Street, Boston, Massachusetts 02106, acts as the custodian of the
Fund's assets. The custodian's responsibilities include safeguarding and
controlling the Fund's cash and securities, determining income and collecting
interest on Fund investments.

COUNSEL

Legal matters in connection with the issuance of shares of stock of the Trust
are passed upon by Seward & Kissel, One Battery Park Plaza, New York, New York
10004.

AUDITORS

[ ], independent auditors, act as auditors for the Trust.

THE TRUST AND ITS SHARES

15
<PAGE>

The Trust was organized in Delaware on August 29, 1995; the Trust's succeeded to
the assets and liabilities of Forum Funds, Inc. on January 5, 1996. Forum
Funds, Inc. was incorporated on March 24, 1980 and assumed the name of Forum
Funds, Inc. on March 16, 1987. The Board has the authority to issue an
unlimited number of shares of beneficial interest of separate series with no par
value per share and to create separate classes of shares within each series.
There are currently seven other series of the Trust.

The Trust is a business trust organized under Delaware law. Delaware law
provides that shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
securities regulators of some states, however, have indicated that they and the
courts in their state may decline to apply Delaware law on this point.

The Trust Instrument further provides that the Trustees shall not be liable to
any person other than the Trust or its shareholders; moreover, the Trustees
shall not be liable for any conduct whatsoever, provided that a Trustee is not
protected against any liability to which he would otherwise by subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.

As of [ ], 1996, the officers and Directors of the Trust as a group owned
less than 1% of the outstanding shares of the Fund. Shareholders owning 25% or
more of the shares of the Fund or of the Trust as a whole may be deemed to be
controlling persons. By reason of their substantial holdings of shares, these
persons may be able to require the Trust to hold a shareholder meeting to vote
on certain issues and may be able to determine the outcome of any shareholder
vote. Certain of these shareholders may hold their shares of record only and
have no beneficial interest, including the right to vote, in the shares.

FINANCIAL STATEMENTS

The fiscal year end of the Fund is March 31. Financial statements for the Fund's
semi-annual period and fiscal year will be distributed to shareholders of
record. The Board in the future may change the fiscal year end of the Fund.

16
<PAGE>

APPENDIX A - DESCRIPTION OF SECURITIES RATINGS

CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)

MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")

Moody's rates corporate bond issues, including convertible debt issues, as
follows:

Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.

Bonds which are rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payment and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.

Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Note: Those bonds in the Aa, A, Baa, Ba or B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa1,
A1, Baa1, Ba1, and B1.

17
<PAGE>

STANDARD AND POOR'S CORPORATION ("S&P")

S&P rates corporate bond issues, including convertible debt issues, as follows:

Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.

Bonds rated BBB are regarded as having an adequate capacity to pay interest and
repay principal. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.

Bonds rated BB, B, CCC, CC and C are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.

Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal payments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.

Bonds rated CCC have currently identifiable vulnerability to default, and are
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.

Bonds rated C typically are subordinated to senior debt which as assigned an
actual or implied CCC debt rating. This rating may also be used to indicate
imminent default.

The C rating may be used to cover a situation where a bankruptcy petition has
been filed, but debt service payments are continued. The rating Cl is reserved
for income bonds on which no interest is being paid.

Bonds are rated D when the issue is in payment default, or the obligor has filed
for bankruptcy. Bonds rated D are in payment default or the obligor has filed
for bankruptcy. The D rating category is used when interest payments or
principal payments are not made on the date due, even if the applicable grace
period has not expired, unless S&P believes that such payments will made during
such grace period.

Note: The ratings from AA to CCC may be modified by the addition of a plus (+)
or minus (-) sign to show the relative standing within the rating category.

18
<PAGE>

FITCH INVESTORS SERVICE, INC. ("FITCH")

Fitch rates corporate bond issues, including convertible debt issues, as
follows:

BBB Bonds are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.

BB Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C Bonds are in imminent default in payment of interest or principal.

DDD, DD, and D Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.

Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA, DDD, DD, or D categories.

19
<PAGE>

PREFERRED STOCK

MOODY'S INVESTORS SERVICE, INC.

Moody's rates preferred stock as follows:

An issue rated aaa is considered to be a top-quality preferred stock. This
rating indicates good asset protection and the least risk of dividend impairment
among preferred stock issues.

An issue rated aa is considered a high-grade preferred stock. This rating
indicates that there is a reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.

An issue rated a is considered to be an upper-medium grade preferred stock.
While risks are judged to be somewhat greater than in the aaa and aa
classification, earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels.

An issue rated baa is considered to be a medium-grade, neither highly protected
nor poorly secured. Earnings and asset protection appear adequate at present
but may be questionable over any great length of time.

An issue rated ba is considered to have speculative elements and its future
cannot be considered well assured. Earnings and asset protection may be very
moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.

An issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of
the issue over any long period of time may be small.

An issue which is rated caa is likely to be in arrears on dividend payments.
This rating designation does not purport to indicate the future status of
payments.

An issue which is rated ca is speculative in a high degree and is likely to be
in arrears on dividends with little likelihood of eventual payment.

An issue which is rated c can be regarded as having extremely poor prospects of
ever attaining any real investment standing. This is the lowest rated class of
preferred or preference stock.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification from aa through b in its preferred stock rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issuer ranks in the lower end of its generic rating
category.

STANDARD & POOR'S CORPORATION

S&P rates preferred stock as follows:

AAA is the highest rating that is assigned by S&P to a preferred stock issue and
indicates an extremely strong capacity to pay the preferred stock obligations.

A preferred stock issue rated AA also qualifies as a high-quality fixed income
security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated AAA.

An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.

20
<PAGE>

An issue rated BBB is regarded as backed by an adequate capacity to pay the
preferred stock obligations. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the A category.

Preferred stock rated BB, B, and CCC are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations. BB indicates the lowest degree of speculation and CCC the highest
degree of speculation. While such issues will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.

The rating CC is reserved for a preferred stock issue in arrears on dividends or
sinking fund payments but that is currently paying.

A preferred stock rated C is a non-paying issue.

A preferred stock rated D is a non-paying issue with the issuer in default on
debt instruments.

To provide more detailed indications of preferred stock quality, the ratings
from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign
to show relative standing within the major rating categories.

COMMERCIAL PAPER

MOODY'S INVESTORS SERVICE, INC.

Moody's two highest ratings for short-term debt, including commercial paper, are
Prime-1 and Prime-2. Both are judged investment grade, to indicate the relative
repayment ability of rated issuers.

Issuers rated Prime-1 have a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics: Leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structure with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; well-established access to a range of financial markets and assured
sources of alternate liquidity.

STANDARD AND POOR'S CORPORATION

S&P's two highest commercial paper ratings are A-1 and A-2. Issues assigned an
A rating are regarded as having the greatest capacity for timely payment.
Issues in this category are delineated with the numbers 1, 2 and 3 to indicate
the relative degree of safety. An A-1 designation indicates that the degree of
safety regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign designation. The capacity for timely payment on issues
with an A-2 designation is strong. However, the relative degree of safety is
not as high as for issues designated A-1. A-3 issues have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations. Issues rated A-2 are regarded as having only an adequate capacity
for timely payment. However, such capacity may be damaged by changing
conditions or short-term adversities.

21
<PAGE>

FITCH INVESTORS SERVICE, INC.

F-1+. Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

F-1. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.

F-2. Issues assigned this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1 rating.

F-3. Issues assigned this rating have characteristics suggesting that the
degree of assurance for timely payment is adequate, however, near-term adverse
changes could cause these securities to be rated below investment grade.

F-S. Issues assigned this rating have characteristics suggesting a minimal
degree of assurance for timely payment and are vulnerable to near-term adverse
changes in financial and economic conditions.

D. Issues assigned this rating are in actual or imminent payment default.

22
<PAGE>

PART C
OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements.

Not applicable to this filing.

Financial Highlights.

Not applicable to this filing.

(b) Exhibits:

NOTE: * INDICATES THAT THE EXHIBIT IS INCORPORATED HEREIN BY REFERENCE. ALL
REFERENCES TO A POST-EFFECTIVE AMENDMENT ("PEA") OR PRE-EFFECTIVE AMENDMENT
("PreEA") ARE TO PEAS AND PreEAS TO REGISTRANT'S REGISTRATION STATEMENT ON FORM
N-1A, FILE NO. 2-67052.

(1) Copy of the Trust Instrument of the Registrant dated August 29, 1995
(filed herewith).

(2)* Copy of By-Laws of the Registrant (filed as Exhibit 2 to PEA No. 30)

(3) None.

(4) (a) Sections 2.04 and 2.06 of Registrant's Trust Instrument provide
as follows:

"SECTION 2.04 TRANSFER OF SHARES. Except as otherwise
provided by the Trustees, Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his
agent thereunto duly authorized in writing, upon delivery to the
Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of
such execution and authorization and of such other matters as may
be required by the Trustees. Upon such delivery the transfer
shall be recorded on the register of the Trust. Until such
record is made, the Shareholder of record shall be deemed to be
the holder of such Shares for all purposes hereunder and neither
the Trustees nor the Trust, nor any transfer agent or registrar
nor any officer, employee or agent of the Trust shall be affected
by any notice of the proposed transfer.

"SECTION 2.06 ESTABLISHMENT OF SERIES. The Trust created
hereby shall consist of one or more Series and separate and
distinct records shall
<PAGE>

be maintained by the Trust for each Series and the assets
associated with any such Series shall be held and accounted for
separately from the assets of the Trust or any other Series. The
Trustees shall have full power and authority, in their sole
discretion, and without obtaining any prior authorization or vote
of the Shareholders of any Series of the Trust, to establish and
designate and to change in any manner any such Series of Shares
or any classes of initial or additional Series and to fix such
preferences, voting powers, rights and privileges of such Series
or classes thereof as the Trustees may from time to time
determine, to divide or combine the Shares or any Series or
classes thereof into a greater or lesser number, to classify or
reclassify any issued Shares or any Series or classes thereof
into one or more Series or classes of Shares, and to take such
other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series shall
be effective upon the adoption of a resolution by a majority of
the Trustees setting forth such establishment and designation and
the relative rights and preferences of the Shares of such Series.
A Series may issue any number of Shares and need not issue
shares. At any time that there are no Shares outstanding of any
particular Series previously established and designated, the
Trustees may by a majority vote abolish that Series and the
establishment and designation thereof.

"All references to Shares in this Trust Instrument shall be
deemed to be Shares of any or all Series, or classes thereof, as
the context may require. All provisions herein relating to the
Trust shall apply equally to each Series of the Trust, and each
class thereof, except as the context otherwise requires.

"Each Share of a Series of the Trust shall represent an
equal beneficial interest in the net assets of such Series. Each
holder of Shares of a Series shall be entitled to receive his pro
rata share of all distributions made with respect to such Series.
Upon redemption of his Shares, such Shareholder shall be paid
solely out of the funds and property of such Series of the
Trust."

(5) (a) Form of Investment Advisory Agreement between Registrant and
Westwood Ventures, Ltd. (filed herewith).

(b) Form of Investment Subadvisory Agreement between Westwood
Ventures, Ltd. and Forum Advisors, Inc. relating to the
Sportsfund (filed herewith).

(6) (a)* Form of Management and Distribution Agreement between Registrant
and Forum Financial Services, Inc. (filed as Exhibit 6(a) to PEA
No. 33).

-2-
<PAGE>

(b)* Form of Distribution Services Agreement between Registrant and
Forum Financial Services, Inc. (filed as Exhibit 6(b) to PEA No.
33).).

(c)* Form of Selected Dealer Agreement between Forum Financial
Services, Inc. and securities brokers (filed as Exhibit 6(c) to
PEA 21).

(d)* Form of Bank Affiliated Selected Dealer Agreement between Forum
Financial Services, Inc. and bank affiliates filed as Exhibit
6(d) of PEA 21).

(7) None.

(8) (a)* Form of Transfer Agency Agreement between Registrant and Forum
Financial Corp. (filed as Exhibit 8(a) to PEA No. 33).

(b)* Form of Custodian Agreement between Registrant and the First
National Bank of Boston (filed as Exhibit 8(b) to PEA No. 33).

(9) (a)* Form of Management Agreement between Registrant and Forum
Financial Services, Inc. (filed as Exhibit 9(a) to PEA No. 33).

(10)* Opinion of Seward & Kissel dated January 5, 1996 (filed as Exhibit 10
of PEA No. 33).

(11) Not applicable to this filing.

(12) None.

(13)* Investment Representation letter of Reich & Tang, Inc. as original
purchaser of shares of registrant (filed as Exhibit 13 of PEA No.
[ ]).

(14)* Form of Disclosure Statement and Custodial Account Agreement
applicable to individual retirement accounts (filed as
Exhibit 14 of PEA No. 21).

(15) (a)* Form of Rule 12b-1 Plan adopted by the Registrant (filed as
Exhibit 15 of PEA No. 16).

(b)* Rule 12b-1 Plan adopted by the Registrant with respect to the
Payson Value Fund and the Payson Balanced Fund (filed as Exhibit
8(c) of PEA No. 20).

(18) Copy of Multiclass (Rule 18f-3) Plan adopted by Registrant (to be
filed by subsequent post-effective amendment prior to the effective
date of this Post-Effective Amendment No. 34).

-3-
<PAGE>

(27) Financial Data Schedules

Other Exhibits:

Powers of Attorney (filed herewith).

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF JUNE [ ], 1996

Title of Class Number of Holders
-------------- -----------------
Investors Stock Fund
Investors Bond Fund
TaxSaver Bond Fund
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets TaxSaver Fund
Payson Value Fund
Payson Balanced Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Sportsfund
Core Portfolio Plus

ITEM 27. INDEMNIFICATION.

In accordance with Section 3803 of the Delaware Business Trust Act,
SECTION 5.2 of the Registrant's Trust Instrument provides as follows:

"5.2. INDEMNIFICATION.

"(a) Subject to the exceptions and limitations contained in
Section (b) below:

"(i) Every Person who is, or has been, a Trustee or
officer of the Trust (hereinafter referred to as a "Covered
Person") shall be indemnified by the Trust to the fullest extent
permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party
or otherwise by virtue of being or having been a Trustee or
officer and against amounts paid or incurred by him in the
settlement thereof;

-4-
<PAGE>

"(ii) The words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while
in office or thereafter, and the words "liability" and "expenses"
shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.

"(b) No indemnification shall be provided hereunder to a Covered
Person:

"(i) Who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable to the
Trust or its Holders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of the Covered Person's office or (B) not to have
acted in good faith in the reasonable belief that Covered Person's
action was in the best interest of the Trust; or

"(ii) In the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the Trustee's
or officer's office,

"(A) By the court or other body approving the settlement;

"(B) By at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to
the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or

"(C) By written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a
full trial-type inquiry);

provided, however, that any Holder may, by appropriate legal
proceedings, challenge any such determination by the Trustees or
by independent counsel.

"(c) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be severable,
shall not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be a Covered Person and shall inure to the benefit of
the heirs, executors and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which
Trust personnel, other than Covered Persons, and other persons may be
entitled by contract or otherwise under law.

"(d) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit or proceeding of the
character described in paragraph (a) of this Section 5.2 may be paid by
the Trust or Series from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such Covered Person
that such amount will be paid over by him to the Trust or Series if it is
ultimately determined that

-5-*
<PAGE>

he is not entitled to indemnification under this Section 5.2; provided,
however, that either (a) such Covered Person shall have provided
appropriate security for such undertaking, (b) the Trust is insured
against losses arising out of any such advance payments or (c) either a
majority of the Trustees who are neither Interested Persons of the Trust
nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available
facts (as opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such Covered Person will be found
entitled to indemnification under this Section 5.2.

"(e) Conditional advancing of indemnification monies under this
Section 5.2 for actions based upon the 1940 Act may be made only on the
following conditions: (i) the advances must be limited to amounts used,
or to be used, for the preparation or presentation of a defense to the
action, including costs connected with the preparation of a settlement;
(ii) advances may be made only upon receipt of a written promise by, or
on behalf of, the recipient to repay that amount of the advance which
exceeds that amount which it is ultimately determined that he is entitled
to receive from the Trust by reason of indemnification; and (iii) (a)
such promise must be secured by a surety bond, other suitable insurance
or an equivalent form of security which assures that any repayments may
be obtained by the Trust without delay or litigation, which bond,
insurance or other form of security must be provided by the recipient of
the advance, or (b) a majority of a quorum of the Trust's disinterested,
non-party Trustees, or an independent legal counsel in a written opinion,
shall determine, based upon a review of readily available facts, that the
recipient of the advance ultimately will be found entitled to
indemnification.

"(f) In case any Holder or former Holder of any Series shall be
held to be personally liable solely by reason of the Holder or former
Holder being or having been a Holder of that Series and not because of
the Holder or former Holder acts or omissions or for some other reason,
the Holder or former Holder (or the Holder or former Holder's heirs,
executors, administrators or other legal representatives, or, in the case
of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all
loss and expense arising from such liability. The Trust, on behalf of
the affected Series, shall, upon request by the Holder, assume the
defense of any claim made against the Holder for any act or obligation of
the Series and satisfy any judgment thereon from the assets of the
Series."

Paragraph 4 of each Investment Advisory Agreement provides in substance as
follows:

"4. We shall expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we agree
as an inducement to your undertaking these services that you shall not be
liable hereunder for any mistake of judgment or in any event whatsoever,
except for lack of good faith, provided that nothing herein shall be
deemed to protect, or purport to protect, you against any liability to us
or and to our security holders to which you would otherwise be subject by
reason of willful

-6-
<PAGE>

misfeasance, bad faith or gross negligence in the performance of your
duties hereunder, or by reason of your reckless disregard of your
obligations and duties hereunder."

Paragraphs 3(f) and (g) and paragraph 5 of the Management and Distribution
Agreement provide as follows:

"(f) We agree to indemnify, defend and hold you, your several officers
and directors, and any person who controls you within the meaning of
Section 15 of the Securities Act, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which you, your officers
and directors or any such controlling person may incur, under the
Securities Act, or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in our
Registration Statement or Prospectus in effect from time to time under
the Securities Act or arising out of or based upon any alleged omission
to state a material fact required to be stated in either thereof or
necessary to make the statements in either thereof not misleading;
provided, however, that in no event shall anything contained in this
paragraph 3(f) be so construed as to protect you against any liability to
us or our security holders to which you would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of your duties, or by reason of your reckless disregard of
your obligations and duties under this paragraph. Our agreement to
indemnify you, your officers and directors and any such controlling
person as aforesaid is expressly conditioned upon our being notified of
any action brought against you, your officers and directors or any such
controlling person, such notification to be given by letter or by
telegram addressed to us at our principal office in New York, New York,
and sent to us by the person against whom such action is brought within
ten days after the summons or other first legal process shall have been
served. The failure so to notify us of any such action shall not relieve
us from any liability which we may have to the person against whom such
action is brought by reason of any such alleged untrue statement or
omission otherwise than on account of our indemnity agreement contained
in this paragraph 3(f). We will be entitled to assume the defense of any
suit brought to enforce any such claim, and to retain counsel of good
standing chosen by us and approved by you. In the event we do elect to
assume the defense of any such suit and retain counsel of good standing
approved by you, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any of them; but
in case we do not elect to assume the defense of any such suit, or in
case you do not approve of counsel chosen by us, we will reimburse you or
the controlling person or persons named as defendant or defendants in
such suit, for the fees and expenses of any counsel retained by you or
them. Our indemnification agreement contained in this paragraph 3(f) and
our representations and warranties in this agreement shall remain
operative and in full force and effect regardless of any investigation
made by or on behalf of you, your officers and directors or any
controlling person and shall survive the sale of any shares of our common
stock made pursuant to subscriptions obtained by you. This agreement of
indemnity will inure exclusively to your benefit, to the benefit of your
successors and assigns, and to the benefit of your officers and directors
and any

-7-
<PAGE>

controlling persons and their successors and assigns. We agree promptly
to notify you of the commencement of any litigation or proceeding against
us in connection with the issue and sale of any shares of our common
stock.

"(g) You agree to indemnify, defend and hold us, our several officers
and directors, and person who controls us within the meaning of Section
15 of the Securities Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which we, our
officers or directors, or any such controlling person may incur under the
Act or under common law or otherwise, but only to the extent that such
liability, or expense incurred by us, our officers or directors or such
controlling person resulting from such claims or demands shall arise out
of or be based upon any alleged untrue statement of a material fact
contained in information furnished in writing by you in your capacity as
distributor to us for use in our Registration Statement or Prospectus in
effect from time to time under the Act, or shall arise out of or be based
upon any alleged omission to state a material fact in connection with
such information required to be stated in the Registration Statement or
Prospectus or necessary to make such information not misleading. Your
agreement to indemnify us, our officers and directors, and any such
controlling person as aforesaid is expressly conditioned upon your being
notified of any action brought against us, our officers or directors or
any such controlling person, such notification to be given by letter or
telegram addressed to you at your principal office in New York, New York,
and sent to you by the person against whom such action is brought,
within ten days after the summons or other first legal process shall have
been served. You shall have a right to control the defense of such
action, with counsel of your own choosing, satisfactory to us, if such
action is based solely upon such alleged misstatement or omission on your
part, and in any other event you and we, our officers or directors or
such controlling person shall each have the right to participate in the
defense or preparation of the defense of any such action. The failure so
to notify you of any such action shall not relieve you from any liability
which you may have to us, to our officers or directors, or to such
controlling person by reason of any such untrue statement or omission on
your part otherwise than on account of your indemnity agreement contained
in this paragraph 3(g).

"5 We shall expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we agree
as an inducement to your undertaking these services that you shall not be
liable hereunder for any mistake of judgment or in any event whatsoever,
except for lack of good faith, provided that nothing herein shall be
deemed to protect, or purport to protect, you against any liability to us
or to our security holders to which you would otherwise be subject by
reason or willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder."

Section 9(a) of the Distribution Services Agreement provides:

-8-
<PAGE>

"The Company agrees to indemnify, defend and hold the Underwriter, and
any person who controls the Underwriter within the meaning of Section 15
of the Securities Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Underwriter or
any such controlling person may incur, under the Securities Act or under
common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in the Company's Registration
Statement or the Prospectus or Statement of Additional Information in
effect from time to time under the Securities Act and relating to the
Fund or arising out of or based upon any alleged omission to state a
material fact required to be stated in any thereof or necessary to make
the statements in any thereof not misleading; provided, however, that in
no event shall anything herein contained be so construed as to protect
the Underwriter against any liability to the Company or its security
holders to which the Underwriter would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of the Underwriter's reckless disregard of its
obligations and duties under this agreement. The Company's agreement to
indemnify the Underwriter and any controlling person as aforesaid is
expressly conditioned upon the Company's being notified of the
commencement of any action brought against the Underwriter or any such
controlling person, such notification to be given by letter or by
telegram addressed to the Company at its principal office in New York,
New York, and sent to the Company by the person against whom such action
is brought within ten days after the summons or other first legal process
shall have been served. The Company will be entitled to assume the
defense of any suit brought to enforce any such claim, and to retain
counsel of good standing chosen by the Company and approved by the
Underwriter. In the event the Company elects to assume the defense of
any such suit and retain counsel of good standing approved by the
Underwriter, the defendants in the suit shall bear the fees and expenses
of any additional counsel retained by any of them; but in case the
Company does not elect to assume the defense of the suit or in case the
Underwriter does not approve of counsel chosen by the Company, the
Company will reimburse the Underwriter or the controlling person or
persons named defendant or defendants in the suit for the fees and
expenses of any counsel retained by the Underwriter or such person. The
indemnification agreement contained in this Section 9 shall remain
operative and in full force and effect regardless of any investigation
made by or on behalf of the Underwriter or any controlling person and
shall survive the sale of the Fund's shares made pursuant to
subscriptions obtained by the Underwriter. This agreement of indemnity
will inure exclusively to the benefit of the Underwriter, to the benefit
of its successors and assigns, and to the benefit of any controlling
persons and their successors and assigns. The Company agrees promptly to
notify the Underwriter of the Underwriter of the commencement of any
litigation or proceeding against the Company in connection with the issue
and sale of any of shares of the Fund. The failure to do so notify the
Company of the commencement of any such action shall not relieve the
Company from any liability which it may have to the person against whom
the action is brought by reason of any alleged untrue statement or
omission otherwise than on account of the indemnity agreement contained
in this Section 9."

-9-
<PAGE>

In so far as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, 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 a director, officer or
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities 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 Securities Act and will be governed by
the final adjudication of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.

Forum Advisors, Inc.

The descriptions of Forum Advisors, Inc. under the caption "Management-
Adviser" in the Prospectus and Statement of Additional Information
relating to the Investors Bond Fund, the TaxSaver Bond Fund, the Daily
Assets Cash Fund, the Daily Assets Government Fund, the Daily Assets
Treasury Fund , the Daily Assets TaxSaver Fund, the Maine Municipal Bond
Fund, the Maine Tax-Free Money Fund, the New Hampshire Bond Fund and the
Sportsfund, constituting certain of Parts A and B, respectively, of the
Registration Statement are incorporated by reference herein.

The following are the directors and officers of Forum Advisors, Inc., Two
Portland Square, Portland, Maine 04101, including their business
connections which are of a substantial nature.

John Y. Keffer, President and Secretary.

Chairman and President of the Registrant; President and Secretary
of Forum Financial Services, Inc. and of Forum Financial Corp.
Mr. Keffer is a director and/or officer of various registered
investment companies for which Forum Financial Services, Inc.
Serves as manager, administrator and/or distributor.

David R. Keffer, Vice President and Treasurer.

Vice President, Assistant Secretary and Assistant Treasurer of the
Registrant; Vice President and Treasurer of Forum Financial
Services, Inc. and of Forum Financial Corp. Mr. Keffer is an
officer of various registered investment companies for which Forum
Financial Services, Inc. Serves as manager, administrator and/or
distributor.

-10-
<PAGE>

H.M. Payson & Co.

The descriptions of H.M. Payson & Co. under the caption "Management -
Adviser" in the Prospectus and Statement of Additional Information, with
respect to the Payson Value Fund and the Payson Balanced Fund,
constituting certain of Parts A and B, respectively, of this Registration
Statement are incorporated by reference herein.

The following are the directors and principal executive officers of H.M.
Payson & Co., including their business connections which are of a
substantial nature. The address of H.M. Payson & Co. is One Portland
Square, Portland, Maine 04101.

Adrian L. Asherman, Managing Director.

Managing Director of H.M. Payson & Co. since 1955, General Partner
from 1964 to 1987 and Managing Director since 1987. His address
is One Portland Square, Portland, Maine 04101.

John C. Downing, Managing Director.

Portfolio Manger of H.M. Payson since 1983 and Managing Director
since 1992. Mr. Downing has been associated with H.M. Payson
since 1983. His address is One Portland Square, Portland, Maine
04101.

William A. Macleod, Managing Director.

Portfolio Manager of H.M. Payson & Co. since 1984 and Managing
Director since 1989. His address is One Portland Square,
Portland, Maine 04101.

Thomas M. Pierce, Managing Director.

Managing Director of H.M. Payson & Co. since 1975, General Partner
from 1981 to 1987 and Managing Director since 1987. His address
is One Portland Square, Portland, Maine 04101.

Peter E. Robbins, Managing Director.

Portfolio Manager of H.M. Payson & Co. since 1992, except for the
period from January 1988 to October 1990. During that period, Mr.
Robbins was president of Mariner Capital Group, a real estate
development and non-financial asset management business. General
Partner of H.M. Payson & Co. from 1986 to 1987, and Managing
Director from 1987 to 1988, and since 1993.

-11-
<PAGE>

John H. Walker, Managing Director and President.

Portfolio Manager of H.M. Payson & Co. since 1967, General Partner
from 1974 to 1987, and Managing Director since 1987. His address
is One Portland Square, Portland, Maine 04101.

ITEM 29. PRINCIPAL UNDERWRITER.

(a) Forum Financial Services, Inc., Registrant's underwriter, serves
as underwriter to Avalon Capital, Inc., Core Trust (Delaware), The
CRM Funds, The Cutler Trust, Monarch Funds, Norwest Advantage
Funds, Norwest Select Funds, Sound Shore Fund, Inc., Stone Bridge
Funds, Inc. and Trans Adviser Funds, Inc.

(b) John Y. Keffer, President and Secretary of Forum Financial
Services, Inc., is the Chairman and President of the Registrant.
David R. Keffer, Vice President and Treasurer of Forum Financial
Services, Inc., is the Vice President, Assistant Treasurer and
Assistant Secretary of the Registrant. Their business address is
Two Portland Square, Portland, Maine 04101.

ITEM 30. LOCATION OF BOOKS AND RECORDS.

The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained at the offices of Forum Financial Services, Inc. and
Forum Financial Corp., Two Portland Square, Portland, Maine 04101. The records
required to be maintained under Rule 31a-1(b)(1) with respect to journals of
receipts and deliveries of securities and receipts and disbursements of cash are
maintained at the offices of the Registrants custodians, The First National Bank
of Boston, 100 Federal Street, Boston, Massachusetts 02106 and Imperial Trust
Company, 201 N. Figueroa Street, Suite 610, Los Angeles, California 90012. The
records required to be maintained under Rule 31a-1(b)(5), (6) and (9) are
maintained at the offices of the Registrant's adviser or subadviser, as listed
in Item 28 hereof.

ITEM 31. MANAGEMENT SERVICES.

Not Applicable.

ITEM 32. UNDERTAKINGS.

(i) file a post-effective amendment, using financial statements which need
not be certified, within four to six months from the latter of the
effective date of Registrant's Securities Act of 1933 Registration
Statement relating to the prospectuses offering those shares or the
commencement of public sales of the respective shares; and,

(ii) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders relating to the portfolio or class thereof to which the
prospectus relates upon request and without charge.

-12-
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Portland and the State of Maine on the 6th day
of May, 1996.

FORUM FUNDS

By:/s/ John Y. Keffer
-------------------------
John Y. Keffer, President

Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registrant's Registration Statement has been signed below by the following
persons in the capacities indicated on the 6th day of May, 1996.

Signatures Title
---------- -----

(a) Principal Executive Officer

/s/ John Y. Keffer President
------------------------ and Chairman
John Y. Keffer

(b) Principal Financial and Accounting Officer

/s/ Michael D. Martins Treasurer
------------------------
Michael D. Martins

/s/ John Y. Keffer Trustee
------------------------
John Y. Keffer

James C. Cheng* Trustee
J. Michael Parish* Trustee
Costas Azariadis* Trustee

By: /s/ David I. Goldstein
------------------------
David I. Goldstein
Attorney in Fact*

<PAGE>

SIGNATURES

On behalf of Core Trust (Delaware), being duly authorized, I have duly caused
this amendment to the Registration Statement of Forum Funds to be signed in the
City of Portland, State of Maine on the 6th day of May, 1996.

CORE TRUST (DELAWARE)

By:/s/ John Y. Keffer
-------------------------
John Y. Keffer, President

This amendment to the Registration Statement of Core Trust (Delaware) has been
signed below by the following persons in the capacities indicated on the 6th day
of May, 1996.

Signatures Title
---------- -----

(a) Principal Executive Officer

/s/ John Y. Keffer Chairman
------------------------ and President
John Y. Keffer

(b) Principal Financial and Accounting Officer

/s/ Michael D. Martins Treasurer
------------------------
Michael D. Martins

/s/ John Y. Keffer Trustee
------------------------
John Y. Keffer

Costas Azariadis* Trustee
J. Michael Parish* Trustee
James C. Cheng* Trustee

By: /s/ John Y. Keffer
------------------------
John Y. Keffer
Attorney in Fact*

<PAGE>

INDEX TO EXHIBITS

SEQUENTIAL
EXHIBIT PAGE NUMBER
- - ------- -----------

(1) Copy of Registrant's Trust Instrument dated August 29, 1995.

(5) (a) Form of Investment Advisory Agreement between Registrant and
Westwood Ventures, Ltd.

(b) Form of Investment Subadvisory Agreement between Westwood
Ventures, Ltd. and Forum Advisors, Inc.

(27) Financial Data Schedules

Other Exhibits:

Powers of Attorney

<PAGE>

EXHIBIT 1

<PAGE>

FORUM FUNDS

TRUST INSTRUMENT

DATED AUGUST 29, 1995

<PAGE>

FORUM FUNDS

TABLE OF CONTENTS

PAGE
ARTICLE I NAME AND DEFINITIONS

Section 1.01 Name 1
Section 1.02 Definitions 1

ARTICLE II BENEFICIAL INTEREST

Section 2.01 Shares of Beneficial Interest 2
Section 2.02 Issuance of Shares 2
Section 2.03 Register of Shares and Share Certificates 2
Section 2.04 Transfer of Shares 3
Section 2.05 Treasury Shares 3
Section 2.06 Establishment of Series 3
Section 2.07 Investment in the Trust 3
Section 2.08 Assets and Liabilities of Series 4
Section 2.09 No Preemptive Rights 4
Section 2.10 No Personal Liability of Shareholders 4
Section 2.11 Assent to Trust Instrument 5

ARTICLE III THE TRUSTEES

Section 3.01 Management of the Trust 5
Section 3.02 Initial Trustees 5
Section 3.03 Term of Office 5
Section 3.04 Vacancies and Appointments 6
Section 3.05 Temporary Absence 6
Section 3.06 Number of Trustees 6
Section 3.07 Effect of Ending of a Trustee's Service 6
Section 3.08 Ownership of Assets of the Trust 6

ARTICLE IV POWERS OF THE TRUSTEES

Section 4.01 Powers 7
Section 4.02 Issuance and Repurchase of Shares 9
Section 4.03 Trustees and Officers as Shareholders 9
Section 4.04 Action by the Trustees 9
Section 4.05 Chairman of the Trustees 10
Section 4.06 Principal Transactions 10

<PAGE>

ARTICLE V EXPENSES OF THE TRUST 10

ARTICLE VI INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT

Section 6.01 Investment Adviser 11
Section 6.02 Principal Underwriter 11
Section 6.03 Administrator 11
Section 6.04 Transfer Agent 11
Section 6.05 Parties to Contract 12
Section 6.06 Provisions and Amendments 12

ARTICLE VII SHAREHOLDERS' VOTING POWERS AND MEETINGS

Section 7.01 Voting Powers 12
Section 7.02 Meetings 13
Section 7.03 Quorum and Required Vote 13

ARTICLE VIII CUSTODIAN

Section 8.01 Appointment and Duties 13
Section 8.02 Central Certificate System 14

ARTICLE IX DISTRIBUTIONS AND REDEMPTIONS

Section 9.01 Distributions 14
Section 9.02 Redemptions 14
Section 9.03 Determination of Net Asset Value
and Valuation of Portfolio Assets 15
Section 9.04 Suspension of the Right of Redemption 15
Section 9.05 Redemption of Shares in Order to
Qualify as Regulated Investment Company 16

ARTICLE X LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 10.01 Limitation of Liability 16
Section 10.02 Indemnification 16
Section 10.03 Shareholders 17

ARTICLE XI MISCELLANEOUS

Section 11.01 Trust Not a Partnership 18
Section 11.02 Trustee's Good Faith Action,
Expert Advice, No Bond or Surety 18

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Section 11.03 Establishment of Record Dates 18
Section 11.04 Termination of Trust 18
Section 11.05 Reorganization 19
Section 11.06 Filing of Copies, References, Headings 19
Section 11.07 Applicable Law 20
Section 11.08 Amendments 20
Section 11.09 Fiscal Year 20
Section 11.10 Provisions in Conflict with Law 21

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FORUM FUNDS

August 29, 1995

TRUST INSTRUMENT, made by David I. Goldstein, Dana A. Lukens and
Christopher J. Kelly (the "Trustees").

WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;

NOW THEREFORE, the Trustees declare that all money and property contributed
to the trust hereunder shall be held and managed in trust under this Trust
Instrument as herein set forth below.

ARTICLE I
NAME AND DEFINITIONS

SECTION 1.01 NAME. The name of the trust created hereby is "Forum Funds."

SECTION 1.02 DEFINITIONS. Wherever used herein, unless otherwise required
by the context or specifically provided:

(a) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.

(b) "Bylaws" means the Bylaws of the trust as adopted by the Trustees, as
amended from time to time;

(c) "Commission" has the meaning given it in the 1940 Act. "Affiliated
Person", "Assignment," "Interested Person" and "Principal Underwriter" shall
have the respective meanings given them in the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any rules or
regulations adopted by or interpretive releases of the Commission thereunder.
"Majority Shareholder Vote" shall have the same meaning as the term "vote of a
majority of the outstanding voting securities" is given in the 1940 Act, as
modified by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted by or interpretive releases of the
Commission thereunder.

(d) "Delaware Act" refers to Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time.

(e) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03 hereof;

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(f) "Outstanding Shares" means those Shares shown from time to time in the
books of the Trust or its transfer agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust;

(g) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof.

(h) "Shareholder" means a record owner of Outstanding Shares of the Trust;

(i) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or class thereof shall be divided and may include fractions of Shares as
well as whole Shares;

(j) The "Trust" means Learning Assets-TM- and reference to the Trust, when
applicable to one or more Series of the Trust, shall refer to any such Series;

(k) The "Trustees" means the person or persons who has or have signed this
Trust Instrument, so long as he or they shall continue in office in accordance
with the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with the provisions of Article
III hereof and reference herein to a Trustee or to the Trustees shall refer to
the individual Trustees in their capacity as Trustees hereunder;

(l) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.

ARTICLE II
BENEFICIAL INTEREST

SECTION 2.01 SHARES OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall be divided into such transferable Shares of one or more separate
and distinct Series or classes of a Series as the Trustees shall from time to
time create and establish. The number of Shares of each Series, and class
thereof, authorized hereunder is unlimited. Each Share shall have no par value.
All Shares issued hereunder, including without limitation, Shares issued in
connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and nonassessable.

SECTION 2.02 ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the

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assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into
a greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof.

SECTION 2.03 REGISTER OF SHARES AND SHARE CERTIFICATES. A register shall
be kept at the principal office of the Trust or an office of the Trust's
transfer agent which shall contain the names and addresses of the Shareholders
of each Series, the number of Shares of that Series (or any class or classes
thereof) held by them respectively and a record of all transfers thereof. As to
Shares for which no certificate has been issued, such register shall be entitled
to receive dividends or other distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or other distribution, nor to have notice given to him as herein
or in the Bylaws provided, until he has given his address to the transfer agent
or such officer or other agent of the Trustees as shall keep the said register
for entry thereon. No share certificates shall be issued by the Trust.

SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees.
Upon such delivery the transfer shall be recorded on the register of the Trust.
Until such record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any transfer agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed transfer.

SECTION 2.05 TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.

SECTION 2.06 ESTABLISHMENT OF SERIES. The Trust created hereby shall
consist of one or more Series and separate and distinct records shall be
maintained by the Trust for each Series and the assets associated with any such
Series shall be held and accounted for separately from the assets of the Trust
or any other Series. The Trustees shall have full power and authority, in their
sole discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number, to classify or reclassify any issued Shares or
any Series or classes thereof into one or more Series or classes of Shares, and
to take such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series shall be effective
upon the adoption of a resolution by a majority of the Trustees setting forth
such establishment

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and designation and the relative rights and preferences of the Shares of such
Series. A Series may issue any number of Shares and need not issue shares. At
any time that there are no Shares outstanding of any particular Series
previously established and designated, the Trustees may by a majority vote
abolish that Series and the establishment and designation thereof.

All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof, as the context may require.
All provisions herein relating to the Trust shall apply equally to each Series
of the Trust, and each class thereof, except as the context otherwise requires.

Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of all distributions made with
respect to such Series. Upon redemption of his Shares, such Shareholder shall
be paid solely out of the funds and property of such Series of the Trust.

SECTION 2.07 INVESTMENT IN THE TRUST. The Trustees shall accept
investments in any Series of the Trust from such persons and on such terms as
they may from time to time authorize. At the Trustees' discretion, such
investments, subject to applicable law, may be in the form of cash or securities
in which the affected Series is authorized to invest, valued as provided in
Article IX, Section 9.03 hereof. Investments in a Series shall be credited to
each Shareholder's account in the form of full Shares at the Net Asset Value per
Share next determined after the investment is received or accepted as may be
determined by the Trustees; provided, however, that the Trustees may, in their
sole discretion, (a) fix the Net Asset Value per Share of the initial capital
contribution, (b) impose a sales charge upon investments in the Trust in such
manner and at such time determined by the Trustees or (c) issue fractional
Shares.

SECTION 2.08 ASSETS AND LIABILITIES OF SERIES. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall be held and accounted for separately from the other assets of the Trust
and of every other Series and may be referred to herein as "assets belonging to"
that Series. The assets belonging to a particular Series shall belong to that
Series for all purposes, and to no other Series, subject only to the rights of
creditors of that Series. In addition, any assets, income, earnings, profits or
funds, or payments and proceeds with respect thereto, which are not readily
identifiable as belonging to any particular Series shall be allocated by the
Trustees between and among one or more of the Series in such manner as the
Trustees, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series. The assets belonging to each
particular Series shall be charged with the liabilities of that Series and all
expenses, costs, charges and reserves attributable to that Series. Any general
liabilities, expenses, costs, charges

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or reserves of the Trust which are not readily identifiable as belonging to any
particular Series shall be allocated and charged by the Trustees between or
among any one or more of the Series in such manner as the Trustees in their sole
discretion deem fair and equitable. Each such allocation shall be conclusive
and binding upon the Shareholders of all Series for all purposes. Without
limitation of the foregoing provisions of this Section 2.08, but subject to the
right of the Trustees in their discretion to allocate general liabilities,
expenses, costs, changes or reserves as herein provided, the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular Series shall be enforceable against the assets of such
Series only, and not against the assets of the Trust generally. Notice of this
contractual limitation on inter-Series liabilities may, in the Trustee's sole
discretion, be set forth in the certificate of trust of the Trust (whether
originally or by amendment) as filed or to be filed in the Office of the
Secretary of State of the State of Delaware pursuant to the Delaware Act, and
upon the giving of such notice in the certificate of trust, the statutory
provisions of Section 3804 of the Delaware Act relating to limitations on inter-
Series liabilities (and the statutory effect under Section 3804 of setting forth
such notice in the certificate of trust) shall become applicable to the Trust
and each Series. Any person extending credit to, contracting with or having any
claim against any Series may look only to the assets of that Series to satisfy
or enforce any debt, with respect to that Series. No Shareholder or former
Shareholder of any Series shall have a claim on or any right to any assets
allocated or belonging to any other Series.

SECTION 2.09 NO PREEMPTIVE RIGHTS. Shareholders shall have no preemptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust or the Trustees, whether of the same or other Series.

SECTION 2.10 NO PERSONAL LIABILITY OF SHAREHOLDER. Each Shareholder of
the Trust and of each Series shall not be personally liable for the debts,
liabilities, obligation and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or by or on behalf of any Series. The
Trustees shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay by
way of subscription for any Shares or otherwise. Every note, bond, contract or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or to a Series shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series and its or their
assets (but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee of the Trust).

SECTION 2.11 ASSENT TO TRUST INSTRUMENT. Every Shareholder, by virtue of
having purchased a Share shall become a Shareholder and shall be held to have
expressly assented and agreed to be bound by the terms hereof.

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ARTICLE III
THE TRUSTEES

SECTION 3.01 MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct
the business of the Trust and carry on its operations in any and all of its
branches and maintain offices both within and without the State of Delaware, in
any and all states of the United States of America, in the District of Columbia,
in any and all commonwealths, territories, dependencies, colonies, or
possessions of the United States of America, and in any foreign jurisdiction and
to do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of the Trust
although such things are not herein specifically mentioned. Any determination
as to what is in the interests of the Trust made by the Trustees in good faith
shall be conclusive. In construing the provisions of this Trust Instrument, the
presumption shall be in favor of a grant of power to the Trustees.

The enumeration of any specific power in this Trust Instrument shall not be
construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court.

Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be elected by
the Shareholders owning of record a plurality of the Shares voting at a meeting
of Shareholders. Such a meeting shall be held on a date fixed by the Trustees.
In the event that less than a majority of the Trustees holding office have been
elected by Shareholders, the Trustees then in office will call a Shareholders'
meeting for the election of Trustees.

SECTION 3.02 INITIAL TRUSTEES. The initial Trustees shall be the persons
named herein. On a date fixed by the Trustees, the Shareholders shall elect at
least three (3) but not more than twelve (12) Trustees, as specified by the
Trustees pursuant to Section 3.06 of this Article III.

SECTION 3.03 TERM OF OFFICE. The Trustees shall hold office during the
lifetime of this Trust, and until its termination as herein provided; except (a)
that any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has died, become physically or mentally incapacitated by reason
of disease or otherwise, or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of the Trust by a vote of Shareholders owning at least two-
thirds of the Outstanding Shares.

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SECTION 3.04 VACANCIES AND APPOINTMENTS. In case of the declination to
serve, death, resignation, retirement, removal, physical or mental incapacity by
reason of disease or otherwise, or a Trustee is otherwise unable to serve, or an
increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy
in the Board of Trustees shall occur, until such vacancy is filled, the other
Trustees shall have all the powers hereunder and the certificate of the other
Trustees of such vacancy shall be conclusive. In the case of an existing
vacancy, the remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit consistent with the limitations
under the 1940 Act. Such appointment shall be evidenced by a written instrument
signed by a majority of the Trustees in office or by resolution of the Trustees,
duly adopted, which shall be recorded in the minutes of a meeting of the
Trustees, whereupon the appointment shall take effect.

An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to this Section 3.04 shall have accepted this trust,
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder.

SECTION 3.05 TEMPORARY ABSENCE. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall less than two Trustees
personally exercise the other powers hereunder except as herein otherwise
expressly provided.

SECTION 3.06 NUMBER OF TRUSTEES. The number of Trustees shall be at least
three (3), and thereafter shall be such number as shall be fixed from time to
time by a majority of the Trustees, provided, however, that the number of
Trustees shall in no event be more than twelve (12).

SECTION 3.07 EFFECT OF ENDING OF A TRUSTEE'S SERVICE. The declination to
serve, death, resignation, retirement, removal, incapacity, or inability of the
Trustees, or any one of them, shall not operate to terminate the trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.

SECTION 3.08 OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in all of the assets of the Trust and
the right to conduct any business shall at all times be considered as vested in
the Trustees on behalf of the Trust, except that the Trustees may cause legal
title to any Trust Property to be held by, or in the name of the Trust, or in
the name of any person as nominee. No Shareholder shall be deemed to have a
severable ownership in any individual asset of the Trust or of any Series or any
right of partition or possession thereof, but each Shareholder shall have,
except as otherwise provided for herein, a proportionate undivided beneficial
interest

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in the Trust or Series. The Shares shall be personal property giving only the
rights specifically set forth in this Trust Instrument.

ARTICLE IV
POWERS OF THE TRUSTEES

SECTION 4.01 POWERS. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. The
Trustees shall not in any way be bound or limited by present or future laws or
customs in regard to trust investments, but shall have full authority and power
to make any and all investments which they, in their sole discretion, shall deem
proper to accomplish the purpose of this Trust without recourse to any court or
other authority. Subject to any applicable limitation in this Trust Instrument
or the Bylaws of the Trust, the Trustees shall have the power and authority:

(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease
any or all of the assets of the Trust:

(b) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations;

(c) To borrow money and in this connection issue notes or other evidence
of indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; to endorse, guarantee, or undertake
the performance of an obligation or engagement of any other Person and to lend
Trust Property;

(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;

(e) To adopt Bylaws not inconsistent with this Trust Instrument providing
for the conduct of the business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the Shareholders; such Bylaws
shall be deemed incorporated and included in this Trust Instrument;

(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;

(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians

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of any assets of the Trust subject to any conditions set forth in this Trust
Instrument or in the Bylaws;

(h) To retain one or more transfer agents and shareholder servicing
agents, or both;

(i) To set record dates in the manner provided herein or in the Bylaws;

(j) To delegate such authority as they consider desirable to any officers
of the Trust and to any investment adviser, manager, custodian, underwriter or
other agent or independent contractor;

(k) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XI, subsection 11.04(b) hereof;

(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;

(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;

(n) To hold any security or property in a form not indicating any trust,
whether in bearer, book entry, unregistered or other negotiable form; or either
in the name of the Trust or in the name of a custodian or a nominee or nominees,
subject in either case to proper safeguards according to the usual practice of
Delaware business trusts or investment companies;

(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;

(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
to apportion the same between or among two or more Series, provided that any
liabilities or expenses incurred by a particular Series shall be payable solely
out of the assets belonging to that Series as provided for in Article II hereof;

(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;

(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;

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(s) To make distributions of income and of capital gains to Shareholders
in the manner provided herein;

(t) To establish, from time to time, a minimum investment for Shareholders
in the Trust or in one or more Series or class, and to require the redemption of
the Shares of any Shareholders whose investment is less than such minimum upon
giving notice to such Shareholder;

(u) To establish one or more committees, to delegate any of the powers of
the Trustees to said committees and to adopt a committee charter providing for
such responsibilities, membership (including Trustees, officers or other agents
of the Trust therein) and any other characteristics of said committees as the
Trustees may deem proper. Notwithstanding the provisions of this Article IV,
and in addition to such provisions or any other provision of this Trust
Instrument or of the Bylaws, the Trustees may by resolution appoint a committee
consisting of less than the whole number of Trustees then in office, which
committee may be empowered to act for and bind the Trustees and the Trust, as if
the acts of such committee were the acts of all the Trustees then in office,
with respect to the institution, prosecution, dismissal, settlement, review or
investigation of any action, suit or proceeding which shall be pending or
threatened to be brought before any court, administrative agency or other
adjudicatory body;

(v) To interpret the investment policies, practices or limitations of any
Series;

(w) To establish a registered office and have a registered agent in the
state of Delaware; and

(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.

The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.

The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.

No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see the application of
any payments made or property transferred to the Trustees or upon their order.

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SECTION 4.02 ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.

SECTION 4.03 TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee, officer
or other agent of the Trust may acquire, own and dispose of Shares to the same
extent as if he were not a Trustee, officer or agent; and the Trustees may issue
and sell or cause to be issued and sold Shares to and buy such Shares from any
such person or any firm or company in which he is interested, subject only to
the general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in the
Bylaws.

SECTION 4.04 ACTION BY THE TRUSTEES. The Trustees shall act by majority
vote at a meeting duly called or by unanimous written consent without a meeting
or by telephone meeting provided a quorum of Trustees participate in any such
telephone meeting, unless the 1940 Act requires that a particular action be
taken only at a meeting at which the Trustees are present in person. At any
meeting of the Trustees, a majority of the Trustees shall constitute a quorum.
Meetings of the Trustees may be called orally or in writing by the Chairman of
the Board of Trustees or by any two other Trustees. Notice of the time, date
and place of all meetings of the Trustees shall be given by the party calling
the meeting to each Trustee by telephone, facsimile or other electronic
mechanism sent to his home or business address at least twenty-four hours in
advance of the meeting or by written notice mailed to his home or business
address at least seventy-two hours in advance of the meeting. Notice need not
be given to any Trustee who attends the meeting without objecting to the lack of
notice or who executes a written waiver of notice with respect to the meeting.
Any meeting conducted by telephone shall be deemed to take place at the
principal office of the Trust, as determined by the Bylaws or by the Trustees.
Subject to the requirements of the 1940 Act, the Trustees by majority vote may
delegate to any one or more of their number their authority to approve
particular matters or take particular actions on behalf of the Trust. Written
consents or waivers of the Trustees may be executed in one or more counterparts.
Execution of a written consent or waiver and delivery thereof to the Trust may
be accomplished by facsimile or other similar electronic mechanism.

SECTION 4.05 CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint one of
their number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the execution
of policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) the chief executive, financial and/or
accounting officer of the Trust.

SECTION 4.06 PRINCIPAL TRANSACTIONS. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment

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adviser, administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person; and the Trust may employ any such person, or
firm or company in which such person is an Interested Person, as broker, legal
counsel, registrar, investment adviser, administrator, distributor, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.

ARTICLE V
EXPENSES OF THE TRUST

Subject to the provisions of Article II, Section 2.08 hereof, the Trustees
shall be reimbursed from the Trust estate or the assets belonging to the
appropriate Series for their expenses and disbursements, including, without
limitation, interest charges, taxes, brokerage fees and commissions; expenses of
issue, repurchase and redemption of shares; certain insurance premiums;
applicable fees, interest charges and expenses of third parties, including the
Trust's investment advisers, managers, administrators, distributors, custodian,
transfer agent and fund accountant; fees of pricing, interest, dividend, credit
and other reporting services; costs of membership in trade associations;
telecommunications expenses; funds transmission expenses; auditing, legal and
compliance expenses; costs of forming the Trust and maintaining corporate
existence; costs of preparing and printing the Trust's prospectuses, statements
of additional information and shareholder reports and delivering them to
existing shareholders; expenses of meetings of shareholders and proxy
solicitations therefore; costs of maintaining books and accounts; costs of
reproduction, stationery and supplies; fees and expenses of the Trust's
trustees; compensation of the Trust's officers and employees and costs of other
personnel performing services for the Trust; costs of Trustee meetings;
Securities and Exchange Commission registration fees and related expenses; state
or foreign securities laws registration fees and related expenses and for such
non-recurring items as may arise, including litigation to which the Trust (or a
Trustee acting as such) is a party, and for all losses and liabilities by them
incurred in administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities the Trustees shall have a lien on the
assets belonging to the appropriate Series, or in the case of an expense
allocable to more than one Series, on the assets of each such Series, prior to
any rights or interests of the Shareholders thereto. This section shall not
preclude the Trust from directly paying any of the aforementioned fees and
expenses.

ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT

SECTION 6.01 INVESTMENT ADVISER. The Trustees may in their discretion,
from time to time, enter into an investment advisory contract or contracts with
respect to the Trust or any Series whereby the other party or parties to such
contract or contracts shall undertake to furnish the Trustees with such
investment advisory, statistical and research facilities and services and such
other facilities and services, if any, all upon such terms and conditions as may
be prescribed in the Bylaws or as the Trustees may in their discretion determine
(such terms and conditions not

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to be inconsistent with the provisions of this Trust Instrument or of the
Bylaws). Notwithstanding any other provision of this Trust Instrument, the
Trustees may authorize any investment adviser (subject to such general or
specific instructions as the Trustees may from time to time adopt) to effect
purchases, sales or exchanges of portfolio securities, other investment
instruments of the Trust, or other Trust Property on behalf of the Trustees, or
may authorize any officer, agent, or Trustee to effect such purchases, sales or
exchanges pursuant to recommendations of the investment adviser (and all without
further action by the Trustees). Any such purchases, sales and exchanges shall
be deemed to have been authorized by all of the Trustees.

The Trustees may authorize the investment adviser to employ, from time to
time, one or more sub-advisers to perform such of the acts and services of the
investment adviser, and upon such terms and conditions, as may be agreed upon
between the investment adviser and sub-adviser (such terms and conditions not to
be inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Any reference in this Trust Instrument to the investment adviser shall be deemed
to include such sub-advisers, unless the context otherwise requires.

SECTION 6.02 PRINCIPAL UNDERWRITER. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of Shares, whereby the Trust may either
agree to sell Shares to the other party to the contract or appoint such other
party its sales agent for such Shares. In either case, the contract shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws); and
such contract may also provide for the repurchase or sale of Shares by such
other party as principal or as agent of the Trust.

SECTION 6.03 ADMINISTRATION. The Trustees may in their discretion from
time to time enter into one or more management or administrative contracts
whereby the other party or parties shall undertake to furnish the Trustees with
management or administrative services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).

SECTION 6.04 TRANSFER AGENT. The Trustees may in their discretion from
time to time enter into one or more transfer agency and Shareholder service
contracts whereby the other party or parties shall undertake to furnish the
Trustees with transfer agency and Shareholder services. The contract or
contracts shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws).

SECTION 6.05 PARTIES TO CONTRACT. Any contract of the character described
in Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any contract of the
character described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be

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invalidated or rendered void or voidable by reason of the existence of any
relationship, nor shall any person holding such relationship be disqualified
from voting on or executing the same in his capacity as Shareholder and/or
Trustee, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VI or Article VIII hereof or of
the Bylaws. The same person (including a firm, corporation, partnership, trust,
or association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or pursuant to Article
VIII hereof, and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts mentioned
in this Section 6.05.

SECTION 6.06 PROVISIONS AND AMENDMENTS. Any contract entered into
pursuant to Sections 6.01 or 6.02 of this Article VI shall be consistent with
and subject to the requirements of Section 15 of the 1940 Act, if applicable, or
other applicable Act of Congress hereafter enacted with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal thereof, and no amendment to any contract
entered into pursuant to Section 6.01 of this Article VI shall be effective
unless assented to in a manner consistent with the requirements of said Section
15, as modified by any applicable rule, regulation or order of the Commission.

ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS

SECTION 7.01 VOTING POWERS. The Shareholders shall have power to vote
only (a) for the election of Trustees as provided in Article III, Sections 3.01
and 3.02 hereof, (b) for the removal of Trustees as provided in Article III,
Section 3.03(d) hereof, (c) with respect to any investment advisory contract as
provided in Article VI, Sections 6.01 and 6.06 hereof, and (d) with respect to
such additional matters relating to the Trust as may be required by law, by this
Trust Instrument, or the Bylaws or any registration of the Trust with the
Commission or any State, or as the Trustees may consider desirable.

On any matter submitted to a vote of the Shareholders, all Shares shall be
voted separately by individual Series, except (i) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series; and (ii)
when the Trustees have determined that the matter affects the interests of more
than one Series, then the Shareholders of all such Series shall be entitled to
vote thereon. The Trustees may also determine that a matter affects only the
interests of one or more classes of a Series, in which case any such matter
shall be voted on by such class or classes. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the Bylaws. A proxy may
be given in writing. The Bylaws may provide that proxies may also, or may
instead, be given by any electronic or telecommunications device or in any other
manner. Notwithstanding anything else herein or in

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the Bylaws, in the event a proposal by anyone other than the officers or
Trustees of the Trust is submitted to a vote of the Shareholders of one or more
Series or of the Trust, or in the event of any proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees of the Trust, Shares may be voted only in person or by written proxy.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required or permitted by law, this Trust Instrument or
any of the Bylaws of the Trust to be taken by Shareholders.

SECTION 7.02 MEETINGS. The first Shareholders' meeting shall be held in
order to elect Trustees as specified in Section 3.02 of Article III hereof at
the principal office of the Trust or such other place as the Trustees may
designate. Meetings may be held within or without the State of Delaware.
Special meetings of the Shareholders of any Series may be called by the Trustees
and shall be called by the Trustees upon the written request of Shareholders
owning at least one-tenth of the Outstanding Shares entitled to vote. Whenever
ten or more Shareholders meeting the qualifications set forth in Section 16(c)
of the 1940 Act, as the same may be amended from time to time, seek the
opportunity of furnishing materials to the other Shareholders with a view to
obtaining signatures on such a request for a meeting, the Trustees shall comply
with the provisions of said Section 16(c) with respect to providing such
Shareholders access to the list of the Shareholders of record of the Trust or
the mailing of such materials to such Shareholders of record, subject to any
rights provided to the Trust or any Trustees provided by said Section 16(c).
Notice shall be sent, by First Class Mail or such other means determined by the
Trustees, at least 15 days prior to any such meeting.

SECTION 7.03 QUORUM AND REQUIRED VOTE. One-third of Shares entitled to
vote in person or by proxy shall be a quorum for the transaction of business at
a Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requires that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series (or that class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument or the Bylaws, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Trust Instrument permits or requires that
the holders of any Series shall vote as a Series (or that the holders of any
class shall vote as a class), then a majority of the Shares present in person or
by proxy of that Series (or class), voted on the matter in person or by proxy
shall decide that matter insofar as that Series (or class) is concerned.
Shareholders may act by unanimous written consent. Actions taken by Series (or
class) may be consented to unanimously in writing by Shareholders of that Series
(or class).

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ARTICLE VIII
CUSTODIAN

SECTION 8.01 APPOINTMENT AND DUTIES. The Trustees shall at all times
employ a bank, a company that is a member of a national securities exchange, or
a trust company, each having capital, surplus and undivided profits of at least
twenty million dollars ($20,000,000) and is a member of the Depository Trust
Company as custodian with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the Bylaws of the Trust: (a) to hold the securities owned by the Trust and
deliver the same upon written order or oral order confirmed in writing; (b) to
receive and receipt for any moneys due to the Trust and deposit the same in its
own banking department or elsewhere as the Trustees may direct; and (c) to
disburse such funds upon orders or vouchers.

The Trustees may also authorize the custodian to employ one or more sub-
custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the laws of the
United States or one of the states thereof and having capital, surplus and
undivided profits of at least twenty million dollars ($20,000,000) and is a
member of the Depository Trust Company or such other person as may be permitted
by the Commission or otherwise in accordance with the 1940 Act.

SECTION 8.02 CENTRAL CERTIFICATE SYSTEM. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, as amended, or such other
person as may be permitted by the Commission, or otherwise in accordance with
the 1940 Act, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodians, sub-custodians or other agents.

ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS

SECTION 9.01 DISTRIBUTIONS.

(a) The Trustees may from time to time declare and pay dividends or other
distributions with respect to any Series. The amount of such dividends or
distributions and the payment of them and whether they are in cash or any other
Trust Property shall be wholly in the discretion of the Trustees.

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(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.

(c) Anything in this Trust Instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute a stock dividend pro rata among
the Shareholders of a particular Series, or class thereof, as of the record date
of that Series fixed as provided in Subsection 9.01(b) hereof.

SECTION 9.02 REDEMPTIONS. In case any holder of record of Shares of a
particular Series desires to dispose of his Shares or any portion thereof, he
may deposit at the office of the transfer agent or other authorized agent of
that Series a written request or such other form of request as the Trustees may
from time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 9.02; and the Shareholder so requesting shall be
entitled to require the Series to purchase, and the Series or the principal
underwriter of the Series shall purchase his said Shares, but only at the Net
Asset Value thereof (as described in Section 9.03 of this Article IX). The
Series shall make payment for any such Shares to be redeemed, as aforesaid, in
cash or property from the assets of that Series and payment for such Shares
shall be made by the Series or the principal underwriter of the Series to the
Shareholder of record within seven (7) days after the date upon which the
request is effective. Upon redemption, shares shall become Treasury shares and
may be re-issued from time to time.

SECTION 9.03 DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO
ASSETS. The term "Net Asset Value" of any Series shall mean that amount by
which the assets of that Series exceed its liabilities, all as determined by or
under the direction of the Trustees. Such value shall be determined separately
for each Series and shall be determined on such days and at such times as the
Trustees may determine. Such determination shall be made with respect to
securities for which market quotations are readily available, at the market
value of such securities; and with respect to other securities and assets, at
the fair value as determined in good faith by the Trustees; provided, however,
that the Trustees, without Shareholder approval, may alter the method of valuing
portfolio securities insofar as permitted under the 1940 Act and the rules,
regulations and interpretations thereof promulgated or issued by the Commission
or insofar as permitted by any Order of the Commission applicable to the Series.
The Trustees may delegate any of their powers and duties under this Section 9.03
with respect to valuation of assets and liabilities. The resulting amount,
which shall represent the total Net Asset Value of the particular Series, shall
be divided by the total number of shares of that Series outstanding at the time
and the quotient so obtained shall be the Net Asset Value per Share of that
Series. At any time the Trustees may cause the Net Asset Value per Share last
determined to be determined again in similar manner and may fix the time when
such redetermined value shall become effective. If, for any reason, the net
income of any Series, determined at any time, is a negative amount, the Trustees
shall have the power with respect to that Series (a) to offset each

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Shareholder's pro rata share of such negative amount from the accrued dividend
account of such Shareholder, (b) to reduce the number of Outstanding Shares of
such Series by reducing the number of Shares in the account of each Shareholder
by a pro rata portion of that number of full and fractional Shares which
represents the amount of such excess negative net income, (c) to cause to be
recorded on the books of such Series an asset account in the amount of such
negative net income (provided that the same shall thereupon become the property
of such Series with respect to such Series and shall not be paid to any
Shareholder), which account may be reduced by the amount, of dividends declared
thereafter upon the Outstanding Shares of such Series on the day such negative
net income is experienced, until such asset account is reduced to zero; (d) to
combine the methods described in clauses (a) and (b) and (c) of this sentence;
or (e) to take any other action they deem appropriate, in order to cause (or in
order to assist in causing) the Net Asset Value per Share of such Series to
remain at a constant amount per Outstanding Share immediately after each such
determination and declaration. The Trustees shall also have the power not to
declare a dividend out of net income for the purpose of causing the Net Asset
Value per Share to be increased. The Trustees shall not be required to adopt,
but may at any time adopt, discontinue or amend the practice of maintaining the
Net Asset Value per Share of the Series at a constant Amount.

SECTION 9.04 SUSPENSION OF THE RIGHT OF REDEMPTION. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
as permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension. In the event that any Series is divided into classes, the
provisions of this Section 9.03, to the extent applicable as determined in the
discretion of the Trustees and consistent with applicable law, may be equally
applied to each such class.

SECTION 9.05 REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED
INVESTMENT COMPANY. If the Trustees shall, at any time and in good faith, be of
the opinion that direct or indirect ownership of Shares of any Series has or may
become concentrated in any Person to an extent which would disqualify any Series
as a regulated investment company under the Internal Revenue Code, then the
Trustees shall have the power (but not the obligation) by lot or other means
deemed equitable by them (a) to call for redemption by any such person of a
number, or principal amount, of Shares sufficient to maintain or bring the
direct or indirect ownership of Shares into conformity with the requirements for
such qualification and (b) to refuse to transfer or issue Shares to any person
whose acquisition of Shares in question would result in such disqualification.
The redemption shall be effected at the redemption price and in the manner
provided in this Article IX.

The holders of Shares shall upon demand disclose to the Trustees in writing
such information with respect to direct and indirect ownership of Shares as the
Trustees deem necessary to comply with the requirements of any taxing authority.

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ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION

SECTION 10.01 LIMITATION OF LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any person other than the Trust or
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission or any conduct
whatsoever in his capacity as Trustee, provided that nothing contained herein or
in the Delaware Act shall protect any Trustee against any liability to the Trust
or to Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.

SECTION 10.02 INDEMNIFICATION.

(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):

(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified by
the Trust to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;

(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.

(b) No indemnification shall be provided hereunder to a Covered Person:

(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office or (B) not to have acted in
good faith in the reasonable belief that his action was in the best interest of
the Trust; or

(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, (A) by the court or other body approving
the settlement; (B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry);

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provided, however, that any Shareholder may, by appropriate legal proceedings,
challenge any such determination by the Trustees or by independent counsel.

(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be exclusive
of or affect any other rights to which any Covered Person may now or hereafter
be entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.

(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) of this Section 10.02 may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him to the Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Section 10.02; provided, however, that
either (i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under Section 10.02.

SECTION 10.03 SHAREHOLDERS. In case any Shareholder of any Series shall
be held to be personally liable solely by reason of his being or having been a
Shareholder of such Series and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The
Trust, on behalf of the affected Series, shall, upon request by the Shareholder,
assume the defense of any claim made against the Shareholder for any act or
obligation of the Series and satisfy any judgment thereon from the assets of the
Series.

ARTICLE XI
MISCELLANEOUS

SECTION 11.01 TRUST NOT A PARTNERSHIP. It is hereby expressly declared
that a trust and not a partnership is created hereby. No Trustee hereunder
shall have any power to bind personally either the Trust officers or any
Shareholder. All persons extending credit to, contracting with or having any
claim against the Trust or the Trustees shall look only to the assets of the
appropriate Series or (if the Trustees shall have yet to have established
Series) of the

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Trust for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of their agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Trust Instrument
shall protect a Trustee against any liability to which the Trustee would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.

SECTION 11.02 TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
X hereof and to Section 11.01 of this Article XI, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Trust Instrument, and subject to the provisions of Article X hereof and
Section 11.01 of this Article XI, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.

SECTION 11.03 ESTABLISHMENT OF RECORD DATES. The Trustees may close the
Share transfer books of the Trust for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of Shares, and in
such case such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other distribution,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the Trust
after any such record date fixed as aforesaid.

SECTION 11.04 TERMINATION OF TRUST.

(a) This Trust shall continue without limitation of time but subject to
the provisions of Subsection 11.04(b).

(b) The Trustees may, subject to a Majority Shareholder Vote of each
Series affected by the matter or, if applicable, to a Majority Shareholder Vote
of the Trust, and subject to a vote of a majority of the Trustees,

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<PAGE>

(i) sell and convey all or substantially all of the assets of the
Trust or any affected Series to another trust, partnership, association or
corporation, or to a separate series of shares thereof, organized under the laws
of any state which trust, partnership, association or corporation is an open-end
management investment company as defined in the 1940 Act, or is a series
thereof, for adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of beneficial
interest, stock or other ownership interests of such trust, partnership,
association or corporation or of a series thereof; or

(ii) at any time sell and convert into money all of the assets of the
Trust or any affected Series.

Upon making reasonable provision, in the determination of the Trustees, for the
payment of all such liabilities in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) of each Series (or class) ratably among the holders of Shares
of that Series then outstanding.

(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in Subsection 11.05(b), the Trust or any affected
Series shall terminate and the Trustees and the Trust shall be discharged of any
and all further liabilities and duties hereunder and the right, title and
interest of all parties with respect to the Trust or Series shall be canceled
and discharged.

Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.

SECTION 11.05 REORGANIZATION. Notwithstanding anything else herein, the
Trustees, in order to change the form of organization of the Trust, may, without
prior Shareholder approval, (a) cause the Trust to merge or consolidate with or
into one or more trusts, partnerships, associations or corporations so long as
the surviving or resulting entity is an open-end management investment company
under the 1940 Act, or is a series thereof, that will succeed to or assume the
Trust's registration under that Act and which is formed, organized or existing
under the laws of a state, commonwealth, possession or colony of the United
States or (b) cause the Trust to incorporate under the laws of Delaware. Any
agreement of merger or consolidation or certificate of merger may be signed by a
majority of Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.

Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Act, and notwithstanding anything to the contrary contained in this
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 11.05 may effect any amendment to the
Trust Instrument or effect the adoption of a new trust instrument of the Trust
if it is the surviving or resulting trust in the merger or consolidation.

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<PAGE>

SECTION 11.06 FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been make and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions like
"herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument.
All expressions like "his", "he" and "him", shall be deemed to include the
feminine and neuter, as well as masculine, genders. Headings are placed herein
for convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust
Instrument may be executed in any number of counterparts each of which shall be
deemed an original.

SECTION 11.07 APPLICABLE LAW. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust", and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.

SECTION 11.08 AMENDMENTS. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument.

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<PAGE>

Shareholders shall have the right to vote (a) on any amendment which would
affect their right to vote granted in Section 7.01 of Article VII hereof, (b) on
any amendment to this Section 11.08, (c) on any amendment as may be required by
law or by the Trust's registration statement filed with the Commission and (d)
on any amendment submitted to them by the Trustees. Any amendment required or
permitted to be submitted to Shareholders which, as the Trustees determine,
shall affect the Shareholders of one or more Series shall be authorized by vote
of the Shareholders of each Series affected and no vote of shareholders of a
Series not affected shall be required. Notwithstanding anything else herein,
any amendment to Article X hereof shall not limit the rights to indemnification
or insurance provided therein with respect to action or omission of Covered
Persons prior to such amendment.

SECTION 11.09 FISCAL YEAR. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees
may, without Shareholder approval, change the fiscal year of the Trust.

SECTION 11.10 PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any matter affect such provisions in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.

IN WITNESS WHEREOF, the undersigned, being all of the initial Trustees of
the Trust, have executed this instrument as of date first written above.

/s/ David I. Goldstein
---------------------------------
David I. Goldstein, as Trustee
and not individually

/s/ Dana A. Lukens
---------------------------------
Dana A. Lukens, as Trustee
and not individually

/s/ Christopher J. Kelley
---------------------------------
Christopher J. Kelley, as Trustee
and not individually

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<PAGE>

EXHIBIT 5(a)
<PAGE>

FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT

[_____________________ ___, 1996

AGREEMENT made this [ ]th day of [ ], 1996, between Forum Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at Two Portland Square, Portland, Maine
04101 and Westwood Ventures, Ltd. (the "Adviser"), a corporation incorporated
under the laws of the State of New York with its principal place of business at
450 Seventh Avenue, Suite 3304, New York, New York 10123.

WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "Act") as an open-end management investment company and is
authorized to issue interests (as defined in the Trust's Trust Instrument), in
separate series;

WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust as listed in Appendix A hereto (each a
"Fund" and collectively the "Funds"), and the Adviser is willing to provide
those services on the terms and conditions set forth in this Agreement;

NOW THEREFORE, the Trust and the Adviser agree as follows:

SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS

The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument, By-Laws and Registration Statement filed with
the Securities and Exchange Commission (the "Commission") under the Act and the
Securities Act of 1933 (the "Securities Act"), including any representations
made in the prospectus and statement of additional information relating to the
Funds contained therein and as may be supplemented from time to time, all in
such manner and to such extent as may from time to time be authorized by the
Trust's Board of Trustees (the "Board"). The Trust is currently authorized to
issue thirteen series of shares and the Board is authorized to issue any
unissued shares in any number of additional classes or series. The Trust has
delivered copies of the documents listed in this Section 1 and will from time to
time furnish Adviser with any amendments thereof.

SECTION 2. INVESTMENT ADVISER; APPOINTMENT

The Trust hereby employs Adviser, subject to the direction and control of
the Board, to manage the investment and reinvestment of the assets in each Fund
and, without limiting the generality of the foregoing, to provide other services
specified in Section 3 hereof.

-1-
<PAGE>

SECTION 3. DUTIES OF THE ADVISER

(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in each Fund. To carry out such
decisions, the Adviser is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, at the risk of and in the name of the Trust, to
place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities for the
Funds, the Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.

(b) The Adviser will report to the Board at each meeting thereof all
changes in each Fund since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Funds and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in the
Funds' holdings, the industries in which they engage, or the economic, social or
political conditions prevailing in each country in which the Funds maintain
investments. The Adviser will also furnish the Board with such statistical and
analytical information with respect to securities in the Funds as the Adviser
may believe appropriate or as the Board reasonably may request. In making
purchases and sales of securities for the Funds, the Adviser will bear in mind
the policies set from time to time by the Board as well as the limitations
imposed by the Trust's Trust Instrument, By-Laws and Registration Statement
under the Act and the Securities Act, the limitations in the Act and in the
Internal Revenue Code of 1986, as amended in respect of regulated investment
companies and the investment objectives, policies and restrictions of the Funds.

(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on
the Trust's behalf in any such respect.

(d) The Adviser shall maintain records relating to portfolio transactions
and the placing and allocation of brokerage orders as are required to be
maintained by the Trust under the Act. The Adviser shall prepare and maintain,
or cause to be prepared and maintained, in such form, for such periods and in
such locations as may be required by applicable law, all documents and records
relating to the services provided by the Adviser pursuant to this Agreement
required to be prepared and maintained by the Trust pursuant to the rules and
regulations of any national, state, or local government entity with jurisdiction
over the Trust, including the Securities and Exchange Commission and the
Internal Revenue Service. The books and records pertaining to the Trust which
are in possession of the Adviser shall be the property of the Trust. The Trust,
or the Trust's authorized representatives, shall have access to such books and
records at all times during the Adviser's normal business hours. Upon the
reasonable request of the Trust, copies of

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<PAGE>

any such books and records shall be provided promptly by the Adviser to the
Trust or the Trust's authorized representatives.

(e) The Adviser shall have no duties or obligations pursuant to this
Agreement, including any obligation to reimburse Fund expenses pursuant to
Section 4 hereof, during any period in which the Fund invests all (or
substantially all) of its investment assets in a registered, open-end management
investment company, or separate series thereof, in accordance with Section
12(d)(1)(E) under the Act.

SECTION 4. EXPENSES

The Adviser shall be responsible for that portion of the net expenses of
each Fund (except interest, taxes, brokerage, fees and other expenses paid by
the fund in accordance with an effective plan pursuant to Rule 12b-1 under the
Act and organization expenses, all to the extent such exceptions are permitted
by applicable state law and regulation) incurred by the Fund during each of the
Fund's fiscal years or portion thereof that this Agreement is in effect which,
as to the Fund, in any such year exceeds the limits applicable to the Fund under
the laws or regulations of any state in which shares of the Fund are qualified
for sale (reduced pro rata for any portion of less than a year) and which is not
assumed by Forum Financial Services, Inc., the Trust's manager and distributor,
or any other person.

The Trust hereby confirms that, subject to the foregoing, the Trust shall
be responsible and shall assume the obligation for payment of all the Trust's
other expenses, including: interest charges, taxes, brokerage fees and
commissions; certain insurance premiums; fees, interest charges and expenses of
the Trust's custodian, transfer agent and dividend disbursing agent;
telecommunications expenses; auditing, legal and compliance expenses; costs of
the Trust's formation and maintaining its existence; costs of preparing and
printing the Trust's prospectuses, statements of additional information, account
application forms and shareholder reports and delivering them to existing and
prospective shareholders; costs of maintaining books of original entry for
portfolio and fund accounting and other required books and accounts and of
calculating the net asset value of shares in the Trust; costs of reproduction,
stationery and supplies; compensation of the Trust's trustees, officers,
employees and other personnel performing services for the Trust who are not the
Adviser's employees or employees of Forum Financial Services, Inc. or affiliated
persons of either; costs of corporate meetings; registration fees and related
expenses for registration with the Commission and the securities regulatory
authorities of other countries in which the Trust's shares are sold; state
securities law registration fees and related expenses; fees and out-of-pocket
expenses payable to Forum Financial Services, Inc. under any distribution,
management or similar agreement; and all other fees and expenses paid by the
Trust pursuant to any distribution or shareholder service plan adopted pursuant
to Rule 12b-1 under the Act.

SECTION 5. STANDARD OF CARE

The Trust shall expect of the Adviser, and the Adviser will give the Trust
the benefit of, the Adviser's best judgment and efforts in rendering its
services to the Trust, and as an

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<PAGE>

inducement to the Adviser's undertaking these services the Adviser shall not be
liable hereunder for any mistake of judgment or in any event whatsoever, except
for lack of good faith, provided that nothing herein shall be deemed to protect,
or purport to protect, the Adviser against any liability to the Trust or to the
Trust's security holders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties hereunder, or by reason of the Adviser's reckless
disregard of its obligations and duties hereunder.

SECTION 6. COMPENSATION

(a) In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each of the Funds, a fee at an annual rate as listed in Appendix
A hereto. Such fees shall be accrued by the Trust daily and shall be payable
monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month. The Adviser's
reimbursement, if any, of a Fund's expenses as provided in Section 4 hereof,
shall be estimated and paid to the Trust monthly in arrears, at the same time as
the Trust's payment to the Adviser for such month. Payment of the advisory fee
will be reduced or postponed, if necessary, with any adjustments made after the
end of the year.

(b) For purposes of calculating a Fund's daily net assets in determining
the fees payable hereunder there shall be excluded all holdings (and liabilities
related to the purchase of holdings) in any registered open-end management
investment company for which the Adviser acts as investment adviser. No fee
shall be payable hereunder with respect to a Fund during any period in which the
Fund invests all (or substantially all) of its investment assets in a
registered, open-end management investment company, or separate series thereof,
in accordance with Section 12(d)(1)(E) under the Act.

SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION

(a) This Agreement shall become effective with respect to a Fund
immediately upon approval by a majority of the outstanding voting securities of
that Fund.

(b) This Agreement shall remain in effect with respect to a Fund for a
period of one year from the date of its effectiveness and shall continue in
effect for successive twelve-month periods (computed from each anniversary date
of the approval) with respect to the Fund; provided that such continuance is
specifically approved at least annually (i) by the Board or by the vote of a
majority of the outstanding voting securities of the Fund, and, in either case,
(ii) by a majority of the Trust's trustees who are not parties to this Agreement
or interested persons of any such party (other than as trustees of the Trust);
provided further, however, that if this Agreement or the continuation of this
Agreement is not approved as to a Fund, the Adviser may continue to render to
that Fund the services described herein in the manner and to the extent
permitted by the Act and the rules and regulations thereunder.

(c) This Agreement may be terminated with respect to a Fund at any time,
without the payment of any penalty, (i) by the Board or by a vote of a majority
of the outstanding voting

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<PAGE>

securities of the Fund on 60 days' written notice to the Adviser or (ii) by the
Adviser on 60 days' written notice to the Trust. This agreement shall terminate
upon assignment.

SECTION 8. ACTIVITIES OF THE ADVISER

Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers, directors or employees who may also be a
trustee, officer or employee of the Trust, or persons otherwise affiliated
persons of the Trust to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, trust, firm, individual or association.

SECTION 9. SUBADVISERS

At its own expense, the Adviser may carry out any of its obligations under
this agreement by employing, subject to your supervision, one or more persons
who are registered as investment advisers pursuant to the Investment Advisers
Act of 1940, as amended, or who are exempt from registration thereunder
("Subadvisers"). Each Subadviser's employment will be evidenced by a separate
written agreement approved by the Board and, if required, by the shareholders of
the applicable Fund. The Adviser shall not be liable hereunder for any act or
omission of any Subadviser, except to exercise good faith in the employment of
the Subadviser and except with respect to matters as to which the Adviser
assumes responsibility in writing.

SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

The Trustees of the Trust and the interest holders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Adviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Adviser's rights or claims relate in settlement of such rights
or claims, and not to the Trustees of the Trust or the interest holders of the
Funds.

SECTION 11. "FORUM" NAME

If the Adviser ceases to act as investment adviser to the Trust or any Fund
whose name includes the word "Forum," or if the Adviser requests in writing, the
Trust shall take prompt action to change the name of the Trust any such Fund to
a name that does not include the word "Forum." The Adviser may from time to
time make available without charge to the Trust for the Trust's use any marks or
symbols owned by the adviser, including marks or symbols containing the word
"Forum" or any variation thereof, as the Adviser deems appropriate. Upon the
Adviser's request in writing, the Trust shall cease to use any such mark or
symbol at any time. The Trust acknowledges that any rights in or to the word
"Forum" and any such marks or symbols which may exist on the date of this
Agreement or arise hereafter are, and under any and all circumstances shall
continue to be, the sole property of the Adviser. The Adviser may permit other
parties, including other investment companies, to use the word "Forum" in their
names

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<PAGE>

without the consent of the Trust. The Trust shall not use the word "Forum" in
conducting any business other than that of an investment company registered
under the Act without the permission of the Adviser.

SECTION 12. MISCELLANEOUS

(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting securities of any Fund thereby affected. No amendment to
this Agreement or the termination of this Agreement with respect to a Fund shall
effect this Agreement as it pertains to any other Fund, nor shall any such
amendment require the vote of any of the Fund's shareholders.

(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.

(d) The terms "vote of a majority of the outstanding voting securities",
"interested person", "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

FORUM FUNDS

__________________________
John Y. Keffer
President

WESTWOOD VENTURES, LTD.

________________________
[ ]

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<PAGE>

FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT

Appendix A

Fee as a % of
the Annual Average Daily
Funds of the Trust Net Assets of the Fund
- - ------------------ ------------------------
%
%

%
%
%
%
%

%
%
%

<PAGE>
EXHIBIT 5(b)
<PAGE>

WESTWOOD VENTURES, LTD.
SUB-ADVISORY AGREEMENT

AGREEMENT made the ___ day of _________, 1996, between Westwood Ventures,
Ltd. ("Westwood"), a company incorporated under the laws of the State of New
York with its principal place of business at 450 Seventh Avenue, Suite 3304, New
York, New York 10123, and Forum Advisors, Inc. (the "Sub-Adviser "), a
corporation organized under the laws of the State of Delaware with its principal
place of business at Two Portland Square, Portland, Maine 04101.

WHEREAS, Westwood has entered into an Investment Advisory Agreement dated
as of the _____ day of _______, 199___ ("Advisory Agreement") with Forum Funds
(the "Trust"), a business trust organized under the laws of the State of
Delaware with its principal place of business at Two Portland Square, Portland,
Maine 04101; and,

WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "Act") as an open-end management investment company and is
authorized to issue its shares in separate series and classes;

WHEREAS, pursuant to the Advisory Agreement, and subject to the direction
and control of the Board of Trustees of the Trust ("Board"), Westwood manages
the investment and reinvestment of the assets of the investment portfolio or
portfolios of the Trust listed on Schedule A hereto (the "Fund" or "Funds"),
each a separate series of the Trust and provides certain management and other
services specified in the Advisory Agreement; and,

WHEREAS, Sub-Adviser is engaged in the business of rendering investment
advice and is registered as an investment adviser under the Investment Advisers
Act of 1940, as amended ("Adviser Act"); and

WHEREAS, Westwood desires to retain Sub-Adviser to perform investment
advisory services for the Fund and Sub-Adviser is willing to provide those
services on the terms and conditions set forth in this Agreement;

NOW THEREFORE, Westwood and Sub-Adviser agree as follows:

SECTION 1. APPOINTMENT AND DELIVERY OF DOCUMENTS

(a) Adviser hereby appoints Sub-Adviser as investment sub-adviser for the
Funds for the period and on the terms set forth in this Agreement. Sub-Adviser
accepts this appointment and agrees to render its services as investment sub-
adviser for the compensation set forth herein.

(b) The Adviser has delivered copies of each of the following documents
and will from time to time furnish Sub-Adviser with any supplements or
amendments to such documents:

(i) the Trust Instrument of the Trust, as filed with the Secretary of
State of the State of Delaware, as in effect on the date hereof and as amended
from time to time ("Trust Instrument");

(ii) the Bylaws of the Trust as in effect on the date hereof and as
amended from time to time ("Bylaws");

(iii) the Registration Statement under the Act and, if applicable, the
Securities Act of 1933 (the "Securities Act"), as filed with the Securities and
Exchange Commission (the "Commission"), relating to the Fund and its shares and
all amendments thereto ("Registration Statement");

(iv) the prospectus and statement of additional information relating
to the Fund ("Prospectus"); and,

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<PAGE>

(v) all proxy statements, reports to shareholders, advertising or
other materials prepared for distribution to shareholders of the Fund or the
public, that refer to Sub-Adviser or its clients.

The Adviser shall furnish Sub-Adviser with any further documents, materials
or information that Sub-Adviser may reasonably request to enable it to perform
its duties pursuant to this Agreement.

SECTION 2. DUTIES OF SUB-ADVISER

(a) Subject to the direction, control and supervision of the Board and
Westwood, Sub-Adviser shall direct the investments of the Funds and shall make
decisions with respect to all purchases and sales of securities and other
investment assets in the Funds. To carry out such decisions, Sub-Adviser is
hereby authorized, as agent and attorney-in-fact for the Trust, for the account
of, and in the name of the Trust, to place orders and issue instructions with
respect to those transactions of the Funds. In all purchases, sales and other
transactions in securities for the Funds, Sub-Adviser is authorized to exercise
full discretion and act for the Trust in the same manner and with the same force
and effect as the Trust might or could do with respect to such purchases, sales
or other transactions, as well as with respect to all other things necessary or
incidental to the furtherance or conduct of such purchases, sales or other
transactions.

(b) Sub-Adviser will provide to the Board, Westwood, or both, as
appropriate, such information, reports, evaluations, analyses and opinions prior
to or at each meeting of the Board and as the parties may mutually agree upon
from time to time. On its own initiative, Sub-Adviser shall provide the Board,
Westwood, or both, from time to time information that Sub-Adviser believes
appropriate, including, but not limited to, information concerning the
individual companies whose securities are included in the Funds' holdings, the
industries in which they engage, or the economic, social or political conditions
prevailing in each country in which the Funds maintain investments. Sub-Adviser
shall also advise the Board, Westwood, or both, as appropriate, of important
developments affecting the Trust, the Fund and Sub-Adviser.

(c) In making purchases and sales of securities for the Funds, and
otherwise performing its duties hereunder, Sub-Adviser will comply with the Act
and the rules and regulations thereunder, all other applicable Federal and state
laws and regulations, the policies set from time to time by the Board as well as
the limitations imposed by the Trust Instrument, Bylaws, Registration Statement,
prospectus, and the Internal Revenue Code of 1986, as amended, in respect of
regulated investment companies and the investment objectives, policies and
restrictions of the Funds. Without limiting the foregoing, Sub-Adviser agrees
that, in placing orders with broker-dealers for the purchase or sales of
portfolio securities, it shall attempt to obtain quality execution at favorable
security prices; provided that, consistent with section 28(e) of the Securities
and Exchange Act, the exercise of Sub-Adviser fiduciary duties under its
Investment Advisory agreement with the Trust, and any other applicable law, Sub-
Adviser may allocate brokerage on behalf of the Trust to broker-dealers who
provide research services and may cause the Fund to pay these broker-dealers a
higher amount of commission than may be charged by other broker-dealers.

(d) Sub-Adviser shall prepare and maintain, or cause to be prepared and
maintained, in such form, for such periods and in such locations as may be
required by applicable law, all documents and records relating to the services
provided by Sub-Adviser pursuant to this Agreement required to be prepared and
maintained by the Trust pursuant to the Act and the rules and regulations
thereunder, the rules and regulations of any national, state, or local
government entity with jurisdiction over the Trust, including the Commission and
the Internal Revenue Service, including but not limited to, records relating to
Fund transactions and the placing and allocation of brokerage orders.

(e) The books and records pertaining to the Trust that are in possession
of Sub-Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during Sub-Adviser's normal business hours. Upon the reasonable request
of the Trust, copies of any such books and records shall be provided promptly by
Sub-Adviser to the Trust, its officers, or such other persons as are authorized
in writing by the Trust to obtain its books and records.

-2-
<PAGE>

(f) Sub-Adviser shall provide the Funds' custodian and fund accountant on
each business day with such information relating to all transactions concerning
the Funds' assets as the custodian and fund accountant may reasonably require.

(g) Sub-Adviser may from time to time employ or associate with such
persons as Sub-Adviser believes to be particularly fitted to assist in the
execution of Sub-Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by Sub-Adviser. No obligation may be incurred on
the Trust's behalf in any such respect.

(h) Sub-Adviser shall authorize and permit any of its trustees, officers
and employees who may be elected as trustees or officers of the Trust to serve
in the capacities in which they are elected.

SECTION 3. EXPENSES

Subject to any expense reimbursement arrangements between Westwood or
others and the Trust, the Trust shall be responsible and shall assume the
obligation for payment of all of the Trust's expenses. Sub-Adviser shall pay
for maintaining its staff and personnel necessary to perform its obligations
under this Agreement and shall, at its own expense, maintain the office space,
facilities, equipment and personnel that are reasonably necessary to carry out
its obligations hereunder.

SECTION 4. STANDARD OF CARE

Sub-Adviser shall use its best judgment and efforts in rendering the
services described in this Agreement. Sub-Adviser shall not be liable to the
Trust or Westwood for any action or inaction of the Sub-Advisor in the absence
of bad faith, willful misconduct or gross negligence or based upon information,
instructions or requests with respect to a Fund made to the Sub-Advisor by a
duly authorized officer of the Trust or Westwood. Sub-Adviser shall not be
responsible or liable for any failure or delay in performance of its obligations
under this Agreement caused by circumstances beyond its reasonable control.

SECTION 5. COMPENSATION

In consideration of the foregoing, Westwood shall pay Sub-Adviser, with
respect to the Fund, a fee at an annual rate as listed in Schedule A to this
Agreement. These fees shall be accrued daily and payable monthly in arrears on
the ______ day of each calendar month for services performed hereunder during
the prior calendar month.

SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION

(a) With respect to the Fund, this Agreement shall become effective upon
the date first written above; provided that it shall not take effect until
approved by (i) a majority of the Trust's Trustees, including a majority of the
Trustees who are not interested persons of the Trust, and (ii) to the extent
required under section 15(a) of the Act, a majority of the outstanding voting
securities of each Fund to which this Agreement pertains, voting separately by
class.

(b) This Agreement shall remain in effect for a period of twenty four
months from the date of its effectiveness and shall continue in effect for
successive twelve-month periods (computed from each anniversary date of
approval) or for such shorter period as may be specified by the Board in giving
its approval as provided below; provided that such continuance is specifically
approved at least annually (i) by the Board or by the vote of a majority of the
outstanding voting securities of the Fund, and, in either case, (ii) by a
majority of the Trust's Trustees who are not parties to this Agreement or
interested persons of any such party (other than as Trustees of the Trust);
provided further, however, that if this Agreement or the continuation of this
Agreement is not approved, Sub-Adviser may continue to render the services
described herein in the manner and to the extent permitted by the Act and the
rules and regulations thereunder. The annual approvals provided for herein
shall be effective to continue this Agreement from year to year (or such shorter
period referred to above) if given within a period

-3-
<PAGE>

beginning not more than sixty (60) days prior to such anniversary,
notwithstanding the fact that more than three hundred sixty-five (365) days may
have elapsed since the date on which such approval was last given.

(c) This Agreement may be terminated at any time, without the payment of
any penalty, (i) by Westwood, upon approval of the Board, by the Board, or by a
vote of a majority of the outstanding voting securities of the Fund on 30 days'
written notice to Sub-Adviser or (ii) by Sub-Adviser on 90 days' written notice
to the Trust, with copies to each of the Trust's Trustees at their respective
addresses set forth in the Trust's Registration Statement or at such other
address as such persons may specify to Sub-Adviser and to legal counsel to the
Trust. This agreement shall terminate automatically and immediately upon
assignment.

SECTION 7. ACTIVITIES OF THE ADVISER

Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict Sub-Adviser's right, or the
right of any of Sub-Adviser's officers, directors or employees who may also be a
Trustee, officer or employee of the Trust, or persons otherwise affiliated with
the Trust to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.

SECTION 8. NOTICES

Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given, if to Westwood, at:

Westwood Ventures, Ltd.
450 Seventh Avenue, Suite 3304
New York, New York 10123
Attention: _______________

and if to Sub-Adviser, at:

Forum Advisors, Inc.
Two Portland Square
Portland, Maine 04101
Attention: _______________

SECTION 9. MISCELLANEOUS

(a) No provisions of this Agreement with respect to the Fund may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the Act, by a
vote of a majority of the outstanding voting securities of the Fund.

(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.

(d) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.

-4-
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.

WESTWOOD VENTURES, LTD.

________________________
[name]
[title]

FORUM ADVISORS, INC.

________________________
[name]
[title]

-5-
<PAGE>

WESTWOOD VENTURES, LTD.
SUB-ADVISORY AGREEMENT

SCHEDULE A

Fee as a % of
the Annual Average Daily
Fund of the Trust Net Assets of the Fund ("ADNA")
- - ----------------- -------------------------------
[Name of Fund] [x.xx%]

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FORUM DAILY ASSETS TREASURY FUND DATED SEPTEMBER 30, 1995 AND IS
QUALIFIED IT ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> DAILY ASSETS FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 38,005,333
<INVESTMENTS-AT-VALUE> 38,005,333
<RECEIVABLES> 185,677
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38,191,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 190,425
<TOTAL-LIABILITIES> 190,425
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37,980,607
<SHARES-COMMON-STOCK> 37,980,607
<SHARES-COMMON-PRIOR> 36,308,407
<ACCUMULATED-NII-CURRENT> 520
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 19,458
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 38,000,585
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,049,617
<OTHER-INCOME> 0
<EXPENSES-NET> 91,913
<NET-INVESTMENT-INCOME> 957,704
<REALIZED-GAINS-CURRENT> 4
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 957,708
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 958,178
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,165,888
<NUMBER-OF-SHARES-REDEEMED> 32,526,457
<SHARES-REINVESTED> 32,769
<NET-CHANGE-IN-ASSETS> 1,671,730
<ACCUMULATED-NII-PRIOR> 1,320,747
<ACCUMULATED-GAINS-PRIOR> 21,288
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36,664
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 185,635
<AVERAGE-NET-ASSETS> 36,664,110
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .5
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FORUM INVESTORS BOND FUND DATED SEPTEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT
</LEGEND>
<SERIES>
<NUMBER> 030
<NAME> INVESTORS BOND FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-30-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 27,007,596
<INVESTMENTS-AT-VALUE> 26,954,453
<RECEIVABLES> 387,709
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,342,162
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 187,297
<TOTAL-LIABILITIES> 187,297
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,189,314
<SHARES-COMMON-STOCK> 2,680,506
<SHARES-COMMON-PRIOR> 2,589,291
<ACCUMULATED-NII-CURRENT> 7,262
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,432
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (53,143)
<NET-ASSETS> 27,154,865
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,080,831
<OTHER-INCOME> 0
<EXPENSES-NET> 99,356
<NET-INVESTMENT-INCOME> 981,475
<REALIZED-GAINS-CURRENT> 6,320
<APPREC-INCREASE-CURRENT> 332,698
<NET-CHANGE-FROM-OPS> 1,320,493
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 981,989
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,237,546
<NUMBER-OF-SHARES-REDEEMED> 1,479,278
<SHARES-REINVESTED> 167,709
<NET-CHANGE-IN-ASSETS> 1,264,481
<ACCUMULATED-NII-PRIOR> 2,050,655
<ACCUMULATED-GAINS-PRIOR> 45,903
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 52,846
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 170,077
<AVERAGE-NET-ASSETS> 26,423,137
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .38
<PER-SHARE-GAIN-APPREC> .13
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.38)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.13
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FORUM MAINE MUNICIPAL BOND FUND DATED SEPTEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 080
<NAME> MAINE BOND FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 23,477,162
<INVESTMENTS-AT-VALUE> 24,037,322
<RECEIVABLES> 1,904,242
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,941,564
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 160,537
<TOTAL-LIABILITIES> 160,537
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,303,864
<SHARES-COMMON-STOCK> 2,399,654
<SHARES-COMMON-PRIOR> 2,437,758
<ACCUMULATED-NII-CURRENT> 421
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (83,418)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 560,160
<NET-ASSETS> 25,781,027
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 694,837
<OTHER-INCOME> 0
<EXPENSES-NET> 77,167
<NET-INVESTMENT-INCOME> 617,670
<REALIZED-GAINS-CURRENT> 56,177
<APPREC-INCREASE-CURRENT> 614,027
<NET-CHANGE-FROM-OPS> 1,287,874
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 617,948
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,396,877
<NUMBER-OF-SHARES-REDEEMED> 2,154,529
<SHARES-REINVESTED> 344,109
<NET-CHANGE-IN-ASSETS> 256,383
<ACCUMULATED-NII-PRIOR> 1,334,004
<ACCUMULATED-GAINS-PRIOR> (139,597)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 51,870
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 179,543
<AVERAGE-NET-ASSETS> 25,934,989
<PER-SHARE-NAV-BEGIN> 10.47
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> .27
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.25)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.74
<EXPENSE-RATIO> .59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FORUM NEW HAMPSHIRE BOND FUND DATED SEPTEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCED TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> NEW HAMPSHIRE BOND FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 5,383,400
<INVESTMENTS-AT-VALUE> 5,470,308
<RECEIVABLES> 394,837
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,865,145
<PAYABLE-FOR-SECURITIES> 97,153
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,603
<TOTAL-LIABILITIES> 122,756
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,690,348
<SHARES-COMMON-STOCK> 554,400
<SHARES-COMMON-PRIOR> 523,132
<ACCUMULATED-NII-CURRENT> 94
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (34,961)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 86,908
<NET-ASSETS> 5,742,389
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 146,959
<OTHER-INCOME> 0
<EXPENSES-NET> 16,390
<NET-INVESTMENT-INCOME> 130,569
<REALIZED-GAINS-CURRENT> 22,962
<APPREC-INCREASE-CURRENT> 124,305
<NET-CHANGE-FROM-OPS> 277,836
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 130,620
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 479,810
<NUMBER-OF-SHARES-REDEEMED> 244,316
<SHARES-REINVESTED> 83,903
<NET-CHANGE-IN-ASSETS> 466,613
<ACCUMULATED-NII-PRIOR> 220,607
<ACCUMULATED-GAINS-PRIOR> (58,412)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,015
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 62220
<AVERAGE-NET-ASSETS> 5,507,266
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> .24
<PER-SHARE-GAIN-APPREC> .28
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.36
<EXPENSE-RATIO> .59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PAYSON BALANCED FUND DATED SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 070
<NAME> PAYSON BALANCED FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 14,264,282
<INVESTMENTS-AT-VALUE> 15,970,402
<RECEIVABLES> 503,487
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,473,889
<PAYABLE-FOR-SECURITIES> 396,024
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 158,870
<TOTAL-LIABILITIES> 158,870
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,873,479
<SHARES-COMMON-STOCK> 1,215,297
<SHARES-COMMON-PRIOR> 1,165,748
<ACCUMULATED-NII-CURRENT> 7,115
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 332,281
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,706,120
<NET-ASSETS> 15,918,995
<DIVIDEND-INCOME> 136,696
<INTEREST-INCOME> 210,919
<OTHER-INCOME> 0
<EXPENSES-NET> 86,288
<NET-INVESTMENT-INCOME> 261,327
<REALIZED-GAINS-CURRENT> 162,928
<APPREC-INCREASE-CURRENT> 1,272,727
<NET-CHANGE-FROM-OPS> 1,696,982
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 264,693
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,206,875
<NUMBER-OF-SHARES-REDEEMED> 742,660
<SHARES-REINVESTED> 150,450
<NET-CHANGE-IN-ASSETS> 2,046,954
<ACCUMULATED-NII-PRIOR> 489,040
<ACCUMULATED-GAINS-PRIOR> 169,116
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 44,913
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 119,910
<AVERAGE-NET-ASSETS> 14,970,997
<PER-SHARE-NAV-BEGIN> 11.90
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> 1.20
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.22)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.10
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PAYSON VALUE FUND DATED SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 010
<NAME> PAYSON VALUE FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 7,527,350
<INVESTMENTS-AT-VALUE> 9,108,975
<RECEIVABLES> 22,419
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,131,394
<PAYABLE-FOR-SECURITIES> 345,400
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44,895
<TOTAL-LIABILITIES> 390,295
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,097,236
<SHARES-COMMON-STOCK> 615,318
<SHARES-COMMON-PRIOR> 626,325
<ACCUMULATED-NII-CURRENT> 3,245
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 58,993
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,581,625
<NET-ASSETS> 8,741,099
<DIVIDEND-INCOME> 103,970
<INTEREST-INCOME> 19,724
<OTHER-INCOME> 0
<EXPENSES-NET> 59,404
<NET-INVESTMENT-INCOME> 64,290
<REALIZED-GAINS-CURRENT> 111,856
<APPREC-INCREASE-CURRENT> 800,954
<NET-CHANGE-FROM-OPS> 977,100
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 66,669
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 571,611
<NUMBER-OF-SHARES-REDEEMED> 737,918
<SHARES-REINVESTED> 37,321
<NET-CHANGE-IN-ASSETS> 781,445
<ACCUMULATED-NII-PRIOR> 102,117
<ACCUMULATED-GAINS-PRIOR> 96,089
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,706
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 85,095
<AVERAGE-NET-ASSETS> 8,176,515
<PER-SHARE-NAV-BEGIN> 12.71
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> 1.50
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.11)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.21
<EXPENSE-RATIO> 1.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FORUM TAXSAVER BOND FUND DATED SEPTEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 050
<NAME> TAXSAVER BOND FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 16,630,828
<INVESTMENTS-AT-VALUE> 17,278,079
<RECEIVABLES> 348,594
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,626,673
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 89,885
<TOTAL-LIABILITIES> 89,885
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16,927,435
<SHARES-COMMON-STOCK> 1,660,025
<SHARES-COMMON-PRIOR> 1,541,284
<ACCUMULATED-NII-CURRENT> 285
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (38,183)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 647,251
<NET-ASSETS> 17,536,788
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 507,915
<OTHER-INCOME> 0
<EXPENSES-NET> 50,912
<NET-INVESTMENT-INCOME> 457,003
<REALIZED-GAINS-CURRENT> 48,112
<APPREC-INCREASE-CURRENT> 227,151
<NET-CHANGE-FROM-OPS> 732,266
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 457,245
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,723,538
<NUMBER-OF-SHARES-REDEEMED> 553,187
<SHARES-REINVESTED> 73,516
<NET-CHANGE-IN-ASSETS> 1,518,888
<ACCUMULATED-NII-PRIOR> 916,723
<ACCUMULATED-GAINS-PRIOR> (78,499)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 33,851
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 118,641
<AVERAGE-NET-ASSETS> 16,925,268
<PER-SHARE-NAV-BEGIN> 10.39
<PER-SHARE-NII> .28
<PER-SHARE-GAIN-APPREC> .17
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.28)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.56
<EXPENSE-RATIO> .6
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that James C. Cheng constitutes and
appoints John Y. Keffer, David I. Goldstein, Anthony C. J. Nuland, and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N-1A and any
or all amendments thereto of Forum Funds, and to file the same with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

/s/ James C. Cheng
-------------------------
James C. Cheng

Dated: December 18, 1995

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that Costas Azariadis constitutes and
appoints John Y. Keffer, David I. Goldstein, Anthony C. J. Nuland, and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N-1A and any
or all amendments thereto of Forum Funds, and to file the same with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

/s/ Costas Azariadis
-----------------------------------
Costas Azariadis

Dated: December 18, 1995

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that J. Michael Parish constitutes and
appoints John Y. Keffer, David I. Goldstein, Anthony C. J. Nuland, and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N-1A and any
or all amendments thereto of Forum Fund, and to file the same with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

/s/ J. Michael Parish
-----------------------------------
J. Michael Parish

Dated: December 18, 1995