FORUM FUNDS INC, 485BPOS, 1997-12-01

FORUM FUNDS INC
485BPOS, 1997-12-01

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As filed with the Securities and Exchange Commission on December 1, 1997
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. 54

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 56
----------------------------

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

Max Berueffy, 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)
__X__ on December 1, 1997 pursuant to Rule 485, paragraph (b)
_____ 60 days after filing pursuant to Rule 485, paragraph (a)(i)
_____ 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 its most recent fiscal year ended March 31, 1997, on May
29, 1997.

<PAGE>

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

PART A
(Prospectus offering Shares Investors Growth Fund)
<TABLE>
<S> <C> <C>
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

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

</TABLE>

<PAGE>

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

PART A
(All other Prospectuses)

Not Applicable in this Filing

<PAGE>

CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(A))
PART B
(SAI offering Shares of Investors Growth Fund)
<TABLE>
<S> <C> <C>
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: Not Applicable

</TABLE>

<PAGE>

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

PART B
(All other SAIs)

Not Applicable in this Filing

<PAGE>

FORUM FUNDS
INVESTORS GROWTH FUND

PROSPECTUS
DECEMBER 1, 1997
- --------------------------------------------------------------------------------
ACCOUNT INFORMATION AND
SHAREHOLDER SERVICING:

Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
(207) 879-0001
(800) 94FORUM
- --------------------------------------------------------------------------------

This Prospectus offers shares of INVESTORS GROWTH FUND (the "Fund"), a
separately-managed, diversified portfolio of Forum Funds (the "Trust"), a
registered open-end management investment company. The Fund seeks to provide
long-term capital appreciation by investing primarily in a portfolio of common
stock of companies domiciled in the United States.

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 amount invested).

This prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. The Trust has filed with the
Securities and Exchange Commission ("SEC") a Statement of Additional Information
dated December 1, 1997, as may be amended from time to time (the "SAI"), which
contains more detailed information about the Trust and the Fund and is available
together with other related materials for reference on the SEC's Internet Web
Site (http://www.sec.gov). The SAI, which is incorporated into this Prospectus
by reference, also is available without charge by writing or calling the Fund's
transfer agent at the address and telephone numbers printed above.

<TABLE>

TABLE OF CONTENTS
<S> <C> <C> <C> <C>
PAGE PAGE
1. PROSPECTUS SUMMARY 2 5. PURCHASES AND REDEMPTIONS OF SHARES 9
2. INVESTMENT OBJECTIVE AND POLICIES 3 6. DIVIDENDS AND TAX MATTERS 15
3. ADDITIONAL INVESTMENT POLICIES 4 7. OTHER INFORMATION 16
4. MANAGEMENT 6
</TABLE>

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 FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE SYSTEM, OR ANY 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 FUND

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of Investors Growth Fund is long-term capital
appreciation. The Fund intends to pursue its objective by investing primarily in
the common stock of domestic companies that, in the view of the Fund's
investment adviser, possess above average growth potential or attractive
valuations when the valuations have not yet been fully reflected in the market
price of the companies' shares.

FUND MANAGEMENT

Forum Advisors, Inc. (the "Adviser") serves as the investment adviser to
the Fund. The Adviser is located at Two Portland Square, Portland, Maine 04101.
See "Management - Adviser " The administrator of the Fund is Forum
Administrative Services, LLC ("FAS") and the distributor of its shares is Forum
Financial Services, Inc. ("FFSI"), Forum Financial Corp. (the "Transfer Agent"
or "FFC"), Two Portland Square, Portland, Maine 04101, serves as the Fund's
transfer agent, dividend disbursing agent and shareholder servicing agent. See
"Management."

PURCHASES AND REDEMPTIONS

Shares of the Fund are offered at their net asset value next-determined
plus any applicable sales charge. Shares may be purchased or redeemed by mail,
by bank-wire and through an investor's broker-dealer or other financial
institution. The minimum initial investment is $5,000 ($2,000 for an Individual
Retirement Account), and the minimum subsequent investment is $500. Shareholders
may redeem shares without charge. See "Purchases and Redemption of Shares."

EXCHANGE PROGRAM

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

DIVIDENDS AND DISTRIBUTIONS

The Fund distributes its net investment income and net realized
long-term capital gain, if any, at least annually. All distributions are
reinvested automatically in additional shares of the Fund at net asset value
unless the shareholder has notified the Fund in his or her Account Application
or otherwise in writing of the shareholder's election to receive dividends or
distributions in cash. See "Dividends and Taxes."

CERTAIN INVESTMENT CONSIDERATIONS AND RISK FACTORS

There can be no assurance that the Fund will achieve its investment
objective and the Fund's net asset value and total return will fluctuate based
upon changes in the value of the securities in which the Fund invests. Investing
in the Fund is subject to the risks of investing in the stock market including
the risk that the value of the stocks in which the Fund invests might decrease.
Investors in the Fund should be willing to accept the risks of the stock market
and should not consider the Fund a complete investment program. See "Investment
Objective and Policies" and "Additional Investment Policies."

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<PAGE>

EXPENSES OF INVESTING IN THE FUND

The purpose of the following table is to assist investors in understanding
the expenses that an investor in Shares of the Fund will bear.

SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(as a percentage of public offering price)(1)...... 4.0%
Exchange Fee....................................... None
ANNUAL FUND OPERATING EXPENSES(2)
(as a percentage of average net assets)
Management Fees.................................... 0.65%
12b-1 Fees......................................... None
Other Expenses (after expense reimbursements)...... 0.45%
Total Fund Operating Expenses...................... 1.10%

(1) Certain shareholders may be eligible for reduced sales charges. See
"Purchases and Redemptions of Shares - Reduced Sales Charges".

(2) The Annual Fund Operating Expenses are based on estimated expenses and
assets during the Fund's initial period of operations ending March 31, 1998.
Management Fees are the investment advisory fees of the Fund. The Adviser has
voluntarily agreed to assume certain expenses of the Fund through at least March
31, 1998 in order to limit Total Fund Operating Expenses to 1.10% of the Fund's
average daily net assets. Without these fee waivers and expense reimbursements,
it is estimated that Other Expenses and Total Operating Expenses, respectively,
for the Fund would be: 0.95% and 1.60%. For a further description of the various
expenses incurred in the operation of the Fund, see "Management."

EXAMPLE

Following is a hypothetical example that indicates the dollar amount of
expenses that an investor in the Fund would pay assuming a $1,000 investment in
the Fund, a 5% annual return, the reinvestment of all dividends and other
distributions and redemption at the end of each time period and payment of the
maximum initial sales charge:

1 YEAR 3 YEARS
------ -------
Investors Growth Fund $51 $74

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
OR RETURNS, AND ACTUAL EXPENSES OR RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
The example is based on the expenses listed in the table. The 5% annual return
is not a prediction of the Fund's return; rather it is required by government
regulation.

3
<PAGE>

2. INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE AND STRATEGY

The investment objective of the Investors Growth Fund is long-term
capital appreciation.

The Fund intends to pursue its objective by investing primarily in
common stock of domestic companies that, in the view of the Adviser, possess
above average growth potential or attractive valuations when the valuations have
not yet been fully reflected in the market price of the companies' shares. Among
the relevant factors considered by the Adviser are the quality of a company's
management, position in the markets in which the company operates, the company's
financial position, and the company's historical and expected return on capital
and rate of earnings growth. In the context of these characteristics the Adviser
may invest in companies that may not have performed well in the recent past, but
have the potential for doing so in the future. Once companies are identified as
possible investments the Adviser utilizes various valuation measures and
technical analysis to determine those companies whose shares are attractively
priced for purchase. Under normal circumstances, the Fund will invest at least
65% of its assets in the common stock of domestic companies, without
concentration in any one industry.

INVESTMENT POLICIES

The Fund may invest in common and preferred stock. 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 general, 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, but
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 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. The
Fund may also 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.

In addition to common and preferred stock, the Fund may invest in
investment-grade convertible debt securities. The Fund also may invest in
American Depository Receipts ("ADRs"), European Depository Receipts ("EDRs") and
other similar securities of foreign issuers. The Fund expects foreign
investments to remain below 15% of the Fund's assets.

CERTAIN RISK CONSIDERATIONS

COMMON STOCK, PREFERRED STOCK AND WARRANTS. The fundamental risk of
investing in common stock is the risk that the value of the stock might
decrease. Stock values fluctuate in response to the activities of an individual
company or in response to general market and/or economic conditions.
Historically, common stocks have provided greater long-term returns and have
entailed greater short-term risks than preferred stocks, fixed-income and money
market investments. 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.
Unlike preferred stocks and convertible securities, warrants do not pay a fixed
dividend. Investments in warrants involve certain risks, including the possible

4
<PAGE>

lack of a liquid market for the resale of the warrants, potential price
fluctuations as a result of speculation or other factors and failure of the
price of the underlying security to reach a level at which the warrant can be
prudently exercised (in which case the warrant may expire without being
exercised, resulting in the loss of the Fund's entire investment therein).
Investors in the Fund should be willing to accept the risks of the stock market
and should consider an investment in the Fund only as a part of their overall
investment portfolio.

INVESTMENT IN FOREIGN SECURITIES. The Fund may invest in ADRs, EDRs and
other similar investments of foreign issuers. See "Additional Investment
Policies" below. Investments in foreign companies involve certain risks, such as
exchange rate fluctuations, political or economic instability of the issuer or
the country of issue and the possible imposition of exchange controls,
withholding taxes on dividends or interest payments, confiscatory taxes or
expropriation. Foreign securities may also be subject to greater fluctuations in
price than securities of domestic corporations denominated in U.S. dollars.
Foreign securities and their markets may not be as liquid as domestic securities
and their markets, and foreign brokerage commissions and custody fees are
generally higher than those in the United States. In addition, less information
may be publicly available about a foreign company than about a domestic company,
and foreign companies may not be subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to domestic
companies.

3. ADDITIONAL INVESTMENT POLICIES

The investment objective and all investment policies of the Fund that
are designated as fundamental may be changed only with the approval of the
holders of a majority of the outstanding voting securities of the Fund. A
majority of outstanding voting securities means the lesser of (i) 67% of the
shares present or represented at a shareholder meeting at which the holders of
more than 50% of the outstanding shares are present or represented, or (ii) more
than 50% of outstanding shares. Unless otherwise indicated, all investment
policies are not fundamental and may be changed by the Trust's Board of Trustees
("Board") without approval by shareholders of the Fund. For more information
concerning shareholder voting, see "Other Information --"The Trust and Its
Shares"

DIVERSIFICATION AND CONCENTRATION. The Fund is diversified as that term
is defined in the Investment Company Act of 1940 (the "1940 Act"). As a
fundamental policy, with respect to 75% of its assets, a diversified fund may
not purchase a security (other than a U.S. Government Security or shares of
investment companies) if, as a result: (i) more than 5% of the Fund's total
assets would be invested in the securities of a single issuer; or (ii) the Fund
would own more than 10% of the outstanding voting securities of any single
issuer. The Fund is prohibited from concentrating its assets in the securities
of issuers in any industry. As a fundamental policy, the Fund may 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 conducting
their principal business activities in the same industry. This limit does not
apply to investments in U.S. Government Securities, foreign government
securities or repurchase agreements covering U.S. Government Securities. The
Fund reserves the right to invest up to 100% of its investable assets in one or
more investment companies.

ILLIQUID SECURITIES. The Fund limits its purchase of illiquid
securities. The Fund may not knowingly acquire securities or invest in
repurchase agreements with respect to any securities if, as a result, more than
15 percent of the Fund's net assets taken at current value would be invested in
securities which are not readily marketable. 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). Under the
supervision of the Board, the Adviser determines and monitors the liquidity of
the portfolio securities.

REPURCHASE AGREEMENTS AND LENDING OF PORTFOLIO SECURITIES. The Fund may
enter into repurchase agreements and may lend securities from its portfolio to
brokers, dealers and other financial institutions. These investments may entail
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, the Fund may have difficulties in exercising its rights to the
underlying securities, may incur costs and experience time delays in disposing
of them and may suffer a loss.

5
<PAGE>

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. When the Fund lends a
security it receives interest from the borrower or from investing cash
collateral. The Trust maintains possession of the purchased securities and any
underlying collateral in these transactions, the total market value of which on
a continuous basis is at least equal to the repurchase price or value of
securities loaned, plus accrued interest. The Fund may pay fees to arrange
securities loans and the Fund will limit securities lending to not more than 33
1/3% of the value of its total assets.

CONVERTIBLE SECURITIES. Convertible securities, which include
convertible debt, convertible preferred stock and other securities exchangeable
under certain circumstances for shares of common stock, are fixed income
securities or preferred stock which generally 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. These
securities are usually senior to common stock in a company's capital structure,
but usually are subordinated to non-convertible debt 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). As a fixed
income security, the value of a convertible security generally increases when
interest rates decline and generally decreases when interest rates rise. The
value of a convertible security is, however, also influenced by the value of the
underlying common stock. The Fund may only invest in convertible securities that
are investment grade. See Appendix A - "Description of Securities Ratings" to
the SAI.

FOREIGN INVESTMENTS. The Fund may invest in sponsored and unsponsored
ADRs, EDRs and other similar investments of foreign issuers. ADRs are receipts
issued by an American bank or trust company evidencing ownership of underlying
securities issued by a foreign issuer. Unsponsored ADRs may be created without
the participation of the foreign issuer. Holders of these ADRs generally bear
all the costs of the ADR facility, whereas foreign issuers typically bear
certain costs in a sponsored ADR. The bank or trust company depository of an
unsponsored ADR may be under no obligation to distribute shareholder
communications received from the foreign issuer or to pass through voting
rights. The Fund also may invest in EDRs, which are receipts issued by a
European financial institution evidencing an arrangement similar to that of
ADRs, and in other similar instruments representing securities of foreign
companies. EDRs, in bearer form, are designed for use in European securities
markets.

CORE AND GATEWAY(R). Shareholders of the Fund have approved an
investment policy that permits the Fund to seek to achieve its investment
objective by converting to a Core and Gateway structure. The Fund, upon future
action by the Board and notice to shareholders, may convert to this structure,
in which the Fund would hold as its only investment security an interest in
another investment company having substantially the same investment objective
and policies as the Fund. The Board will not authorize conversion to a Core and
Gateway structure if it would materially increase costs to a Fund's
shareholders.

TEMPORARY DEFENSIVE POSITION. When business or financial conditions
warrant, the Fund may assume a temporary defensive position and invest without
limit in cash or prime quality cash equivalents, including: (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; (iii) commercial paper; (iv) repurchase agreements; and (v)
shares of money market funds registered under the 1940 Act within the limits
specified therein. During periods when and to the extent that the Fund has
assumed a temporary defensive position, it may not be pursuing its investment
objective. Prime quality instruments are those that are rated in one of the two
highest short-term rating categories by a nationally recognized statistical
rating organization or, if not rated, determined by the investment adviser to be
of comparable quality. Apart from temporary defensive purposes, the Fund may at
any time invest a portion of its assets in cash and cash equivalents as

6
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described above. Except during periods when the Fund assumes a temporary
defensive position, the Fund will have at least 65% of its total assets invested
in common stock.

PORTFOLIO TURNOVER. The frequency of portfolio transactions of the Fund
(the portfolio turnover rate) will vary from year to year depending on market
conditions. The Fund may engage in short-term trading, but its portfolio
turnover rate is not expected to exceed 100%. An annual portfolio turnover rate
of 100% would occur if all the securities in the Fund were replaced in a one
year period. Higher portfolio turnover and short-term trading involve
correspondingly greater commission expenses and transaction costs. The Adviser
weighs the anticipated benefits of short-term investments against these
consequences. Higher portfolio turnover rates may cause shareholders of the Fund
to recognize gains for federal income tax purposes. See "Taxation" in the SAI.

4. MANAGEMENT

The business and affairs of the Fund are managed under the direction of
the Board. 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.
Information regarding the Trustees and the executive officers of the Trust may
be found in the SAI under the heading "Management --Trustees and Officers."

INVESTMENT ADVISER

Forum Advisors, Inc. serves as investment adviser to the Fund pursuant
to an investment advisory agreement with the Trust. Subject to the general
control of the Board, the Adviser is responsible for among other things,
developing a continuing investment program for the Fund in accordance with its
investment objective and reviewing the investment strategies and policies of the
Fund. The Adviser was incorporated under the laws of Delaware in 1987 and is
registered under the Investment Advisers Act of 1940. Effective on or about
January 2, 1998, the Adviser will reorganize into a new company named Forum
Investment Advisors, LLC. The reorganization will not result in any changes in
advisory staff, portfolio managers, advisory fees, or any other material change.
For its services, the Adviser receives an advisory fee at an annual rate of
0.65% of the Fund's average daily net assets.

Mark Kaplan, CFA, serves as the portfolio manager of the Fund. Mr. Kaplan
has over thirteen years of experience in the investment industry and has been a
Managing Director at FFSI since September 1995 where he is a senior portfolio
manager. Before that Mr. Kaplan was Managing Director and Director of Research
at H.M. Payson & Co., an investment advisory and trust services company. Prior
thereto, Mr. Kaplan was a securities analyst in the investment division of UNUM
Life Insurance Company. Mr. Kaplan has a Masters in Business Administration from
Boston University.

ADMINISTRATIVE AND DISTRIBUTION SERVICES

On behalf of the Fund, the Trust has entered into an administrative
services contract with Forum Administrative Services, LLC. As provided in this
agreement, FAS is responsible for the supervision of the overall management of
the Trust (including the Trust's receipt of services for which it must pay),
providing the Trust with general office facilities and providing persons
satisfactory to the Board of Trustees to serve as officers of the Trust. For
these services, FAS receives from the Fund a fee computed and paid monthly at an
annual rate of 0.20% of the Fund's average daily net assets.

Pursuant to a Distribution Agreement with the Trust, Forum Financial
Services, Inc. acts as distributor of the Fund's shares. FFSI acts as the agent
of the Trust in connection with the offering of shares of the Fund. FFSI
receives no compensation for its services under the Distribution Agreement. FFSI
may enter into arrangements with banks, broker-dealers or other financial

7
<PAGE>

institutions ("Selected Dealers") through which investors may purchase or redeem
shares. FFSI may, at its own expense and from its own resources, compensate
certain persons who provide services in connection with the sale or expected
sale of shares of the Fund. Investors purchasing shares of the Fund through
another financial institution should read any materials and information provided
by the financial institution to acquaint themselves with its procedures and any
fees that it may charge.

FFSI and FAS are located at Two Portland Square, Portland, Maine 04101.
FFSI is a registered broker-dealer and is a member of the National Association
of Securities Dealers, Inc. As of the date of this Prospectus, FAS and FFSI
provide management, administration and distribution services to registered
investment companies and collective investment funds with assets of
approximately $30 billion, and FAS, FFSI, the Adviser, the Transfer Agent, and
Forum Accounting Services, LLC, the Trust's fund accountant, were controlled by
John Y. Keffer, president and Chairman of the Trust.

Forum Accounting Services, LLC ("Forum Accounting") performs portfolio
accounting services for the Fund, including determination of the Fund's net
asset value, pursuant to an agreement with the Trust. For its services, Forum
Accounting receives a fee at an annual rate of $36,000 subject to adjustments
for the number and type of portfolio transactions.

SHAREHOLDER SERVICING

Shareholder inquiries and communications concerning the Fund may be
directed to Forum Financial Corp. FFC acts as the Fund's transfer agent and
dividend disbursing agent. FFC maintains for each shareholder of record, an
account (unless such accounts are maintained by sub-transfer agents) to which
all shares purchased are credited, together with any distributions that are
reinvested in additional shares. FFC also performs other transfer agency
functions and acts as dividend disbursing agent for the Trust. For its services,
FFC receives a fee at an annual rate of 0.25% of the Fund's average daily net
assets plus $12,000.

FFC 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"), FAS or affiliates of
FAS, who agree to comply with the terms of the Transfer Agency Agreement. FFC
may pay those agents for their services, but no such payment will increase the
Transfer Agent's compensation from the Trust.

EXPENSES OF THE TRUST

The Trust is obligated to pay for all of its expenses, subject to FAS's
obligation to reimburse the Trust for excess expenses of the Fund. The Fund's
expenses comprise Trust expenses attributable to the Fund and expenses not
attributable to any particular portfolio of the Trust, which are allocated among
the Fund and the portfolios in proportion to their average net assets. The
Fund's expenses include: interest charges; taxes; brokerage fees and
commissions; certain insurance premiums; applicable fees and expenses under the
Trust's contracts with the Adviser, FAS, the Transfer Agent and any
subcustodian; 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 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.

8
<PAGE>

The Adviser, FAS and the Transfer Agent, in their sole discretion, may
waive all or any portion of their respective fees, which are accrued daily and
paid monthly. Any such waiver, which could be discontinued at any time, would
have the effect of increasing the Fund's performance for the period during which
the waiver was in effect and would not be recouped at a later date.

PORTFOLIO TRANSACTIONS

The Adviser monitors the creditworthiness of counterparties to the
Fund's transactions and intends to enter into a transaction only when it
believes that the counterparty presents minimal credit risks and the benefits
from the transaction justify the attendant risks.

The Adviser places orders for the purchase and sale of assets they
manage with brokers and dealers selected by and in the discretion of the
Adviser. The Adviser seeks "best execution" for all portfolio transactions, but
the Fund may pay higher than the lowest available commission rates when the
Adviser believes it is reasonable to do so in light of the value of the
brokerage and research services provided by the broker effecting the
transaction.

The Adviser may effect transactions for the Fund through brokers who
sell Fund shares. The Fund has no obligation to deal with any specific broker or
dealer in the execution of portfolio transactions.

Although the Fund does not currently engage in directed brokerage
arrangements to pay expenses, it may do so in the future. These arrangements,
whereby brokers executing the Fund's portfolio transactions would agree to pay
designated expenses of the Fund if brokerage commissions generated by the Fund
reached certain levels, might reduce the Fund's expenses). As anticipated, these
arrangements would not materially increase the brokerage commissions paid by the
Fund.

5. 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 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 next-determined after receipt in proper form of an order plus any
applicable sales charge on all weekdays except days when the New York Stock
Exchange is closed, normally, New Year's Day, Martin Luther King Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas ("Fund Business Day") (see "Sales Charges"
below). Fund shares are issued immediately 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
order is accepted.

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.

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 receipt 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.

9
<PAGE>

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 Securities and Exchange
Commission.

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 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). If the Trust did not employ such procedures it
could 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, the 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
open an account by completing the application at the back of this Prospectus or
by contacting the Transfer Agent at the address on the first page of this
prospectus. For those shareholder services not referenced on the account
application and to change information regarding a shareholder's account (such as
addresses), investors should request an Optional Services Form from the Transfer
Agent.

INITIAL PURCHASE OF SHARES

There is a $5,000 minimum for initial investments in the Fund ($2,000 for
individual retirement accounts).

BY MAIL. Investors may send a check made payable to the Trust along
with a completed account application to the Fund at the address listed above.
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 FFSI.

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 or 800-94FORUM (800-943-6786) to obtain an account
number. The investor should then instruct a bank to wire the investor's money
immediately to:

BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Financial Corp.
Account #: 541-54171
Re: Investors Growth Fund
Account #:______________
Account Name:______________

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<PAGE>

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. There may be a
charge imposed by the bank for transmitting payment by wire, and there also may
be a charge for the use of Federal funds.

SUBSEQUENT PURCHASES OF SHARES

There is a $500 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 (207) 879-0001 or 800-94FORUM (800-943-6786) to notify it of the wire
transfer. All payments should clearly indicate the shareholder's name and
account number.

AUTOMATIC INVESTMENT. 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 wishing to
participate in this program may obtain the applicable forms from the Transfer
Agent. 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

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.

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 or 800-94FORUM (800-943-6786) 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.

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<PAGE>

OTHER REDEMPTION MATTERS. To protect shareholders and the Fund against
fraud, signatures on certain requests must have a signature guarantee. Requests
must be made in writing and include a signature guarantee for any of the
following transactions: (1) any endorsement on a stock certificate; (2) written
instruction to redeem Shares whose value exceeds $50,000; (3) instructions to
change a shareholder's record name; (4) redemption in an account in which the
account address or account registration has changed within the last 30 days; (5)
the proceeds are not being sent to the address of record, preauthorized bank
account, or preauthorized brokerage firm account; (6) proceeds are to be paid to
someone other than the registered owners or to an account with a different
registration; (7) change of 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. A notarized signature is not sufficient.

The Transfer Agent will deem a shareholder's account "lost" if
correspondence to the shareholder's address of record is returned as
undeliverable, unless the Transfer Agent determines the shareholder's new
address. When an account is deemed lost all distributions on the account will be
reinvested in additional shares of the Fund. In addition, the amount of any
outstanding (unpaid for six months or more) checks for distributions that have
been returned to the Transfer Agent will be reinvested and the checks will be
canceled.

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 for the Fund as follows:

<TABLE>
<S> <C> <C> <C>
AMOUNT OF PURCHASE PUBLIC OFFERING NET ASSET DEALERS'
- ------------------ PRICE VALUE* REALLOWANCE
----- ----- -----------
less than $100,000............................................ 4.00% 4.17% 3.50%
$100,000 but less than $200,000............................... 3.50 3.63 3.10
$200,000 but less than $400,000............................... 3.00 3.09 2.70
$400,000 but less than $600,000............................... 2.50 2.56 2.25
$600,000 but less than $800,000............................... 2.00 2.04 1.75
$800,000 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.
</TABLE>

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

In addition, from time to time and at its own expense, FFSI may provide
compensation, including financial assistance, to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns or other dealer-sponsored special events.
Compensation may include: (i) the provision of travel arrangements and lodging,
(ii) tickets for entertainment events and (iii) merchandise.

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<PAGE>

No sales charge will be assessed on purchases made for investment
purposes by: (a) any bank, trust company, savings association or similar
institution with whom FFSI 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 (including a pension, profit sharing or other
employee benefit trust created pursuant to a qualified retirement plan); (b) any
registered investment adviser with whom FFSI has entered into a share purchase
agreement and which is acting on behalf of its fiduciary customer accounts; (c)
any registered investment adviser which is acting on behalf of its fiduciary
customer accounts and for which it provides additional investment advisory
services; (d) any broker-dealer with whom FFSI has entered into a Selected
Dealer Agreement and a Fee-Based or Wrap Account Agreement and which is acting
on behalf of its fee-based program clients; (e) directors and officers of the
Trust; directors, officers and full-time employees of the Adviser, FFSI, any of
their affiliates or any organization with which FFSI 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 or
individual retirement account or self-employed retirement plan for the benefit
of any such person or relative; or the estate of any such person or relative;
(f) 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; (g) persons who exchange into the Fund from
a mutual fund other than a fund of the Trust that participates in the Trust's
exchange program, See "Purchases and Redemptions of Shares _ Exchange Program;"
and (h) employee benefit plans qualified under Section 401 of the Internal
Revenue Code of 1986. The Trust may require appropriate documentation from an
investor concerning that investor's eligibility to purchase Fund shares without
a sales charge. Any shares so purchased may not be resold except to the Fund.

REDUCED SALES CHARGES

For an investor to qualify for a reduced sales charge as described
below, the investor must notify the Transfer Agent at the time of purchase.
Programs for 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 shares of
the Fund 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 4.0% 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.

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

13
<PAGE>

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, and 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.

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.

EXCHANGE 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 or 800-94FORUM (800-943-6786) 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.

RETIREMENT PROGRAMS

INDIVIDUAL RETIREMENT ACCOUNTS. The Fund should not be considered as a
complete investment vehicle for the assets held in individual retirement
accounts ("IRAs"). The minimum initial investment for an IRA is $2,000, and the
minimum subsequent investment is $500. There are limits on the amount of
tax-deductible contributions individuals may make into the various types of
IRAs. Individuals should consult their tax advisers with respect to their
specific tax situations as well as with respect to state and local taxes and
read any materials supplied by the Fund concerning Fund sponsored IRAs.

EMPLOYEE BENEFIT PLANS. The Fund may be a suitable investment vehicle
for part of the assets held in various employee benefit plans, including 401(k)
plans, 403(b) plans and SARSEPs.

PURCHASES AND REDEMPTIONS THROUGH FINANCIAL INSTITUTIONS

Shares may be purchased and redeemed through certain broker-dealer
banks, trust companies and their affiliates, and other financial institutions,
including affiliates of the Transfer Agent ("Processing Organizations").
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.

Investors who purchase shares through a Processing Organization may be
charged a fee if they effect transactions in Fund Shares through a broker or
agent and will be subject to the procedures of their Processing Organization,
which may include limitations, investment minimums, cutoff times and

14
<PAGE>

restrictions in addition to, or different from, those applicable to shareholders
who invest in the Fund directly. These investors should acquaint themselves with
their Processing Organization's procedures and should read this Prospectus in
conjunction with any materials and information provided by their Processing
Organization. Customers who purchase Fund shares through a Processing
Organization may or may not be the shareholder of record and, subject to their
Processing Organization's and the Fund's procedures, may have Fund shares
transferred into their name. Under their arrangements with the Trust,
broker-dealer Processing Organizations are not generally required to deliver
payment for purchase orders until several business days after a purchase order
has been received by the Fund. Certain other Processing Organizations may also
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. The
Trust is not responsible for the failure of any Processing Organization to carry
out its obligations to its customer. Certain states permit shares of the Fund to
be purchased and redeemed only through registered broker-dealers, including the
Fund's distributor.

6. DIVIDENDS AND TAX MATTERS

DIVIDENDS

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

Shareholders may have all dividends reinvested in additional shares of
the Fund in which they invest or received in cash. In addition, shareholders may
have dividends of net capital gain reinvested in additional shares of the Fund
in which they invest 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

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
amended. 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.

Dividends paid by the Fund out of its net investment income (including
any realized net short-term capital gain) are taxable to shareholders as
ordinary income. Two different tax rates apply to net capital gain -- that is,
the excess of net gain from capital assets held for more than one year over net
losses from capital assets held for not more than one year. One rate (generally
28%) applies to net gain on capital assets held for more than one year but not
more than 18 months and a second rate (generally 20%) applies to the balance of
such net capital gains. Distributions of net capital gain will be taxable to
shareholders as such, regardless of how long a shareholder has 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 treated as long-term capital loss to the extent of any
long-term capital gain distribution of net capital gain received on those
shares.

Any dividend or distribution received by a shareholder reduces the net
asset value of the shareholder's shares by the amount of the dividend or
distribution. To the extent that the income or gain comprising a dividend or
distribution were accrued by the Fund before the shareholder purchased the
shares, the dividend or distribution would be in effect a return of capital to
the shareholder. All dividends and distributions, including those that operate

15
<PAGE>

as a return of capital, however, are taxable as described above to the
shareholder receiving them regardless of the length of time he may have held
shares prior to the dividend or distribution.

It is expected that a portion of the Fund's dividends to shareholders
will qualify for the dividends received deduction for corporations.

The Fund may be required by Federal law to withhold 31% of reportable
payments (which may include 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.

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

The foregoing is only a summary of some of the important Federal 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 advisers.

8. OTHER INFORMATION

PERFORMANCE INFORMATION

The Fund's performance may be quoted in advertising in terms of yield
or total return. Both types are based on historical results and are not intended
to indicate future performance. 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 dividends and
expressing the result as an annualized percentage rate based on the Fund's share
price at the end of the period. 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 dividends and distributions and deductions of expenses during the period.
The Fund also may advertise its total return over different periods of time 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. A computation of yield or total return that does
not take into account the sales load paid by an investor will be higher than a
computation based on the public offering price of the shares purchased that does
take into account payment of a sales load.

The Fund's advertisements may 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 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.

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 FFSI 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.

16
<PAGE>

DETERMINATION OF NET ASSET VALUE

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 under the name
Forum Funds.

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 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 16 separate series.

Generally, shares will be voted in the aggregate without reference to a
particular portfolio, except if the matter affects only one portfolio or voting
by portfolio or class is required by law, in which case shares will be voted
separately by portfolio. 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
(and Trustees) 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.

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 SAI 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 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>

SHAREHOLDER INFORMATION
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
207-879-0001 (IN PORTLAND, ME)
800-94FORUM (ELSEWHERE)

<PAGE>

INVESTORS GROWTH 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

DECEMBER 1, 1997

Investors Growth Fund (the "Fund") is a series of Forum Funds (the "Trust"), a
registered, open-end investment company. This Statement of Additional
Information supplements the Prospectus dated December 1, 1997 offering shares of
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.

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.

TABLE OF CONTENTS

PAGE

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

Appendix A - Description of Securities Ratings

<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. The Trust currently
offers shares of eighteen series and has two series that have not commenced
operation as of the date of this SAI. The series of the Trust are as follows:

Investors Bond Fund Maine Municipal Bond Fund
TaxSaver Bond Fund New Hampshire Bond Fund
Daily Assets Treasury Fund Austin Global Equity Fund
Daily Assets Treasury Obligations Fund Oak Hall Equity Fund
Daily Assets Cash Fund Quadra Limited Maturity Treasury
Fund
Daily Assets Government Fund Quadra Value Equity Fund
Daily Assets Tax Exempt Fund Quadra Growth Fund
Payson Value Fund Quadra International Equity Fund
Payson Balanced Fund Quadra Opportunistic Bond Fund

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

"Board" means the Board of Trustees of Forum Funds.

"FAS" means Forum Administrative Services, LLC.

"FAcS" means Forum Accounting Services, LLC.

"FFC" means Forum Financial Corp.

"Forum" means Forum Financial Services, Inc.

"Forum Advisors" means Forum Advisors, Inc.

"Fund" means Investors Growth Fund, a separate series of Forum Funds.

"Fund Business Day" has the meaning ascribed thereto in the current Prospectus
of the Fund.

"NRSRO" means a nationally recognized statistical rating organization.

"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" has the meaning ascribed thereto by the current
Prospectus of the Funds.

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

2
<PAGE>

2. INVESTMENT POLICIES

INTRODUCTION

The following information supplements the discussion found under "Investment
Objective and Policies" and "Additional Investment Policies" in the Prospectus.

For temporary defensive purposes, to accumulate cash for investments, or to meet
anticipated redemptions, the Fund may invest in (or enter into repurchase
agreements with banks and broker dealers with respect to) short-term debt
securities, including Treasury bills and other U.S. Government securities, and
certificates of deposit and bankers' acceptances of U.S. banks.

ILLIQUID AND RESTRICTED SECURITIES

"Illiquid and Restricted Securities" under "Additional Investment Policies" in
the Prospectus sets forth the circumstances in which the Fund may invest in
"restricted securities". In connection with the Fund's original purchase of
restricted securities it may negotiate rights with the issuer to have such
securities registered for sale at a later time. Further, the registration
expenses of illiquid restricted securities may also be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund. When
registration is required, however, a considerable period may elapse between the
decision to sell the securities and the time the Fund would be permitted to sell
such securities. A similar delay might be experienced in attempting to sell such
securities pursuant to an exemption from registration. Thus, the Fund may not be
able to obtain as favorable a price as that prevailing at the time of the
decision to sell.

U.S. GOVERNMENT SECURITIES

The Fund may invest in obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities which have remaining maturates not
exceeding one year. Agencies and instrumentalities which issue or guarantee debt
securities and which have been established or sponsored by the U.S. Government
include the Bank for Cooperatives, the Export-Import Bank, the Federal Farm
Credit System, the Federal Home Loan Banks, the Federal Home Loan Mortgage
Corporation, the Federal Intermediate Credit Banks, the Federal Land Banks, the
Federal National Mortgage Association, the Government National Mortgage
Association and the Student Loan Marketing Association. Except for obligations
issued by the U.S. Treasury and the Government National Mortgage Association,
none of the obligations of the other agencies or instrumentalities referred to
above are backed by the full faith and credit of the U.S. Government.

BANK OBLIGATIONS

The Fund may invest in obligations of U.S. banks (including certificates of
deposit and bankers' acceptances) having total assets at the time of purchase in
excess of $1 billion. Such banks must be members of the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance Corporation.

The Fund also may invest in certificates of deposit issued by foreign banks,
denominated in any major foreign currency. The Fund will invest in instruments
issued by foreign banks which, in the view of its investment adviser and the
Trustees of the Trust, are of credit-worthiness and financial stature in their
respective countries comparable to U.S. banks used by the Fund.

A certificate of deposit is an interest-bearing negotiable certificate issued by
a bank against funds deposited in the bank. A bankers' acceptance is a
short-term draft drawn on a commercial bank by a borrower, usually in connection
with an international commercial transaction. Although the borrower is liable
for payment of the draft, the bank unconditionally guarantees to pay the draft
at its face value on the maturity date.

3
<PAGE>

LOANS OF PORTFOLIO SECURITIES

The Fund may lend its portfolio securities subject to the restrictions stated in
the Prospectus. Under applicable regulatory requirements (which are subject to
change), the loan collateral must (a) on each business day, at least equal the
market value of the loaned securities and (b) must consist of cash, bank letters
of credit, U.S. Government securities, or other cash equivalents in which the
Fund is permitted to invest. To be acceptable as collateral, letters of credit
must obligate a bank to pay amounts demanded by the Fund if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to the
Fund. When lending portfolio securities, the Fund receives from the borrower an
amount equal to the interest paid or the dividends declared on the loaned
securities during the term of the loan plus the interest on the collateral
securities (less any finders' or administrative fees the Fund pays in arranging
the loan). A Fund may share the interest it receives on the collateral
securities with the borrower as long as it realizes at least a minimum amount of
interest required by the lending guidelines established by the Board. The Fund
will not lend its portfolio securities to any officer, director, employee or
affiliate of the Fund or the investment adviser to the Fund. The terms of the
Fund's loans must meet certain tests under the Internal Revenue Code and permit
the Fund to reacquire loaned securities on five business days' notice or in time
to vote on any important matter.

SHORT-TERM DEBT SECURITIES

The Fund may invest in commercial paper, that is short-term unsecured promissory
notes issued in bearer form by bank holding companies, corporations and finance
companies. The commercial paper purchased by the Fund for temporary defensive
purposes consists of direct obligations of domestic issuers which, at the time
of investment, are rated "P-1" by Moody's Investors Service, Inc. ("Moody's") or
"A-1" by Standard & Poor's Corporation ("S&P"), or securities which, if not
rated, are issued by companies having an outstanding debt issue currently rated
Aa by Moody's or AAA or AA by S&P. The rating "P-1" is the highest commercial
paper rating assigned by Moody's and the rating "A-1" is the highest commercial
paper ratings assigned by S&P.

REPURCHASE AGREEMENTS

The Fund may invest in securities subject to repurchase agreements with U.S.
banks or broker-dealers maturing in seven days or less. In a typical repurchase
agreement the seller of a security commits itself at the time of the sale to
repurchase that security from the buyer at a mutually agreed-upon time and
price. The repurchase price exceeds the sale price, reflecting an agreed-upon
interest rate effective for the period the buyer owns the security subject to
repurchase. The agreed-upon rate is unrelated to the interest rate on that
security. The Fund's investment adviser will monitor the value of the underlying
security at the time the transaction is entered into and at all times during the
term of the repurchase agreement to insure that the value of the security always
equals or exceeds the repurchase price. In the event of default by the seller
under the repurchase agreement, the Fund may have difficulties in exercising its
rights to the underlying securities and may incur costs and experience time
delays in connection with the disposition of such securities. To evaluate
potential risks, the investment adviser reviews the credit-worthiness of those
banks and dealers with which the Fund enters into repurchase agreements.

CONVERTIBLE SECURITIES

The Fund may invest in convertible preferred stocks and convertible debt
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. Convertible securities rank
senior to common stocks in a corporation's capital structure and, therefore,
carry less risk than the corporation's common stock. The value of a convertible
security is a function of its "investment value" (its value as if it did not
have a conversion privilege), and its "conversion value" (the security's worth
if it were to be exchanged for the underlying security, at market value,
pursuant to its conversion privilege).

4
<PAGE>

DEPOSITORY RECEIPTS

Investments in securities of foreign issuers may be in the form of sponsored or
unsponsored American Depository Receipts ("ADRs") or European Depository
Receipts ("EDRs"), or other similar securities convertible into securities of
foreign issuers. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued in the United States by a bank or trust company, evidencing
ownership of the underlying securities. EDRs are typically issued in Europe
under a similar arrangement. Generally, ADRs, in registered form, are designed
for use in the U.S. securities markets and EDRs, in bearer form, are designed
for use in European securities markets. Unsponsored ADRs may be created without
the participation of the foreign issuer. Holders of these ADRs generally bear
all the costs of the ADR facility, whereas foreign issuers typically bear
certain costs in a sponsored ADR. The bank or trust company depository of an
unsponsored ADR may be under no obligation to distribute shareholder
communications received from the foreign issuer or to pass through voting
rights.

FOREIGN SECURITIES

Investment in the securities of foreign issuers may involve risks in addition to
those normally associated with investments in the securities of U.S. issuers.
There may be less publicly available information about foreign issuers than is
available for U.S. issuers, and foreign auditing, accounting and financial
reporting practices may differ from U.S. practices. Foreign securities markets
may be less active than U.S. markets, trading may be thin and consequently
securities prices may be more volatile. The Fund's investment adviser, will, in
general, invest only in securities of companies and governments of countries
which, in its judgment, are both politically and economically stable.
Nevertheless, all foreign investments are subject to risks of foreign political
and economic instability, adverse movements in foreign exchange rates, the
imposition or tightening of exchange controls or other limitations on the
repatriation of foreign capital and changes in foreign governmental attitudes
toward private investment, possibly leading to nationalization, increased
taxation, or confiscation of Fund assets.

WARRANTS AND STOCK RIGHTS

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). A 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 in
units or attached to other securities). No more than 2% of the Fund's net assets
(at the time of investment) may be invested in warrants that are not listed on
the New York or American Stock Exchanges. Investments in warrants involve
certain risks, including the possible lack of a liquid market for the resale of
the warrants, potential price fluctuations as a result of speculation or other
factors and failure of the price of the underlying security to reach a level at
which the warrant can be prudently exercised (in which case the warrant may
expire without being exercised, resulting in the loss of the Fund's entire
investment therein). The prices of warrants 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.

In addition, the Fund may invest up to 5% of its assets (at the time of
investment) in stock rights. A stock right is an option given to a shareholder
to buy additional shares at a predetermined price during a specified time
period.

3. INVESTMENT LIMITATIONS

The following investment restrictions restate or are in addition to those
described under "Investment Objective and Policies" and "Additional Investment
Policies and Risk Considerations" in the Prospectus. The Fund has adopted the
following investment limitations which are fundamental policies of the Fund,
unless otherwise stated.

(a) Diversification:

The Fund may not, with respect to 75% of its assets, purchase a
security if as a result: (i) more than 5% of its assets would be
invested in the securities of any single issuer or (ii) the Fund would

5
<PAGE>

own more than 10% of the outstanding voting securities of any single
issuer. This restriction does not apply to securities issued by the
U.S. Government, its agencies or instrumentalities.

(b) Illiquid Securities

The Fund will not invest more than 10% of its net assets in "illiquid
securities", which are securities that cannot be disposed of within
seven days at their then current value. For purposes of this
limitation, "illiquid securities" includes, except in those
circumstances described below, (i) "restricted securities", which are
securities that cannot be resold to the public without registration
under the Federal securities laws, and (ii) securities of issuers
having a record (together with all predecessors) of less than three
years of continuous operation.

The Fund will not invest 25% or more of the value of its total assets
in any one industry.

(d) Underwriting Activities

The Fund will not underwrite securities issued by other persons except
to the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under U.S.
securities laws.

(e) Borrowing

The Fund may borrow money for temporary or emergency purposes,
including the meeting of redemption requests, but not in excess of 33
13% of the value of the Fund's total assets (computed immediately after
the borrowing).

(f) Pledging

As a non-fundamental policy, the Fund may not pledge, mortgage,
hypothecate or encumber any of its assets except to secure permitted
borrowings or to secure other permitted transactions.

(g) Margin and Short Sales

The Fund may not purchase securities on margin; however, the Fund may
make margin deposits in connection with any Hedging Instruments, which
it may use as permitted by any of its other fundamental policies.

The Fund may not sell securities short.

(h) Investing for Control

The Fund may not make investments for the purpose of exercising control
or management.

(i) Real Estate

The Fund may not purchase or sell real estate, provided that the Fund
may invest in securities issued by companies which invest in real
estate or interests therein.

(j) Lending

The Fund will not lend money except in connection with the acquisition
of that portion of publicly-distributed debt securities which the

6
<PAGE>

Fund's investment policies and restrictions permit it to purchase (see
"Investment Objective" and "Investment Policies" in the Prospectus);
the Fund may also make loans of portfolio securities (see "Loans of
Portfolio Securities") and enter into repurchase agreements (see
"Repurchase Agreements");

(k) Senior Securities

The Fund will not 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.

(l) Purchases and Sales of Commodities

The Fund will not invest in commodities or commodity contracts (other
than Hedging Instruments which it may use as permitted by any of its
other fundamental policies, whether or not any such Hedging Instrument
is considered to be a commodity or a commodity contract);

(m) Options and Futures Contracts

The Fund may not purchase or write puts or calls except as permitted by
any of its other fundamental investment policies.

(n) Warrants

The Fund may not invest in warrants, valued at the lower of cost or
market, more than 5% of the value of the Fund's net assets (included
within that amount, but not to exceed 2% of the value of the Fund's net
assets, may be warrants which are not listed on the New York or
American Stock Exchange. Warrants acquired by the Fund in units or
attached to securities may be deemed to be without value).

4. PERFORMANCE DATA

The Fund may, from time to time, include quotations of its average annual total
return in advertisements or reports to shareholders or prospective investors.

Quotations of average annual total return will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in the
Fund over periods of 1, 5 and 10 years (up to the life of the Fund), calculated
pursuant to the following formula:

P (1+T)n = ERV

(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). All total
return figures will reflect the deduction of Fund expenses (net of certain
reimbursed expenses) on an annual basis, and will assume that all dividends and
distributions are reinvested when paid.

Quotations of total return will reflect only the performance of a hypothetical
investment in the Fund during the particular time period shown. Total return for
the Fund will vary based on changes in market conditions and the level of the
Fund's expenses, and no reported performance figure should be considered an
indication of performance which may be expected in the future.

In connection with communicating total return to current or prospective
investors, the Fund also may compare these figures to the performance of other

7
<PAGE>

mutual funds tracked by mutual fund rating services or to other unmanaged
indexes which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.

Investors who purchase and redeem shares of the Fund through a customer account
maintained at a Service Organization may be charged one or more of the following
types of fees as agreed upon by the Service Organization and the investor, with
respect to the customer services provided by the Service Organization: account
fees (a fixed amount per month or per year); transaction fees (a fixed amount
per transaction processed); compensating balance requirements (a minimum dollar
amount a customer must maintain in order to obtain the services offered); or
account maintenance fees (a periodic charge based upon a percentage of the
assets in the account or of the dividends paid on these assets). Such fees will
have the effect of reducing the average annual total return of the Fund for
those investors.

5. MANAGEMENT

TRUSTEES AND OFFICERS

THE TRUST

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 54)

President and Director, Forum Financial Services, Inc. (a registered
broker-dealer), Forum Administrative Services, LLC (a mutual fund
administrator), 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 Administrative Services, LLC serves as manager or
administrator and for which Forum Financial Services, Inc. serves as
distributor. His address is Two Portland Square, Portland, Maine
04101.

Costas Azariadis, Trustee (age 53)

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 54)

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 53)

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.

8
<PAGE>

Mark D. Kaplan, Vice President, Assistant Treasurer and Assistant Secretary (age
41)

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.

Robert Campbell, Treasurer (age 36)

Director of Fund Accounting, Forum Financial Corp., with which he has
been associated since April 1997. Prior thereto, Mr. Campbell was the
Vice President of Domestic Operations for State Street Fund Services in
Toronto, Ontario, and prior to that, Mr. Campbell served as Assistant
Vice President/Fund Manager of Mutual Fund, State Street Bank & Trust
in Boston, Massachusetts. Mr. Campbell is also treasurer of various
registered investment companies for which Forum Administrative
Services, LLC or Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. His address is Two Portland Square,
Portland, Maine 04101.

David I. Goldstein, Secretary (age 35)

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 Administrative Services, LLC or Forum
Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is Two Portland Square, Portland, Maine
04101.

Max Berueffy, Assistant Secretary (age 44)

Counsel, Forum Financial Services, Inc., with which he has been
associated since 1994. Prior thereto, Mr. Berueffy was on the staff of
the U.S. Securities and Exchange Commission for seven years, first in
the appellate branch of the Office of the General Counsel, then as a
counsel to Commissioner Grundfest and finally as a senior special
counsel in the Division of Investment Management. Mr. Berueffy is also
Secretary or Assistant Secretary of various registered investment
companies for which Forum Administrative Services, LLC or Forum
Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is Two Portland Square, Portland, Maine 04101.

Cheryl O. Tumlin, Assistant Secretary (age 31)

Assistant Counsel, Forum Financial Services, Inc., with which she has
been associated since July 1996. Prior thereto, Ms. Tumlin was on the
staff of the U.S. Securities and Exchange Commission as an attorney in
the Division of Market Regulation and prior thereto Ms. Tumlin was an
associate with the law firm of Robinson Silverman Pearce Aronsohn &
Berman in New York, New York. Ms. Tumlin is also Assistant Secretary of
various registered investment companies for which Forum Administrative
Services, LLC or Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. Her address is Two Portland Square,
Portland, Maine 04101.

M. Paige Turney, Assistant Secretary (age 28).

Fund Administrator, Forum Financial Services, Inc., with which she has
been associated since 1995. Ms. Turney was employed from 1992 as a
Senior Fund Accountant with First Data Corporation in Boston,
Massachusetts. Ms. Turney is also Assistant Secretary of various
registered investment companies for which Forum Administrative
Services, LLC or Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. Prior thereto she was a student at
Montana State University Her address is Two Portland Square, Portland,
Maine 04101.

9
<PAGE>

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) and is paid $1,000 for each committee
meeting attended on a date when a Board meeting is not held. As of March 31,
1997, in addition to $1,000 for each Board meeting attended, each Trustee
receives $100 per active portfolio of the Trust. 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, 1997.
<TABLE>
<S> <C> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Keffer None None None None
Mr. Azariadis $4,000 None None $4,000
Mr. Cheng $4,000 None None $4,000
Mr. Parish $4,000 None None $4,000
</TABLE>

TRUSTEE COMPENSATION FOR CORE TRUST (DELWARE). Each of the Trustees of the Trust
is also a Trustee of Core Trust (Delaware), a registered, open-end management
investment company ("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 portfolios.
Core Trust trustees are also reimbursed for travel and related expenses incurred
in attending meetings of the Core Trust Board. For the fiscal year ended March
31, 1997, each Core Trust trustee received fees totalling $7,200.

INVESTMENT ADVISER

Forum Advisors, Inc. serves as investment adviser to Investors Growth Fund
pursuant to an investment advisory agreement with the Trust. Subject to the
general control of the Board, Forum Advisors is responsible for among other
things, developing a continuing investment program for the Fund in accordance
with its investment objective and reviewing the investment strategies and
policies of the Fund. Forum Advisors was incorporated under the laws of Delaware
in 1987 and is registered under the Investment Advisers Act of 1940. For its
services, Forum Advisors receives an advisory fee at an annual rate of 0.65% of
Investor Growth Fund's average daily net assets.

Pursuant to the investment advisory agreement, Forum Advisors is responsible for
managing the investment and reinvestment of the assets included in the Fund and
for continuously reviewing, supervising and administering the Fund's
investments. In this regard, it is the responsibility of Forum Advisors to make
decisions relating to the Fund's investments and to place purchase and sale
orders regarding such investments with brokers or dealers selected by it in its
discretion. Forum Advisors also furnishes to the Board, which has overall
responsibility for the business and affairs of the Trust, periodic reports on
the investment performance of the Fund.

Under the terms of the investment advisory agreement, Forum Advisors is required
to manage the Fund's investment portfolio in accordance with applicable laws and
regulations. In making its investment decisions, Forum Advisors does not use
material information that may be in its possession or in the possession of its
affiliates.

The investment advisory agreement will continue in effect provided such
continuance is approved annually (i) by the holders of a majority of the
outstanding voting securities of the Fund (as defined by the 1940 Act) or by the
Board and (ii) by a majority of the Trustees who are not parties to such
agreement or "interested persons" (as defined in the 1940 Act) of any such
party. The investment advisory agreement may be terminated without penalty

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<PAGE>

by vote of the or the shareholders of the Fund on 60 days' written notice to the
Adviser, or by the Adviser on 60 days' written notice to the Trust and it will
terminate automatically if assigned. The investment advisory agreement also
provides that, with respect to the Fund, neither Forum Advisors nor its
personnel shall be liable for any error of judgment or mistake of law or for any
act or omission in the performance of its or their duties to the Fund, except
for willful misfeasance, bad faith or gross negligence in the performance of
Forum Advisors or their duties or by reason of reckless disregard of its or
their obligations and duties under the investment advisory agreement.

ADMINISTRATIVE SERVICES

Forum Administrative Services, LLC ("FAS") acts as administrator to the Trust on
behalf of the Fund pursuant to an Administration Agreement with the Trust. As
administrator, FAS provides management and administrative services necessary to
the operation of the Trust (which include, 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), and provides the Trust with general office
facilities. The Administration Agreement will remain in effect for a period of
twelve months with respect to the Fund and thereafter is automatically renewed
each year for an additional term of one year.

The Administration Agreement terminates automatically if it is assigned and may
be terminated without penalty with respect to the Fund by vote of the Fund's
shareholders or by either party on not more than 60 days' written notice. The
Administration Agreement also provides that FAS 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 FAS's duties or by reason of
reckless disregard of its obligations and duties under the Administration
Agreement.

At the request of the Board, FAS provides persons satisfactory to the Board to
serve as officers of the Trust. Those officers, as well as certain other
employees and Trustees of the Trust, may be directors, officers or employees of
FAS, the Adviser or their affiliates.

DISTRIBUTOR

Forum Financial Services, Inc. ("Forum"), an affiliate of FAS, is the Trust's
distributor and acts as the agent of the Trust in connection with the offering
of shares of the Fund pursuant to a Distribution Agreement. The Distribution
Agreement will continue in effect for twelve months and will continue in effect
thereafter only if its continuance is specifically approved at least annually by
the Board or by vote of the shareholders entitled to vote thereon, and in either
case, by a majority of the Trustees who (i) are not parties to the Distribution
Agreement, (ii) are not interested persons of any such party or of the Trust and
(iii) with respect to any class for which the Trust has adopted a distribution
plan, have no direct or indirect financial interest in the operation of that
distribution plan or in the Distribution Agreement, at a meeting called for the
purpose of voting on the Distribution Agreement. All subscriptions for shares
obtained by Forum are directed to the Trust for acceptance and are not binding
on the Trust until accepted by it. Forum receives no compensation or
reimbursement of expenses for the distribution services provided pursuant to the
Distribution Agreement and is under no obligation to sell any specific amount of
Fund shares.

The Distribution Agreement provides that Forum shall not be liable for any error
of judgment or mistake of law or in any event whatsoever, 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
Distribution Agreement.

The Distribution Agreement is terminable with respect to the Fund without
penalty by the Trust on 60 days' written notice when authorized either by vote
of the Fund's shareholders or by a vote of a majority of the Board, or by Forum
on 60 days' written notice. The Distribution Agreement will automatically
terminate in the event of its assignment.

Forum may enter into agreements with selected broker-dealers, banks, or other
financial institutions for distribution of shares of the Fund. These financial

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<PAGE>

institutions may charge a fee for their services and may receive shareholders
service fees even though shares of the Fund are sold without sales charges or
distribution fees. These financial institutions may otherwise act as processing
agents, and will be responsible for promptly transmitting purchase, redemption
and other requests to the Fund.

Investors who purchase shares in this manner will be subject to the procedures
of the institution through whom they purchase shares, which may include charges,
investment minimums, cutoff times and other restrictions in addition to, or
different from, those listed herein. Information concerning any charges or
services will be provided to customers by the financial institution. Investors
purchasing shares of the Fund in this manner should acquaint themselves with
their institution's procedures and should read this Prospectus in conjunction
with any materials and information provided by their institution. The financial
institution and not its customers will be the shareholder of record, although
customers may have the right to vote shares depending upon their arrangement
with the institution.

TRANSFER AGENT

Forum Financial Corp. ("FFC") acts as transfer agent of the Trust pursuant to a
transfer agency agreement (the "Transfer Agency Agreement"). The Transfer Agency
Agreement provided, with respect to the 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 that the agreement is specifically
approved at least annually by the Board or, with respect to either Fund, by a
vote of the shareholders of that 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 FFC 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.

FFC 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. FFC 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 FFC with respect to
assets of those customers or clients invested in the Fund. FFC, FAS or
sub-transfer agents or processing agents retained by FFC 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 FFC or FAS.

For its services under the Transfer Agency Agreement, FFC receives: (i) a fee at
an annual rate of 0.25 percent of the average daily net assets of the Fund and
(ii) a fee of $24,000 per year; such amounts to be computed and paid monthly in
arrears by the Fund; and (iii) Annual Shareholder Account Fees of $25.00 for a
retail and $125.00 for an institutional shareholder account; such fees to be
computed as of the last business day of the prior month.

FFC or any sub-transfer agent or processing agent may also act and receive
compensation for acting 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.

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<PAGE>

FUND ACCOUNTING

Forum Accounting Services, LLC ("FAcS") performs portfolio accounting services
for the Fund pursuant to the Fund Accounting Agreement with the Trust. The Fund
Accounting Agreement will continue in effect only if such continuance is
specifically approved at least annually by the Board of Trustees or by a vote of
the shareholders of the Trust and in either case by a majority of the Trustees
who are not parties to the Fund Accounting Agreement or interested persons of
any such party, at a meeting called for the purpose of voting on the Fund
Accounting Agreement. Under its agreement, FAcS prepares and maintains books and
records prepares and maintains books and records of the Fund on behalf of the
Trust as required under the 1940 Act, calculates the net asset value per share
of the Fund and dividends and capital gain distributions and prepares periodic
reports to shareholders and the Securities and Exchange Commission. For its
services, FAcS receives from the Trust with respect to the Fund a fee of
$12,000.

6. 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 that Fund's shares outstanding at the
time the determination is made. Securities owned by the Fund listed on the
recognized stock exchanges are valued at the last reported trade price, prior to
the time when the assets are valued, on the exchange on which the securities are
principally traded. Listed securities traded on recognized stock exchanges where
last trade prices are not available are valued at mid-market prices. Securities
traded in over-the-counter markets, or listed securities for which no trade is
reported on the valuation date, are valued at the most recent reported
mid-market price. Other securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith using
methods approved by the Board.

Trading in securities on European and Far Eastern Securities exchanges and
over-the-counter markets may not take place on every day that the New York Stock
Exchange is open for trading. Furthermore, trading takes place in various
foreign markets on days on which the Fund's NAV is not calculated. If events
materially affecting the value of foreign securities occur between the time when
their price is determined and the time when net asset value is calculated, such
securities will be valued at fair value as determined in good faith by the
Board.

All assets and liabilities of the Fund denominated in foreign currencies are
converted to U.S. dollars at the mid price of such currencies against U.S.
dollars last quoted by a major bank prior to the time when NAV of the Fund is
calculated.

7. PORTFOLIO TRANSACTIONS

INVESTMENT DECISIONS

Investment decisions for the Fund and for the other investment advisory clients
of the investment advisers are made with a view to achieving their respective
investment objectives. Investment decisions are the product of many factors in
addition to basic suitability for the particular client involved. Thus, a
particular security may be bought or sold for certain clients even though it
could have been bought or sold for other clients at the same time. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling the security. In some instances, one client may sell a
particular security to another client. It also sometimes happens that two or
more clients simultaneously purchase or sell the same security, in which event
each day's transactions in such security are, insofar as is possible, averaged
as to price and allocated between such clients in a manner which in the
investment adviser's opinion is equitable to each and in accordance with the
amount being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients.

BROKERAGE AND RESEARCH SERVICES

Transactions on U.S. stock exchanges and other agency transactions involve the
payment by the Fund of negotiated brokerage commissions. Such commissions vary
among different brokers. Also, a particular broker may charge different
commissions according to such factors as the difficulty and size of the

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<PAGE>

transaction. Transactions in foreign securities generally involve the payment of
fixed brokerage commissions, which are generally higher than those in the United
States. There is generally no stated commission in the case of securities traded
in the over-the-counter markets, but the price paid by the Fund usually includes
an undisclosed dealer commission or mark-up. In underwritten offerings, the
price paid by the Fund includes a disclosed, fixed commission or discount
retained by the underwriter or dealer.

The Investment Advisory Agreement authorizes and directs the investment adviser
to place orders for the purchase and sale of assets with brokers or dealers
selected by the investment advisers in their discretion and to seek "best
execution" of such portfolio transactions. An investment adviser places all such
orders for the purchase and sale of portfolio securities and buys and sells
securities for the Fund through a substantial number of brokers and dealers. In
so doing, the investment adviser uses its best efforts to obtain for the Fund
the most favorable price and execution available. The Fund may, however, pay
higher than the lowest available commission rates when the investment adviser
believes it is reasonable to do so in light of the value of the brokerage and
research services provided by the broker effecting the transaction. In seeking
the most favorable price and execution, the investment adviser, having in mind
the Fund's best interests, considers all factors it deems relevant, including,
by way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker-dealers involved and the
quality of service rendered by the broker-dealers in other transactions.

It has for many years been a common practice in the investment advisory business
as conducted in certain countries, including the United States, for advisers of
investment companies and other institutional investors to receive research
services from broker-dealers which execute portfolio transactions for the
clients of such advisers. Consistent with this practice, and investment adviser
may receive research services from broker-dealers with which it places the
Fund's portfolio transactions. These services, which in some cases may also be
purchased for cash, include such items as general economic and security market
reviews, industry and company reviews, evaluations of securities and
recommendations as to the purchase and sale of securities. Some of these
services are of value to the investment adviser in advising various of its
clients (including the Fund), although not all of these services are necessarily
useful and of value in managing the Fund. The investment advisory fee paid by
the Fund is not reduced because the investment adviser and its affiliates
receive such services.

As permitted by Section 28(e) of the Securities Exchange Act of 1934 (the
"Act"), an investment adviser may cause the Fund to pay a broker-dealer which
provides "brokerage and research services" (as defined in the Act) to it an
amount of disclosed commission for effecting a securities transaction in excess
of the commission which another broker-dealer would have charged for effecting
that transaction.

The annual portfolio turnover rate of the Fund may exceed 50% but will not
ordinarily exceed 100%.

8. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Detailed information pertaining to the purchase of shares of the Fund,
redemption of shares and the determination of the net asset value of Fund shares
is set forth in the Prospectus under "Purchases and Redemptions of Shares".

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 beneficial
interest aggregating less than $100,000 subject to the schedule of sales charges
set forth in the Prospectus at a price based on the net asset value per share of
the Fund on ________.

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<PAGE>

Net Asset Value Per Share $ X.XX

Sales Charge, 4.00% of offering
price (4.17% of net asset value
per share) $ X.XX

Offering to Public $ X.XX

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 the 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 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.

REDEMPTION IN KIND

In the event that payment for redeemed shares is made wholly or partly in
portfolio securities, brokerage costs may be incurred by the shareholder in
converting the securities to cash. An in kind distribution of portfolio
securities will be less liquid than cash. The shareholder may have difficulty in
finding a buyer for portfolio securities received in payment for redeemed
shares. Portfolio securities may decline in value between the time of receipt by
the shareholder and conversion to cash. A redemption in kind of the Fund's
portfolio securities could result in a less diversified portfolio of investments
for the Fund and could affect adversely the liquidity of the Fund's portfolio.

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 FAS 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.

By use of the 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. Proceeds of an exchange transaction may be invested in
another Participating Fund in the name of the shareholder.

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

15
<PAGE>

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.

9. TAXATION

The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"). To qualify as a
regulated investment company the Fund intends to distribute to shareholders at
least 90% of its net investment income (which includes, among other items,
dividends, interest and the excess of any net short-term capital gains over net
long-term capital losses), and to meet certain diversification of assets, source
of income, and other requirements of the Code. By so doing, the Fund will not be
subject to Federal income tax on its net investment income and net realized
capital gains (the excess of net long-term capital gains over net short-term
capital losses) distributed to shareholders. If the Fund does not meet all of
these Code requirements, it will be taxed as an ordinary corporation, and its
distributions will be taxable to shareholders as ordinary income.

Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a 4% nondeductible excise tax. To
prevent imposition of the excise tax, the Fund must distribute for each calendar
year an amount equal to the sum of (1) at least 98% its ordinary income
(excluding any capital gains or losses) for the calendar year, (2) at least 98%
of the excess of its capital gains over capital losses realized during the
one-year period ending October 31, of such year, and (3) all such ordinary
income and capital gains for previous years that were not distributed during
such years. A distribution will be treated as paid during the calendar year if
it is declared by the Fund in October, November or December of the year with a
record date in such month and paid by the Fund during January of the following
year. Such distributions will be taxable to shareholders in the calendar year in
which the distributions are declared, rather than the calendar year in which the
distributions are received.

In addition to satisfying the distribution requirement, a regulated investment
company must derive at least 90% of its gross income from dividends, interest,
certain payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies (to the extent such
currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gain from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies.

Distributions of net investment income (including realized net short-term
capital gain) are taxable to shareholders as ordinary income. It is not expected
that such distributions will be eligible for the dividends received deduction
available to corporations.

Distributions of net long-term capital gain are taxable to shareholders as
long-term capital gain, regardless of the length of time the Fund shares have
been held by a shareholder, and are not eligible for the dividends received
deduction. A loss realized by a shareholder on the sale of shares of the Fund
with respect to which capital gain dividends have been paid will, to the extent
of such capital gain dividends, be treated as long-term capital loss although
such shares may have been held by the shareholder for one year or less. Further,
a loss realized on a disposition will be disallowed to the extent the shares
disposed of are replaced (whether by reinvestment or distributions or otherwise)
within a period of 61 days beginning 30 days before and ending 30 days after the
shares are disposed of. In such a case, the basis of the shares acquired will be
adjusted to reflect the disallowed loss.

All distributions are taxable to the shareholder whether reinvested in
additional shares or received in cash. Shareholders receiving distributions in
the form of additional shares will have a cost basis for Federal income tax
purposes in each share received equal to the net asset value of a share of the
Fund on the reinvestment date. Shareholders will be notified annually as to the
Federal tax status of distributions.

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<PAGE>

Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value below a shareholder's cost
basis, such distribution nevertheless would be taxable to the shareholder as
ordinary income or capital gain as described above, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will receive a distribution which will nevertheless
be taxable to them.

Upon redemption or sale of his shares, a shareholder will realize a taxable gain
or loss depending upon his basis in his shares. Such gain or loss generally will
be treated as capital gain or loss if the shares are capital assets in the
shareholder's hands. Such gain or loss generally will be long-term or short-term
depending upon the shareholder's holding period for the shares.

The Fund intends to minimize foreign income and withholding taxes by investing
in obligations the payments with respect to which will be subject to minimal or
no such taxes insofar as this objective is consistent with the Fund's income
objective. However, since the Fund may incur foreign taxes, it intends, if it is
eligible to do so, to elect under Section 853 of the Code to treat each
shareholder as having received an additional distribution from the Fund, in the
amount indicated in a notice furnished to him, as his pro rata portion of income
taxes paid to or withheld by foreign governments with respect to interest,
dividends and gain on the Fund's foreign portfolio investments. The shareholder
then may take the amount of such foreign taxes paid or withheld as a credit
against his Federal income tax, subject to certain limitations. If the
shareholder finds it more to his advantage to do so, he may, in the alternative,
deduct the foreign tax withheld as an itemized deduction, in computing his
taxable income. Each shareholder is referred to his tax adviser with respect to
the availability of the foreign tax credit.

The Fund will be required to report to the Internal Revenue Service (the "IRS")
all distributions as well as gross proceeds from the redemption of the Fund
shares, except in the case of certain exempt shareholders. All such
distributions and proceeds generally will be subject to withholding of Federal
income tax at a rate of 31% ("backup withholding") in the case of nonexempt
shareholders if (1) the shareholder fails to furnish the Fund with and to
certify the shareholder's correct taxpayer identification number or social
security number, (2) the IRS notifies the Fund that the shareholder has failed
to report properly certain interest and dividend income to the IRS and to
respond to notices to that effect, or (3) when required to do so, the
shareholder fails to certify that he is not subject to backup withholding. If
the withholding provisions are applicable, any such distributions or proceeds,
whether reinvested in additional shares or taken in cash, will be reduced by the
amount required to be withheld. Any amounts withheld may be credited against the
shareholder's Federal income tax liability. Investors may wish to consult their
tax advisers about the applicability of the backup withholding provisions.

The foregoing discussion relates only to Federal income tax law as applicable to
U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by the Fund also may be subject
to state and local taxes, and their treatment under state and local income tax
laws may differ from the Federal income tax treatment. Shareholders should
consult their tax advisors with respect to particular questions of Federal,
state and local taxation. Shareholders who are not U.S. persons should consult
their tax advisors regarding U.S. and foreign tax consequences of ownership of
shares of the Fund including the likelihood that distributions to them would be
subject to withholding of U.S. tax at a rate of 30% (or a lower rate under a tax
treaty).

10. OTHER INFORMATION

ORGANIZATION

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,

17
<PAGE>

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 16 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.

COUNSEL

Legal matters in connection with the issuance of shares of beneficial interest
of the Trust are passed upon by the law firm of Seward & Kissel, 1200 G Street,
N.W. Washington, D.C. 20005.

INDEPENDENT ACCOUNTANTS

Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, 02110,
independent auditors, act as auditors for the Trust.

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<PAGE>

APPENDIX A - DESCRIPTION OF SECURITIES RATINGS

1. PREFERRED STOCK

(A) MOODY'S

Moody's rates preferred stock issues as follows:

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

An issue which is rated "aa" is 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 which is rated "a" is 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 which is rated "baa" is a medium-grade preferred stock,
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 which is rated "ba" has 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.

(B) STANDARD & POOR'S

Standard & Poor's rates preferred stock issues 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.

An issue rated "BBB" is regarded as backed by an adequate capacity to
pay the preferred stock obligations. While it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances

A-1
<PAGE>

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 "B" may be modified by the addition of a plus (+) or minus
(-) sign to show relative standing

2. CORPORATE BONDS INCLUDING CONVERTIBLE DEBT

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

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

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 fundamentally 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 sometime in the future.

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 of or maintenance of
other terms of the contract over any long period of time may be small.

A-2
<PAGE>

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.

(B) STANDARD & 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 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.

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.

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. 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

A-3
<PAGE>

payments will made during such grace period. The `D' rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

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.

3. 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+.

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.

A-4
<PAGE>

PART C
OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(A) FINANCIAL STATEMENTS.

Included in the Prospectus:

None.

Included in the Statement of Additional Information:

None.

(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 as Exhibit 1 to PEA No. 34 via EDGAR on May 9, 1996, accession
number 0000912057-96-008780).

(2)* Copy of By-Laws of the Registrant (filed as Exhibit (2) to PEA No. 43
via EDGAR on July 31, 1997, accession number 0000912057-97-025707)

(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 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

<PAGE>

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) Investment Advisory Agreement between Registrant and
Forum Advisors, Inc. (filed herewith).

(b)* Form of Investment Advisory Agreement between
Registrant and H.M. Payson & Co. relating to the Payson
Value Fund and the Payson Balanced Fund (filed as
Exhibit 5(b) to PEA No. 33 via EDGAR on January 5,
1996, accession number 0000912057-96-000216).

(c)* Investment Advisory Agreement between Registrant and
Quadra Capital Partners, L.P. (filed as Exhibit (5)(c)
to PEA No. 41 via EDGAR on December 31, 1996, accession
number 0000912057-96-030646).

(d)* Investment Subadvisory Agreement between Quadra Capital
Partners, L.P. and Anhalt/O'Connell, Inc. (filed as
Exhibit (5)(d) to PEA No. 41 via EDGAR on December 31,
1996, accession number 0000912057-96-030646).

(e)* Investment Subadvisory Agreement between Quadra Capital
Partners, L.P. and Carl Domino Associates, L.P. (filed
as Exhibit (5)(e) to PEA No. 41 via EDGAR on December
31, 1996, accession number 0000912057-96-030646).

(f)* Investment Subadvisory Agreement between Quadra Capital
Partners, L.P. and McDonald Investment Management, Inc.
(filed as Exhibit (5)(f) to PEA No. 41 via EDGAR on
December 31, 1996, accession number
0000912057-96-030646).

(g)* Investment Subadvisory Agreement between Quadra Capital
Partners, L.P. and LM Capital Management, Inc. (filed
as Exhibit (5)(g) to PEA No. 41 via EDGAR on December
31, 1996, accession number 0000912057-96-030646).

(j)* Investment Advisory Agreement between the Registrant
and Austin Investment Management, Inc. (filed as
Exhibit (5)(j) to PEA No. 43 via EDGAR on July 31,
1997, accession number 0000912057-97-025707).

<PAGE>

(k)* Investment Advisory Agreement between the Registrant
and Oak Hall Capital Advisors, Inc. (filed as Exhibit
(5)(k) to PEA No. 43 via EDGAR on July 31, 1997,
accession number 0000912057-97-025707).

(l)* Investment Advisory Agreement between Norwest Bank
Minnesota, N.A. and Core Trust (Delaware) relating to
Index Portfolio (filed as Exhibit 5(a) ro Amendment No.
5 the Registration Statement of Core Trust (Delarware),
File No. 811-8858, via EDGAR on September 30, 1996,
accession number 0000912057-96-021568).

(m)* Investment Advisory Agreement between Schroder Capital
Management International, Inc. and Schroder Capital
Funds, relating to Schroder U.S. Smaller Companies
Portfolio, International Equity Fund and Schroder
Emerging Markets Fund Institutional Portfolio (filed as
Exhibit 5 to Amendment No. 1 to the Registration
Statement of Schroder Capital Funds, File No. 811-9130,
via EDGAR on August 9, 1996, accesssion number
0000898432-96-000341.

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

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

(c)* Distribution Agreement between Registrant and Forum
Financial Services, Inc. (filed herewith).

(7) None.

(8) (a)* Form of Transfer Agency Agreement between Registrant
and Forum Financial Corp. (filed as Exhibit 8(a) to PEA
No. 33 via EDGAR on January 5, 1996, accession number
0000912057-96-000216).

(b)* Form of Custodian Agreement between Registrant and the
First National Bank of Boston (filed as Exhibit 8(b) to
PEA No. 33 via EDGAR on January 5, 1996, accession
number 0000912057-96-000216).

(9) (a) Administration Agreement between Registrant and Forum
Administrative Services, LLC (filed as Exhibit 6(e) to
PEA No. 43 via EDGAR on July 31, 1997, accession number
0000912057-97-025707).

(b) Shareholder Service Plan of Registrant relating to the
Quadra Funds and Form of Shareholder Service Agreement
relating to Quadra Funds (filed as Exhibit 9(b) to PEA
No. 49 via EDGAR on November 5, 1997, accession number
0001004402-97-000163).

(c) Form of Shareholder Service Plan of Registrant and Form
of Shareholder Service Agreement relating to the Daily
Assets Treasury Fund, Daily Assets Cash Fund, Daily
Assets Government Fund, Daily Assets Tax-Exempt Fund
and Daily Assets Treasury Obligations Fund (filed as
Exhibit 9(c) to PEA No. 50 via EDGAR on November 12,
1997, accession no ______________).

(10)* Opinion of Seward & Kissel dated January 5, 1996 (filed as
Exhibit 10 of PEA No. 33 via EDGAR on January 5, 1996,
accession number 0000912057-96-000216).

(11) None.

<PAGE>

(12) None.

(13)* Investment Representation letter of Reich & Tang, Inc. as
original purchaser of shares of registrant (filed as Exhibit
13 to Registration Statement).

(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).

(16) Schedule of Sample Performance Calculations (filed as Exhibit
16 to PEA No. 43 via EDGAR on July 31, 1997, accession
number 0000912057-97-025707).

Other Exhibits*:

Powers of Attorney (filed as Exhibit 99 to PEA No. 34 via
EDGAR on May 9, 1996, accession number
0000912057-96-008780).

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

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF SEPTEMBER 30, 1997

TITLE OF CLASS NUMBER OF HOLDERS
-------------- -----------------
Investors Bond Fund 74
TaxSaver Bond Fund 48
Daily Assets Cash Fund 15
Daily Assets Treasury Fund 73
Daily Assets Government Fund 0
Daily Assets TaxSaver Fund 0
Payson Value Fund 312
Payson Balanced Fund 378
Maine Municipal Bond Fund 387
New Hampshire Bond Fund 78
Austin Global Equity Fund 12
Oak Hall Equity Fund 199
Quadra Limited Maturity Treasury Fund 4
Quadra Value Equity Fund 16
Quadra International Equity Fund 10
Quadra Opportunistic Bond Fund 6

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:

<PAGE>

"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;

"(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 he is not entitled
to indemnification under this Section 5.2; provided, however, that
either (a) such Covered Person shall have provided appropriate security

<PAGE>

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 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

<PAGE>

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 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

<PAGE>

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:

"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."

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.

<PAGE>

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 Maine Municipal Bond Fund, the New
Hampshire Bond Fund, 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 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 Administrative Services, LLC serves as
administrator and for which Forum Financial Services, Inc. serves
as manager, administrator and/or distributor.

Sara M. Morris, Treasurer.

Treasurer of Forum Financial Services, Inc. and of Forum
Financial Corp., Ms. Morris is an officer of various registered
investment companies for which Forum Financial Services, Inc.
serves as manager, administrator and/or distributor.

David I. Goldstein, Secretary.

Secretary of Forum Financial Services, Inc. and of Forum
Financial Corp., Mr. Goldstein is an officer of various
registered investment companies for which Forum Administrative
Services serves as administrator and for which Forum Financial
Services, Inc. serves as manager, administrator and/or
distributor.

Margaret J. Fenderson, Assistant Treasurer.

Ms. Fenderson is Assistant Treasurer of Forum Financial Services,
Inc. and of Forum Financial Corp.

Dana Lukens, Assistant Secretary.

Mr. Lukens is Assistant Secretary of Forum Financial Services,
Inc. and of Forum Financial Corp.

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.

<PAGE>

Adrian L. Asherman, Managing Director.

Portfolio Manager 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 and Treasurer.

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.

Portfolio Manager 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.

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. Mr.
Walker is also a Director of York Holding Company and York
Insurance Company. His address is One Portland Square, Portland,
Maine 04101.

Teresa M. Esposito, Managing Director.

Managing Director of H.M. Payson & Co. since 1995. Her address is
One Portland Square, Portland, Maine 04101.

John C. Knox, Managing Director.

Managing Director of H.M. Payson & Co. since 1995. His address is
One Portland Square, Portland, Maine 04101.

Harold J. Dixon, Managing Director and Secretary.

Managing Director of H.M. Payson & Co. since 1995. His address is
One Portland Square, Portland, Maine 04101.

Laura McDill, Managing Director.

Managing Director of H.M. Payson & Co. since 1995. Her address is
One Portland Square, Portland, Maine 04101.

<PAGE>

Austin Investment Management, Inc.

The description of Austin Investment Management, Inc. under the caption
"Management - Adviser" in the Prospectus and Statement of Additional
Information with respect to the Austin Global Equity Fund, constituting
part of Parts A and B, respectively, of this Registration Statement are
incorporated by reference herein.

The following is the director and principal executive officer of Austin
Investment Management, Inc. 375 Park Avenue, New York, New York 10152,
including his business connections which are of a substantial nature.

Peter Vlachos, Director, President Treasurer and Secretary

Oak Hall Capital Advisors, Inc.

The description of Oak Hall Capital Advisors, Inc. under the caption
"Management - Advisor" in the Prospectus and Statement of Additional
Information with respect to the Oak Hall Equity Fund, constituting part
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, Oak
Hall Capital Advisors, Inc. 122 East 42nd Street, New York, New York
10168, including their business connections which are of a substantial
nature.

Alexander G. Anagnos, Director and Portfolio Manager.

Consultant to American Services Corporation and Financial Advisor to
WR Family Associates.

Lewis G. Cole, Director.

Partner, the Law Firm of Strook, Strook & Lavan.

John C. Hathaway, President, director and Portfolio Manager.

John J. Hock, Executive Vice President.

Charles D. Klein, Portfolio Manager.

Director, American Securities Corporation and Financial Advisor to
WR Family Associates.

David P. Steinmann, Executive Vice President, Secretary and Treasurer.

Administrator WR Family Associates and Secretary and Treasurer of
American Securities Corporation.

Carl Domino Associates, L.P.

The description of Carl Domino Associates, L.P. under the caption
"Management - Advisor" in the Prospectus and Statement of Additional
Information with respect to the Quadra Value Equity Fund, constituting
part 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, Carl
Domino Associates, L.P., 580 Village Blvd., West Palm Beach, FL 33409
including their business connections which are of a substantial nature.

Carl J. Domino, Managing Partner & Portfolio Manager.

Paul Scoville, Jr., Senior Portfolio Manager.

<PAGE>

Ann Fritts Syring, Senior Portfolio Manager.

John Wagstaff-Callahan, Senior Portfolio Manager.

Prior to joining Carl Domino Associates, L.P., Mr. Wagstaff-Callahan
was a Trustee with Batterymarch Financial Management, Boston,
Massachusetts.

Stephen Krider Kent, Jr., Senior Portfolio Manager.

Prior to joining Carl Domino Associates, L.P., Mr. Kent was a Senior
Portfolio Manager with Gamble, Jones Holbrook & Bent, Carlsbad
California.

Anhalt/O'Connell, Inc.

The description of Anhalt/O'Connell, Inc. under the caption "Management -
Advisor" in the Prospectus and Statement of Additional Information with
respect to the Quadra Limited Maturity Treasury Fund, constituting part
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,
Anhalt/O'Connell, Inc., 345 South Figueroa Street, Suite 303, Los
Angeles, CA, including their business connections which are of a
substantial nature.

Paul Edward Anhalt, Managing Director and Chairman.

Mr. Anhalt is also a partner of Anhalt/O'Connell, a partnership,
and was formerly Managing Director and Consulting Economist of
Trust Company of the West.

Michael Frederick O'Connell, Managing Director

Mr. O'Connell is also a partner of Anhalt/O'Connell, a partnership,
and was formerly Managing Director of Trust Company of the West and
Vice President of Institutional Research Services, Inc., a
registered broker-dealer.

LM Capital Management, Inc.

The description of LM Capital Management, Inc., under the caption
"Management - Advisor" in the Prospectus and Statement of Additional
Information with respect to the Quadra Opportunistic Bond Fund,
constituting part 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, LM
Capital Management, Inc., including their business connections which are
of a substantial nature.

Luis Malzel, Managing Director.

John Chalker, Managing Director

McDonald Investment Management, Inc.

The description of McDonald Investment Management, Inc., under the
caption "Management - Advisor" in the Prospectus and Statement of
Additional Information with respect to the Quadra International Equity
Fund, constituting part of Parts A and B, respectively, of this
Registration Statement are incorporated by reference herein.

<PAGE>

The following are the directors and principal executive officers of
McDonald Investment Management, Inc., including their business
connections which are of a substantial nature.

John McDonald, President and Chief Investment Officer.

Ron Belcot, Vice President - Research and Trading.

Bill Hallman, Vice President.

Ray DiBernardo, Vice President., Managing Director

Mr. DiBernardo was formerly a portfolio manager with Royal Trust.

Smith Asset Management Group, L.P.

The description of Smith Asset Management Group, L.P., under the caption
"Management - Investment Advisory Services" in the Prospectus and
Statement of Additional Information with respect to the Quadra Growth
Fund, constituting part 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 Smith
Asset Management Group, L.P., including their business connections which
are of a substantial nature.

Mr. Stephen Smith, Chief Investment Officer

ITEM 29. PRINCIPAL UNDERWRITER.

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

(b) John Y. Keffer, President of Forum Financial Services, Inc.,
is the Chairman and President of the Registrant. Sara M.
Morris is the Treasurer of Forum Financial Services. David I.
Goldstein, Secretary of Forum Financial Services, Inc., is the
Secretary of the Registrant. Margaret J. Fenderson is the
Assistant Treasurer of Forum Financial Services, Inc. and Dana
Lukens is the Assistant Secretary of Forum Financial Services,
Inc. 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 Administrative Services, LLC
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 Registrant's custodian, The First
National Bank of Boston, 100 Federal Street, Boston, Massachusetts 02106. 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.

<PAGE>

ITEM 31. MANAGEMENT SERVICES.

Not Applicable.

ITEM 32. UNDERTAKINGS.

(i) Registrant undertakes to 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 shares of the
respective shares; and,

(i) 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.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and 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 State of Maine on the 28th
day of November, 1997.

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 on the 28th day of November, 1997.

SIGNATURES TITLE

(a) Principal Executive Officer

/S/ JOHN Y. KEFFER President
------------------- and Chairman
John Y. Keffer

(b) Principal Financial and Accounting Officer

/S/ ROBERT B. CAMPBELL Treasurer
---------------------
Robert B. Campbell

/S/ JOHN Y. KEFFER Trustee
------------------------
John Y. Keffer

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

By: /S/ JOHN Y. KEFFER
------------------------
John Y. Keffer
Attorney in Fact*

<PAGE>

INDEX TO EXHIBITS

EXHIBIT

(5)(A) Investment Advisory Agreement between Registrant and Forum
Advisors, Inc.

(6)(A) Distribution Agreement between Registrant and Forum Financial
Services, Inc.

<PAGE>

EXHIBIT 5(A)

<PAGE>

FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT

December 18, 1995,
as amended December 5, 1997

Forum Advisors, Inc.
Two Portland Square
Portland, ME 04101

Dear Sirs:

We, the undersigned Forum Funds, herewith confirm our agreement with
you as follows:

1. We propose to engage in the business of investing and reinvesting
our assets in securities of the type and in accordance with the limitations
specified in Trust Instrument, By-Laws and registration statement filed with the
Securities and Exchange Commission under the Investment Company Act of 1940 (the
"Investment Company Act") and the Securities Act of 1933 (the "Securities Act"),
including any representations made in our prospectus and statement of additional
information, all in such manner and to such extent as may from time to time be
authorized by our Board of Trustees. We enclose copies of the documents listed
above and will from time to time furnish you with any amendments thereof.

2. We hereby employ you, subject to the direction and control of our
Board of Trustees, to manage the investment and reinvestment of the assets with
respect to each class or series of our shares as listed in Appendix A hereto
("Funds"), and, without limiting the generality of the foregoing, to provide
management and other services specified below.

(a) You will make decisions with respect to all purchases and sales of
securities in each Fund. To carry out such decisions, you are hereby authorized,
as our agent and attorney-in-fact, for our account and at our risk and in our
name, to place orders for the investment and reinvestment of the assets of the
Funds. In all purchases, sales and other transactions in securities in the Funds
you are authorized to exercise full discretion and act for us in the same manner
and with the same force and effect as we 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) You will report to our Board of Trustees at each meeting thereof
all changes in the Funds since the prior report, and will also keep us in touch
with important developments affecting the Funds and on your own initiative will
furnish us from time to time with such information as you may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Funds, the industries in which they engage, or
the conditions prevailing in the economy generally. You will also furnish us

<PAGE>

with such statistical and analytical information with respect to securities in
the Funds as you may believe appropriate or as we reasonably may request. In
making such purchases and sales of securities in the Funds, you will bear in
mind the policies set from time to time by our Board of Trustees as well as the
limitations imposed by our Trust Instrument and in our Registration Statements
under the Investment Company Act and the Securities Act the limitations in the
Investment Company Act and of the Internal Revenue Code in respect of regulated
investment companies and the investment objective, policies and restrictions for
the Funds.

(c) It is understood that you will from time to time employ or
associate with yourselves such persons as you believe to be particularly fitted
to assist you in the execution of your duties hereunder, the cost of performance
of such duties to be borne and paid by you. No obligation may be incurred on our
behalf in any such respect.

3. It is further agreed that you shall be responsible for the portion
of the net expenses that relate to each of the Funds (except interest, taxes,
brokerage fees and other expenses paid by us in accordance with an effective
plan pursuant to Rule 12b-1 under the Investment Company Act and organization
expenses, all to the extent such exclusions are permitted by applicable state
law and regulation) incurred by us during each of our fiscal years or portion
thereof that this agreement is in effect between us 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 our shares are qualified for sale (reduced pro
rata for any portion of less than a year). We hereby confirm that, subject to
the foregoing, we shall be responsible and hereby assume the obligation for
payment of all our other expenses, including: (a) payment of the fee payable to
you under paragraph 5 hereof and the fee payable to Forum Financial Services,
Inc. pursuant to the Management and Distribution Agreements between Forum
Financial Services, Inc. and us; (b) taxes, brokerage fees and commissions; (c)
certain insurance premiums; (d) fees, interest charges and expenses of our
custodian, transfer agent and dividend disbursing agent; (e) telecommunications
expenses; (f) auditing, legal and compliance expenses; (g) costs of forming the
corporation and maintaining corporate existence; (h) costs of preparing and
printing our Prospectuses, Statements of Additional Information, subscription
application forms and shareholder reports and their delivery to existing and
prospective shareholders; (i) 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 our shares; (j) costs of reproduction,
stationery and supplies; (k) compensation of our trustees, officers and
employees and costs of other personnel performing services for us who are not
your officers or officers of Forum Financial Services, Inc., or your and its
respective affiliates; (l) costs of corporate meetings; (m) Securities and
Exchange Commission registration fees and related expenses; (n) state securities
laws registration fees and related expenses and (o) all fees and expenses paid
by us in accordance with any distribution plan adopted by us pursuant to Rule
12b-1 under the Investment Company Act.

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

<PAGE>

holders to which you would otherwise be subject by reason of 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.

5. In consideration of the foregoing we will pay you, with respect to
each each Fund a fee as described in Appendix A hereto. Such fees shall be
accrued by us 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. Your reimbursement, if any, of our expenses as provided in paragraph 3
hereof, shall be estimated and paid to us monthly in arrears, at the same time
as our payment to you for such month. Payment of the advisory fees will be
reduced or postponed, if necessary, with any adjustments made after the end of
the year.

6. This agreement shall become effective as to a Fund immediately upon
approval by a majority of the outstanding voting securities (as defined in the
Investment Company Act) of that Fund and shall remain in effect for a period of
one year from the date it first becomes effective and shall continue in effect
thereafter for successive twelve-month periods (computed from each anniversary
date of the effective date) with respect to each Fund, provided that such
continuance is specifically approved at least annually by our Board of Trustees
or by majority vote of the holders of the outstanding voting securities (as
defined) of each Fund, and, in either case, by a majority of our trustees who
are not parties to this agreement or interested persons, as defined in the
Investment Company Act, of any such party (other than as our trustees), provided
further, however, that if the continuation of this agreement is not approved as
to a Fund, you may continue to render to such Fund the services described herein
in the manner and to the extent permitted by the Act and the rules and
regulations thereunder. Upon the effectiveness of this agreement, it shall
supersede all previous agreements between us covering the subject matter hereof.
This agreement may be terminated with respect to any Fund at any time, without
the payment of any penalty, by vote of a majority of the outstanding voting
securities (as so defined) of such Fund, or by a vote of a majority of our
entire Board of Trustees on 60 days' written notice to you, or by you with
respect to the Fund on not more than 60 days' nor less than 30 days' written
notice to us.

7. This agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you and this agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer," "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations promulgated by the
Securities and Exchange Commission thereunder.

8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, trustees or employees who may also be a
trustee, officer or employee of ours, or persons otherwise affiliated with us
(within the meaning of the Investment Company Act) 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.

<PAGE>

If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.

Very truly yours,

FORUM FUNDS

By_____________________
John Y. Keffer
President

FORUM ADVISORS, INC.

By______________________
David R. Keffer
Vice President

<PAGE>

FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT

APPENDIX A
AS AMENDED DECEMBER 5, 1997
<TABLE>
<S> <C>
Advisory Fee as a % of
the Annual Average Daily
Fund Net Assets of the Fund
---- ----------------------

Daily Assets Cash Fund 0.00% (fee paid at the Core)
Daily Assets Treasury Fund 0.00% (fee paid at the Core)
Investors Bond Fund 0.40%
TaxSaver Bond Fund 0.40%
Maine Municipal Bond Fund 0.40%
New Hampshire Bond Fund 0.40%
Investors High Grade Bond Fund 0.40%

Investors Growth Fund 0.65%

</TABLE>

<PAGE>

EXHIBIT 6(A)

<PAGE>

FORUM FUNDS
DISTRIBUTION AGREEMENT

AGREEMENT made as of the 19th day of June, 1997, and as amended as of
of the 22nd day of September, 1997, by and between Forum Funds, a Delaware
business trust, with its principal office and place of business at Two Portland
Square, Portland, Maine 04101 (the "Trust"), and Forum Financial Services, Inc.,
a Delaware corporation with its principal office and place of business at Two
Portland Square, Portland, Maine 04101 ("Distributor").

WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company and
may issue its shares of beneficial interest, no par value ("Shares") in separate
series and classes; and

WHEREAS, the Distributor is registered under the Securities Exchange
Act of 1934, as amended ("1934 Act"), as a broker-dealer and is engaged in the
business of selling shares of registered investment companies either directly to
purchasers or through other financial intermediaries;

WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement being herein
referred to as a "Fund," and collectively as the "Funds") and the Trust may in
the future offer shares of various classes of each Fund as listed in Appendix A
hereto (each such class together with all other classes subsequently established
by the Trust in a Fund being herein referred to as a "Class," and collectively
as the "Classes"); and

WHEREAS, the Trust desires that the Distributor offer, as principal
underwriter, the Shares of each Fund and Class thereof to the public and the
Distributor is willing to provide those services on the terms and conditions set
forth in this Agreement in order to promote the growth of the Funds and
facilitate the distribution of the Shares;

NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Distributor do hereby agree as
follows:

SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS

(a) The Trust hereby appoints the Distributor, and the Distributor
hereby agrees, to act as distributor of the Shares for the period and on the
terms set forth in this Agreement.

(b) In connection therewith, the Trust has delivered to the Distributor
copies of (i) the Trust's Trust Instrument and Bylaws (collectively, as amended
from time to time, "Organic Documents"), (ii) the Trust's Registration Statement
and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended

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("Securities Act"), or the 1940 Act ("Registration Statement"), (iii) the
current prospectuses and statements of additional information of each Fund and
Class thereof (collectively, as currently in effect and as amended or
supplemented, the "Prospectus"), (iv) each current plan of distribution or
similar document adopted by the Trust under Rule 12b-1 under the 1940 Act
("Plan") and each current shareholder service plan or similar document adopted
by the Trust ("Service Plan"); and (iv) all procedures adopted by the Trust with
respect to the Funds (e.g., repurchase agreement procedures), and shall promptly
furnish the Distributor with all amendments of or supplements to the foregoing.
The Trust shall deliver to Forum a certified copy of the resolution of the Board
of Trustees of the Trust (the "Board") appointing Forum and authorizing the
execution and delivery of this Agreement.

SECTION 2. EXCLUSIVE NATURE OF DUTIES

The Distributor shall be the exclusive representative of the Trust to
act distributor of the Funds except that the rights given under this Agreement
to the Distributor shall not apply to: (i) Shares issued in connection with the
merger, consolidation or reorganization of any other investment company or
series or class thereof with a Fund or Class thereof; (ii) a Fund's acquisition
by purchase or otherwise of all or substantially all of the assets or stock of
any other investment company or series or class thereof; (iii) the reinvestment
in Shares by a Fund's shareholders of dividends or other distributions; or (iv)
any other offering by the Trust of securities to its shareholders (collectively
"exempt transactions").

SECTION 3. OFFERING OF SHARES

(a) The Distributor shall have the right to buy from the Trust the
Shares needed to fill unconditional orders for unsold Shares of the Funds as
shall then be effectively registered under the Securities Act placed with the
Distributor by investors or selected dealers or selected agents (each as defined
in Section 11 hereof) acting as agent for their customers or on their own
behalf. Alternatively, the Distributor may act as the Trust's agent, to offer,
and to solicit offers to subscribe to, unsold Shares of the Funds as shall then
be effectively registered under the Securities Act. The Distributor will
promptly forward all orders and subscriptions to the Trust. The price that the
Distributor shall pay for Shares purchased from the Trust shall be the net asset
value per Share, determined as set forth in Section 3(c) hereof, used in
determining the public offering price on which the orders are based. Shares
purchased by the Distributor are to be resold by the Distributor to investors at
the public offering price, as set forth in Section 3(b) hereof, or to selected
dealers or selected agents acting as agent for their customers that have entered
into agreements with the Distributor pursuant to Section 11 hereof or acting on
their own behalf. The Trust reserves the right to sell Shares directly to
investors through subscriptions received by the Trust, but no such direct sales
shall affect the sales charges due to the Distributor hereunder.

(b) The public offering price of the Shares of a Fund, i.e., the price
per Share at which the Distributor or selected dealers or selected agents may
sell Shares to the public or to those persons eligible to invest in Shares as
described in the applicable Prospectus, shall be the public offering price
determined in accordance with the then currently effective Prospectus of the
Fund or Class thereof under the Securities Act relating to such Shares. The
public offering price shall
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not exceed the net asset value at which the
Distributor, when acting as principal, is to purchase such Shares, plus, in the
case of Shares for which an initial sales charge is assessed, an initial charge
equal to a specified percentage or percentages of the public offering price of
the Shares as set forth in the current Prospectus relating to the Shares. In the
case of Shares for which an initial sales charge may be assessed, Shares may be
sold to certain classes of persons at reduced sales charges or without any sales
charge as from time to time set forth in the current Prospectus relating to the
Shares. The Trust will advise the Distributor of the net asset value per Share
at each time as the net asset value per Share shall have been determined by the
Trust and at such other times as the Distributor may reasonably request.

(c) The net asset value per Share of each Fund or Class thereof shall
be determined by the Trust, or its designated agent, in accordance with and at
the times indicated in the applicable Prospectus on each Fund business day in
accordance with the method set forth in the Prospectus and guidelines
established by the Trust's Board of Trustees (the "Board").

(d) The Trust reserves the right to suspend the offering of Shares of a
Fund or of any Class thereof at any time in the absolute discretion of the
Board, and upon notice of such suspension the Distributor shall cease to offer
Shares of the Funds or Classes thereof specified in the notice.

(e) The Trust, or any agent of the Trust designated in writing to the
Distributor by the Trust, shall be promptly advised by the Distributor of all
purchase orders for Shares received by the Distributor and all subscriptions for
Shares obtained by the Distributor as agent shall be directed to the Trust for
acceptance and shall not be binding until accepted by the Trust. Any order or
subscription may be rejected by the Trust; provided, however, that the Trust
will not arbitrarily or without reasonable cause refuse to accept or confirm
orders or subscriptions for the purchase of Shares. The Trust or its designated
agent will confirm orders and subscriptions upon their receipt, will make
appropriate book entries and, upon receipt by the Trust or its designated agent
of payment thereof, will issue such Shares in certificated or uncertificated
form pursuant to the instructions of the Distributor. The Distributor agrees to
cause such payment and such instructions to be delivered promptly to the Trust
or its designated agent.

SECTION 4. REPURCHASE OR REDEMPTION OF SHARES BY THE TRUST

(a) Any of the outstanding Shares of a Fund or Class thereof may be
tendered for redemption at any time, and the Trust agrees to redeem or
repurchase the Shares so tendered in accordance with its obligations as set
forth in the Organic Documents and the Prospectus relating to the Shares. The
price to be paid to redeem or repurchase the Shares of a Fund of Class thereof
shall be equal to the net asset value calculated in accordance with the
provisions of Section 3(b) hereof less, in the case of Shares for which a
deferred sales charge is assessed, a deferred sales charge equal to a specified
percentage or percentages of the net asset value of those Shares as from time to
time set forth in the Prospectus relating to those Shares [or their cost,
whichever is less.] Shares of a Fund or Class thereof for which a deferred sales
charge may be assessed and that have been outstanding for a specified period of
time may be redeemed without payment of a deferred sales charge as from time to
time set forth in the Prospectus relating to those Shares.

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(b) The Trust or its designated agent shall pay (i) the total amount of
the redemption price consisting of the redemption price less any applicable
deferred sales charge to the redeeming shareholder or its agent and (ii) except
as may be otherwise required by the Rules of Fair Practice (the "Rules") of the
National Association of Securities Dealers Regulation, Inc. (the "NASD") and any
interpretations thereof, any applicable deferred sales charges to the
Distributor in accordance with the Distributor's instructions on or before the
fifth business day (or such other earlier business day as is customary in the
investment company industry) subsequent to the Trust or its agent having
received the notice of redemption in proper form.

(c) Redemption of Shares or payment therefor may be suspended at times
when the New York Stock Exchange is closed for any reason other than its
customary weekend or holiday closings, when trading thereon is restricted, when
an emergency exists as a result of which disposal by the Trust of securities
owned by a Fund is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of a Fund's net assets,
or during any other period when the SEC so requires or permits.

SECTION 5. DUTIES AND REPRESENTATIONS OF THE DISTRIBUTOR

(a) The Distributor shall use reasonable efforts to sell Shares of the
Funds upon the terms and conditions contained herein and in the then current
Prospectus. The Distributor shall devote reasonable time and effort to effect
sales of Shares but shall not be obligated to sell any specific number of
Shares. The services of the Distributor to the Trust hereunder are not to be
deemed exclusive, and nothing herein contained shall prevent the Distributor
from entering into like arrangements with other investment companies so long as
the performance of its obligations hereunder is not impaired thereby.

(b) In selling Shares of the Funds, the Distributor shall use its best
efforts in all material respects duly to conform with the requirements of all
federal and state laws relating to the sale of the Shares. None of the
Distributor, any selected dealer, any selected agent or any other person is
authorized by the Trust to give any information or to make any representations
other than as is contained in a Fund's Prospectus or any advertising materials
or sales literature specifically approved in writing by the Trust or its agents.

(c) The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers or selected agents, the
collection of amounts payable by investors and selected dealers or selected
agents on such sales, and the cancellation of unsettled transactions, as may be
necessary to comply with the requirements of the NASD.

(d) The Distributor represents and warrants to the Trust that:

(i) It is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware and it is duly
qualified to carry on its business in the State of Maine;

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(ii) It is empowered under applicable laws and by its Articles of
Incorporation to enter into and perform this Agreement;

(iii) All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;

(iv) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;

(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Distributor, enforceable
against the Distributor in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and
secured parties;

(vi) It is registered under the 1934 Act with the SEC as a
broker-dealer, it is a member in good standing of the NASD, it will
abide by the rules and regulations of the NASD, and it will notify the
Trust if its membership in the NASD is terminated or suspended; and

(vii) The performance by the Distributor of its obligations hereunder
does not and will not contravene any provision of its Articles of
Incorporation.

(e) Notwithstanding anything in this Agreement, including the
Appendices, to the contrary, the Distributor makes no warranty or representation
as to the number of selected dealers or selected agents with which it has
entered into agreements in accordance with Section 11 hereof, as to the
availability of any Shares to be sold through any selected dealer, selected
agent or other intermediary or as to any other matter not specifically set forth
herein.

SECTION 6. DUTIES AND REPRESENTATIONS OF THE TRUST

(a) The Trust shall furnish to the Distributor copies of all financial
statements and other documents to be delivered to shareholders or investors at
least two Fund business days prior to such delivery and shall furnish the
Distributor copies of all other financial statements, documents and other papers
or information which the Distributor may reasonably request for use in
connection with the distribution of Shares. The Trust shall make available to
the Distributor the number of copies of the Funds' Prospectuses as the
Distributor shall reasonably request.

(b) The Trust shall take, from time to time, subject to the approval of
the Board and any required approval of the shareholders of the Trust, all action
necessary to fix the number of authorized Shares (if such number is not limited)
and to register the Shares under the Securities Act, to the end that there will
be available for sale the number of Shares as reasonably may be expected to be
sold pursuant to this Agreement.

(c) The Trust shall execute any and all documents, furnish to the
Distributor any and all information, otherwise use its best efforts to take all

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actions that may be reasonably necessary and cooperate with the Distributor in
taking any action as may be necessary to register or qualify Shares for sale
under the securities laws of the various states of the United States and other
jurisdictions ("States") as the Distributor shall designate (subject to approval
by the Trust); provided that the Distributor shall not be required to register
as a broker-dealer or file a consent to service of process in any State and
neither the Trust nor any Fund or Class thereof shall be required to qualify as
a foreign corporation, trust or association in any State. Any registration or
qualification may be withheld, terminated or withdrawn by the Trust at any time
in its discretion. The Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the Trust
in connection with such registration or qualification.

(d) The Trust represents and warrants to the Distributor that:

(i) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware;

(ii) It is empowered under applicable laws and by its Organic
Documents to enter into and perform this Agreement;

(iii) All proceedings required by the Organic Documents have been
taken to authorize it to enter into and perform its duties under this
Agreement;

(iv) It is an open-end management investment company registered with
the SEC under the 1940 Act;

(v) All Shares, when issued, shall be validly issued, fully paid and
non-assessable;

(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Trust, enforceable against
the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties;

(vii) The performance by the Distributor of its obligations hereunder
does not and will not contravene any provision of its Articles of
Incorporation.

(viii) The Registration statement is currently effective and will
remain effective with respect to all Shares of the Funds and Classes
thereof being offered for sale;

(ix) The Registration Statement and Prospectuses have been or will be,
as the case may be, carefully prepared in conformity with the
requirements of the Securities Act and the rules and regulations
thereunder;

(x) The Registration Statement and Prospectuses contain or will contain
all statements required to be stated therein in accordance with the
Securities Act and the rules and regulations thereunder; all statements
of fact contained or to be contained in the Registration Statement or

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Prospectuses are or will be true and correct at the time indicated or
on the effective date as the case may be; and neither the Registration
Statement nor any Prospectus, when they shall become effective or be
authorized for use, will include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser
of Shares;

(xi) It will from time to time file such amendment or amendments to the
Registration Statement and Prospectuses as, in the light of
then-current and then-prospective developments, shall, in the opinion
of its counsel, be necessary in order to have the Registration
Statement and Prospectuses at all times contain all material facts
required to be stated therein or necessary to make any statements
therein not misleading to a purchaser of Shares ("Required
Amendments");

(xii) It shall not file any amendment to the Registration Statement or
Prospectuses without giving the Distributor reasonable advance notice
thereof; provided, however, that nothing contained in this Agreement
shall in any way limit the Trust's right to file at any time such
amendments to the Registration Statement or Prospectuses, of whatever
character, as the Trust may deem advisable, such right being in all
respects absolute and unconditional; and

(xiii) Any amendment to the Registration Statement or Prospectuses
hereafter filed will, when it becomes effective, contain all statements
required to be stated therein in accordance with the 1940 Act and the
rules and regulations thereunder; all statements of fact contained in
the Registration Statement or Prospectuses will, when be true and
correct at the time indicated or on the effective date as the case may
be; and no such amendment, when it becomes effective, will include an
untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of the Shares.

SECTION 7. STANDARD OF CARE

(a) The Distributor shall use its best judgment and reasonable efforts
in rendering services to the Trust under this Agreement but shall be under no
duty to take any action except as specifically set forth herein or as may be
specifically agreed to by the Distributor in writing. The Distributor shall not
be liable to the Trust or any of the Trust's shareholders for any error of
judgment or mistake of law, for any loss arising out of any investment, or for
any action or inaction of the Distributor in the absence of bad faith, willful
misfeasance or gross negligence in the performance of the Distributor's duties
or obligations under this Agreement or by reason or the Distributor's reckless
disregard of its duties and obligations under this Agreement

(b) The Distributor shall not be liable for any action taken or failure
to act in good faith reliance upon:

(i) the advice of the Trust or of counsel, who may be counsel to
the Trust or counsel to the Distributor;

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(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction (the Distributor
shall have no duty or obligation to make any inquiry or effort of
certification of such oral instruction);

(iii) any written instruction or certified copy of any resolution of
the Board, and the Distributor may rely upon the genuineness of any
such document or copy thereof reasonably believed in good faith by the
Distributor to have been validly executed; or

(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
the Distributor to be genuine and to have been signed or presented by
the Trust or other proper party or parties;

and the Distributor shall not be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which the Distributor reasonably believes in
good faith to be genuine.

(c) The Distributor shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control including, without limitation, acts of civil or military authority,
national emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent the
Distributor's obligations hereunder are to oversee or monitor the activities of
third parties, the Distributor shall not be liable for any failure or delay in
the performance of the Distributor's duties caused, directly or indirectly, by
the failure or delay of such third parties in performing their respective duties
or cooperating reasonably and in a timely manner with the Distributor.

SECTION 8. INDEMNIFICATION

(a) The Trust will indemnify, defend and hold the Distributor, its
employees, agents, directors and officers and any person who controls the
Distributor within the meaning of section 15 of the Securities Act or section 20
of the 1934 Act ("Distributor Indemnitees") free and harmless from and against
any and all claims, demands, actions, suits, judgments, liabilities, losses,
damages, costs, charges, reasonable counsel fees and other expenses of every
nature and character (including the cost of investigating or defending such
claims, demands, actions, suits or liabilities and any reasonable counsel fees
incurred in connection therewith) which any Distributor Indemnitee 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
Registration Statement or the Prospectuses or arising out of or based upon any
alleged omission to state a material fact required to be stated in any one

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thereof or necessary to make the statements in any one thereof not misleading,
unless such statement or omission was made in reliance upon, and in conformity
with, information furnished in writing to the Trust in connection with the
preparation of the Registration Statement or exhibits to the Registration
Statement by or on behalf of the Distributor ("Distributor Claims").

After receipt of the Distributor's notice of termination under Section
13(e), the Trust shall indemnify and hold each Distributor Indemnitee free and
harmless from and against any Distributor Claim; provided, that the term
Distributor Claim for purposes of this sentence shall mean any Distributor Claim
related to the matters for which the Distributor has requested amendment to the
Registration Statement and for which the Trust has not filed a Required
Amendment, regardless of with respect to such matters whether any statement in
or omission from the Registration Statement was made in reliance upon, or in
conformity with, information furnished to the Trust by or on behalf of the
Distributor.

(b) The Trust may assume the defense of any suit brought to enforce any
Distributor Claim and may retain counsel of good standing chosen by the Trust
and approved by the Distributor, which approval shall not be withheld
unreasonably. The Trust shall advise the Distributor that it will assume the
defense of the suit and retain counsel within ten (10) days of receipt of the
notice of the claim. If the Trust assumes the defense of any such suit and
retains counsel, the defendants shall bear the fees and expenses of any
additional counsel that they retain. If the Trust does not assume the defense of
any such suit, or if Distributor does not approve of counsel chosen by the Trust
or has been advised that it may have available defenses or claims that are not
available to or conflict with those available to the Trust, the Trust will
reimburse any Distributor Indemnitee named as defendant in such suit for the
reasonable fees and expenses of any counsel that person retains. A Distributor
Indemnitee shall not settle or confess any claim without the prior written
consent of the Trust, which consent shall not be unreasonably withheld or
delayed.

(c) The Distributor will indemnify, defend and hold the Trust and its
several officers and trustees (collectively, the "Trust Indemnitees"), free and
harmless from and against any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other expenses of every nature and character (including the cost of
investigating or defending such claims, demands, actions, suits or liabilities
and any reasonable counsel fees incurred in connection therewith), but only to
the extent that such claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses
result from, arise out of or are based upon:

(i) any alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or any alleged omission of a
material fact required to be stated or necessary to make the statements
therein not misleading, if such statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Trust in writing in connection with the preparation of the Registration
Statement or Prospectus by or on behalf of the Distributor; or

<PAGE>

(ii) any act of, or omission by, Distributor or its sales
representatives that does not conform to the standard of care set forth
in Section 7 of this Agreement ("Trust Claims").

(d) The Distributor may assume the defense of any suit brought to
enforce any Trust Claim and may retain counsel of good standing chosen by the
Distributor and approved by the Trust, which approval shall not be withheld
unreasonably. The Distributor shall advise the Trust that it will assume the
defense of the suit and retain counsel within ten (10) days of receipt of the
notice of the claim. If the Distributor assumes the defense of any such suit and
retains counsel, the defendants shall bear the fees and expenses of any
additional counsel that they retain. If the Distributor does not assume the
defense of any such suit, or if Trust does not approve of counsel chosen by the
Distributor or has been advised that it may have available defenses or claims
that are not available to or conflict with those available to the Distributor,
the Distributor will reimburse any Trust Indemnitee named as defendant in such
suit for the reasonable fees and expenses of any counsel that person retains. A
Trust Indemnitee shall not settle or confess any claim without the prior written
consent of the Distributor, which consent shall not be unreasonably withheld or
delayed.

(e) The Trust's and the Distributor's obligations to provide
indemnification under this Section is conditioned upon the Trust or the
Distributor receiving notice of any action brought against a Distributor
Indemnitee or Trust Indemnitee, respectively, by the person against whom such
action is brought within twenty (20) days after the summons or other first legal
process is served. Such notice shall refer to the person or persons against whom
the action is brought. The failure to provide such notice shall not relieve the
party entitled to such notice of any liability that it may have to any
Distributor Indemnitee or Trust Indemnitee except to the extent that the ability
of the party entitled to such notice to defend such action has been materially
adversely affected by the failure to provide notice.

(f) The provisions of this Section and the parties' 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 any Distributor
Indemnitee or Trust Indemnitee and shall survive the sale and redemption of any
Shares made pursuant to subscriptions obtained by the Distributor. The
indemnification provisions of this Section will inure exclusively to the benefit
of each person that may be a Distributor Indemnitee or Trust Indemnitee at any
time and their respective successors and assigns (it being intended that such
persons be deemed to be third party beneficiaries under this Agreement).

(g) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware arising
out of or in any way connected with the issuance or sale of Shares.

(h) Nothing contained herein shall require the Trust to take any action
contrary to any provision of its Organic Documents or any applicable statute or
regulation or shall require the Distributor to take any action contrary to any
provision of its Articles of Incorporation or Bylaws or any applicable statute
or regulation; provided, however, that neither the Trust nor the Distributor may

<PAGE>

amend their Organic Documents or Articles of Incorporation and Bylaws,
respectively, in any manner that would result in a violation of a representation
or warranty made in this Agreement.

(i) Nothing contained in this section shall be construed to protect the
Distributor against any liability to the Trust or its security holders to which
the Distributor would otherwise be subject by reason of its failure to satisfy
the standard of care set forth in Section 7 of this Agreement.

SECTION 9. NOTIFICATION BY THE TRUST

The Trust shall advise the Distributor immediately: (i) of any request
by the SEC for amendments to the Trust's Registration Statement or Prospectus or
for additional information; (ii) in the event of the issuance by the SEC of any
stop order suspending the effectiveness of the Trust's Registration Statement or
any Prospectus or the initiation of any proceedings for that purpose; (iii) of
the happening of any material event which makes untrue any statement made in the
Trust's then current Registration Statement or Prospectus or which requires the
making of a change in either thereof in order to make the statements therein not
misleading; and (iv) of all action of the SEC with respect to any amendments to
the Trust's Registration Statement or Prospectus which may from time to time be
filed with the Commission under the 1940 Act or the Securities Act.

SECTION 10. COMPENSATION; EXPENSES

(a) In consideration of the Distributor's services in connection with
the distribution of Shares of each Fund and Class thereof, the Distributor shall
receive: (i) any applicable sales charge assessed upon investors in connection
with the purchase of Shares; (ii) from the Trust, any applicable contingent
deferred sales charge ("CDSC") assessed upon investors in connection with the
redemption of Shares; (iii) from the Trust, the [distribution service fees] with
respect to the Shares of those Classes as designated in Appendix A for which a
Plan is effective (the "Distribution Fee"); and (iv) from the Trust, the
[shareholder service fees] with respect to the Shares of those Classes as
designated in Appendix A for which a Service Plan is effective (the "Shareholder
Service Fee"). The Distribution Fee and Shareholder Service Fee shall be accrued
daily by each applicable Fund or Class thereof and shall be paid monthly as
promptly as possible after the last day of each calendar month but in any event
on or before the fifth (5th) Fund business day after month-end, at the rate or
in the amounts set forth in Appendix A [and, as applicable, the Plan(s)]. The
Trust grants and transfers to the Distributor a general lien and security
interest in any and all securities and other assets of a Fund now or hereafter
maintained in an account at the Fund's custodian on behalf of the Fund to secure
any Distribution Fees and Shareholder Service Fees owed the Distributor by the
Trust under this Agreement.

(b) The Trust shall cause its transfer agent (the "Transfer Agent") to
withhold, from redemption proceeds payable to holders of Shares of the Funds and
the Classes thereof, all CDSCs properly payable by the shareholders in
accordance with the terms of the applicable Prospectus and shall cause the
Transfer Agent to pay such amounts over to the Distributor as promptly as
possible after the settlement date for each redemption of Shares.

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(c) Except as specified in Sections 8 and 10(a), the Distributor shall
be entitled to no compensation or reimbursement of expenses for the services
provided by the Distributor pursuant to this Agreement. [The Distributor may
receive compensation from [NAME OF INVESTMENT ADVISER]("Adviser") for its
services hereunder or for additional services all as may be agreed to between
the Adviser and the Distributor. Notwithstanding anything in this Agreement to
the contrary, to the extent the Distributor receives compensation from the
Adviser that is disclosed to the Board, the Trust will indemnify, defend and
hold each Distributor Indemnitees free and harmless from and against any and all
claims, demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character (including the cost of investigating or defending such claims,
demands, actions, suits or liabilities and any reasonable counsel fees incurred
in connection therewith) related in any way to such payment.]

(d) The Trust shall be responsible and assumes the obligation for
payment of all the expenses of the Funds, including fees and disbursements of
its counsel and auditors, in connection with the preparation and filing of the
Registration Statement and Prospectuses (including but not limited to the
expense of setting in type the Registration Statement and Prospectuses and
printing sufficient quantities for internal compliance, regulatory purposes and
for distribution to current shareholders).

(e) The Trust shall bear the cost and expenses (i) of the registration
of the Shares for sale under the Securities Act; (ii) of the registration or
qualification of the Shares for sale under the securities laws of the various
States; (iii) if necessary or advisable in connection therewith, of qualifying
the Trust, the Funds or the Classes thereof (but not the Distributor) as an
issuer or as a broker or dealer, in such States as shall be selected by the
Trust and the Distributor pursuant to Section 6(c) hereof; and (iv) payable to
each State for continuing registration or qualification therein until the Trust
decides to discontinue registration or qualification pursuant to Section 6(c)
hereof. The Distributor shall pay all expenses relating to the Distributor's
broker-dealer qualification.

SECTION 11. SELECTED DEALER AND SELECTED AGENT AGREEMENTS

The Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") and
selected agent agreements with depository institutions and other financial
intermediaries of its choice ("selected agents") for the sale of Shares and to
fix therein the portion of the sales charge, if any, that may be allocated to
the selected dealers or selected agents; provided, that the Trust shall approve
the forms of agreements with selected dealers or selected agents and shall
review the compensation set forth therein. Shares of each Fund or Class thereof
shall be resold by selected dealers or selected agents only at the public
offering price(s) set forth in the Prospectus relating to the Shares. Within the
United States, the Distributor shall offer and sell Shares of the Funds only to
such selected dealers as are members in good standing of the NASD.

<PAGE>

SECTION 12. CONFIDENTIALITY

The Distributor agrees to treat all records and other information
related to the Trust as proprietary information of the Trust and, on behalf of
itself and its employees, to keep confidential all such information, except that
the Distributor may:

(i) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;

(ii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and

(iii) release such other information as approved in writing by the
Trust, which approval shall not be unreasonably withheld;

provided, however, that the Distributor may release any information regarding
the Trust without the consent of the Trust if the Distributor reasonably
believes that it may be exposed to civil or criminal legal proceedings for
failure to comply, when requested to release any information by duly constituted
authorities or when so requested by the Trust.

SECTION 13. EFFECTIVENESS, DURATION AND TERMINATION

(a) This Agreement shall become effective with respect to each Fund on
the later of (i) the date first above written or (ii) the date on which the
Trust's Registration Statement relating to Shares of the Fund becomes effective.
Upon effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Funds.

(b) This Agreement shall continue in effect with respect to a Fund for
a period of one year from its effectiveness and thereafter shall continue in
effect with respect to a Fund until terminated; provided, that continuance is
specifically approved at least annually (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund and (ii) by a vote of
a majority of Trustees of the Trust (I) who are not parties to this Agreement or
interested persons of any such party (other than as Trustees of the Trust) and
(II) with respect to each class of a Fund for which there is an effective Plan,
who do not have any direct or indirect financial interest in any such Plan
applicable to the class or in any agreements related to the Plan, cast in person
at a meeting called for the purpose of voting on such approval.

(c) This Agreement may be terminated at any time with respect to a
Fund, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund or, with respect to
each class of a Fund for which there is an effective Plan, a majority of
Trustees of the Trust who do not have any direct or indirect financial interest
in any such Plan or in any agreements related to the Plan, on 60 days' written
notice to the Distributor or (ii) by the Distributor on 60 days' written notice
to the Trust.

<PAGE>

(d) This Agreement shall automatically terminate upon its assignment
and upon the termination of the Distributor's membership in the NASD.

(e) If the Trust shall not file a Required Amendment within fifteen
days following receipt of a written request from the Distributor to do so, the
Distributor may, at its option, terminate this Agreement immediately.

(f) The obligations of Sections 5(d), 6(d), 8, 9 and 10 shall
survive any termination of this Agreement.

SECTION 14. NOTICES

Any notice required or permitted to be given hereunder by either party
to the other shall be deemed sufficiently given if personally delivered or sent
by telegram, facsimile or registered, certified or overnight mail, postage
prepaid, addressed by the party giving such notice to the other party at the
last address furnished by the other party to the party giving such notice, and
unless and until changed pursuant to the foregoing provisions hereof each such
notice shall be addressed to the Trust or the Distributor, as the case may be,
at their respective principal places of business.

SECTION 15. ACTIVITIES OF THE DISTRIBUTOR

Except to the extent necessary to perform the Distributor's obligations
hereunder, nothing herein shall be deemed to limit or restrict the Distributor's
right, or the right of any of the Distributor's employees, agents, officers or
directors who may also be a trustee, officer or employee of the Trust, or
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 16. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY

The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Distributor 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 Distributor's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the shareholders of
the Funds.]

SECTION 17. MISCELLANEOUS

(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.

<PAGE>

(b) 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.

(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of New York.

(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.

(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.

(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.

(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.

(h) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund are separate and distinct
from the assets and liabilities of each other Fund and that no Fund shall be
liable or shall be charged for any debt, obligation or liability of any other
Fund, whether arising under this Agreement or otherwise.

(i) No affiliated person, employee, agent, officer or director of the
Distributor shall be liable at law or in equity for the Distributor's
obligations under this Agreement.

(j) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof.

(k) 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 1940 Act.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.

FORUM FUNDS

By:/S/ MARK D. KAPLAN
----------------------
Mark D. Kaplan
Vice President, Assistant Treasurer
and Assistant Secretary

FORUM FINANCIAL SERVICES, INC.

By: /S/ JOHN Y. KEFFER
----------------------
John Y. Keffer
President

NOTE: THIS AGREEMENT NOT TO BE USED
FOR CDSC FUNDING (B SHARE) FINANCING

<PAGE>

FORUM FUNDS
DISTRIBUTION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
JUNE 19, 1997,
AMENDED AS OF SEPTEMBER 22, 1997

Quadra Opportunistic Bond Fund
Quadra Limited Maturity Treasury Fund
Quadra Invernational Equity Fund
Quadra Value Equity Fund
Quadra Growth Fund
Investors Bond Fund
TaxSaver Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
S&P 500 Index Fund
Small Cap Fund
International Equity Fund
Emerging Markets Fund
Investors Growth Fund
Investors Equity Fund
Payson Balanced Fund
Payson Value Fund
Oak Hall Equity Fund
Austin Global Equity Fund
INVESTOR SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets TaxSaver Fund
Daily Assets Treasury Fund II
INSTITUTIONAL SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets TaxSaver Fund
Daily Assets Treasury Fund II
INSTITUTIONAL SERVICE SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets TaxSaver Fund
Daily Assets Treasury Fund II