As filed with the Securities and Exchange Commission on November 17, 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. 51
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 53
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:
[X] immediately upon filing pursuant to Rule 485, paragraph (b)
[ ] on November 17, 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 Investor Shares of Daily Assets Treasury Fund,
Daily Assets Government Fund, Daily Assets Cash Fund, Daily Assets
Tax-Exempt Fund and Daily Assets Treasury Obligations Fund)
<TABLE>
Form N-1A Location in Prospectus
Item No. (Caption)
<S> <C> <C>
Item 1. Cover Page: Cover Page
Item 2. Synopsis: Prospectus Summary
Item 3. Condensed Financial
Information: Financial Highlights
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
(Prospectus offering Institutional Shares of Daily Assets Treasury Fund,
Daily Assets Government Fund, Daily Assets Cash Fund, Daily Assets
Tax-Exempt Fund and Daily Assets Treasury Obligations Fund)
<TABLE>
Form N-1A Location in Prospectus
Item No. (Caption)
<S> <C> <C>
Item 1. Cover Page: Cover Page
Item 2. Synopsis: Prospectus Summary
Item 3. Condensed Financial
Information: Financial Highlights
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
(Prospectus offering Institutional Service Shares of Daily Assets
Treasury Fund, Daily Assets Government Fund, Daily Assets Cash Fund, Daily
Assets Tax-Exempt Fund and Daily Assets Treasury Obligations Fund)
<TABLE>
Form N-1A Location in Prospectus
Item No. (Caption)
<S> <C> <C>
Item 1. Cover Page: Cover Page
Item 2. Synopsis: Prospectus Summary
Item 3. Condensed Financial
Information: Financial Highlights
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>
Part A offering Shares of S&P 500 Index Fund, Investors Equity Fund, Small Cap
Fund, International Equity Fund and Emerging Markets Fund, as filed in
Post-Effective Amendment No. 45 to Registrant's Registration Statement under the
Securities Act of 1933 and Amendment No. 47 to the Registration Statement under
the Investment Company Act of 1940 is incorporated by reference herein in its
entirety by the Registrant.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(a))
PART A
(All other Prospectuses)
Not Applicable in this Filing
<PAGE>
PART B (SAI offering Shares of Daily Assets Treasury Fund, Daily Assets
Government Fund, Daily Assets Cash Fund, Daily Assets Tax-Exempt Fund and Daily
Assets Treasury Obligations Fund)
<TABLE>
Location in Statement
Form N-1A of Additional Information
Item No. (Caption)
<S> <C> <C>
Item 10. Cover Page: Cover Page
Item 11. Table of Contents: Cover Page
Item 12. General Information and History: Management; Other Information
Item 13. Investment Objectives and
Policies: Investment Policies; Investment Limitations
Item 14. Management of the Registrant: Management
Item 15. Control Persons and
Principal Holders of
Securities: Other Information
Item 16. Investment Advisory
and Other Services: Management; Other Information - Custodian, Counsel, Auditors
Item 17. Brokerage Allocation
and Other Practices: Portfolio Transactions
Item 18. Capital Stock and
Other Securities: Determination of Net Asset Value
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered: Determination of Net Asset Value; Additional Purchase and Redemption
Information
Item 20. Tax Status: Taxation
Item 21. Underwriters: Management
Item 22. Calculation of
Performance Data: Performance Data
Item 23. Financial Statements: Financial Statements
</TABLE>
<PAGE>
Part B offering Shares of S&P 500 Index Fund, Investors Equity Fund, Small Cap
Fund, International Equity Fund and Emerging Markets Fund, as filed in
Post-Effective Amendment No. 45 to Registrant's Registration Statement under the
Securities Act of 1933 and Amendment No. 47 to the Registration Statement under
the Investment Company Act of 1940 is incorporated by reference herein in its
entirety by the Registrant
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(a))
PART B
(All other SAIs)
Not Applicable in this Filing
<PAGE>
PROSPECTUS
November 17, 1997
Forum Funds
Daily Assets Treasury Fund
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Tax-Exempt Fund
This Prospectus offers Institutional Shares of Daily Assets Treasury Fund, Daily
Assets Treasury Obligations Fund, Daily Assets Government Fund, Daily Assets
Cash Fund and Daily Assets Tax-Exempt Fund (each a "Fund"). Each Fund is a
diversified no-load, money market portfolio of Forum Funds (the "Trust"), a
registered open-end, management investment company. Each Fund seeks to provide
its shareholders with high current income (which, in the case of Daily Assets
Tax-Exempt Fund, is exempt from federal income taxes) to the extent consistent
with the preservation of capital and the maintenance of liquidity.
Each Fund seeks to achieve its objective by investing all of its investable
assets in a separate portfolio of an open-end, management investment company
with an identical investment objective. See "Prospectus Summary" and "Other
Information - Fund Structure." Through the portfolio in which it invests:
Daily Assets Treasury Fund invests primarily in obligations of the U.S.
Treasury or certain agencies and instrumentalities of the U.S.
Government with a view toward providing income that is generally
considered exempt from state and local income taxes. Daily Assets
Treasury Obligations Fund invests substantially all of its assets in
obligations of the U.S. Treasury and in repurchase agreements backed by
these obligations. Daily Assets Government Fund invests substantially
all of its assets in obligations of the U.S. Government, its agencies
and instrumentalities and in repurchase agreements backed by these
obligations. Daily Assets Cash Fund invests in a broad spectrum of
high-quality money market instruments. Daily Assets Tax-Exempt Fund
invests primarily in high-quality obligations of the states,
territories and possessions of the U.S. and of their subdivisions,
authorities and corporations ("municipal securities") with a view
toward providing income that is exempt from federal income taxes.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated November 17, 1997, as may be amended from time to
time (the "SAI"), which contains more detailed information about the Trust and
the Funds 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 contacting the Funds' transfer agent, Forum Financial Corp., at P.O. Box 446,
Portland, Maine 04112, (207) 879-0001 or (800) 94FORUM.
Investors should read this Prospectus
and retain it for future reference.
FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.
THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
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.
<TABLE>
TABLE OF CONTENTS
<S> <C> <C>
1. Prospectus Summary.............................. 2 5. Purchases and Redemptions of Shares............. 11
2. Financial Highlights............................ 4 6. Distributions and Tax Matters................... 15
3. Investment Objectives and Policies.............. 5 7. Other Information............................... 17
4. Management...................................... 10
</TABLE>
<PAGE>
1. PROSPECTUS SUMMARY
HIGHLIGHTS OF THE FUNDS
This prospectus offers shares of the Institutional class ("Institutional
Shares") of each of the Funds. The Funds operate in accordance with the
provisions of Rule 2a-7 under the Investment Company Act of 1940 (the "1940
Act"). "). Each Fund invests all of its investable assets in a separate
portfolio (each a "Portfolio") of Core Trust (Delaware), an open-end, management
investment company ("Core Trust") as follows:
Daily Assets Treasury Fund Treasury Portfolio
Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Tax-Exempt Fund Municipal Cash Portfolio
Accordingly, the investment experience of each Fund will correspond directly
with the investment experience of its corresponding Portfolio. See "Other
Information - Fund Structure." Each Fund currently offers three separate classes
of shares: Institutional Shares, Institutional Service Shares and Investor
Shares. Institutional Shares are sold through this Prospectus. Institutional
Service Shares and Investor Shares are each offered by a separate prospectus.
See "Other Information -- Fund Structure -- Other Classes of Shares."
Management. Forum Administrative Services, LLC ("FAS") supervises the overall
management of the Funds and the Portfolios and Forum Financial Services, Inc.
("FFSI") is the distributor of the Funds' shares. Forum Advisors, Inc. ("Forum
Advisors") is the investment adviser of Treasury Portfolio and Municipal Cash
Portfolio and provides professional management of those Portfolio's investments.
Linden Asset Management, Inc. ("Linden") is the investment adviser of Treasury
Cash Portfolio, Government Cash Portfolio and Cash Portfolio and provides
professional management of those Portfolios' investments. Forum Advisors and
Linden (each an "Adviser") provide certain subadvisory assistance for the
Portfolios they do not directly advise. The Funds' transfer agent, dividend
disbursing agent and shareholder servicing agent is Forum Financial Corp. (the
"Transfer Agent"). See "Management" for a description of the services provided
and fees charged to the Funds.
It is anticipated that, as of January 1, 1998, Forum Advisors will acquire
Linden and reorganize into a new company named Forum Investment Advisors, LLC.
The acquisition is subject to a vote of the shareholders of Daily Assets Cash
Fund and of the other investors in the Portfolio which Linden currently advises.
No change in advisory staff, portfolio managers, or advisory fees, or any other
material change is expected as a result of these transactions.
Purchases and Redemptions. The minimum initial investment in Institutional
Shares is $1,000,000. Institutional Shares may be purchased and redeemed Monday
through Friday, between 9:00 a.m. and 6:00 p.m., Eastern Time, except on Federal
holidays and days that the Federal Reserve Bank of San Francisco (Boston in the
case of Daily Assets Treasury Fund and Daily Assets Tax-Exempt Fund) is closed
("Fund Business Days"). To be eligible to receive that day's income, purchase
orders must be received by the Transfer Agent in good order no later than 2:00
p.m., Eastern Time (noon in the case of Daily Assets Treasury Fund and Daily
Assets Tax_Exempt Fund). Shareholders may have redemption proceeds over $5,000
transferred by bank wire to a designated bank account. To be able to receive
redemption proceeds by wire on the day of the redemption, redemption orders must
be received by the Transfer Agent in good order no later than 2:00 p.m., Eastern
Time (noon in the case of Daily Assets Treasury Fund and Daily Assets Tax-Exempt
Fund). All times may be changed without notice by Fund management due to market
activities. See "Purchase and Redemption of Shares."
Exchanges. Shareholders of a Fund may exchange Institutional Shares without
charge for Institutional Shares of the other Funds. See "Purchases and
Redemptions of Shares - Exchanges."
Distributions. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."
Investment Considerations. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Portfolios
invest only in money market instruments, an investment in any Fund involves
certain risks, depending on the types of investments made and the types of
investment techniques employed. Investment in any security, including U.S.
Government Securities, involves some level of investment risk. An investment in
a Fund is not insured by the FDIC, nor is it insured or guaranteed against loss
of principal. By investing in its corresponding Portfolio, each Fund may achieve
certain efficiencies and economies of scale. Nonetheless, these investments
could also have potential adverse effects on the applicable Fund. See "Other
Information - Fund Structure."
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Institutional Shares will bear directly or
indirectly. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares.
Annual Fund Operating Expenses (as a percentage of average net assets)(1)
<TABLE>
Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Treasury Government Cash Tax-Exempt
Fund Obligations Fund Cash Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Management Fees(2) 0.15% 0.14% 0.14% 0.14% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.05% 0.06% 0.06% 0.06% 0.05%
Total Operating Expenses 0.20% 0.20% 0.20% 0.20% 0.20%
</TABLE>
(1) For a further description of the various expenses incurred in the operation
of the Funds and the Portfolios, see "Management." The amount of fees and
expenses for each Fund is based on estimated annualized expenses for the Funds'
fiscal year ending August 31, 1998. Each Fund's expenses include the Fund's pro
rata portion of all expenses of its corresponding Portfolio, which are borne
indirectly by Fund shareholders. (2) Management Fees include all administration
fees and investment advisory fees incurred by the Funds and the Portfolios; as
long as its assets are invested in a Portfolio, a Fund pays no investment
advisory fees directly. (3) Absent estimated reimbursements by Linden, Forum
Advisors and its affiliates, Other Expenses and Total Fund Operating Expenses
would be: 0.17 % and 0.32%, respectively, for Daily Assets Treasury Fund; 0.15%
and 0.29%, respectively, for Daily Assets Treasury Obligations Fund; 0.17% and
0.31%, respectively, for Daily Assets Government Fund; 0.19% and 0.33%,
respectively, for Daily Assets Cash Fund; 0.19% and 0.34%, respectively, for
Daily Assets Tax-Exempt Fund. Expense reimbursements are voluntary and may be
reduced or eliminated at any time.
Example
Following is a hypothetical example that indicates the dollar amount of expenses
that an investor in Institutional Shares would pay assuming (i) the investment
of all of the Fund's assets in the Portfolio, (ii) a $1,000 investment in the
Fund, (iii) a 5% annual return, (iv) the reinvestment of all distributions and
(v) redemption at the end of each period:
One Year Three Years Five Years Ten Years
Each Fund $2 $6 $11 $26
The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Funds' projected returns; rather, it is required by government
regulation. The example should not be considered a representation of past or
future expenses or return. Actual expenses and return may be greater or less
than indicated.
<PAGE>
2. FINANCIAL HIGHLIGHTS
As of the date hereof, Institutional Shares were not offered. The following
information represents selected data for a single outstanding Institutional
Service Share of Daily Assets Treasury Fund and of Daily Assets Cash Fund. Those
classes were the first offered by the respective Funds and, accordingly,
represent data since each Fund's inception. Information for the period ended
August 31, 1997, was audited by KPMG Peat Marwick LLP, independent auditors.
Information for prior periods was audited by other independent auditors. The
financial statements for Daily Assets Treasury Fund and Daily Assets Cash Fund
and independent auditors' report thereon for the fiscal year ended August 31,
1997 are incorporated by reference into the SAI and may be obtained from the
Trust without charge. As of the date hereof, Daily Assets Treasury Obligations
Fund, Daily Assets Government Fund, Daily Assets Tax-Exempt Fund, as well as
Municpal Cash Portfolio had not commenced operations.
As of August 31, 1997, Treasury Portfolio, Treasury Cash Portfolio, Government
Cash Portfolio and Cash Portfolio had net assets of $44,321,412; $71,102,520;
$476,768,745 and $259,491,011, respectively.
<TABLE>
- Ratios to Average Net Net Assets Ratio to
at
Beginning DistributionsEnding Assets End of Average
-----------------------
Net Asset Net From Net Net Asset Net Period Net Assets
-------------
Value Per Investment Investment Value per Net Investment Total (000's Gross
Share Income Income Share Expenses Income Return Omitted) Expenses(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Daily Assets Treasury Fund
Institutional Service Shares
April 1, 1997 to $ 1.00 0.02 (0.02) $ 1.00 0.50%(2) 4.76%(2) 2.01%(3) $44,116 0.95%(2)
August 31, 1997
Year Ended March 31, 1.00 0.05 (0.05) 1.00 0.50% 4.70% 4.80% 43,975 0.99%
1997
Year Ended March 31, 1.00 0.05 (0.05) 1.00 0.50% 5.01% 5.18% 43,103 1.06%
1996
Year Ended March 31, 1.00 0.04 (0.04) 1.00 0.37% 4.45% 4.45% 36,329 1.10%
1995
Year Ended March 31, 1.00 0.03 (0.03) 1.00 0.33% 2.82% 2.83% 26,505 1.17%
1994
July 1, 1992 to March 1.00 0.02 (0.02) 1.00 0.32%(2) 2.92%(2) 3.13%(2) 4,687 2.43%(2)
31, 1993
Daily Assets Cash Fund
Institutional Service
Shares
October 1, 1996 to 1.00 0.05 (0.05) 1.00 0.52%(2) 5.06%(2) 4.70%(3) $12,076 1.22%(2)
August 31, 1997
</TABLE>
(1) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects the
expense ratio in the absence of any waivers and reimbursements for the Fund and
its respective Portfolio.
(2) Annualized.
(3) Not annualized
<PAGE>
3. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of each Fund except Daily Assets Tax-Exempt Fund is to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of Daily
Assets Tax-Exempt Fund is to provide high current income which is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity.
There can be no assurance that any Fund or Portfolio will achieve its investment
objective or maintain a stable net asset value.
Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio, which has the same
investment objective and substantially similar investment policies. Therefore,
although the following discusses the investment policies of the Portfolios (and
the responsibilities of Core Trust's board of trustees (the "Core Trust
Board")), it applies equally to the Funds (and the Trust's board of trustees
(the "Board")).
INVESTMENT POLICIES
Each Portfolio invests only in high quality, short-term money market instruments
that are determined by the Adviser, pursuant to procedures adopted by the Core
Trust Board, to be eligible for purchase and to present minimal credit risks.
High quality instruments include those that (i) are rated (or, if unrated, are
issued by an issuer with comparable outstanding short-term debt that is rated)
in the highest rating category by two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO has issued a rating, by that
NRSRO or (ii) are otherwise unrated and determined by the Adviser to be of
comparable quality. A description of the rating categories of certain NRSROs,
such as Standard & Poor's and Moody's Investors Service, Inc., is contained in
the SAI.
Each Portfolio invests only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated under Rule 2a-7) and
maintains a dollar-weighted average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, each Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. As used herein, "U.S. Government
Securities" means obligations issued or guaranteed as to principal and interest
by the United States government, its agencies or instrumentalities and "Treasury
Securities" means U.S. Treasury bills and notes and other U.S. Government
Securities which are guaranteed as to principal and interest by the U.S.
Treasury.
In the case of municipal securities, when the assets and revenues of an issuer
are separate from those of the government creating the issuer and a security is
backed only by the assets and revenues of the issuer, the issuer and not the
creating government is deemed to be the sole issuer of the security. Similarly,
in the case of a security issued by or on behalf of public authorities to
finance various privately operated facilities that is backed only by the assets
and revenues of the non-governmental user, the non-governmental user will be
deemed to be the sole issuer of the security.
Yields on money market securities are dependent on a variety of factors,
including the general conditions of the money markets and the fixed income
markets in general, the size of a particular offering, the maturity of the
obligation and the rating of the issue. A Fund's yield will tend to fluctuate
inversely with prevailing market interest rates. For instance, in periods of
falling market interest rates, yields will tend to be somewhat higher. Although
each Portfolio only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities and municipal securities, can
change in value when there is a change in interest rates, the issuer's actual or
perceived creditworthiness or the issuer's ability to meet its obligations. The
achievement of a Fund's investment objective is dependent in part on the
continuing ability of the issuers of the securities in which the Portfolio
invests to meet their obligations for the payment of principal and interest when
due.
DAILY ASSETS TREASURY FUND
Treasury Portfolio seeks to attain its investment objective by investing
primarily in Treasury Securities. Under normal market conditions, the Portfolio
will invest at least 65% of its total assets in Treasury Securities. The
Portfolio may also invest in other U.S. Government Securities. The Portfolio
invests with a view toward providing income that is generally considered exempt
from state and local income taxes. The Portfolio will purchase a U.S. Government
Security (other than a Treasury Security) only if that security has a remaining
maturity of thirteen months or less.
Among the U.S. Government Securities in which the Portfolio may invest are
obligations of the Farm Credit System, Farm Credit System Financial Assistance
Corporation, Federal Financing Bank, Federal Home Loan Banks, General Services
Administration, Student Loan Marketing Association, and Tennessee Valley
Authority. Income on these obligations and the obligations of certain other
agencies and instrumentalities is generally not subject to state and local
income taxes by Federal law. In addition, the income received by Fund
shareholders that is attributable to these investments will also be exempt in
most states from state and local income taxes. Shareholders should determine
through consultation with their own tax advisers whether and to what extent
dividends payable by the Fund from interest received with respect to its
investments will be considered to be exempt from state and local income taxes in
the shareholder's state. Shareholders similarly should determine whether the
capital gain and other income, if any, payable by the Fund will be subject to
state and local income taxes in the shareholder's state. See "Distributions and
Tax Matters."
The U.S. Government Securities in which the Portfolio may invest include
securities supported primarily or solely by the creditworthiness of the issuer.
There is no guarantee that the U.S. government will support securities not
backed by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than securities backed by the U.S. government's full faith
and credit.
DAILY ASSETS TREASURY OBLIGATIONS FUND
Treasury Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.
DAILY ASSETS GOVERNMENT FUND
Government Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities and in repurchase
agreements backed by U.S. Government Securities. The U.S. Government Securities
in which the Portfolio may invest include Treasury Securities and securities
supported primarily or solely by the creditworthiness of the issuer, such as
securities of the Federal National Mortgage Association, Federal Home Loan Banks
and Student Loan Marketing Association. There is no guarantee that the U.S.
Government will support securities not backed by its full faith and credit.
Accordingly, although these securities have historically involved little risk of
loss of principal if held to maturity, they may involve more risk than
securities backed by the U.S. Government's full faith and credit.
DAILY ASSETS CASH FUND
Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments. The Portfolio may invest in (i)
obligations of domestic financial institutions, (ii) U.S. Government Securities
(see "Investment Objectives and Policies - Daily Assets Government Fund") and
(iii) corporate debt obligations of domestic issuers.
Financial institution obligations include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of banks (including savings
banks and savings associations) and their foreign branches. The Portfolio limits
its investments in bank obligations to banks which at the time of investment
have total assets in excess of one billion dollars. Certificates of deposit
represent an institution's obligation to repay funds deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations
of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" that are restricted as to
disposition under the Federal securities laws ("restricted securities"). Any
sale of these securities may not be made absent registration under the
Securities Act of 1933 or the availability of an appropriate exemption
therefrom. Some of these restricted securities, however, are eligible for resale
to institutional investors, and accordingly, a liquid market may exist for them.
Pursuant to guidelines adopted by the Core Trust Board, the investment adviser
will determine whether each such investment is liquid.
DAILY ASSETS TAX-EXEMPT FUND
Municipal Cash Portfolio seeks to attain its investment objective by investing
primarily in municipal securities. The Portfolio attempts to maintain 100% of
its assets invested in federally tax-exempt municipal securities; during periods
of normal market conditions the Portfolio will have at least 80% of its net
assets invested in federally tax-exempt instruments the income from which may be
subject to the federal alternative minimum tax ("AMT").
The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.
The Short-Term Municipal Securities Market. It is anticipated that a substantial
amount of the municipal securities held by the Portfolio will be supported by
credit and liquidity enhancements, such as letters of credit (which are not
covered by federal deposit insurance) or put or demand features of third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Portfolio will be dependent in part upon the
credit quality of the banks supporting the Portfolio's investments. This will
result in exposure to risks pertaining to the banking industry, including the
foreign banking industry. These risks include a sustained increase in interest
rates, which can adversely affect the availability and cost of a bank's lending
activities; exposure to credit losses during times of economic decline;
concentration of loan portfolios in certain industries; regulatory developments;
and competition among financial institutions. Brokerage firms and insurance
companies also provide certain liquidity and credit support. The Portfolio's
policy is to purchase municipal securities with third party credit or liquidity
support only after the Adviser has considered the creditworthiness of the
financial institution providing the support and believes that the security
presents minimal credit risk.
The Portfolio may purchase long term municipal securities with various maturity
shortening provisions. For instance, variable rate demand notes ("VRDN") are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer) which may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
VRDNs may be issued directly by the municipal issuer or created by a bank,
broker-dealer or other financial institution by selling a previously issued
long-term bond with a demand feature attached. Similarly, tender option bonds
(also referred to as certificates of participation) are municipal securities
with relatively long original maturities and fixed rates of interest that are
coupled with an agreement of a third party financial institution under which the
third party grants the security holders the option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. As consideration for
providing the option, the financial institution receives a fee equal to the
difference between the underlying municipal security's fixed rate and the rate,
as determined by a remarketing or similar agent, that would cause the
securities, coupled with the tender option, to trade at par on the date of the
interest rate determination. These bonds effectively provide the holder with a
demand obligation that bears interest at the prevailing short-term municipal
securities interest rate.
The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the Portfolio the right to sell the municipal security at a specified
price at any time before a specified date. The Portfolio will acquire puts only
to enhance liquidity, shorten the maturity of the related municipal security or
permit the Portfolio to invest its funds at more favorable rates. Generally, the
Portfolio will buy a municipal security that is accompanied by a put only if the
put is available at no extra cost. In some cases, however, the Portfolio may pay
an extra amount to acquire a put, either in connection with the purchase of the
related municipal security or separately from the purchase of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
Municipal Bonds. Municipal bonds are long term fixed-income securities. "General
obligation" bonds are secured by a municipality's pledge of its full faith,
credit and taxing power for the payment of principal and interest. "Revenue"
bonds are usually payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other tax, but not from general tax revenues. Under a "moral
obligation" bond (which is normally issued by special purpose public
authorities), if the issuer is unable to meet its obligations under the bonds
from current revenues, it may draw on a reserve fund that is backed by the moral
commitment (but not the legal obligation) of the state or municipality that
created the issuer. The Portfolio may invest in industrial development bonds,
which in most cases are revenue bonds. The payment of the principal and interest
on these bonds is dependent solely on the ability of an initial or subsequent
user of the facilities financed by the bonds to meet its financial obligations
and the pledge, if any, of real and personal property so financed as security
for such payment.
Municipal Notes and Leases. Municipal notes, which may be either "general
obligation" or "revenue" securities, are short-term fixed income securities
intended to fulfill short-term capital needs of a municipality. Municipal
leases, which may take various forms, are issued by municipalities to acquire a
wide variety of equipment and facilities. Municipal leases frequently have
special risks not normally associated with other municipal securities. Municipal
leases (which normally provide for title to the leased assets to pass eventually
to the government issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
Participation Interests. The Portfolio may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.
Taxable Investments. The Portfolio may invest up to 20% of the value of its net
assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, are fundamental and therefore may not be
changed without approval of the holders of a majority of the Fund's or
Portfolio's, as applicable, outstanding voting securities (as defined in the
1940 Act). Except as otherwise indicated herein or in the SAI, investment
policies of a Fund or a Portfolio may be changed by the applicable board of
trustees without shareholder approval. Each Portfolio is permitted to hold cash
in any amount pending investment in securities and may invest in other
investment companies that intend to comply with Rule 2a-7 and have substantially
similar investment objectives and policies. A further description of the Funds'
and the Portfolios' investment policies is contained in the SAI.
Borrowing. Each Portfolio may borrow money for temporary or emergency purposes
(including the meeting of redemption requests), but not in excess of 33 1/3% of
the value of the Portfolio's total assets. Borrowing for purposes other than
meeting redemption requests will not exceed 5% of the value of the Portfolio's
total assets.
Repurchase Agreements. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain credit risks not associated with direct investment in
securities. Each Portfolio, however, intends to enter into repurchase agreements
only with sellers which the Adviser believes present minimal credit risks in
accordance with guidelines established by the Core Trust Board. In the event
that a seller defaulted on its repurchase obligation, however, a Portfolio might
suffer a loss.
Liquidity. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including repurchase agreements
not entitling the Portfolio to payment of principal within seven days. There may
not be an active secondary market for securities held by a Portfolio. The value
of securities that have a limited market tend to fluctuate more than those that
have an active market. Each Portfolio's Adviser monitors the liquidity of the
Portfolio's investments, but there can be no guarantee that an active secondary
market will exist.
When-Issued and Forward Commitment Securities. In order to assure itself of
being able to obtain securities at prices which the Adviser believes might not
be available at a future time, each Portfolio's Adviser may purchase securities
on a when-issued or delayed delivery basis. When these transactions are
negotiated, the price or yield is fixed at the time the commitment is made, but
delivery and payment for the securities take place at a later date. Securities
so purchased are subject to market price fluctuation and no interest on the
securities accrues to a Portfolio until delivery and payment take place.
Accordingly, the value of the securities on the delivery date may be more or
less than the purchase price. Commitments for when-issued or delayed delivery
transactions will be entered into only when a Portfolio has the intention of
actually acquiring the securities, but the Portfolio may sell the securities
before the settlement date if deemed advisable. Failure by the other party to
deliver a security purchased by a Portfolio may result in a loss or missed
opportunity to make an alternative investment. As a result of entering into
forward commitments, the Funds are exposed to greater potential fluctuations in
the value of their assets and net asset values per share.
Variable and Floating Rate Securities. The securities in which each Portfolio
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Those
securities with ultimate maturities of greater than 397 days may be purchased
only in accordance with the provisions of Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features which comply with certain
requirements and certain U.S. Government Securities may be purchased. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.
Financial Institution Guidelines. Treasury Cash Portfolio and Government Cash
Portfolio invests only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. These Portfolios do not intend to hold in their portfolio any
securities or instruments that would be subject to restriction as to amount held
by a national bank under Title 12, Section 24 (Seventh) of the United States
Code. In addition, these Portfolios limit their investments to those permissible
for Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act and the applicable rules and regulations of the National Credit
Union Administration. Government Cash Portfolio limits its investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage and to investments that permit Fund
shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction the Core Trust Board. The
Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The Core Trust Board
performs similar functions for the Portfolios and Core Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust.
ADMINISTRATION AND DISTRIBUTION
Subject to the supervision of the Board, FAS supervises the overall management
of the Trust, including overseeing the Trust's receipt of services, advising the
Trust and the Trustees on matters concerning the Trust and its affairs, and
providing the Trust with general office facilities and certain persons to serve
as officers. For these services and facilities, FAS receives a fee at an annual
rate of 0.05% of the daily net assets of each Fund. FAS also serves as
administrator of the Portfolios and provides administrative services for each
Portfolio that are similar to those provided to the Funds. For its
administrative services to the Portfolios, FAS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("Forum Accounting") performs portfolio accounting services for
the Funds and Portfolios pursuant to agreements with the Trust and Core Trust
and is paid a separate fee for these services.
FFSI acts as the agent of the Trust in connection with the offering of shares of
the Funds but receives no compensation for these services. FFSI is a registered
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
FAS, FFSI, Forum Advisors, Forum Accounting and the Transfer Agent are members
of the Forum Financial Group of companies and together provide a full range of
services to the investment company and financial services industry. As of the
date of this Prospectus, each of these companies was controlled by John Y.
Keffer, President and Chairman of the Trust, and FAS and FFSI provided
administration services to registered investment companies with assets of
approximately $30 billion.
INVESTMENT ADVISERS
Subject to the general supervision of the Core Trust Board, Forum Advisors makes
investment decisions for Treasury Portfolio and Municipal Cash Portfolio and
monitors those Portfolios' investments, and Linden makes investment decisions
for Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio and
monitors those Portfolios' investments. Forum Advisors, which is located at Two
Portland Square, Portland, Maine 04101, provides investment advisory services to
four other mutual funds. Linden, which is located at 812 N. Linden Drive,
Beverly Hills, California 90210, is controlled by Anthony R. Fischer, Jr., who
is its sole stockholder, director, and officer. Forum Advisors and Linden also
act as investment subadvisers to the Portfolios that they do not manage on a
daily basis and from time to time may provide each other with assistance
regarding the other's advisory responsibilities. These services may include
management of part of or all of the Portfolios' investment portfolios.
For its services, Forum Advisors receives an advisory fee at an annual rate of
0.05% of Treasury Portfolio's and Municipal Cash Portfolio's average daily net
assets. For its services, Linden receives from each of Treasury Cash Portfolio,
Government Cash Portfolio and Cash Portfolio an advisory fee based upon the
total average daily net assets of those Portfolios ("Total Portfolio Assets").
Linden's fee is calculated at an annual rate on a cumulative basis as follows:
0.06% of the first $200 million of Total Portfolio Assets, 0.04% of the next
$300 million of Total Portfolio Assets, and 0.03% of the remaining Total
Portfolio Assets. A Fund's expenses include the Fund's pro rata portion of the
advisory fee paid by the corresponding Portfolio. To the extent Forum Advisors
or Linden has delegated its responsibilities to the other, Forum Advisors or
Linden pays its advisory fee accrued for such period of time to the other.
Currently, it is anticipated that Forum Advisors and Linden will delegate
responsibility for portfolio management to the other investment adviser
infrequently.
SHAREHOLDER SERVICING
Shareholder inquiries and communications concerning the Funds may be directed to
the Transfer Agent at the address and telephone numbers on the first page of
this Prospectus. The Transfer Agent maintains an account for each shareholder of
the Funds (unless such accounts are maintained by sub-transfer agents or
processing agents) and performs other transfer agency and related functions. The
Transfer Agent is authorized to subcontract any or all of its functions to one
or more qualified sub-transfer agents or processing agents, which may be its
affiliates, who agree to comply with the terms of the Transfer Agent's agreement
with the Trust. The Transfer Agent may pay those agents for their services, but
no such payment will increase the Transfer Agent's compensation from the Trust.
For its services, the Transfer Agent is paid a transfer agent fee at an annual
rate of 0.05% of the average daily net assets of each Fund attributable to
Institutional Shares plus $12,000 per year for each Fund and certain account and
additional class charges and is reimbursed for certain expenses incurred on
behalf of the Funds.
EXPENSES OF THE FUNDS
Each Fund's expenses comprise Trust expenses attributable to the Fund, which are
charged to the Fund, and expenses not attributable to a particular fund of the
Trust, which are allocated among the Fund and all other funds of the Trust in
proportion to their average net assets. Each service provider in its sole
discretion may elect to waive (or continue to waive) all or any portion of its
fees, which are accrued daily and paid monthly, and may reimburse a Fund for
certain expenses. Any such waivers or reimbursements would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.
Each Fund's expenses include the service fees described in this Prospectus, the
fees and expenses of the Board, applicable insurance and bonding expenses and
state and SEC registration fees. Each Fund bears its pro rata portion of the
expenses of the Portfolio in which it invests along with all other investors in
the Portfolio.
5. PURCHASES AND REDEMPTIONS OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through the Transfer Agent, which
accepts orders for purchases and redemptions from shareholders of record and new
investors. Shareholders of record will receive from the Trust periodic
statements listing all account activity during the statement period. The Trust
reserves the right in the future to modify, limit or terminate any shareholder
privilege, upon appropriate notice to shareholders, and may 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 of an order in proper form, on each Fund Business
Day. Fund shares are issued immediately after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by the Transfer Agent. Each Fund's net asset value is
calculated at 4:00 p.m., Eastern Time.
Fund shares become entitled to receive distributions on the day the purchase
order is accepted if the order and payment are received by the Transfer Agent as
follows:
<TABLE>
Order Must be Received by Payment Must be Received by
<S> <C> <C>
Daily Assets Treasury Fund and
Daily Assets Tax-Exempt Fund 12:00 p.m., Eastern time 4:00 p.m., Eastern time
All other Funds 2:00 p.m., Eastern time 4:00 p.m., Eastern time
</TABLE>
If a purchase order is transmitted to the Transfer Agent (or the wire is
received) after the times listed above, the investor will not receive a
distribution on that day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco (Boston in the case of Daily Assets Treasury Fund
and Daily Assets Tax-Exempt Fund) closes early or the Public Securities
Association recommends that the government securities markets close early, the
Trust may advance the time by which the Transfer Agent must receive completed
wire purchase orders and the cut-off times set forth above.
Each Fund reserves the right to reject any subscription for the purchase of Fund
shares. Stock certificates are issued only to shareholders of record upon their
written request and no certificates are issued for fractional shares.
Redemptions. Fund shares may be redeemed without charge at their net asset value
on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following 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 distributions declared on or after the day on which the
redemption becomes effective.
For wire redemption orders received after 12:00 p.m., Eastern time, in the case
of Daily Assets Treasury Fund and Daily Assets Tax-Exempt Fund, and after 2:00
p.m., Eastern Time, in the case of each other Fund, the Transfer Agent will wire
proceeds the next Fund Business Day. On days that the New York Stock Exchange or
Federal Reserve Bank of San Francisco (Boston in the case of Daily Assets
Treasury Fund and Daily Assets Tax-Exempt Fund) closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which the Transfer Agent must receive
completed wire redemption orders.
Normally, redemption proceeds are paid immediately, 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 to
purchase the shares 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 for more than seven days after
the tender of the shares to the Fund except when the New York Stock Exchange is
closed (or when trading thereon is restricted) for any reason other than its
customary weekend or holiday closings or under any emergency or other
circumstance as determined by the SEC.
Proceeds of redemptions normally are paid in cash. However, payments may be made
wholly or partially in portfolio securities if the Board determines that payment
in cash would be detrimental to the best interests of the Fund.
The Trust employs reasonable procedures to ensure 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, 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 $5,000.
PURCHASE AND REDEMPTION PROCEDURES
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. To request 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 $1,000,000 minimum for initial investments in each Fund.
By Mail. Investors may send a check made payable to the Trust along with a
completed account application to the Transfer Agent. Checks are accepted at full
value subject to collection. Payment by a check drawn on any member of the
Federal Reserve System can normally be converted into Federal Funds within two
business days after receipt of the check. Checks drawn on some non-member banks
may take longer.
For individual or Uniform Gift to Minors Act accounts, the check or money order
used to purchase shares of a Fund must be made payable to "Forum Funds" or to
one or more owners of that account and endorsed to Forum Funds. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts, the check
used to purchase shares of a Fund must be made payable on its face to "Forum
Funds." No other method of payment by check will be accepted. All purchases must
be paid in U.S. dollars; checks must be drawn on U.S. banks. Payment by
Traveler's Checks is prohibited.
By Bank Wire. To make an initial investment in a Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Trust
at 800-94FORUM (800-943-6786) or (207) 879-0001 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: [Name of Fund] - Institutional Shares
Account #: .........
Account Name: .........
The investor should then promptly complete and mail the account application. Any
investor planning to wire funds should instruct a bank early in the day so the
wire transfer can be accomplished the same day. 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.
Through Financial Institutions. Shares may be purchased and redeemed through
certain broker-dealers, banks or other financial institutions ("Processing
Organizations"), including affiliates of the Transfer Agent. Processing
Organizations may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
a Fund. The Trust is not responsible for the failure of any Processing
Organization to promptly forward these requests.
Investors who purchase or redeem shares in this manner will be subject to the
procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Investors who purchase Fund shares
through a Processing Organization may or may not be the shareholder of record
and, subject to their institution's and the Fund's procedures, may have Fund
shares transferred into their name. Certain Processing Organizations may enter
purchase orders with payment to follow.
The Trust may confirm purchases and redemptions of a Processing Organization's
customers directly to the Processing Organization, which in turn will provide
its customers with such confirmations and periodic statements as may be required
by law or agreed to between the Processing Organization and its customers.
Subsequent Purchases of Shares
Subsequent purchases may be made by mailing a check, by sending a bank wire or
through a financial institution as indicated above. Shareholders using the wire
system for purchase should first telephone the Trust at 800-94FORUM
(800-943-6786) or (207) 879-0001 to notify it of the wire transfer. All payments
should clearly indicate the shareholder's name and account number.
Shareholders may purchase Fund shares at regular, preselected intervals
by authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to the Transfer Agent.
Redemption of Shares
Shareholders who wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several days 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 who has elected telephone redemption privileges may
make a telephone redemption request by calling the Transfer Agent at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number. In response to
the telephone redemption instruction, the Fund will mail a check to the
shareholder's record address or, if the shareholder has elected wire redemption
privileges, wire the proceeds.
By Bank Wire. For redemptions of more than $5,000, a shareholder who 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.
Other Redemption Matters. To protect shareholders and the Funds 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.
EXCHANGES
Shareholders may exchange their shares for Institutional Shares of any other
Fund. Exchanges are subject to the fees charged by, and the restrictions listed
in the prospectus for, the fund into which a shareholder is exchanging,
including minimum investment requirements. The Funds do not charge for
exchanges, and there is currently no limit on the number of exchanges a
shareholder may make, but each Fund reserves the right to limit excessive
exchanges by any shareholder. See "Additional Purchase and Redemption
Information" in the SAI.
Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the new account. Shareholders may only exchange into a fund if
that fund's shares may legally be sold in the shareholder's state of residence.
The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Accordingly, a
shareholder may realize a capital gain or loss with respect to the shares
redeemed. Redemptions and purchases are effected at the respective net asset
values of the two funds as next determined following receipt of proper
instructions and all necessary supporting documents by the fund whose shares are
being exchanged. 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 instruction to the Transfer
Agent accompanied by any stock certificate that may have been issued to the
shareholder. All written requests for exchanges must be signed by the
shareholder (a signature guarantee is not required) and all certificates
submitted for exchange must be endorsed by the shareholder with signature
guaranteed.
By Telephone. Exchanges may be accomplished by telephone by any shareholder who
has elected telephone exchange privileges by calling the Transfer Agent at
800-94FORUM (800-943-6786) or (207) 879-0001 and providing the shareholder's
account number, the exact name in which the shareholder's shares are registered
and the shareholder's social security or taxpayer identification number.
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Each
type of net capital gain realized by a Fund, if any, will be distributed
annually. Shareholders may choose to have all distributions reinvested in
additional shares of the Fund or received in cash. In addition, shareholders may
have all distributions of net capital gain reinvested in additional shares of
the Fund and distributions of net investment income paid in cash. All
distributions are treated in the same manner for Federal income tax purposes
whether received in cash or reinvested in shares of the Fund.
All distributions will be reinvested at the Fund's net asset value as of the
payment date of the dividend. All distributions are reinvested unless another
option is selected. All distributions not reinvested will be paid to the
shareholder in cash and may be paid more than seven days following the date on
which distribution would otherwise be reinvested.
TAXES
Tax Status of the Funds. Each Fund intends to qualify or continue to qualify to
be taxed as a "regulated investment company" under the Internal Revenue Code of
1986, as amended. Accordingly, no Fund will be liable for Federal income taxes
on the net investment income and capital gain distributed to its shareholders.
Because each Fund intends to distribute all of its net investment income and net
capital gain each year, the Funds should also avoid Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. 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.
The Portfolios. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
Daily Assets Tax-Exempt Fund. Distributions paid by Daily Assets Tax-Exempt Fund
out of federally tax-exempt interest income earned by the Fund ("exempt-interest
dividends") generally will not be subject to federal income tax in the hands of
the Fund's shareholders. Substantially all of the distributions paid by the Fund
are anticipated to be exempt-interest dividends. Persons who are "substantial
users" or "related persons" thereof of facilities financed by private activity
securities held by the Fund, however, may be subject to federal income tax on
their pro rata share of the interest income from those securities and should
consult their tax advisers before purchasing Shares. Exempt-interest dividends
are included in the "adjusted current earnings" of corporations for purposes of
the federal alternative minimum tax ("AMT").
Interest on indebtedness incurred by shareholders to purchase or carry shares of
the Fund generally is not deductible for federal income tax purposes. Under
rules for determining when borrowed funds are used for purchasing or carrying
particular assets, shares of the Fund may be considered to have been purchased
or carried with borrowed funds even though those funds are not directly linked
to the shares.
The income from the Portfolio's investments may be subject to the AMT. Interest
on certain municipal securities issued to finance "private activities" ("private
activity securities") is a "tax preference item" for purposes of the AMT
applicable to certain individuals and corporations even though such interest
will continue to be fully tax-exempt for regular federal income tax purposes.
The Portfolio may purchase private activity securities, the interest on which
may constitute a "tax preference item" for purposes of the AMT.
State and Local Taxes. Daily Assets Treasury Fund's investment policies are
structured to provide shareholders, to the extent permissible by Federal and
state law, with income that is exempt or excluded from income taxation at the
state and local level. Many states (by statute, judicial decision or
administrative action) do not tax dividends from a regulated investment company
that are attributable to interest on obligations of the U.S. Treasury and
certain U.S. Government agencies and instrumentalities if the interest on those
obligations would not be taxable to a shareholder that held the obligation
directly. As a result, substantially all distributions paid by the Fund to
shareholders residing in certain states will be exempt or excluded from state
income taxes. A portion of the distributions paid by the other Funds to
shareholders may be exempt or excluded from state income taxes, but these Funds
are not managed to provide any specific amount of state tax-free income to
shareholders.
The exemption for federal income tax purposes of distributions derived from
interest on municipal securities does not necessarily result in an exemption
under the income or other tax laws of any state or local taxing authority.
Shareholders of Daily Assets Tax-Exempt Fund may be exempt from state and local
taxes on distributions of tax-exempt interest income derived from obligations of
the state and/or municipalities of the state in which they reside but may be
subject to tax on income derived from the municipal securities of other
jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in a Fund which may differ
from the federal income tax consequences described above.
General. Each Fund may be required by Federal law to withhold 31% of reportable
payments (which may include taxable distributions and redemption proceeds) paid
to individuals and certain other non-corporate shareholders. Withholding is not
required if a shareholder certifies that the shareholder's social security or
tax identification number provided to a Fund is correct and that the shareholder
is not subject to backup withholding.
Each Fund must include a portion of the original issue discount of zero-coupon
securities, if any, as income even though these securities do not pay any
interest until maturity. Because each Fund distributes all of its net investment
income, a Fund may have to sell portfolio securities to distribute imputed
income, which may occur at a time when the investment adviser would not have
chosen to sell such securities and which may result in a taxable gain or loss.
Shortly after the close of each year, a statement is sent to each shareholder of
the Funds advising the shareholder of the portion of total distributions paid to
the shareholder that is (i) derived from each type of obligation in which a Fund
has invested, (ii) derived from the obligations of issuers in the various states
and (iii) exempt from federal income taxes. These portions are determined for
the entire year and on a monthly basis and, thus, are an annual or monthly
average, rather than a day-by-day determination for each shareholder.
The foregoing is only a summary of some of the important Federal and state tax
considerations generally affecting the Funds and their shareholders. There may
be other Federal, state or local tax considerations applicable to a particular
investor. Prospective investors are urged to consult their tax advisors.
7. OTHER INFORMATION
PERFORMANCE INFORMATION
Institutional Shares' performance may be advertised. All performance information
is based on historical results, is not intended to indicate future performance
and, unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of the period. A Fund's compounded
annualized yield assumes the reinvestment of distributions paid by the Fund,
and, therefore will be somewhat higher than the annualized yield for the same
period. A Fund may also quote tax-equivalent yields, which show the taxable
yields a shareholder would have to earn to equal the Fund's tax-free yield,
after taxes. A tax-equivalent yield is calculated by dividing the Fund's
tax-free yield by one minus a stated federal, state or combined federal and
state tax rate. Each class' performance will vary.
The Funds' advertisements may also reference ratings and rankings among similar
funds by independent evaluators such as Morningstar, Lipper Analytical Services,
Inc. or IBC Financial Data, Inc. In addition, the performance of the Funds may
be compared to recognized indices of market performance. The comparative
material found in a Fund's advertisements, sales literature, or reports to
shareholders may contain performance rankings. This material is not to be
considered representative or indicative of future performance.
BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a 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.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 4:00 p.m.,
Eastern Time, on each Fund Business Day by dividing the value of the Fund's net
assets (the value of its interest in the Portfolio and other assets less its
liabilities) by the number of shares outstanding at the time the determination
is made. In order to more easily maintain a stable net asset value per share,
each Portfolio's portfolio securities are valued at their amortized cost
(acquisition cost adjusted for amortization of premium or accretion of discount)
in accordance with Rule 2a-7. The Portfolios will only value their portfolio
securities using this method if the Core Trust Board believes that it fairly
reflects the market-based net asset value per share. The Portfolios' other
assets, if any, are valued at fair value by or under the direction of the Core
Trust Board.
THE TRUST AND ITS SHARES
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., which was incorporated in 1980. The
Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create classes of
shares within each series. There are currently sixteen series of the Trust.
Each share of each fund of the Trust and each class of shares has equal
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 fund or class, except if the matter affects only one
fund or class or voting by fund or class is required by law, in which case
shares will be voted separately by fund 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 (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. A shareholder in a fund is entitled to the shareholder's pro rata
share of all distributions arising from that fund's assets and, upon redeeming
shares, will receive the portion of the fund's net assets represented by the
redeemed shares.
From time to time certain shareholders may own a large percentage of shares of a
Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of any shareholder vote. As of the date hereof, due to
initial investment in Daily Assets Treasury Obligations Fund, Daily Assets
Government Fund and Daily Assets Tax-Exempt Fund, prior to the public offering
of shares, FAS may be deemed to control those Funds.
FUND STRUCTURE
Other Classes of Shares. In addition to Institutional Shares, each Fund may
create and issue shares of other classes of securities. Each Fund currently has
two other classes of shares authorized, Institutional Service Shares and
Investor Shares. Institutional Services Shares are offered solely through banks,
trust companies and certain other financial institutions, and their affiliates
and correspondents, for investment of their funds or funds for which they act in
a fiduciary, agency or custodial capacity. Investor Shares are offered to the
general public, have a $10,000 minimum investment and bear shareholder service
and distribution fees. Institutional Service Shares and Investor Shares incur
more expenses than Institutional Shares. See, "Additional Information" below.
Except for certain differences, each share of each class represents an
undivided, proportionate interest in a Fund. Each share of each Fund is entitled
to participate equally in distributions and the proceeds of any liquidation of
that Fund except that, due to the differing expenses borne by the various
classes, the amount of distributions will differ among the classes.
Core Trust Structure. Each Fund invests all of its assets in its corresponding
Portfolio of Core Trust, a business trust organized under the laws of the State
of Delaware in September 1994 and registered under the 1940 Act as an open-end,
management investment company. Accordingly, a Portfolio directly acquires its
own securities and its corresponding Fund acquires an indirect interest in those
securities. The assets of each Portfolio belong only to, and the liabilities of
the Portfolio are borne solely by, the Portfolio and no other portfolio of Core
Trust. Upon liquidation of a Portfolio, investors in the Portfolio would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.
The Portfolios. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, Daily
Assets Treasury Fund and Daily Assets Tax-Exempt Fund are the only investors
(other than FAS or its affiliates) that have invested in Treasury Portfolio and
Municipal Cash Portfolio, respectively. Each of the other Portfolios has another
investor besides the Funds (and FAS and its affiliates). All investors in a
Portfolio invest on the same terms and conditions as the Funds and will pay a
proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio is entitled to vote in proportion to the relative value of its
interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. There can be no assurance that
any issue that receives a majority of the votes cast by a Fund's shareholders
will receive a majority of votes cast by all investors in the Portfolio.
Considerations of Investing in a Portfolio. A Fund's investment in a Portfolio
may be affected by the actions of other large investors in the Portfolio, if
any. If a large investor other than a Fund redeemed its interest in a Portfolio,
the Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from a Portfolio at any time, if the
Board determines that it is in the best interests of the Fund and its
shareholders to do so. The Fund might withdraw, for example, if other investors
in the Portfolio, by a vote of shareholders, changed the investment objective or
policies of the Portfolio in a manner not acceptable to the Board or not
permissible by the Fund. A withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. If
the Fund decided to convert those securities to cash, it usually would incur
transaction costs. If the Fund withdrew its investment from the Portfolio, the
Board would consider what action might be taken, including the management of the
Fund's assets in accordance with its investment objective and policies by the
investment adviser to the Portfolio or the investment of all of the Fund's
investable assets in another pooled investment entity having substantially the
same investment objective as the Fund. The inability of the Fund to find a
suitable replacement investment, in the event the Board decided not to permit
the Portfolio's investment adviser to manage the Fund's assets, could have a
significant impact on shareholders of the Fund.
Additional Information. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact
FFSI at 207-879-1900. If an investor invests through a financial institution,
the investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the SAI and the
Funds' official sales literature in connection with the offering of the Funds'
shares, and if given or made, such information or representations must not be
relied upon as having been authorized by the Trust. This Prospectus does not
constitute an offer in any state in which, or to any person to whom, such offer
may not lawfully be made.
<PAGE>
PROSPECTUS
November 17, 1997
Forum Funds
Daily Assets Treasury Fund
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Tax-Exempt Fund
This Prospectus offers Institutional Service Shares of Daily Assets Treasury
Fund, Daily Assets Treasury Obligations Fund, Daily Assets Government Fund,
Daily Assets Cash Fund and Daily Assets Tax-Exempt Fund (each a "Fund"). Each
Fund is a diversified no-load, money market portfolio of Forum Funds (the
"Trust"), a registered, open-end, management investment company. Each Fund seeks
to provide its shareholders with high current income (which, in the case of
Daily Assets Tax-Exempt Fund, is exempt from federal income taxes) to the extent
consistent with the preservation of capital and the maintenance of liquidity.
Each Fund seeks to achieve its objective by investing all of its investable
assets in a separate portfolio of an open-end, management investment company
with an identical investment objective. See "Prospectus Summary" and "Other
Information - Fund Structure." Through the portfolio in which it invests:
Daily Assets Treasury Fund invests primarily in obligations of the U.S.
Treasury or certain agencies and instrumentalities of the U.S.
Government with a view toward providing income that is generally
considered exempt from state and local income taxes. Daily Assets
Treasury Obligations Fund invests substantially all of itss assets in
obligations of the U.S. Treasury and in repurchase agreements backed by
these obligations. Daily Assets Government Fund invests substantially
all of itss assets in obligations of the U.S. Government, its agencies
and instrumentalities and in repurchase agreements backed by these
obligations. Daily Assets Cash Fund invests in a broad spectrum of
high-quality money market instruments. Daily Assets Tax-Exempt Fund
invests primarily in high-quality obligations of the states,
territories and possessions of the U.S. and of their subdivisions,
authorities and corporations ("municipal securities") with a view
toward providing income that is exempt from federal income taxes.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated November 17, 1997, as may be amended from time to
time (the "SAI"), which contains more detailed information about the Trust and
the Funds 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 contacting the Funds' transfer agent, Forum Financial Corp., at P.O. Box 446,
Portland, Maine 04112, (207) 879-0001 or (800) 94FORUM.
Investors should read this Prospectus
and retain it for future reference.
FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.
THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
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.
<TABLE>
TABLE OF CONTENTS
<S> <C> <C> <C>
1. Prospectus Summary.............................. 2 5. Purchases and Redemptions of Shares............. 12
2. Financial Highlights............................ 4 6. Distributions and Tax Matters................... 16
3. Investment Objectives and Policies.............. 5 7. Other Information............................... 17
4. Management...................................... 10
</TABLE>
<PAGE>
1. PROSPECTUS SUMMARY
HIGHLIGHTS OF THE FUNDS
This prospectus offers shares of the Institutional Service class ("Institutional
Service Shares") of each of the Funds. Institutional Services Shares are offered
solely through banks, trust companies and certain other financial institutions,
and their affiliates and correspondents, for investment of their funds or funds
for which they act in a fiduciary, agency or custodial capacity. The Funds
operate in accordance with the provisions of Rule 2a-7 under the Investment
Company Act of 1940 (the "1940 Act"). Each Fund invests all of its investable
assets in a separate portfolio (each a "Portfolio") of Core Trust (Delaware), an
open-end, management investment company ("Core Trust") as follows:
Daily Assets Treasury Fund Treasury Portfolio
Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Tax-Exempt Fund Municipal Cash Portfolio
Accordingly, the investment experience of each Fund will correspond directly
with the investment experience of its corresponding Portfolio. See "Other
Information - Fund Structure." Each Fund currently offers three separate classes
of shares: Institutional Shares, Institutional Service Shares and Investor
Shares. Institutional Service Shares are sold through this Prospectus.
Institutional Shares and Investor Shares are each offered by a separate
prospectus. See "Other Information-- Fund Structure -- Other Classes of Shares."
Management. Forum Administrative Services, LLC ("FAS") supervises the overall
management of the Funds and the Portfolios and Forum Financial Services, Inc.
("FFSI") is the distributor of the Funds' shares. Forum Advisors, Inc. ("Forum
Advisors") is the investment adviser of Treasury Portfolio and Municipal Cash
Portfolio and provides professional management of those Portfolio's investments.
Linden Asset Management, Inc. ("Linden") is the investment adviser of Treasury
Cash Portfolio, Government Cash Portfolio and Cash Portfolio and provides
professional management of those Portfolios' investments. Forum Advisors and
Linden (each an "Adviser") provide certain subadvisory assistance for the
Portfolios they do not directly advise. The Funds' transfer agent, dividend
disbursing agent and shareholder servicing agent is Forum Financial Corp. (the
"Transfer Agent"). See "Management" for a description of the services provided
and fees charged to the Funds.
It is anticipated that, as of January 1, 1998, Forum Advisors will acquire
Linden and reorganize into a new company named Forum Investment Advisors, LLC.
The acquisition is subject to a vote of the shareholders of Daily Assets Cash
Fund and of the other investors in the Portfolio which Linden currently advises.
No change in advisory staff, portfolio managers, or advisory fees, or any other
material change is expected as a result of these transactions.
Shareholder Servicing and Distribution. The Trust has adopted a Shareholder
Service Plan relating to Institutional Service Shares under which FAS is
compensated for various shareholder servicing activities. See "Management -
Shareholder Servicing" and "- Administration and Distribution."
Purchases and Redemptions. The minimum initial investment in Institutional
Service Shares is $100,000. Institutional Service Shares may be purchased and
redeemed Monday through Friday, between 9:00 a.m. and 6:00 p.m., Eastern Time,
except on Federal holidays and days that the Federal Reserve Bank of San
Francisco (Boston in the case of Daily Assets Treasury Fund and Daily Assets
Tax-Exempt Fund) is closed ("Fund Business Days"). To be eligible to receive
that day's income, purchase orders must be received by the Transfer Agent in
good order no later than 2:00 p.m., Eastern Time (noon in the case of Daily
Assets Treasury Fund and Daily Assets Tax-Exempt Fund). Shareholders may elect
to have redemption proceeds over $5,000 transferred by bank wire to a designated
bank account. To be able to receive redemption proceeds by wire on the day of
the redemption, redemption orders must be received by the Transfer Agent in good
order no later than 2:00 p.m., Eastern Time (noon in the case of Daily Assets
Treasury Fund and Daily Assets Tax-Exempt Fund). All times may be changed
without notice by Fund management due to market activities. See "Purchase and
Redemption of Shares."
Exchanges. Shareholders of a Fund may exchange Institutional Service Shares
without charge for Institutional Service Shares of the other Funds. See
"Purchases and Redemptions of Shares - Exchanges."
Distributions. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."
Investment Considerations. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Portfolios
invest only in money market instruments, an investment in any Fund involves
certain risks, depending on the types of investments made and the types of
investment techniques employed. Investment in any security, including U.S.
Government Securities, involves some level of investment risk. An investment in
a Fund is not insured by the FDIC, nor is it insured or guaranteed against loss
of principal. By investing in its corresponding Portfolio, each Fund may achieve
certain efficiencies and economies of scale. Nonetheless, these investments
could also have potential adverse effects on the applicable Fund. See "Other
Information - Core Trust Structure."
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Institutional Service Shares will bear
directly or indirectly. There are no transaction expenses associated with
purchases, redemptions or exchanges of Fund shares.
Annual Fund Operating Expenses (as a percentage of average net assets)(1)
<TABLE>
Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Treasury Government Cash Tax-Exempt
Fund Obligations Fund Cash Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Management Fees(2) 0.15% 0.14% 0.14% 0.14% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.30% 0.31% 0.31% 0.31% 0.30%
Total Operating Expenses 0.45% 0.45% 0.45% 0.45% 0.45%
</TABLE>
(1) For a further description of the various expenses incurred in the operation
of the Funds and the Portfolios, see "Management." The amount of fees and
expenses for Daily Assets Treasury Fund and Daily Assets Cash Fund is based on
the Fund's expenses for its last fiscal year ended August 31, 1997 restated to
reflect current fees; the amount of expenses for each other Fund is based on
estimated annualized expenses for those Funds' fiscal year ending August 31,
1998. Each Fund's expenses include the Fund's pro rata portion of all expenses
of its corresponding Portfolio, which are borne indirectly by Fund shareholders.
(2) Management Fees include all administration fees and investment advisory fees
incurred by the Funds and the Portfolios; as long as its assets are invested in
a Portfolio, a Fund pays no investment advisory fees directly. (3) Absent
estimated reimbursements by Linden, Forum Advisors and its affiliates, Other
Expenses and Total Fund Operating Expenses would be: 0.40% and 0.55%,
respectively, for Daily Assets Treasury Fund; 0.36% and 0.50%, respectively, for
Daily Assets Treasury Obligations Fund; 0.40% and 0.54%, respectively, for Daily
Assets Government Fund; 0.43% and 0.57%, respectively, for Daily Assets Cash
Fund; 0.43% and 0.58%, respectively, for Daily Assets Tax-Exempt Fund. Expense
reimbursements are voluntary and may be reduced or eliminated at any time.
Example
Following is a hypothetical example that indicates the dollar amount of expenses
that an investor in Institutional Service Shares would pay assuming (i) the
investment of all of the Fund's assets in the Portfolio, (ii) a $1,000
investment in the Fund, (iii) a 5% annual return, (iv) the reinvestment of all
distributions and (v) redemption at the end of each period:
One Year Three Years Five Years Ten Years
Each Fund $5 $14 $25 $57
The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Funds' projected returns; rather, it is required by government
regulation. The example should not be considered a representation of past or
future expenses or return. Actual expenses and return may be greater or less
than indicated.
2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Institutional Service Share of Daily Assets Treasury Fund and of Daily Assets
Cash Fund. Information for the period ended August 31, 1997, was audited by KPMG
Peat Marwick LLP, independent auditors. Information for prior periods was
audited by other independent auditors. The financial statements for Daily Assets
Treasury Fund and Daily Assets Cash Fund and independent auditors' report
thereon for the fiscal year ended August 31, 1997 are incorporated by reference
into the SAI and may be obtained from the Trust without charge. As of the date
hereof, Daily Assets Treasury Obligations Fund, Daily Assets Government Fund,
Daily Assets Tax-Exempt Fund, as well as Municpal Cash Portfolio had not
commenced operations.
As of August 31, 1997, Treasury Portfolio, Treasury Cash Portfolio, Government
Cash Portfolio and Cash Portfolio had net assets of $44,321,412; $71,102,520;
$476,768,745 and $259,491,011, respectively.
<TABLE>
- Ratios to Average Net Net Assets Ratio to
at
Beginning DistributionsEnding Assets End of Average
-----------------------
Net Asset Net From Net Net Asset Net Period Net Assets
-------------
Value Per Investment Investment Value per Net Investment Total (000's Gross
Share Income Income Share Expenses Income Return Omitted) Expenses(1)
Daily Assets Treasury
Fund Institutional Service Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
April 1, 1997 toAugust $ 1.00 0.02 (0.02) $ 1.00 0.50%(2) 4.76%(2) 2.01%(3) $44,116 0.95%(2)
31, 1997
Year Ended March 31, 1.00 0.05 (0.05) 1.00 0.50% 4.70% 4.80% 43,975 0.99%
1997
Year Ended March 31, 1.00 0.05 (0.05) 1.00 0.50% 5.01% 5.18% 43,103 1.06%
1996
Year Ended March 31, 1.00 0.04 (0.04) 1.00 0.37% 4.45% 4.45% 36,329 1.10%
1995
Year Ended March 31, 1.00 0.03 (0.03) 1.00 0.33% 2.82% 2.83% 26,505 1.17%
1994
July 1, 1992 to March 1.00 0.02 (0.02) 1.00 0.32%(2) 2.92%(2) 3.13%(2) 4,687 2.43%(2)
31, 1993
Daily Assets Cash Fund
Institutional Service
Shares
October 1, 1996 to 1.00 0.05 (0.05) 1.00 0.52%(2) 5.06%(2) 4.70%(3) $12,076 1.22%(2)
August 31, 1997
</TABLE>
(1) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects the
expense ratio in the absence of any waivers and reimbursements for the Fund and
its respective Portfolio.
(2) Annualized.
(3) Not annualized.
<PAGE>
3. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of each Fund, except Daily Assets Tax-Exempt Fund, is
to provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of Daily
Assets Tax-Exempt Fund is to provide high current income which is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity.
There can be no assurance that any Fund or Portfolio will achieve its investment
objective or maintain a stable net asset value.
Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio, which has the same
investment objective and substantially similar investment policies. Therefore,
although the following in part discusses the investment policies of the
Portfolios (and the responsibilities of Core Trust's board of trustees (the
"Core Trust Board")), it applies equally to the Funds (and the Trust's board of
trustees (the "Board")).
INVESTMENT POLICIES
Each Portfolio invests only in high quality, short-term money market instruments
that are determined by the Adviser, pursuant to procedures adopted by the Core
Trust Board, to be eligible for purchase and to present minimal credit risks.
High quality instruments include those that (i) are rated (or, if unrated, are
issued by an issuer with comparable outstanding short-term debt that is rated)
in the highest rating category by two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO has issued a rating, by that
NRSRO or (ii) are otherwise unrated and determined by the Adviser to be of
comparable quality. A description of the rating categories of certain NRSROs,
such as Standard & Poor's and Moody's Investors Service, Inc., is contained in
the SAI.
Each Portfolio invests only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated under Rule 2a-7) and
maintains a dollar-weighted average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, each Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. As used herein, "U.S. Government
Securities" means obligations issued or guaranteed as to principal and interest
by the United States government, its agencies or instrumentalities and "Treasury
Securities" means U.S. Treasury bills and notes and other U.S. Government
Securities which are guaranteed as to principal and interest by the U.S.
Treasury.
In the case of municipal securities, when the assets and revenues of an issuer
are separate from those of the government creating the issuer and a security is
backed only by the assets and revenues of the issuer, the issuer and not the
creating government is deemed to be the sole issuer of the security. Similarly,
in the case of a security issued by or on behalf of public authorities to
finance various privately operated facilities that is backed only by the assets
and revenues of the non-governmental user, the non-governmental user will be
deemed to be the sole issuer of the security.
Yields on money market securities are dependent on a variety of factors,
including the general conditions of the money markets and the fixed income
markets in general, the size of a particular offering, the maturity of the
obligation and the rating of the issue. A Fund's yield will tend to fluctuate
inversely with prevailing market interest rates. For instance, in periods of
falling market interest rates, yields will tend to be somewhat higher. Although
each Portfolio only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities and municipal securities, can
change in value when there is a change in interest rates, the issuer's actual or
perceived creditworthiness or the issuer's ability to meet its obligations. The
achievement of a Fund's investment objective is dependent in part on the
continuing ability of the issuers of the securities in which the Portfolio
invests to meet their obligations for the payment of principal and interest when
due.
DAILY ASSETS TREASURY FUND
Treasury Portfolio seeks to attain its investment objective by investing
primarily in Treasury Securities. Under normal market conditions, the Portfolio
will invest at least 65% of its total assets in Treasury Securities. The
Portfolio may also invest in other U.S. Government Securities. The Portfolio
invests with a view toward providing income that is generally considered exempt
from state and local income taxes. The Portfolio will purchase a U.S. Government
Security (other than a Treasury Security) only if that security has a remaining
maturity of thirteen months or less.
Among the U.S. Government Securities in which the Portfolio may invest are
obligations of the Farm Credit System, Farm Credit System Financial Assistance
Corporation, Federal Financing Bank, Federal Home Loan Banks, General Services
Administration, Student Loan Marketing Association, and Tennessee Valley
Authority. Income on these obligations and the obligations of certain other
agencies and instrumentalities is generally not subject to state and local
income taxes by Federal law. In addition, the income received by Fund
shareholders that is attributable to these investments will also be exempt in
most states from state and local income taxes. Shareholders should determine
through consultation with their own tax advisers whether and to what extent
dividends payable by the Fund from interest received with respect to its
investments will be considered to be exempt from state and local income taxes in
the shareholder's state. Shareholders similarly should determine whether the
capital gain and other income, if any, payable by the Fund will be subject to
state and local income taxes in the shareholder's state. See "Distributions and
Tax Matters."
The U.S. Government Securities in which the Portfolio may invest include
securities supported primarily or solely by the creditworthiness of the issuer.
There is no guarantee that the U.S. government will support securities not
backed by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than securities backed by the U.S. government's full faith
and credit.
DAILY ASSETS TREASURY OBLIGATIONS FUND
Treasury Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.
DAILY ASSETS GOVERNMENT FUND
Government Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities and in repurchase
agreements backed by U.S. Government Securities. The U.S. Government Securities
in which the Portfolio may invest include Treasury Securities and securities
supported primarily or solely by the creditworthiness of the issuer, such as
securities of the Federal National Mortgage Association, Federal Home Loan Banks
and Student Loan Marketing Association. There is no guarantee that the U.S.
Government will support securities not backed by its full faith and credit.
Accordingly, although these securities have historically involved little risk of
loss of principal if held to maturity, they may involve more risk than
securities backed by the U.S. Government's full faith and credit.
DAILY ASSETS CASH FUND
Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments. The Portfolio may invest in (i)
obligations of domestic financial institutions, (ii) U.S. Government Securities
(see "Investment Objectives and Policies - Daily Assets Government Fund") and
(iii) corporate debt obligations of domestic issuers.
Financial institution obligations include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of banks (including savings
banks and savings associations) and their foreign branches. The Portfolio limits
its investments in bank obligations to banks which at the time of investment
have total assets in excess of one billion dollars. Certificates of deposit
represent an institution's obligation to repay funds deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations
of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" that are restricted as to
disposition under the Federal securities laws ("restricted securities"). Any
sale of these securities may not be made absent registration under the
Securities Act of 1933 or the availability of an appropriate exemption
therefrom. Some of these restricted securities, however, are eligible for resale
to institutional investors, and accordingly, a liquid market may exist for them.
Pursuant to guidelines adopted by the Core Trust Board, the investment adviser
will determine whether each such investment is liquid.
DAILY ASSETS TAX-EXEMPT FUND
Municipal Cash Portfolio seeks to attain its investment objective by investing
primarily in municipal securities. The Portfolio attempts to maintain 100% of
its assets invested in federally tax-exempt municipal securities; during periods
of normal market conditions the Portfolio will have at least 80% of its net
assets invested in federally tax-exempt instruments the income from which may be
subject to the federal alternative minimum tax ("AMT").
The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.
The Short-Term Municipal Securities Market. It is anticipated that a substantial
amount of the municipal securities held by the Portfolio will be supported by
credit and liquidity enhancements, such as letters of credit (which are not
covered by federal deposit insurance) or put or demand features of third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Portfolio will be dependent in part upon the
credit quality of the banks supporting the Portfolio's investments. This will
result in exposure to risks pertaining to the banking industry, including the
foreign banking industry. These risks include a sustained increase in interest
rates, which can adversely affect the availability and cost of a bank's lending
activities; exposure to credit losses during times of economic decline;
concentration of loan portfolios in certain industries; regulatory developments;
and competition among financial institutions. Brokerage firms and insurance
companies also provide certain liquidity and credit support. The Portfolio's
policy is to purchase municipal securities with third party credit or liquidity
support only after the Adviser has considered the creditworthiness of the
financial institution providing the support and believes that the security
presents minimal credit risk.
The Portfolio may purchase long term municipal securities with various maturity
shortening provisions. For instance, variable rate demand notes ("VRDN") are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer) which may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
VRDNs may be issued directly by the municipal issuer or created by a bank,
broker-dealer or other financial institution by selling a previously issued
long-term bond with a demand feature attached. Similarly, tender option bonds
(also referred to as certificates of participation) are municipal securities
with relatively long original maturities and fixed rates of interest that are
coupled with an agreement of a third party financial institution under which the
third party grants the security holders the option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. As consideration for
providing the option, the financial institution receives a fee equal to the
difference between the underlying municipal security's fixed rate and the rate,
as determined by a remarketing or similar agent, that would cause the
securities, coupled with the tender option, to trade at par on the date of the
interest rate determination. These bonds effectively provide the holder with a
demand obligation that bears interest at the prevailing short-term municipal
securities interest rate.
The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the Portfolio the right to sell the municipal security at a specified
price at any time before a specified date. The Portfolio will acquire puts only
to enhance liquidity, shorten the maturity of the related municipal security or
permit the Portfolio to invest its funds at more favorable rates. Generally, the
Portfolio will buy a municipal security that is accompanied by a put only if the
put is available at no extra cost. In some cases, however, the Portfolio may pay
an extra amount to acquire a put, either in connection with the purchase of the
related municipal security or separately from the purchase of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
Municipal Bonds. Municipal bonds are long term fixed-income securities. "General
obligation" bonds are secured by a municipality's pledge of its full faith,
credit and taxing power for the payment of principal and interest. "Revenue"
bonds are usually payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other tax, but not from general tax revenues. Under a "moral
obligation" bond (which is normally issued by special purpose public
authorities), if the issuer is unable to meet its obligations under the bonds
from current revenues, it may draw on a reserve fund that is backed by the moral
commitment (but not the legal obligation) of the state or municipality that
created the issuer. The Portfolio may invest in industrial development bonds,
which in most cases are revenue bonds. The payment of the principal and interest
on these bonds is dependent solely on the ability of an initial or subsequent
user of the facilities financed by the bonds to meet its financial obligations
and the pledge, if any, of real and personal property so financed as security
for such payment.
Municipal Notes and Leases. Municipal notes, which may be either "general
obligation" or "revenue" securities, are short-term fixed income securities
intended to fulfill short-term capital needs of a municipality. Municipal
leases, which may take various forms, are issued by municipalities to acquire a
wide variety of equipment and facilities. Municipal leases frequently have
special risks not normally associated with other municipal securities. Municipal
leases (which normally provide for title to the leased assets to pass eventually
to the government issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
Participation Interests. The Portfolio may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.
Taxable Investments. The Portfolio may invest up to 20% of the value of its net
assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, are fundamental and therefore, may not be
changed without approval of the holders of a majority of the Fund's or
Portfolio's, as applicable, outstanding voting securities (as defined in the
1940 Act). Except as otherwise indicated herein or in the SAI, investment
policies of a Fund or a Portfolio may be changed by the applicable board of
trustees without shareholder approval. Each Portfolio is permitted to hold cash
in any amount pending investment in securities and may invest in other
investment companies that intend to comply with Rule 2a-7 and have substantially
similar investment objectives and policies. A further description of the Funds'
and the Portfolios' investment policies is contained in the SAI.
Borrowing. Each Portfolio may borrow money for temporary or emergency purposes
(including the meeting of redemption requests), but not in excess of 33 1/3% of
the value of the Portfolio's total assets. Borrowing for purposes other than
meeting redemption requests will not exceed 5% of the value of the Portfolio's
total assets.
Repurchase Agreements. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain credit risks not associated with direct investment in
securities. Each Portfolio, however, intends to enter into repurchase agreements
only with sellers which the Adviser believes present minimal credit risks in
accordance with guidelines established by the Core Trust Board. In the event
that a seller defaulted on its repurchase obligation, however, a Portfolio might
suffer a loss.
Liquidity. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including, repurchase agreements
not entitling the Portfolio to payment of principal within seven days. There may
not be an active secondary market for securities held by a Portfolio. The value
of securities that have a limited market tend to fluctuate more than those that
have an active market. Each Portfolio's Adviser monitors the liquidity of the
Portfolio's investments, but there can be no guarantee that an active secondary
market will exist.
When-Issued and Forward Commitment Securities. In order to assure itself of
being able to obtain securities at prices which the Adviser believes might not
be available at a future time, each Portfolio's Adviser may purchase securities
on a when-issued or delayed delivery basis. When these transactions are
negotiated, the price or yield is fixed at the time the commitment is made, but
delivery and payment for the securities take place at a later date. Securities
so purchased are subject to market price fluctuation and no interest on the
securities accrues to a Portfolio until delivery and payment take place.
Accordingly, the value of the securities on the delivery date may be more or
less than the purchase price. Commitments for when-issued or delayed delivery
transactions will be entered into only when a Portfolio has the intention of
actually acquiring the securities, but the Portfolio may sell the securities
before the settlement date if deemed advisable. Failure by the other party to
deliver a security purchased by a Portfolio may result in a loss or missed
opportunity to make an alternative investment. As a result of entering into
forward commitments, the Funds are exposed to greater potential fluctuations in
the value of their assets and net asset values per share.
Variable and Floating Rate Securities. The securities in which each Portfolio
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Those
securities with ultimate maturities of greater than 397 days may be purchased
only in accordance with the provisions of Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features which comply with certain
requirements and certain U.S. Government Securities may be purchased. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.
Financial Institution Guidelines. Treasury Cash Portfolio and Government Cash
Portfolio invests only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. These Portfolios do not intend to hold in their portfolio any
securities or instruments that would be subject to restriction as to amount held
by a national bank under Title 12, Section 24 (Seventh) of the United States
Code. In addition, these Portfolios limit their investments to those permissible
for Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act and the applicable rules and regulations of the National Credit
Union Administration. Government Cash Portfolio limits its investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage and to investments that permit Fund
shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction the Core Trust Board. The
Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The Core Trust Board
performs similar functions for the Portfolios and Core Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust.
ADMINISTRATION AND DISTRIBUTION
Subject to the supervision of the Board, FAS supervises the overall management
of the Trust, including overseeing the Trust's receipt of services, advising the
Trust and the Trustees on matters concerning the Trust and its affairs, and
providing the Trust with general office facilities and certain persons to serve
as officers. For these services and facilities, FAS receives a fee at an annual
rate of 0.05% of the daily net assets of each Fund. FAS also serves as
administrator of the Portfolios and provides administrative services for each
Portfolio that are similar to those provided to the Funds. For its
administrative services to the Portfolios, FAS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("Forum Accounting") performs portfolio accounting services for
the Funds and Portfolios pursuant to agreements with the Trust and Core Trust
and is paid a separate fee for these services.
FFSI acts as the agent of the Trust in connection with the offering of shares of
the Funds but receives no compensation for these services. FFSI is a registered
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
FAS, FFSI, Forum Advisors, Forum Accounting and the Transfer Agent are members
of the Forum Financial Group of companies and together provide a full range of
services to the investment company and financial services industry. As of the
date of this Prospectus, each of these companies was controlled by John Y.
Keffer, President and Chairman of the Trust, and FAS and FFSI provided
administration services to registered investment companies with assets of
approximately $30 billion.
INVESTMENT ADVISERS
Subject to the general supervision of the Core Trust Board, Forum Advisors makes
investment decisions for Treasury Portfolio and Municipal Cash Portfolio and
monitors those Portfolios' investments, and Linden makes investment decisions
for Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio and
monitors those Portfolios' investments. Forum Advisors, which is located at Two
Portland Square, Portland, Maine 04101, provides investment advisory services to
four other mutual funds. Linden, which is located at 812 N. Linden Drive,
Beverly Hills, California 90210, is controlled by Anthony R. Fischer, Jr., who
is its sole stockholder, director, and officer. Forum Advisors and Linden also
act as investment subadvisers to the Portfolios that they do not manage on a
daily basis and from time to time may provide each other with assistance
regarding the other's advisory responsibilities. These services may include
management of part of or all of the Portfolios' investment portfolios.
For its services, Forum Advisors receives an advisory fee at an annual rate of
0.05% of Treasury Portfolio's and Municipal Cash Portfolio's average daily net
assets. For its services, Linden receives from each of Treasury Cash Portfolio,
Government Cash Portfolio and Cash Portfolio an advisory fee based upon the
total average daily net assets of those Portfolios ("Total Portfolio Assets").
Linden's fee is calculated at an annual rate on a cumulative basis as follows:
0.06% of the first $200 million of Total Portfolio Assets, 0.04% of the next
$300 million of Total Portfolio Assets, and 0.03% of the remaining Total
Portfolio Assets. A Fund's expenses include the Fund's pro rata portion of the
advisory fee paid by the corresponding Portfolio. To the extent Forum Advisors
or Linden has delegated its responsibilities to the other, Forum Advisors or
Linden pays its advisory fee accrued for such period of time to the other.
Currently, it is anticipated that Forum Advisors and Linden will delegate
responsibility for portfolio management to the other investment adviser
infrequently.
SHAREHOLDER SERVICING
Transfer and Dividend Disbursing Agent. Shareholder inquiries and communications
concerning the Funds may be directed to the Transfer Agent at the address and
telephone numbers on the first page of this Prospectus. The Transfer Agent
maintains an account for each shareholder of the Funds (unless such accounts are
maintained by sub-transfer agents or processing agents) and performs other
transfer agency and related functions. The Transfer Agent is authorized to
subcontract any or all of its functions to one or more qualified sub-transfer
agents or processing agents, which may be its affiliates, who agree to comply
with the terms of the Transfer Agent's agreement with the Trust. The Transfer
Agent may pay those agents for their services, but no such payment will increase
the Transfer Agent's compensation from the Trust. For its services, the Transfer
Agent is paid a transfer agent fee at an annual rate of 0.10% of the average
daily net assets of each Fund attributable to Institutional Service Shares plus
$12,000 per year for each Fund and certain account and additional class charges
and is reimbursed for certain expenses incurred on behalf of the Funds.
Shareholder Service Agents. The Trust has adopted a shareholder service plan
("Shareholder Service Plan") which provides that, as compensation for FAS's
service activities with respect to the Institutional Service Shares, the Trust
shall pay FAS a fee at an annual rate of 0.25% of the average daily net assets
attributable to Institutional Service Shares. FAS is authorized to enter into
shareholder servicing agreements pursuant to which a shareholder servicing
agent, on behalf of its customers, performs certain shareholder services not
otherwise provided by the Transfer Agent. As compensation for its services, the
shareholder servicing agent is paid a fee by FAS of up to 0.25% of the average
daily net assets of Institutional Service Shares owned by investors for which
the shareholder service agent maintains a servicing relationship. Certain
shareholder servicing agents may be subtransfer or processing agents.
Among the services provided by shareholder servicing agents are answering
customer inquiries regarding the manner in which purchases, exchanges and
redemptions of shares of the Trust may be effected and other matters pertaining
to the Trust's services; providing necessary personnel and facilities to
establish and maintain shareholder accounts and records; assisting shareholders
in arranging for processing purchase, exchange and redemption transactions;
arranging for the wiring of funds; guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request.
EXPENSES OF THE FUNDS
Each Fund's expenses comprise Trust expenses attributable to the Fund, which are
charged to the Fund, and expenses not attributable to a particular fund of the
Trust, which are allocated among the Fund and all other funds of the Trust in
proportion to their average net assets. Each service provider in its sole
discretion may elect to waive (or continue to waive) all or any portion of its
fees, which are accrued daily and paid monthly, and may reimburse a Fund for
certain expenses. Any such waivers or reimbursements would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.
Each Fund's expenses include the service fees described in this Prospectus, the
fees and expenses of the Board, applicable insurance and bonding expenses and
state and SEC registration fees. Each Fund bears its pro rata portion of the
expenses of the Portfolio in which it invests along with all other investors in
the Portfolio.
5. PURCHASES AND REDEMPTIONS OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through the Transfer Agent, which
accepts orders for purchases and redemptions from shareholders of record and new
investors. Shareholders of record will receive from the Trust periodic
statements listing all account activity during the statement period. The Trust
reserves the right in the future to modify, limit or terminate any shareholder
privilege, upon appropriate notice to shareholders, and may 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 of an order in proper form, on each Fund Business
Day. Fund shares are issued immediately after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by the Transfer Agent. Each Fund's net asset value is
calculated at 4:00 p.m., Eastern Time.
Fund shares become entitled to receive distributions on the day the purchase
order is accepted if the order and payment are received by the Transfer Agent as
follows:
<TABLE>
Order Must be Received by Payment Must be Received by
<S> <C> <C>
Daily Assets Treasury Fund and
Daily Assets Tax-Exempt Fund 12:00 p.m., Eastern time 4:00 p.m., Eastern time
All other Funds 2:00 p.m., Eastern time 4:00 p.m., Eastern time
</TABLE>
If a purchase order is transmitted to the Transfer Agent (or the wire is
received) after the times listed above, the investor will not receive a
distribution on that day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco (Boston in the case of Daily Assets Treasury Fund
and Daily Assets Tax-Exempt Fund) closes early or the Public Securities
Association recommends that the government securities markets close early, the
Trust may advance the time by which the Transfer Agent must receive completed
wire purchase orders and the cut-off times set forth above.
Each Fund reserves the right to reject any subscription for the purchase of Fund
shares. Stock certificates are issued only to shareholders of record upon their
written request and no certificates are issued for fractional shares.
Redemptions. Fund shares may be redeemed without charge at their net asset value
on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following 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 distributions declared on or after the day on which the
redemption becomes effective.
For wire redemption orders received after 12:00 p.m., Eastern time, in the case
of Daily Assets Treasury Fund and Daily Assets Tax-Exempt Fund, and after 2:00
p.m., Eastern Time, in the case of each other Fund, the Transfer Agent will wire
proceeds the next Fund Business Day. On days that the New York Stock Exchange or
Federal Reserve Bank of San Francisco (Boston in the case of Daily Assets
Treasury Fund and Daily Assets Tax-Exempt Fund) closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which the Transfer Agent must receive
completed wire redemption orders.
Normally, redemption proceeds are paid immediately, 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 to
purchase the shares 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 for more than seven days after
the tender of the shares to the Fund except when the New York Stock Exchange is
closed (or when trading thereon is restricted) for any reason other than its
customary weekend or holiday closings or under any emergency or other
circumstance as determined by the SEC.
Proceeds of redemptions normally are paid in cash. However, payments may be made
wholly or partially in portfolio securities if the Board determines that payment
in cash would be detrimental to the best interests of the Fund.
The Trust employs reasonable procedures to ensure 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, 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 $5,000.
PURCHASE AND REDEMPTION PROCEDURES
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. To request 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 $100,000 minimum for total initial investments through of by any
financial institution in each Fund.
By Mail. Investors may send a check made payable to the Trust along with a
completed account application to the Transfer Agent. Checks are accepted at full
value subject to collection. Payment by a check drawn on any member of the
Federal Reserve System can normally be converted into Federal Funds within two
business days after receipt of the check. Checks drawn on some non-member banks
may take longer.
For individual or Uniform Gift to Minors Act accounts, the check or money order
used to purchase shares of a Fund must be made payable to "Forum Funds" or to
one or more owners of that account and endorsed to Forum Funds. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts, the check
used to purchase shares of a Fund must be made payable on its face to "Forum
Funds." No other method of payment by check will be accepted. All purchases must
be paid in U.S. dollars; checks must be drawn on U.S. banks. Payment by
Traveler's Checks is prohibited.
By Bank Wire. To make an initial investment in a Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Trust
at 800-94FORUM (800-943-6786) or (207) 879-0001 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: [Name of Fund] - Institutional Service Shares
Account #: .........
Account Name: .........
The investor should then promptly complete and mail the account application. Any
investor planning to wire funds should instruct a bank early in the day so the
wire transfer can be accomplished the same day. 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.
Through Financial Institutions. Shares may be purchased and redeemed through
certain broker-dealers, banks or other financial institutions ("Processing
Organizations"), including affiliates of the Transfer Agent. Processing
Organizations may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
a Fund. The Trust is not responsible for the failure of any Processing
Organization to promptly forward these requests.
Investors who purchase or redeem shares in this manner will be subject to the
procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Investors who purchase Fund shares
through a Processing Organization may or may not be the shareholder of record
and, subject to their institution's and the Fund's procedures, may have Fund
shares transferred into their name. Certain Processing Organizations may enter
purchase orders with payment to follow.
The Trust may confirm purchases and redemptions of a Processing Organization's
customers directly to the Processing Organization, which in turn will provide
its customers with such confirmations and periodic statements as may be required
by law or agreed to between the Processing Organization and its customers.
Subsequent Purchases of Shares
Subsequent purchases may be made by mailing a check, by sending a bank wire or
through a financial institution as indicated above. Shareholders using the wire
system for purchase should first telephone the Trust at 800-94FORUM
(800-943-6786) or (207) 879-0001 to notify it of the wire transfer. All payments
should clearly indicate the shareholder's name and account number.
Shareholders may purchase Fund shares at regular, preselected intervals
by authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to the Transfer Agent.
Redemption of Shares
Shareholders who wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several days 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 who has elected telephone redemption privileges may
make a telephone redemption request by calling the Transfer Agent at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number. In response to
the telephone redemption instruction, the Fund will mail a check to the
shareholder's record address or, if the shareholder has elected wire redemption
privileges, wire the proceeds.
By Bank Wire. For redemptions of more than $5,000, a shareholder who 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.
Other Redemption Matters. To protect shareholders and the Funds 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.
EXCHANGES
Shareholders may exchange their shares for Institutional Service Shares of any
other Fund. Exchanges are subject to the fees charged by, and the restrictions
listed in the prospectus for, the Fund into which a shareholder is exchanging,
including minimum investment requirements. The Funds do not charge for
exchanges, and there is currently no limit on the number of exchanges a
shareholder may make, but each Fund reserves the right to limit excessive
exchanges by any shareholder. See "Additional Purchase and Redemption
Information" in the SAI.
Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the new account. Shareholders may only exchange into a Fund if
that Fund's shares may legally be sold in the shareholder's state of residence.
The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Accordingly, a
shareholder may realize a capital gain or loss with respect to the shares
redeemed. Redemptions and purchases are effected at the respective net asset
values of the two Funds as next determined following receipt of proper
instructions and all necessary supporting documents by the Fund whose shares are
being exchanged. 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 instruction to the Transfer
Agent accompanied by any stock certificate that may have been issued to the
shareholder. All written requests for exchanges must be signed by the
shareholder (a signature guarantee is not required) and all certificates
submitted for exchange must be endorsed by the shareholder with signature
guaranteed.
By Telephone. Exchanges may be accomplished by telephone by any shareholder who
has elected telephone exchange privileges by calling the Transfer Agent at
800-94FORUM (800-943-6786) or (207) 879-0001 and providing the shareholder's
account number, the exact name in which the shareholder's shares are registered
and the shareholder's social security or taxpayer identification number.
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Each
type of net capital gain realized by a Fund, if any, will be distributed
annually. Shareholders may choose to have all distributions reinvested in
additional shares of the Fund or received in cash. In addition, shareholders may
have all distributions of net capital gain reinvested in additional shares of
the Fund and distributions of net investment income paid in cash. All
distributions are treated in the same manner for Federal income tax purposes
whether received in cash or reinvested in shares of the Fund.
All distributions will be reinvested at the Fund's net asset value as of the
payment date of the dividend. All distributions are reinvested unless another
option is selected. All distributions not reinvested will be paid to the
shareholder in cash and may be paid more than seven days following the date on
which distribution would otherwise be reinvested.
TAXES
Tax Status of the Funds. Each Fund intends to qualify or continue to qualify to
be taxed as a "regulated investment company" under the Internal Revenue Code of
1986, as amended. Accordingly, no Fund will be liable for Federal income taxes
on the net investment income and capital gain distributed to its shareholders.
Because each Fund intends to distribute all of its net investment income and net
capital gain each year, the Funds should also avoid Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. 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.
The Portfolios. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
Daily Assets Tax-Exempt Fund. Distributions paid by Daily Assets Tax-Exempt Fund
out of federally tax-exempt interest income earned by the Fund ("exempt-interest
dividends") generally will not be subject to federal income tax in the hands of
the Fund's shareholders. Substantially all of the distributions paid by the Fund
are anticipated to be exempt-interest dividends. Persons who are "substantial
users" or "related persons" thereof of facilities financed by private activity
securities held by the Fund, however, may be subject to federal income tax on
their pro rata share of the interest income from those securities and should
consult their tax advisers before purchasing shares. Exempt-interest dividends
are included in the "adjusted current earnings" of corporations for purposes of
the federal alternative minimum tax ("AMT").
Interest on indebtedness incurred by shareholders to purchase or carry shares of
the Fund generally is not deductible for federal income tax purposes. Under
rules for determining when borrowed funds are used for purchasing or carrying
particular assets, shares of the Fund may be considered to have been purchased
or carried with borrowed funds even though those funds are not directly linked
to the shares.
The income from the Portfolio's investments may be subject to the AMT. Interest
on certain municipal securities issued to finance "private activities" ("private
activity securities") is a "tax preference item" for purposes of the AMT
applicable to certain individuals and corporations even though such interest
will continue to be fully tax-exempt for regular federal income tax purposes.
The Portfolio may purchase private activity securities, the interest on which
may constitute a "tax preference item" for purposes of the AMT.
State and Local Taxes. Daily Assets Treasury Fund's investment policies are
structured to provide shareholders, to the extent permissible by Federal and
state law, with income that is exempt or excluded from income taxation at the
state and local level. Many states (by statute, judicial decision or
administrative action) do not tax dividends from a regulated investment company
that are attributable to interest on obligations of the U.S. Treasury and
certain U.S. Government agencies and instrumentalities if the interest on those
obligations would not be taxable to a shareholder that held the obligation
directly. As a result, substantially all distributions paid by the Fund to
shareholders residing in certain states will be exempt or excluded from state
income taxes. A portion of the distributions paid by the other Funds to
shareholders may be exempt or excluded from state income taxes, but these Funds
are not managed to provide any specific amount of state tax-free income to
shareholders.
The exemption for Federal income tax purposes of distributions derived from
interest on municipal securities does not necessarily result in an exemption
under the income or other tax laws of any state or local taxing authority.
Shareholders of Daily Assets Tax-Exempt Fund may be exempt from state and local
taxes on distributions of tax-exempt interest income derived from obligations of
the state and/or municipalities of the state in which they reside but may be
subject to tax on income derived from the municipal securities of other
jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in a Fund which may differ
from the federal income tax consequences described above.
General. Each Fund may be required by Federal law to withhold 31% of reportable
payments (which may include taxable distributions and redemption proceeds) paid
to individuals and certain other non-corporate shareholders. Withholding is not
required if a shareholder certifies that the shareholder's social security or
tax identification number provided to a Fund is correct and that the shareholder
is not subject to backup withholding.
Each Fund must include a portion of the original issue discount of zero-coupon
securities, if any, as income even though these securities do not pay any
interest until maturity. Because each Fund distributes all of its net investment
income, a Fund may have to sell portfolio securities to distribute imputed
income, which may occur at a time when the investment adviser would not have
chosen to sell such securities and which may result in a taxable gain or loss.
Shortly after the close of each year, a statement is sent to each shareholder of
the Funds advising the shareholder of the portions of total distributions paid
to the shareholder that is (i) derived from each type of obligation in which a
Fund has invested, (ii) derived from the obligations of issuers in the various
states and (iii) exempt from federal income taxes. These portions are determined
for the entire year and on a monthly basis and, thus, are an annual or monthly
average, rather than a day-by-day determination for each shareholder.
The foregoing is only a summary of some of the important Federal and state tax
considerations generally affecting the Funds and their shareholders. There may
be other Federal, state or local tax considerations applicable to a particular
investor. Prospective investors are urged to consult their tax advisors.
7. OTHER INFORMATION
PERFORMANCE INFORMATION
Institutional Service Shares' performance may be advertised. All performance
information is based on historical results, is not intended to indicate future
performance and, unless otherwise indicated, is net of all expenses. The Funds
may advertise yield, which shows the rate of income a Fund has earned on its
investments as a percentage of the Fund's share price. To calculate yield, a
Fund takes the interest income it earned from its portfolio of investments for a
specified period (net of expenses), divides it by the average number of shares
entitled to receive distributions, and expresses the result as an annualized
percentage rate based on the Fund's share price at the end of the period. A
Fund's compounded annualized yield assumes the reinvestment of distributions
paid by the Fund, and, therefore will be somewhat higher than the annualized
yield for the same period. A Fund may also quote tax-equivalent yields, which
show the taxable yields a shareholder would have to earn to equal the Fund's
tax-free yield, after taxes. A tax-equivalent yield is calculated by dividing
the Fund's tax-free yield by one minus a stated federal, state or combined
federal and state tax rate. Each class' performance will vary.
The Funds' advertisements may also reference ratings and rankings among similar
funds by independent evaluators such as Morningstar, Lipper Analytical Services,
Inc. or IBC Financial Data, Inc. In addition, the performance of the Funds may
be compared to recognized indices of market performance. The comparative
material found in a Fund's advertisements, sales literature, or reports to
shareholders may contain performance rankings. This material is not to be
considered representative or indicative of future performance.
BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a 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.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 4:00 p.m.,
Eastern Time, on each Fund Business Day by dividing the value of the Fund's net
assets (the value of its interest in the Portfolio and other assets less its
liabilities) by the number of shares outstanding at the time the determination
is made. In order to more easily maintain a stable net asset value per share,
each Portfolio's portfolio securities are valued at their amortized cost
(acquisition cost adjusted for amortization of premium or accretion of discount)
in accordance with Rule 2a-7. The Portfolios will only value their portfolio
securities using this method if the Core Trust Board believes that it fairly
reflects the market-based net asset value per share. The Portfolios' other
assets, if any, are valued at fair value by or under the direction of the Core
Trust Board.
THE TRUST AND ITS SHARES
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., which was incorporated in 1980. The
Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create classes of
shares within each series. There are currently sixteen series of the Trust.
Each share of each fund of the Trust and each class of shares has equal
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 fund or class, except if the matter affects only one
fund or class or voting by fund or class is required by law, in which case
shares will be voted separately by fund 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 (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. A shareholder in a fund is entitled to the shareholder's pro rata
share of all distributions arising from that fund's assets and, upon redeeming
shares, will receive the portion of the fund's net assets represented by the
redeemed shares.
From time to time certain shareholders may own a large percentage of shares of a
Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of any shareholder vote. As of the date hereof, due to
initial investment in Daily Assets Treasury Obligations Fund, Daily Assets
Government Fund and Daily Assets Tax-Exempt Fund, prior to the public offering
of shares, FAS may be deemed to control those Funds.
FUND STRUCTURE
Other Classes of Shares. In addition to Institutional Service Shares, each Fund
may create and issue shares of other classes of securities. Each Fund currently
has two other classes of shares authorized, Institutional Shares and Investor
Shares. Institutional Shares have an investment minimum of $1,000,000. Investor
Shares are offered to the general public, have a $10,000 minimum investment and
bear shareholder service and distribution fees. Institutional Shares incur less
expenses and Investor Shares incur more expenses than Institutional Service
Shares. See, "Additional Information" below. Except for certain differences,
each share of each class represents an undivided, proportionate interest in a
Fund. Each share of each Fund is entitled to participate equally in
distributions and the proceeds of any liquidation of that Fund except that, due
to the differing expenses borne by the various classes, the amount of
distributions will differ among the classes.
Core Trust Structure. Each Fund invests all of its assets in its corresponding
Portfolio of Core Trust, a business trust organized under the laws of the State
of Delaware in September 1994 and registered under the 1940 Act as an open-end,
management investment company. Accordingly, a Portfolio directly acquires its
own securities and its corresponding Fund acquires an indirect interest in those
securities. The assets of each Portfolio belong only to, and the liabilities of
the Portfolio are borne solely by, the Portfolio and no other portfolio of Core
Trust. Upon liquidation of a Portfolio, investors in the Portfolio would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.
The Portfolios. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, Daily
Assets Treasury Fund and Daily Assets Tax-Exempt Fund are the only investors
(other than FAS or its affiliates) that have invested in Treasury Portfolio and
Municipal Cash Portfolio, respectively. Each of the other Portfolios has another
investor besides the Funds (and FAS and its affiliates). All investors in a
Portfolio invest on the same terms and conditions as the Funds and will pay a
proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio is entitled to vote in proportion to the relative value of its
interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. There can be no assurance that
any issue that receives a majority of the votes cast by a Fund's shareholders
will receive a majority of votes cast by all investors in the Portfolio.
Considerations of Investing in a Portfolio. A Fund's investment in a Portfolio
may be affected by the actions of other large investors in the Portfolio, if
any. If a large investor other than a Fund redeemed its interest in a Portfolio,
the Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from a Portfolio at any time, if the
Board determines that it is in the best interests of the Fund and its
shareholders to do so. The Fund might withdraw, for example, if other investors
in the Portfolio, by a vote of shareholders, changed the investment objective or
policies of the Portfolio in a manner not acceptable to the Board or not
permissible by the Fund. A withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. If
the Fund decided to convert those securities to cash, it usually would incur
transaction costs. If the Fund withdrew its investment from the Portfolio, the
Board would consider what action might be taken, including the management of the
Fund's assets in accordance with its investment objective and policies by the
investment adviser to the Portfolio or the investment of all of the Fund's
investable assets in another pooled investment entity having substantially the
same investment objective as the Fund. The inability of the Fund to find a
suitable replacement investment, in the event the Board decided not to permit
the Portfolio's investment adviser to manage the Fund's assets, could have a
significant impact on shareholders of the Fund.
Additional Information. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact
FFSI at 207-879-1900. If an investor invests through a financial institution,
the investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the SAI
and the Funds' official sales literature in connection with the
offering of the Funds' shares, and if given or made, such information
or representations must not be relied upon as having been authorized by
the Trust. This Prospectus does not constitute an offer in any state in
which, or to any person to whom, such offer may not lawfully be made.
<PAGE>
PROSPECTUS
November 17, 1997
Forum Funds
Daily Assets Treasury Fund
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Tax-Exempt Fund
This Prospectus offers Investor Shares of Daily Assets Treasury Fund, Daily
Assets Treasury Obligations Fund, Daily Assets Government Fund, Daily Assets
Cash Fund and Daily Assets Tax-Exempt Fund (each a "Fund"). Each Fund is a
diversified no-load, money market portfolio of Forum Funds (the "Trust"), a
registered open-end, management investment company. Each Fund seeks to provide
its shareholders with high current income (which, in the case of Daily Assets
Tax-Exempt Fund, is exempt from federal income taxes) to the extent consistent
with the preservation of capital and the maintenance of liquidity.
Each Fund seeks to achieve its objective by investing all of its investable
assets in a separate portfolio of an open-end, management investment company
with an identical investment objective. See "Prospectus Summary" and "Other
Information - Fund Structure." Through the portfolio in which it invests:
Daily Assets Treasury Fund invests primarily in obligations of the U.S.
Treasury or certain agencies and instrumentalities of the U.S.
Government with a view toward providing income that is generally
considered exempt from state and local income taxes. Daily Assets
Treasury Obligations Fund invests primarily in obligations of the U.S.
Treasury and in repurchase agreements backed by these obligations.
Daily Assets Government Fund invests primarily in obligations of the
U.S. Government, its agencies and instrumentalities and in repurchase
agreements backed by these obligations. Daily Assets Cash Fund invests
in a broad spectrum of high-quality money market instruments. Daily
Assets Tax-Exempt Fund invests primarily in high-quality obligations of
the states, territories and possessions of the U.S. and of their
subdivisions, authorities and corporations ("municipal securities")
with a view toward providing income that is exempt from federal income
taxes.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated November 17, 1997, as may be amended from time to
time (the "SAI"), which contains more detailed information about the Trust and
the Funds 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 contacting the Funds' transfer agent, Forum Financial Corp., at P.O. Box 446,
Portland, Maine 04112, (207) 879-0001 or (800) 94FORUM.
Investors should read this Prospectus
and retain it for future reference.
FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.
THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
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.
<TABLE>
TABLE OF CONTENTS
<S> <C> <C> <C>
1. Prospectus Summary.............................. 2 5. Purchases and Redemptions of Shares............. 12
2. Financial Highlights............................ 4 6. Distributions and Tax Matters................... 16
3. Investment Objectives and Policies.............. 5 7. Other Information............................... 18
4. Management...................................... 10
</TABLE>
<PAGE>
1. PROSPECTUS SUMMARY
HIGHLIGHTS OF THE FUNDS
This prospectus offers shares of the Investor class ("Investor Shares") of each
of the Funds. The Funds operate in accordance with the provisions of Rule 2a-7
under the Investment Company Act of 1940 (the "1940 Act"). Each Fund invests all
of its investable assets in a separate portfolio (each a "Portfolio") of Core
Trust (Delaware), an open-end, management investment company ("Core Trust") as
follows:
Daily Assets Treasury Fund Treasury Portfolio
Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Tax-Exempt Fund Municipal Cash Portfolio
Accordingly, the investment experience of each Fund will correspond directly
with the investment experience of its corresponding Portfolio. See "Other
Information - Fund Structure." Each Fund currently offers three separate classes
of shares: Institutional Shares, Institutional Service Shares and Investor
Shares. Investor Shares are sold through this Prospectus. Institutional Shares
and Institutional Service Shares are each offered by a separate prospectus.
See "Other Information -- Fund Structure -- Other Classes of Shares."
Management. Forum Administrative Services, LLC ("FAS") supervises the overall
management of the Funds and the Portfolios and Forum Financial Services, Inc.
("FFSI") is the distributor of the Funds' shares. Forum Advisors, Inc. ("Forum
Advisors") is the investment adviser of Treasury Portfolio and Municipal Cash
Portfolio and provides professional management of those Portfolio's investments.
Linden Asset Management, Inc. ("Linden") is the investment adviser of Treasury
Cash Portfolio, Government Cash Portfolio and Cash Portfolio and provides
professional management of those Portfolios' investments. Forum Advisors and
Linden (each an "Adviser") provide certain subadvisory assistance for the
Portfolios they do not directly advise. The Funds' transfer agent, dividend
disbursing agent and shareholder servicing agent is Forum Financial Corp. (the
"Transfer Agent"). See "Management" for a description of the services provided
and fees charged to the Funds.
It is anticipated that, as of January 1, 1998, Forum Advisors will acquire
Linden and reorganize into a new company named Forum Advisors, LLC. The
acquisition is subject to a vote of the shareholders of Daily Assets Cash Fund
and of the other investors in the Portfolio which Linden currently advises. No
change in advisory staff, portfolio managers, or advisory fees, or any other
material change is expected as a result of these transactions.
Shareholder Servicing and Distribution. The Trust has adopted a Shareholder
Service Plan and a Plan of Distribution relating to Investor Shares under which
FAS and Forum, respectively, are compensated for various shareholder servicing
and distribution related activities. See "Management - Shareholder Servicing"
and "- Administration and Distribution."
Purchases and Redemptions. The minimum initial investment in Investor Shares is
$10,000 ($2,000 for IRAs, $2,500 for exchanges). The minimum subsequent
investment is $500. Investor Shares may be purchased and redeemed Monday through
Friday, between 9:00 a.m. and 6:00 p.m., Eastern Time, except on Federal
holidays and days that the Federal Reserve Bank of San Francisco (Boston in the
case of Daily Assets Treasury Fund and Daily Assets Tax-Exempt Fund) is closed
("Fund Business Days"). To be eligible to receive that day's income, purchase
orders must be received by the Transfer Agent in good order no later than 2:00
p.m., Eastern Time (noon in the case of Daily Assets Treasury Fund and Daily
Assets Tax-Exempt Fund). Shareholders may elect to have redemption proceeds over
$5,000 transferred by bank wire to a designated bank account. To be able to
receive redemption proceeds by wire on the day of the redemption, redemption
orders must be received by the Transfer Agent in good order no later than 2:00
p.m., Eastern Time (noon in the case of Daily Assets Treasury Fund and Daily
Assets Tax-Exempt Fund). All times may be changed without notice by Fund
management due to market activities. See "Purchase and Redemption of Shares."
Exchanges. Shareholders of a Fund may exchange Investor Shares without charge
for Investor Shares of the other Funds and for the shares of other certain other
mutual funds not offered by this Prospectus. See "Purchases and Redemptions of
Shares - Exchanges."
Distributions. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."
Investment Considerations. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Portfolios
invest only in money market instruments, an investment in any Fund involves
certain risks, depending on the types of investments made and the types of
investment techniques employed. Investment in any security, including U.S.
Government Securities, involves some level of investment risk. An investment in
a Fund is not insured by the FDIC, nor is it insured or guaranteed against loss
of principal. By investing in its corresponding Portfolio, each Fund may achieve
certain efficiencies and economies of scale. Nonetheless, these investments
could also have potential adverse effects on the applicable Fund. See "Other
Information - Fund Structure."
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Investor Shares will bear directly or
indirectly. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares.
Annual Fund Operating Expenses (as a percentage of average net assets)(1)
<TABLE>
Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Treasury Government Cash Tax-Exempt
Fund Obligations Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Management Fees(2) 0.15% 0.14% 0.14% 0.14% 0.15%
Rule 12b-1 Fees 0.15% 0.15% 0.15% 0.15% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.45% 0.46% 0.46% 0.46% 0.45%
Total Operating Expenses 0.75% 0.75% 0.75% 0.75% 0.75%
</TABLE>
(1) For a further description of the various expenses incurred in the operation
of the Funds and the Portfolios, see "Management." The amount of fees and
expenses for each Fund is based on estimated annualized expenses for the Funds'
fiscal year ending August 31, 1998. Each Fund's expenses include the Fund's pro
rata portion of all expenses of its corresponding Portfolio, which are borne
indirectly by Fund shareholders. (2) Management Fees include all administration
fees and investment advisory fees incurred by the Funds and the Portfolios; as
long as its assets are invested in a Portfolio, a Fund pays no investment
advisory fees directly. (3) Absent estimated reimbursements by Forum Advisors
and its affiliates, Other Expenses and Total Fund Operating Expenses would be:
0.75% and 1.05%, respectively, for Daily Assets Treasury Fund; 0.70% and 0.99%,
respectively, for Daily Assets Treasury Obligations Fund; 0.75% and 1.04%,
respectively, for Daily Assets Government Fund; 0.80% and 1.09%, respectively,
for Daily Assets Cash Fund; 0.80% and 1.10%, respectively, for Daily Assets
Tax-Exempt Fund. Expense reimbursements are voluntary and may be reduced or
eliminated at any time.
Example
Following is a hypothetical example that indicates the dollar amount of expenses
that an investor in Investor Shares would pay assuming (i) the investment of all
of the Fund's assets in the Portfolio, (ii) a $1,000 investment in the Fund,
(iii) a 5% annual return, (iv) the reinvestment of all distributions and (v)
redemption at the end of each period:
One Year Three Years Five Years Ten Years
Each Fund $8 $26 $46 $103
The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Funds' projected returns; rather, it is required by government
regulation. The example should not be considered a representation of past or
future expenses or return. Actual expenses and return may be greater or less
than indicated.
<PAGE>
2. FINANCIAL HIGHLIGHTS
As of the date hereof, Investor Shares were not offered. The following
information represents selected data for a single outstanding Institutional
Service Share of Daily Assets Treasury Fund and of Daily Assets Cash Fund. Those
classes were the first offered by the respective Funds and, accordingly,
represent data since each Fund's inception. Information for the year ended
August 31, 1997, was audited by KPMG Peat Marwick, LLP, independent auditors.
Information for prior periods was audited by other independent auditors. The
financial statements for Daily Assets Treasury Fund and Daily Assets Cash Fund
and independent auditors' report thereon for the fiscal year ended August 31,
1997 are incorporated by reference into the SAI and may be obtained from the
Trust without charge. As of the date hereof, Daily Assets Treasury Obligations
Fund, Daily Assets Government Fund, Daily Assets Tax-Exempt Fund, as well as
Municpal Cash Portfolio had not commenced operations.
As of August 31, 1997, Treasury Portfolio, Treasury Cash Portfolio, Government
Cash Portfolio and Cash Portfolio had net assets of $44,321,412, $71,102,520,
$476,768,745 and $259,491,011, respectively.
<TABLE>
- Ratios to Average Net Net Assets Ratio to
at
Beginning DistributionsEnding Assets End of Average
-----------------------
Net Asset Net From Net Net Asset Net Period Net Assets
-------------
Value Per Investment Investment Value per Investment Total (000's Gross
Share Income Income Share Expenses Income Return Omitted) Expenses(1)
Daily Assets Treasury
Fund
Institutional Service
Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended August 31, $ 1.00 0.02 (0.02) $ 1.00 0.50% 4.76% 2.01% $44,116 0.95%
1997
Year Ended March 31, 1.00 0.05 (0.05) 1.00 0.50% 4.70% 4.80% 43,975 0.99%
1997
Year Ended March 31, 1.00 0.05 (0.05) 1.00 0.50% 5.01% 5.18% 43,103 1.06%
1996
Year Ended March 31, 1.00 0.04 (0.04) 1.00 0.37% 4.45% 4.45% 36,329 1.10%
1995
Year Ended March 31, 1.00 0.03 (0.03) 1.00 0.33% 2.82% 2.83% 26,505 1.17%
1994
July 1, 1992 to March 1.00 0.02 (0.02) 1.00 0.32%(2) 2.92%(2) 3.13%(2) 4,687 2.43%(2)
31, 1993
Daily Assets Cash Fund
Institutional Service
Shares
October 1, 1996 to 1.00 0.05 (0.05) 1.00 0.52% 5.06% 4.70% $12,076 1.22%
August 31, 1997
</TABLE>
(1) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects the
expense ratio in the absence of any waivers and reimbursements for the Fund and
its respective Portfolio.
(2) Annualized.
<PAGE>
3. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of each Fund except Daily Assets Tax-Exempt Fund is to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of Daily
Assets Tax-Exempt Fund is to provide high current income which is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity.
There can be no assurance that any Fund or Portfolio will achieve its investment
objective or maintain a stable net asset value.
Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio, which has the same
investment objective and substantially similar investment policies. Therefore,
although the following discusses investment policies of the Portfolios (and the
responsibilities of Core Trust's board of trustees (the "Core Trust Board")), it
applies equally to the Funds (and the Trust's board of trustees (the "Board")).
INVESTMENT POLICIES
Each Portfolio invests only in high quality, short-term money market instruments
that are determined by the Adviser, pursuant to procedures adopted by the Core
Trust Board, to be eligible for purchase and to present minimal credit risks.
High quality instruments include those that (i) are rated (or, if unrated, are
issued by an issuer with comparable outstanding short-term debt that is rated)
in the highest rating category by two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO has issued a rating, by that
NRSRO or (ii) are otherwise unrated and determined by the Adviser to be of
comparable quality. A description of the rating categories of certain NRSROs,
such as Standard & Poor's and Moody's Investors Service, Inc., is contained in
the SAI.
Each Portfolio invests only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated under Rule 2a-7) and
maintains a dollar-weighted average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, each Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. As used herein, "U.S. Government
Securities" means obligations issued or guaranteed as to principal and interest
by the United States government, its agencies or instrumentalities and "Treasury
Securities" means U.S. Treasury bills and notes and other U.S. Government
Securities which are guaranteed as to principal and interest by the U.S.
Treasury.
In the case of municipal securities, when the assets and revenues of an issuer
are separate from those of the government creating the issuer and a security is
backed only by the assets and revenues of the issuer, the issuer and not the
creating government is deemed to be the sole issuer of the security. Similarly,
in the case of a security issued by or on behalf of public authorities to
finance various privately operated facilities that is backed only by the assets
and revenues of the non-governmental user, the non-governmental user will be
deemed to be the sole issuer of the security.
Yields on money market securities are dependent on a variety of factors,
including the general conditions of the money markets and the fixed income
markets in general, the size of a particular offering, the maturity of the
obligation and the rating of the issue. A Fund's yield will tend to fluctuate
inversely with prevailing market interest rates. For instance, in periods of
falling market interest rates, yields will tend to be somewhat higher. Although
each Portfolio only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities and municipal securities, can
change in value when there is a change in interest rates, the issuer's actual or
perceived creditworthiness or the issuer's ability to meet its obligations. The
achievement of a Fund's investment objective is dependent in part on the
continuing ability of the issuers of the securities in which the Portfolio
invests to meet their obligations for the payment of principal and interest when
due.
DAILY ASSETS TREASURY FUND
Treasury Portfolio seeks to attain its investment objective by investing
primarily in Treasury Securities. Under normal market conditions, the Portfolio
will invest at least 65% of its total assets in Treasury Securities. The
Portfolio may also invest in other U.S. Government Securities. The Portfolio
invests with a view toward providing income that is generally considered exempt
from state and local income taxes. The Portfolio will purchase a U.S. Government
Security (other than a Treasury Security) only if that security has a remaining
maturity of thirteen months or less.
Among the U.S. Government Securities in which the Portfolio may invest are
obligations of the Farm Credit System, Farm Credit System Financial Assistance
Corporation, Federal Financing Bank, Federal Home Loan Banks, General Services
Administration, Student Loan Marketing Association, and Tennessee Valley
Authority. Income on these obligations and the obligations of certain other
agencies and instrumentalities is generally not subject to state and local
income taxes by Federal law. In addition, the income received by Fund
shareholders that is attributable to these investments will also be exempt in
most states from state and local income taxes. Shareholders should determine
through consultation with their own tax advisers whether and to what extent
dividends payable by the Fund from interest received with respect to its
investments will be considered to be exempt from state and local income taxes in
the shareholder's state. Shareholders similarly should determine whether the
capital gain and other income, if any, payable by the Fund will be subject to
state and local income taxes in the shareholder's state. See "Distributions and
Tax Matters."
The U.S. Government Securities in which the Portfolio may invest include
securities supported primarily or solely by the creditworthiness of the issuer.
There is no guarantee that the U.S. government will support securities not
backed by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than securities backed by the U.S. government's full faith
and credit.
DAILY ASSETS TREASURY OBLIGATIONS FUND
Treasury Cash Portfolio seeks to attain its investment objective by investing
only in Treasury Securities and in repurchase agreements backed by Treasury
Securities.
DAILY ASSETS GOVERNMENT FUND
Government Cash Portfolio seeks to attain its investment objective by investing
only in U.S. Government Securities and in repurchase agreements backed by U.S.
Government Securities. The U.S. Government Securities in which the Portfolio may
invest include Treasury Securities and securities supported primarily or solely
by the creditworthiness of the issuer, such as securities of the Federal
National Mortgage Association, Federal Home Loan Banks and Student Loan
Marketing Association. There is no guarantee that the U.S. Government will
support securities not backed by its full faith and credit. Accordingly,
although these securities have historically involved little risk of loss of
principal if held to maturity, they may involve more risk than securities backed
by the U.S. Government's full faith and credit.
DAILY ASSETS CASH FUND
Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments. The Portfolio may invest in (i)
obligations of domestic financial institutions, (ii) U.S. Government Securities
(see "Investment Objectives and Policies - Daily Assets Government Fund") and
(iii) corporate debt obligations of domestic issuers.
Financial institution obligations include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of banks (including savings
banks and savings associations) and their foreign branches. The Portfolio limits
its investments in bank obligations to banks which at the time of investment
have total assets in excess of one billion dollars. Certificates of deposit
represent an institution's obligation to repay funds deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations
of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" that are restricted as to
disposition under the Federal securities laws ("restricted securities"). Any
sale of these securities may not be made absent registration under the
Securities Act of 1933 or the availability of an appropriate exemption
therefrom. Some of these restricted securities, however, are eligible for resale
to institutional investors, and accordingly, a liquid market may exist for them.
Pursuant to guidelines adopted by the Core Trust Board, the investment adviser
will determine whether each such investment is liquid.
DAILY ASSETS TAX-EXEMPT FUND
Municipal Cash Portfolio seeks to attain its investment objective by investing
primarily in municipal securities. The Portfolio attempts to maintain 100% of
its assets invested in federally tax-exempt municipal securities; during periods
of normal market conditions the Portfolio will have at least 80% of its net
assets invested in federally tax-exempt instruments the income from which may be
subject to the federal alternative minimum tax ("AMT").
The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.
The Short-Term Municipal Securities Market. It is anticipated that a substantial
amount of the municipal securities held by the Portfolio will be supported by
credit and liquidity enhancements, such as letters of credit (which are not
covered by federal deposit insurance) or put or demand features of third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Portfolio will be dependent in part upon the
credit quality of the banks supporting the Portfolio's investments. This will
result in exposure to risks pertaining to the banking industry, including the
foreign banking industry. These risks include a sustained increase in interest
rates, which can adversely affect the availability and cost of a bank's lending
activities; exposure to credit losses during times of economic decline;
concentration of loan portfolios in certain industries; regulatory developments;
and competition among financial institutions. Brokerage firms and insurance
companies also provide certain liquidity and credit support. The Portfolio's
policy is to purchase municipal securities with third party credit or liquidity
support only after the Adviser has considered the creditworthiness of the
financial institution providing the support and believes that the security
presents minimal credit risk.
The Portfolio may purchase long term municipal securities with various maturity
shortening provisions. For instance, variable rate demand notes ("VRDN") are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer) which may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
VRDNs may be issued directly by the municipal issuer or created by a bank,
broker-dealer or other financial institution by selling a previously issued
long-term bond with a demand feature attached. Similarly, tender option bonds
(also referred to as certificates of participation) are municipal securities
with relatively long original maturities and fixed rates of interest that are
coupled with an agreement of a third party financial institution under which the
third party grants the security holders the option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. As consideration for
providing the option, the financial institution receives a fee equal to the
difference between the underlying municipal security's fixed rate and the rate,
as determined by a remarketing or similar agent, that would cause the
securities, coupled with the tender option, to trade at par on the date of the
interest rate determination. These bonds effectively provide the holder with a
demand obligation that bears interest at the prevailing short-term municipal
securities interest rate.
The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the Portfolio the right to sell the municipal security at a specified
price at any time before a specified date. The Portfolio will acquire puts only
to enhance liquidity, shorten the maturity of the related municipal security or
permit the Portfolio to invest its funds at more favorable rates. Generally, the
Portfolio will buy a municipal security that is accompanied by a put only if the
put is available at no extra cost. In some cases, however, the Portfolio may pay
an extra amount to acquire a put, either in connection with the purchase of the
related municipal security or separately from the purchase of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
Municipal Bonds. Municipal bonds are long term fixed-income securities. "General
obligation" bonds are secured by a municipality's pledge of its full faith,
credit and taxing power for the payment of principal and interest. "Revenue"
bonds are usually payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other tax, but not from general tax revenues. Under a "moral
obligation" bond (which is normally issued by special purpose public
authorities), if the issuer is unable to meet its obligations under the bonds
from current revenues, it may draw on a reserve fund that is backed by the moral
commitment (but not the legal obligation) of the state or municipality that
created the issuer. The Portfolio may invest in industrial development bonds,
which in most cases are revenue bonds. The payment of the principal and interest
on these bonds is dependent solely on the ability of an initial or subsequent
user of the facilities financed by the bonds to meet its financial obligations
and the pledge, if any, of real and personal property so financed as security
for such payment.
Municipal Notes and Leases. Municipal notes, which may be either "general
obligation" or "revenue" securities, are short-term fixed income securities
intended to fulfill short-term capital needs of a municipality. Municipal
leases, which may take various forms, are issued by municipalities to acquire a
wide variety of equipment and facilities. Municipal leases frequently have
special risks not normally associated with other municipal securities. Municipal
leases (which normally provide for title to the leased assets to pass eventually
to the government issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
Participation Interests. The Portfolio may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.
Taxable Investments. The Portfolio may invest up to 20% of the value of its net
assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, are fundamental and therefore, may not be
changed without approval of the holders of a majority of the Fund's or
Portfolio's, as applicable, outstanding voting securities (as defined in the
1940 Act). Except as otherwise indicated herein or in the SAI, investment
policies of a Fund or a Portfolio may be changed by the applicable board of
trustees without shareholder approval. Each Portfolio is permitted to hold cash
in any amount pending investment in securities and may invest in other
investment companies that intend to comply with Rule 2a-7 and have substantially
similar investment objectives and policies. A further description of the Funds'
and the Portfolios' investment policies is contained in the SAI.
Borrowing. Each Portfolio may borrow money for temporary or emergency purposes
(including the meeting of redemption requests), but not in excess of 33 1/3% of
the value of the Portfolio's total assets. Borrowing for purposes other than
meeting redemption requests will not exceed 5% of the value of the Portfolio's
total assets.
Repurchase Agreements. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain credit risks not associated with direct investment in
securities. Each Portfolio, however, intends to enter into repurchase agreements
only with sellers which the Adviser believes present minimal credit risks in
accordance with guidelines established by the Core Trust Board. In the event
that a seller defaulted on its repurchase obligation, however, a Portfolio might
suffer a loss.
Liquidity. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including, repurchase agreements
not entitling the Portfolio to payment of principal within seven days. There may
not be an active secondary market for securities held by a Portfolio. The value
of securities that have a limited market tend to fluctuate more than those that
have an active market. Each Portfolio's Adviser monitors the liquidity of the
Portfolio's investments, but there can be no guarantee that an active secondary
market will exist.
When-Issued and Forward Commitment Securities. In order to assure itself of
being able to obtain securities at prices which the Adviser believes might not
be available at a future time, each Portfolio's Adviser may purchase securities
on a when-issued or delayed delivery basis. When these transactions are
negotiated, the price or yield is fixed at the time the commitment is made, but
delivery and payment for the securities take place at a later date. Securities
so purchased are subject to market price fluctuation and no interest on the
securities accrues to a Portfolio until delivery and payment take place.
Accordingly, the value of the securities on the delivery date may be more or
less than the purchase price. Commitments for when-issued or delayed delivery
transactions will be entered into only when a Portfolio has the intention of
actually acquiring the securities, but the Portfolio may sell the securities
before the settlement date if deemed advisable. Failure by the other party to
deliver a security purchased by a Portfolio may result in a loss or missed
opportunity to make an alternative investment. As a result of entering into
forward commitments, the Funds are exposed to greater potential fluctuations in
the value of their assets and net asset values per share.
Variable and Floating Rate Securities. The securities in which each Portfolio
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Those
securities with ultimate maturities of greater than 397 days may be purchased
only in accordance with the provisions of Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features which comply with certain
requirements and certain U.S. Government Securities may be purchased. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.
Financial Institution Guidelines. Treasury Cash Portfolio and Government Cash
Portfolio invests only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. These Portfolios do not intend to hold in their portfolio any
securities or instruments that would be subject to restriction as to amount held
by a national bank under Title 12, Section 24 (Seventh) of the United States
Code. In addition, these Portfolios limit their investments to those permissible
for Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act and the applicable rules and regulations of the National Credit
Union Administration. Government Cash Portfolio limits its investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage and to investments that permit Fund
shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction the Core Trust Board. The
Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The Core Trust Board
performs similar functions for the Portfolios and Core Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust.
ADMINISTRATION AND DISTRIBUTION
Subject to the supervision of the Board, FAS supervises the overall management
of the Trust, including overseeing the Trust's receipt of services, advising the
Trust and the Trustees on matters concerning the Trust and its affairs, and
providing the Trust with general office facilities and certain persons to serve
as officers. For these services and facilities, FAS receives a fee at an annual
rate of 0.05% of the daily net assets of each Fund. FAS also serves as
administrator of the Portfolios and provides administrative services for each
Portfolio that are similar to those provided to the Funds. For its
administrative services to the Portfolios, FAS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("Forum Accounting") performs portfolio accounting services for
the Funds and Portfolios pursuant to agreements with the Trust and Core Trust
and is paid a separate fee for these services.
FFSI acts as the agent of the Trust in connection with the offering of shares of
the Funds. FFSI is a registered broker-dealer and is a member of the National
Association of Securities Dealers, Inc. In order to facilitate the distribution
of Investor Shares, the Trust has adopted a plan of distribution (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund's Investor
Shares. Under the Plan, Forum receives a fee at an annual rate of 0.15% of the
average daily net assets of each Fund attributable to Investor Shares as
compensation for Forum's services as distributor. From this amount, Forum may
make payments to various financial institutions, including broker-dealers, banks
and trust companies as compensation for services or reimbursement of expenses in
connection with the distribution of shares or the provision of various
shareholder services. If the distribution related expenses of Forum exceed its
Rule 12b-1 fees for any Fund, the Fund will not be obligated to pay Forum an
additional amount and if Forum's distribution related expenses are less than its
Rule 12b-1 fees, Forum will realize a profit.
FAS, FFSI, Forum Advisors, Forum Accounting and the Transfer Agent are members
of the Forum Financial Group of companies and together provide a full range of
services to the investment company and financial services industry. As of the
date of this Prospectus, each of these companies was controlled by John Y.
Keffer, President and Chairman of the Trust and FAS and FFSI provided
administration services to registered investment companies with assets of
approximately $30 billion.
INVESTMENT ADVISERS
Subject to the general supervision of the Core Trust Board, Forum Advisors makes
investment decisions for Treasury Portfolio and Municipal Cash Portfolio and
monitors those Portfolio's investments and Linden makes investment decisions for
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio and
monitors those Portfolios' investments. Forum Advisors, which is located at Two
Portland Square, Portland, Maine 04101, provides investment advisory services to
four other mutual funds. Linden, which is located at 812 N. Linden Drive,
Beverly Hills, California 90210, is controlled by Anthony R. Fischer, Jr., who
is its sole stockholder, director, and officer. Forum Advisors and Linden act
also as investment subadvisers to the Portfolios that they do not manage on a
daily basis and from time to time may provide each other with assistance
regarding the other's advisory responsibilities. These services may include
management of part of or all of the Portfolios' investment portfolios.
For its services, Forum Advisors receives an advisory fee at an annual rate of
0.05% of Treasury Portfolio's and Municipal Cash Portfolio's average daily net
assets. For its services, Linden receives from each of Treasury Cash Portfolio,
Government Cash Portfolio and Cash Portfolio an advisory fee based upon the
total average daily net assets of those Portfolios ("Total Portfolio Assets").
Linden's fee is calculated at an annual rate on a cumulative basis as follows:
0.06% of the first $200 million of Total Portfolio Assets, 0.04% of the next
$300 million of Total Portfolio Assets, and 0.03% of the remaining Total
Portfolio Assets. A Fund's expenses include the Fund's pro rata portion of the
advisory fee paid by the corresponding Portfolio. To the extent Forum Advisors
or Linden has delegated its responsibilities to the other, Forum Advisors or
Linden pays its advisory fee accrued for such period of time to the other.
Currently, it is anticipated that Forum Advisors and Linden will delegate
responsibility for portfolio management to the other investment adviser
infrequently.
SHAREHOLDER SERVICING
Transfer and Dividend Disbursing Agent. Shareholder inquiries and communications
concerning the Funds may be directed to the Transfer Agent at the address and
telephone numbers on the first page of this Prospectus. The Transfer Agent
maintains an account for each shareholder of the Funds (unless such accounts are
maintained by sub-transfer agents or processing agents) and performs other
transfer agency and related functions. The Transfer Agent is authorized to
subcontract any or all of its functions to one or more qualified sub-transfer
agents or processing agents, which may be its affiliates, who agree to comply
with the terms of the Transfer Agent's agreement with the Trust. The Transfer
Agent may pay those agents for their services, but no such payment will increase
the Transfer Agent's compensation from the Trust. For its services, the Transfer
Agent is paid a transfer agent fee at an annual rate of 0.25% of the average
daily net assets of each Fund attributable to Investor Shares plus $12,000 per
year for each Fund and certain account and additional class charges and is
reimbursed for certain expenses incurred on behalf of the Funds.
Shareholder Service Agents. The Trust has adopted a shareholder service plan
("Shareholder Service Plan") which provides that, as compensation for FAS's
service activities with respect to the Investor Shares, the Trust shall pay FAS
a fee at an annual rate of 0.25% of the average daily net assets attributable to
Investor Shares. FAS is authorized to enter into shareholder servicing
agreements pursuant to which a shareholder servicing agent, on behalf of its
customers, performs certain shareholder services not otherwise provided by the
Transfer Agent. As compensation for its services, the shareholder servicing
agent is paid a fee by FAS of up to 0.25% of the average daily net assets of
Investor Shares owned by investors for which the shareholder service agent
maintains a servicing relationship. Certain shareholder servicing agents may be
subtransfer or processing agents.
Among the services provided by shareholder servicing agents are answering
customer inquiries regarding the manner in which purchases, exchanges and
redemptions of shares of the Trust may be effected and other matters pertaining
to the Trust's services; providing necessary personnel and facilities to
establish and maintain shareholder accounts and records; assisting shareholders
in arranging for processing purchase, exchange and redemption transactions;
arranging for the wiring of funds; guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request.
EXPENSES OF THE FUNDS
Each Fund's expenses comprise Trust expenses attributable to the Fund, which are
charged to the Fund, and expenses not attributable to a particular fund of the
Trust, which are allocated among the Fund and all other funds of the Trust in
proportion to their average net assets. Each service provider in its sole
discretion may elect to waive (or continue to waive) all or any portion of its
fees, which are accrued daily and paid monthly, and may reimburse a Fund for
certain expenses. Any such waivers or reimbursements would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.
Each Fund's expenses include the service fees described in this Prospectus, the
fees and expenses of the Board, applicable insurance and bonding expenses and
state and SEC registration fees. Each Fund bears its pro rata portion of the
expenses of the Portfolio in which it invests along with all other investors in
the Portfolio.
5. PURCHASES AND REDEMPTIONS OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through the Transfer Agent, which
accepts orders for purchases and redemptions from shareholders of record and new
investors. Shareholders of record will receive from the Trust periodic
statements listing all account activity during the statement period. The Trust
reserves the right in the future to modify, limit or terminate any shareholder
privilege, upon appropriate notice to shareholders, and may 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 of an order in proper form, on each Fund Business
Day. Fund shares are issued immediately after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by the Transfer Agent. Each Fund's net asset value is
calculated at 4:00 p.m., Eastern Time.
Fund shares become entitled to receive distributions on the day the purchase
order is accepted if the order and payment are received by the Transfer Agent as
follows:
<TABLE>
<S> <C> <C>
Order Must be Received by Payment Must be Received by
Daily Assets Treasury Fund and
Daily Assets Tax-Exempt Fund 12:00 p.m., Eastern Time 4:00 p.m., Eastern Time
All other Funds 2:00 p.m., Eastern Time 4:00 p.m., Eastern Time
</TABLE>
If a purchase order is transmitted to the Transfer Agent (or the wire is
received) after the times listed above, the investor will not receive a
distribution on that day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco (Boston in the case of Daily Assets Treasury Fund
and Daily Assets Tax-Exempt Fund) closes early or the Public Securities
Association recommends that the government securities markets close early, the
Trust may advance the time by which the Transfer Agent must receive completed
wire purchase orders and the cut-off times set forth above.
Each Fund reserves the right to reject any subscription for the purchase of Fund
shares. Stock certificates are issued only to shareholders of record upon their
written request and no certificates are issued for fractional shares.
Redemptions. Fund shares may be redeemed without charge at their net asset value
on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following 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 distributions declared on or after the day on which the
redemption becomes effective.
For wire redemption orders received after 12:00 p.m., Eastern time, in the case
of Daily Assets Treasury Fund and Daily Assets Tax-Exempt Fund, and after 2:00
p.m., Eastern Time, in the case of each other Fund, the Transfer Agent will wire
proceeds the next Fund Business Day. On days that the New York Stock Exchange or
Federal Reserve Bank of San Francisco (Boston in the case of Daily Assets
Treasury Fund and Daily Assets Tax-Exempt Fund) closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which the Transfer Agent must receive
completed wire redemption orders.
Normally, redemption proceeds are paid immediately, 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 to
purchase the shares 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 for more than seven days after
the tender of the shares to the Fund except when the New York Stock Exchange is
closed (or when trading thereon is restricted) for any reason other than its
customary weekend or holiday closings or under any emergency or other
circumstance as determined by the SEC.
Proceeds of redemptions normally are paid in cash. However, payments may be made
wholly or partially in portfolio securities if the Board determines that payment
in cash would be detrimental to the best interests of the Fund.
The Trust employs reasonable procedures to ensure 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, 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 $5,000.
PURCHASE AND REDEMPTION PROCEDURES
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. To request 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 $10,000 minimum for initial investments in each Fund ($2,000 for
individual retirement accounts, $2,500 for exchanges).
By Mail. Investors may send a check made payable to the Trust along with a
completed account application to the Transfer Agent. Checks are accepted at full
value subject to collection. Payment by a check drawn on any member of the
Federal Reserve System can normally be converted into Federal Funds within two
business days after receipt of the check. Checks drawn on some non-member banks
may take longer.
For individual or Uniform Gift to Minors Act accounts, the check or money order
used to purchase shares of a Fund must be made payable to "Forum Funds" or to
one or more owners of that account and endorsed to Forum Funds. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts, the check
used to purchase shares of a Fund must be made payable on its face to "Forum
Funds." No other method of payment by check will be accepted. All purchases must
be paid in U.S. dollars; checks must be drawn on U.S. banks. Payment by
Traveler's Checks is prohibited.
By Bank Wire. To make an initial investment in a Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Trust
at 800-94FORUM (800-943-6786) or (207) 879-0001 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: [Name of Fund] - Investor Shares
Account #: .........
Account Name: .........
The investor should then promptly complete and mail the account application. Any
investor planning to wire funds should instruct a bank early in the day so the
wire transfer can be accomplished the same day. 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.
Through Financial Institutions. Shares may be purchased and redeemed through
certain broker-dealers, banks or other financial institutions ("Processing
Organizations"), including affiliates of the Transfer Agent. Processing
Organizations may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
a Fund. The Trust is not responsible for the failure of any Processing
Organization to promptly forward these requests.
Investors who purchase or redeem shares in this manner will be subject to the
procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Investors who purchase Fund shares
through a Processing Organization may or may not be the shareholder of record
and, subject to their institution's and the Fund's procedures, may have Fund
shares transferred into their name. Certain Processing Organizations may enter
purchase orders with payment to follow.
The Trust may confirm purchases and redemptions of a Processing Organization's
customers directly to the Processing Organization, which in turn will provide
its customers with such confirmations and periodic statements as may be required
by law or agreed to between the Processing Organization and its customers.
Subsequent Purchases of Shares
There is a $500 minimum for subsequent purchases. Subsequent purchases may be
made by mailing a check, by sending a bank wire or through a financial
institution as indicated above. Shareholders using the wire system for purchase
should first telephone the Trust at 800-94FORUM (800-943-6786) or (207) 879-0001
to notify it of the wire transfer. All payments should clearly indicate the
shareholder's name and account number.
Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to the Transfer Agent.
Redemption of Shares
Shareholders who wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several days 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 who has elected telephone redemption privileges may
make a telephone redemption request by calling the Transfer Agent at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number. In response to
the telephone redemption instruction, the Fund will mail a check to the
shareholder's record address or, if the shareholder has elected wire redemption
privileges, wire the proceeds.
By Bank Wire. For redemptions of more than $5,000, a shareholder who 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.
Other Redemption Matters. To protect shareholders and the Funds 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.
EXCHANGES
Shareholders may exchange their shares for shares of any other fund of the Trust
or any other mutual fund administered by FAS that participates with the Funds in
the exchange program (currently, Sound Shore Fund, Inc. and CRM Small Cap Value
Fund). Exchanges are subject to the fees charged by, and the restrictions listed
in the prospectus for, the fund into which a shareholder is exchanging,
including minimum investment requirements. The minimum amount required to open
an account in a Fund through an exchange from another fund (other than the
Funds) is $2,500. The Funds do not charge for exchanges, and there is currently
no limit on the number of exchanges a shareholder may make, but each Fund
reserves the right to limit excessive exchanges by any shareholder. See
"Additional Purchase and Redemption Information" in the SAI.
Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the new account. Shareholders may only exchange into a fund if
that fund's shares may legally be sold in the shareholder's state of residence.
The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Accordingly, a
shareholder may realize a capital gain or loss with respect to the shares
redeemed. Redemptions and purchases are effected at the respective net asset
values of the two funds as next determined following receipt of proper
instructions and all necessary supporting documents by the fund whose shares are
being exchanged.
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 instruction to the Transfer
Agent accompanied by any stock certificate that may have been issued to the
shareholder. All written requests for exchanges must be signed by the
shareholder (a signature guarantee is not required) and all certificates
submitted for exchange must be endorsed by the shareholder with signature
guaranteed.
By Telephone. Exchanges may be accomplished by telephone by any shareholder who
has elected telephone exchange privileges by calling the Transfer Agent at
800-94FORUM (800-943-6786) or (207) 879-0001 and providing the shareholder's
account number, the exact name in which the shareholder's shares are registered
and the shareholder's social security or taxpayer identification number.
INDIVIDUAL RETIREMENT ACCOUNTS
Each Fund (other than Daily Assets Tax-Exempt Fund) may be a suitable investment
vehicle for part or all of the assets held in individual retirement accounts
("IRAs"). The minimum initial investment for IRAs is $2,000, and the minimum
subsequent investment is $500. 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 Funds concerning Fund sponsored IRAs.
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Each
type of net capital gain realized by a Fund, if any, will be distributed
annually. Shareholders may choose to have all distributions reinvested in
additional shares of the Fund or received in cash. In addition, shareholders may
have all distributions of net capital gain reinvested in additional shares of
the Fund and distributions of net investment income paid in cash. All
distributions are treated in the same manner for Federal income tax purposes
whether received in cash or reinvested in shares of the Fund.
All distributions will be reinvested at the Fund's net asset value as of the
payment date of the dividend. All distributions are reinvested unless another
option is selected. All distributions not reinvested will be paid to the
shareholder in cash and may be paid more than seven days following the date on
which distribution would otherwise be reinvested.
TAXES
Tax Status of the Funds. Each Fund intends to qualify or continue to qualify to
be taxed as a "regulated investment company" under the Internal Revenue Code of
1986, as amended. Accordingly, no Fund will be liable for Federal income taxes
on the net investment income and capital gain distributed to its shareholders.
Because each Fund intends to distribute all of its net investment income and net
capital gain each year, the Funds should also avoid Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. 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.
The Portfolios. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
Daily Assets Tax-Exempt Fund. Distributions paid by Daily Assets Tax-Exempt Fund
out of federally tax-exempt interest income earned by the Fund ("exempt-interest
dividends") generally will not be subject to federal income tax in the hands of
the Fund's shareholders. Substantially all of the distributions paid by the Fund
are anticipated to be exempt-interest dividends. Persons who are "substantial
users" or "related persons" thereof of facilities financed by private activity
securities held by the Fund, however, may be subject to federal income tax on
their pro rata share of the interest income from those securities and should
consult their tax advisers before purchasing Shares. Exempt-interest dividends
are included in the "adjusted current earnings" of corporations for purposes of
the AMT.
Interest on indebtedness incurred by shareholders to purchase or carry shares of
the Fund generally is not deductible for federal income tax purposes. Under
rules for determining when borrowed funds are used for purchasing or carrying
particular assets, shares of the Fund may be considered to have been purchased
or carried with borrowed funds even though those funds are not directly linked
to the shares.
The income from the Municipal Cash Portfolio's investments may be subject to the
AMT. Interest on certain municipal securities issued to finance "private
activities" ("private activity securities") is a "tax preference item" for
purposes of the AMT applicable to certain individuals and corporations even
though such interest will continue to be fully tax-exempt for regular federal
income tax purposes. The Portfolio may purchase private activity securities, the
interest on which may constitute a "tax preference item" for purposes of the
AMT.
State and Local Taxes. Daily Assets Treasury Fund's investment policies are
structured to provide shareholders, to the extent permissible by Federal and
state law, with income that is exempt or excluded from income taxation at the
state and local level. Many states (by statute, judicial decision or
administrative action) do not tax dividends from a regulated investment company
that are attributable to interest on obligations of the U.S. Treasury and
certain U.S. Government agencies and instrumentalities if the interest on those
obligations would not be taxable to a shareholder that held the obligation
directly. As a result, substantially all distributions paid by the Fund to
shareholders residing in certain states will be exempt or excluded from state
income taxes. A portion of the distributions paid by the other Funds to
shareholders may be exempt or excluded from state income taxes, but these Funds
are not managed to provide any specific amount of state tax-free income to
shareholders.
The exemption for federal income tax purposes of distributions derived from
interest on municipal securities does not necessarily result in an exemption
under the income or other tax laws of any state or local taxing authority.
Shareholders of Daily Assets Tax-Exempt Fund may be exempt from state and local
taxes on distributions of tax-exempt interest income derived from obligations of
the state and/or municipalities of the state in which they reside but may be
subject to tax on income derived from the municipal securities of other
jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in a Fund which may differ
from the federal income tax consequences described above.
General. Each Fund may be required by Federal law to withhold 31% of reportable
payments (which may include taxable distributions and redemption proceeds) paid
to individuals and certain other non-corporate shareholders. Withholding is not
required if a shareholder certifies that the shareholder's social security or
tax identification number provided to a Fund is correct and that the shareholder
is not subject to backup withholding.
Each Fund must include a portion of the original issue discount of zero-coupon
securities, if any, as income even though these securities do not pay any
interest until maturity. Because each Fund distributes all of its net investment
income, a Fund may have to sell portfolio securities to distribute imputed
income, which may occur at a time when the investment adviser would not have
chosen to sell such securities and which may result in a taxable gain or loss.
Shortly after the close of each year, a statement is sent to each shareholder of
the Funds advising the shareholder of the portions of total distributions paid
to the shareholder that is (i) derived from each type of obligation in which a
Fund has invested, (ii) derived from the obligations of issuers in the various
states and (iii) exempt from federal income taxes. These portions are determined
for the entire year and on a monthly basis and, thus, are an annual or monthly
average, rather than a day-by-day determination for each shareholder.
The foregoing is only a summary of some of the important Federal and state tax
considerations generally affecting the Funds and their shareholders. There may
be other Federal, state or local tax considerations applicable to a particular
investor. Prospective investors are urged to consult their tax advisors.
7. OTHER INFORMATION
PERFORMANCE INFORMATION
Investor Shares' performance may be advertised. All performance information is
based on historical results, is not intended to indicate future performance and,
unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of the period. A Fund's compounded
annualized yield assumes the reinvestment of distributions paid by the Fund,
and, therefore will be somewhat higher than the annualized yield for the same
period. A Fund may also quote tax-equivalent yields, which show the taxable
yields a shareholder would have to earn to equal the Fund's tax-free yield,
after taxes. A tax-equivalent yield is calculated by dividing the Fund's
tax-free yield by one minus a stated federal, state or combined federal and
state tax rate. Each class' performance will vary.
The Funds' advertisements may also reference ratings and rankings among similar
funds by independent evaluators such as Morningstar, Lipper Analytical Services,
Inc. or IBC Financial Data, Inc. In addition, the performance of the Funds may
be compared to recognized indices of market performance. The comparative
material found in a Fund's advertisements, sales literature, or reports to
shareholders may contain performance rankings. This material is not to be
considered representative or indicative of future performance.
BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a 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.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 4:00 p.m.,
Eastern Time, on each Fund Business Day by dividing the value of the Fund's net
assets (the value of its interest in the Portfolio and other assets less its
liabilities) by the number of shares outstanding at the time the determination
is made. In order to more easily maintain a stable net asset value per share,
each Portfolio's portfolio securities are valued at their amortized cost
(acquisition cost adjusted for amortization of premium or accretion of discount)
in accordance with Rule 2a-7. The Portfolios will only value their portfolio
securities using this method if the Core Trust Board believes that it fairly
reflects the market-based net asset value per share. The Portfolios' other
assets, if any, are valued at fair value by or under the direction of the Core
Trust Board.
THE TRUST AND ITS SHARES
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., which was incorporated in 1980. The
Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create classes of
shares within each series. There are currently sixteen series of the Trust.
Each share of each fund of the Trust and each class of shares has equal
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 fund or class, except if the matter affects only one
fund or class or voting by fund or class is required by law, in which case
shares will be voted separately by fund 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 (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. A shareholder in a fund is entitled to the shareholder's pro rata
share of all distributions arising from that fund's assets and, upon redeeming
shares, will receive the portion of the fund's net assets represented by the
redeemed shares.
From time to time certain shareholders may own a large percentage of shares of a
Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of any shareholder vote. As of the date hereof, due to
initial investment in Daily Assets Treasury Obligations Fund, Daily Assets
Government Fund and Daily Assets Tax-Exempt Fund, prior to the public offering
of shares, FAS may be deemed to control those Funds.
FUND STRUCTURE
Other Classes of Shares. In addition to Investor Shares, each Fund may create
and issue shares of other classes of securities. Each Fund currently has two
other classes of shares authorized, Institutional Shares and Institutional
Service Shares. Institutional Shares have an investment minimum of $1,000,000.
Institutional Service Shares are offered solely through banks, trust companies
and certain other financial institutions, and their affiliates and
correspondents, for investment of their funds or funds for which they act in a
fiduciary, agency or custodial capacity. Institutional Shares and Institutional
Service Shares incur less expenses than Investor Shares. See, "Additional
Information" below. Except for certain differences, each share of each class
represents an undivided, proportionate interest in a Fund. Each share of each
Fund is entitled to participate equally in distributions and the proceeds of any
liquidation of that Fund except that, due to the differing expenses borne by the
various classes, the amount of distributions will differ among the classes.
Core Trust Structure. Each Fund invests all of its assets in its corresponding
Portfolio of Core Trust, a business trust organized under the laws of the State
of Delaware in September 1994 and registered under the 1940 Act as an open-end,
management investment company. Accordingly, a Portfolio directly acquires its
own securities and its corresponding Fund acquires an indirect interest in those
securities. The assets of each Portfolio belong only to, and the liabilities of
the Portfolio are borne solely by, the Portfolio and no other portfolio of Core
Trust. Upon liquidation of a Portfolio, investors in the Portfolio would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.
The Portfolios. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, Daily
Assets Treasury Fund and Daily Assets Tax-Exempt Fund are the only investors
(other than FAS or its affiliates) that have invested in Treasury Portfolio and
Municipal Cash Portfolio, respectively. Each of the other Portfolios has another
investor besides the Funds (and FAS and its affiliates). All investors in a
Portfolio invest on the same terms and conditions as the Funds and will pay a
proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio is entitled to vote in proportion to the relative value of its
interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. There can be no assurance that
any issue that receives a majority of the votes cast by a Fund's shareholders
will receive a majority of votes cast by all investors in the Portfolio.
Considerations of Investing in a Portfolio. A Fund's investment in a Portfolio
may be affected by the actions of other large investors in the Portfolio, if
any. If a large investor other than a Fund redeemed its interest in a Portfolio,
the Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from a Portfolio at any time, if the
Board determines that it is in the best interests of the Fund and its
shareholders to do so. The Fund might withdraw, for example, if other investors
in the Portfolio, by a vote of shareholders, changed the investment objective or
policies of the Portfolio in a manner not acceptable to the Board or not
permissible by the Fund. A withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. If
the Fund decided to convert those securities to cash, it usually would incur
transaction costs. If the Fund withdrew its investment from the Portfolio, the
Board would consider what action might be taken, including the management of the
Fund's assets in accordance with its investment objective and policies by the
investment adviser to the Portfolio or the investment of all of the Fund's
investable assets in another pooled investment entity having substantially the
same investment objective as the Fund. The inability of the Fund to find a
suitable replacement investment, in the event the Board decided not to permit
the Portfolio's investment adviser to manage the Fund's assets, could have a
significant impact on shareholders of the Fund.
Additional Information. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact
FFSI at 207-879-1900. If an investor invests through a financial institution,
the investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the SAI
and the Funds' official sales literature in connection with the
offering of the Funds' shares, and if given or made, such information
or representations must not be relied upon as having been authorized by
the Trust. This Prospectus does not constitute an offer in any state in
which, or to any person to whom, such offer may not lawfully be made.
<PAGE>
FORUM FUNDS
DAILY ASSETS TREASURY FUND
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS CASH FUND
DAILY ASSETS TAX-EXEMPT 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
November 17, 1997
This Statement of Additional Information supplements the Prospectuses dated
November 17, 1997 offering Investor Shares, Institutional Service Shares and
Institutional Shares of Daily Assets Treasury Fund, Daily Assets Treasury
Obligations Fund, Daily Assets Government Fund, Daily Assets Cash Fund and Daily
Assets Tax-Exempt Fund, five portfolios of the Trust, and should be read only in
conjunction with the applicable Prospectus, a copy of which may be obtained by
an investor without charge by contacting the Trust's Distributor at the address
listed above.
TABLE OF CONTENTS
Page
1. General
2. Investment Policies
3. Investment Limitations
4. Investment by Financial Institutions
5. Performance Data
6. Management
7. Determination of Net Asset Value
8. Portfolio Transactions
9. Additional Purchase and
Redemption Information
10. Taxation
11. Other Information
12. Financial Statements
Appendix A - Description of Securities Ratings
Appendix B - Performance Information
Appendix C - Miscellaneous Tables
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
1. GENERAL
The Trust
The Trust is registered with the SEC as an open-end, management investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc. Forum Funds, Inc. was incorporated
on March 24, 1980 and assumed the name of Forum Funds, Inc. on March 16, 1987.
The Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create separate
classes of shares within each series. The Trust currently offers shares of
eighteen series and has three series that have not commenced operation as of the
date of this SAI. The series of the Trust are as follows:
Daily Assets Treasury Fund Austin Global Equity Fund
Daily Assets Treasury Obligations Fund Oak Hall Equity Fund
Daily Assets Government Fund
Daily Assets Cash Fund Quadra Limited Maturity Treasury Fund
Daily Assets Tax-Exempt Fund Quadra Value Equity Fund
Quadra Growth Fund
Investors Bond Fund Quadra International Equity Fund
TaxSaver Bond Fund Quadra Opportunistic Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Payson Value Fund
Payson Balanced Fund.
Definitions
As used in this Statement of Additional Information, the following terms shall
have the meanings listed:
"Adviser" means Forum Advisors or Linden, as applicable.
"Board" means the Board of Trustees of Forum Funds.
"Core Trust" means Core Trust (Delaware), a Delaware business trust.
"Core Trust Board" means the Board of Trustees of Core Trust (Delaware).
"FAS" means Forum Administrative Services, LLC
"FFC" means Forum Financial Corp.
"FFSI" means Forum Financial Services, Inc.
"Forum Advisors" means Forum Advisors, Inc.
"Fund" means Daily Assets Treasury Fund, Daily Assets Treasury Obligations Fund,
Daily Assets Government Fund, Daily Assets Cash Fund or Daily Assets Tax-Exempt
Fund.
"Fund Business Day" has the meaning ascribed thereto in the current Prospectus
of the Funds.
"Linden" means Linden Asset Management, Inc.
"NRSRO" means a nationally recognized statistical rating organization.
"Portfolio" means Treasury Portfolio, Treasury Cash Portfolio, Government Cash
Portfolio, Cash Portfolio or Municipal Cash Portfolio, each a portfolio of Core
Trust.
"SAI" means this Statement of Additional Information.
"SEC" means the U.S. Securities and Exchange Commission.
"Subadviser" means Forum Advisors or Linden, as applicable, when acting as
investment subadviser to a Portfolio.
"Treasury Securities" has the meaning ascribed thereto by the current Prospectus
of the Funds.
"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. INVESTMENT POLICIES
Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio. The corresponding
Portfolios of Daily Assets Treasury Fund, Daily Assets Treasury Obligations
Fund, Daily Assets Government Fund, Daily Assets Cash Fund and Daily Assets
Tax-Exempt Fund, respectively, are Treasury Portfolio, Treasury Cash Portfolio,
Government Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio.
Following is information pertaining to the investment policies of the
Portfolios, which supplements the investment policy information contained in the
Funds' Prospectuses.
Each Fund has an investment policy that allows it to invest all of its
investable assets in its corresponding Portfolio. All other investment policies
of each Fund and its corresponding Portfolio are identical. Therefore, although
this and the following sections provide supplemental information regarding the
investment policies of the Portfolios (and the responsibilities of the Core
Trust Board), they apply equally to the investment policies of the Funds (and
the responsibilities of the Board). Information with respect to Daily Assets
Treasury Fund for periods prior to December 5, 1995 (for instance, investment
advisory fees paid), the date that Fund began investing in Treasury Portfolio,
reflects information with respect to the Fund and the Fund's direct investment
in securities.
Debt securities with longer maturities tend to produce higher yields and are
generally subject to greater price movements than obligations with shorter
maturities. An increase in interest rates will generally reduce the market value
of portfolio investments, and a decline in interest rates will generally
increase the value of portfolio investments.
Each Portfolio invests at least 95% of its total assets in securities in the
highest rating category (as determined pursuant to Rule 2a-7 under the 1940
Act).
Government Cash Portfolio and Cash Portfolio currently are prohibited from
purchasing any security issued by the Federal Home Loan Mortgage Corporation.
This does not prohibit the Portfolios from entering into repurchase agreements
collateralized with securities issued by the Federal Home Loan Mortgage
Corporation.
Except for U.S. Government Securities and to the limited extent otherwise
permitted by Rule 2a-7 under the 1940 Act, the Portfolios may not invest more
than five percent of their total assets in (i) the securities of any one issuer
or (ii) securities that are rated (or are issued by an issuer with comparable
outstanding short-term debt that is rated) in the second highest rating category
or are unrated and determined by an Adviser to be of comparable quality.
Ratings as Investment Criteria
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P") and other NRSROs are private services that provide ratings of the credit
quality of debt obligations. A description of the higher quality ratings
assigned to debt securities by several NRSROs is included in Appendix A to this
SAI. The Portfolios use these ratings in determining whether to purchase, sell
or hold a security. It should be emphasized, however, that ratings are general
and are not absolute standards of quality. Consequently, securities with the
same maturity, interest rate and rating may have different market prices.
Subsequent to its purchase by a Portfolio, an issue of securities may cease to
be rated or its rating may be reduced. A Portfolio's Adviser, and in certain
cases the Core Trust Board, will consider such an event in determining whether
the Portfolio should continue to hold the obligation. Credit ratings attempt to
evaluate the safety of principal and interest payments and do not evaluate the
risks of fluctuations in market value. Also, rating agencies may fail to make
timely changes in credit ratings in response to developments and events, so that
an issuer's current financial condition may be better or worse than the rating
indicates.
Small Business Administration Securities
Each Portfolio (other than Municipal Cash Portfolio) may purchase securities
issued by the Small Business Administration ("SBA"). SBA securities are variable
rate securities that carry the full faith and credit of the United States
Government, and generally have an interest rate that resets monthly or quarterly
based on a spread to the Prime rate. SBA securities generally have maturities at
issue of up to 25 years. No Portfolio may purchase an SBA security if,
immediately after the purchase, (i) the Portfolio would have more than 15% of
its net assets invested in SBA securities or (ii) either the unamortized premium
or unaccreted discount on SBA securities held by the Portfolio divided by the
sum of the premium or discount securities' par amount, respectively, would
exceed 2.5% (0.025).
Adjustable Rate Mortgage Backed Securities
The Portfolios (other than Treasury Portfolio) may purchase adjustable rate
mortgage backed or other asset backed securities (such as SBA securities) that
are U.S. Government Securities. Treasury Cash Portfolio may purchase mortgage
backed or asset backed securities that are U.S. Treasury Securities. These types
of securities directly or indirectly represent a participation in, or are
secured by and payable from, adjustable rate mortgages or other loans which may
be secured by real estate or other assets. Unlike traditional debt instruments,
payments on these securities include both interest and a partial payment of
principal. Prepayments of the principal of underlying loans may shorten the
effective maturities of these securities. Some adjustable rate securities (or
the underlying loans) are subject to caps or floors that limit the maximum
change in interest rate during a specified period or over the life of the
security.
Adjustable rate mortgage backed securities ("MBSs") are securities that have
interest rates that are reset at periodic intervals, usually by reference to
some interest rate index or market interest rate. MBSs represent interests in
pools of mortgages made by lenders such as commercial banks, savings
associations, mortgage bankers and mortgage brokers and may be issued by
governmental or government-related entities or by non-governmental entities such
as commercial banks, savings associations, mortgage bankers and other secondary
market issuers.
MBSs differ from other forms of debt securities, which normally provide for
periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates in that MBSs provide periodic payments which
consist of interest and, in most cases, principal. In effect, these payments are
a "pass-through" of the periodic payments and optional prepayments made by the
individual borrowers on their mortgage loans, net of any fees paid to the issuer
or guarantor of such securities. Additional payments to holders of MBSs are
caused by prepayments resulting from the sale of the underlying property or the
refinancing or foreclosure of the underlying mortgage loans. Such prepayments
may significantly shorten the effective maturities of MBSs, and occur more often
during periods of declining interest rates.
Although the rate adjustment feature of MBSs may act as a buffer to reduce sharp
changes in the value of MBSs, these securities are still subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rate is reset only periodically, changes
in the interest rate on MBSs may lag behind changes in prevailing market
interest rates. Also, some MBSs (or the underlying mortgages) are subject to
caps or floors that limit the maximum change in interest rate during a specified
period or over the life of the security.
During periods of declining interest rates, income to the Portfolios derived
from mortgages which are not prepaid will decrease as the coupon rate resets
along with the decline in interest rates in contrast to the income on fixed-rate
mortgages, which will remain constant. At times, some of the MBSs in which the
Portfolios will invest will have higher-than-market interest rates, and will
therefore be purchased at a premium above their par value. Unscheduled
prepayments, which are made at par, will cause the Portfolios to suffer a loss
equal to the unamortized premium, if any.
During periods of rising interest rates, changes in the coupon rates of the
mortgages underlying the Portfolios' investments may lag behind changes in
market interest rates. This may result in a slightly lower value until the
coupons reset to market rates. Many MBSs in the Portfolios' portfolios will have
"caps" that limit the maximum amount by which the interest rate paid by the
borrower may change at each reset date or over the life of the loan and
fluctuation in interest rates above these levels could cause these securities to
"cap out" and to behave more like fixed-rate debt securities.
The Portfolios may purchase collateralized mortgage obligations ("CMOs"), which
are collateralized by MBSs or by pools of conventional mortgages. CMOs are
typically structured with a number of classes or series that have different
maturities and are generally retired in sequence. Each class of bonds receives
periodic interest payments according to the coupon rate on the bonds. However,
all monthly principal payments and any prepayments from the collateral pool are
paid first to the "Class 1" bondholders. The principal payments are such that
the Class 1 bonds will be completely repaid no later than, for example, five
years after the offering date. Thereafter, all payments of principal are
allocated to the next most senior class of bonds until that class of bonds has
been fully repaid. Although full payoff of each class of bonds is contractually
required by a certain date, any or all classes of bonds may be paid off sooner
than expected because of an acceleration in pre-payments of the obligations
comprising the collateral pool.
Since the inception of the mortgage-related pass-through security in 1970, the
market for these securities has expanded considerably. The size of the primary
issuance market and active participation in the secondary market by securities
dealers and many types of investors make government and government-related
pass-through pools highly liquid.
Governmental or private entities may create new types of MBSs in response to
changes in the market or changes in government regulation of such securities. As
new types of these securities are developed and offered to investors, the
Adviser may, consistent with the investment objective and policies of a
Portfolio, consider making investments in such new types of securities.
When-Issued Securities and Delayed Delivery Securities
Each Portfolio may purchase securities on a when-issued or delayed delivery
basis. In those cases, the purchase price and the interest rate payable on the
securities are fixed on the transaction date and delivery and payment may take
place a month or more after the date of the transaction. At the time a Portfolio
makes the commitment to purchase securities on a when-issued or delayed delivery
basis, the Portfolio will record the transactions as a purchase and thereafter
reflect the value each day of such securities in determining its net asset
value. If a Portfolio chooses to dispose of the right to acquire a when-issued
security prior to its acquisition, it could, as with the disposition of any
other portfolio obligation, incur a gain or loss due to market fluctuation.
Failure of an issuer to deliver the security may result in the Portfolio
incurring a loss or missing an opportunity to make an alternative investment.
When a Portfolio agrees to purchase a security on a when-issued or delayed
delivery basis, its custodian will set aside and maintain in a segregated
account cash, U.S. Government Securities or other liquid assets with a market
value at all times at least equal to the amount of its commitment.
Core Trust's custodian will set aside and maintain in a segregated account cash
and securities with a market value at all times equal to the amount of each
Portfolio's forward commitment obligations.
Illiquid Securities
Each Portfolio may invest up to 10% of its net assets in illiquid securities.
The term "illiquid securities" for this purpose means repurchase agreements not
entitling the holder to payment of principal within seven days and securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market.
The Core Trust Board has ultimate responsibility for determining whether
specific securities are liquid or illiquid. The Core Trust Board has delegated
the function of making day-to-day determinations of liquidity to the Advisers
and, with respect to certain types of restricted securities which may be deemed
to be liquid, has adopted guidelines to be followed by the Advisers. The
Advisers take into account a number of factors in reaching liquidity decisions,
including but not limited to (1) the frequency of trades and quotations for the
security; (2) the number of dealers willing to purchase or sell the security and
the number of other potential buyers; (3) the willingness of dealers to
undertake to make a market in the security; (4) the nature of the marketplace
trades, including the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer; (5) whether the security is
registered; and (6) if the security is not traded in the United States, whether
it can be freely traded in a liquid foreign securities market. The Advisers
monitor the liquidity of the securities in each Portfolio's portfolio and report
periodically to the Core Trust Board.
Certificates of deposit and other fixed time deposits that carry an early
withdrawal penalty or mature in greater than seven days are treated by the
Portfolio as illiquid securities if there is no readily available market for the
instrument.
Repurchase Agreements and Securities Lending
In order to obtain additional income, the Portfolios may from time to time lend
securities from their portfolio to brokers, dealers and financial institutions.
Securities loans must be callable at any time and must be continuously secured
by collateral from the borrower in the form of cash or U.S. Government
Securities. The Portfolios receive fees in respect of securities loans from the
borrower or interest from investing the cash collateral. The Portfolios may pay
fees to arrange the loans. As a fundamental policy, Treasury Portfolio, and as a
nonfundamental policy, the other Portfolios, may not lend portfolio securities
in an amount greater than 33 1/3% of the value of their total assets.
In connection with entering into repurchase agreements and securities loans, the
Portfolios require continual maintenance by Core Trust's custodian of the market
value of the underlying collateral in amounts equal to, or in excess of, the
repurchase price plus the transaction costs (including loss of interest) that
the Portfolios could expect to incur upon liquidation of the collateral if the
counterparty defaults. The Portfolios' use of securities lending entails certain
risks not associated with direct investments in securities. For instance, in the
event that bankruptcy or similar proceedings were commenced against a
counterparty in these transactions or a counterparty defaulted on its
obligations, a Portfolio might suffer a loss. Failure by the other party to
deliver a security purchased by a Portfolio may result in a missed opportunity
to make an alternative investment. The Adviser monitors the creditworthiness of
counterparties to these transactions under the Core Trust Board's general
supervision and pursuant to specific Core Trust Board adopted procedures and
intend to enter into these transactions only when they believe the
counterparties present minimal credit risks and the income to be earned from the
transaction justifies the attendant risks.
Variable and Floating Rate Securities
The yield of variable and floating rate securities varies in relation to changes
in specific money market rates, such as the Prime Rate. A "variable" interest
rate adjusts at predetermined intervals (for example, daily, weekly or monthly),
while a "floating" interest rate adjusts whenever a specified benchmark rate
(such as the bank prime lending rate) changes. These changes are reflected in
adjustments to the yields of the variable and floating rate securities, and
different securities may have different adjustment rates. Accordingly, as
interest rates increase or decrease, the capital appreciation or depreciation
may be less on these obligations than for fixed rate obligations. To the extent
that the Portfolios invest in long-term variable or floating rate securities,
the Adviser believes that the Portfolios may be able to take advantage of the
higher yield that is usually paid on long-term securities.
Cash Portfolio also may purchase variable and floating rate master notes of
corporations, which are unsecured obligations redeemable upon notice that permit
investment of fluctuating amounts at varying rates of interest pursuant to
direct arrangement with the issuer of the instrument. These obligations include
master demand notes that permit investment of fluctuating amounts at varying
rates of interest pursuant to direct arrangement with the issuer of the
instrument. The issuer of these obligations often has the right, after a given
period, to prepay their outstanding principal amount of the obligations upon a
specified number of days' notice. These obligations generally are not traded,
nor generally is there an established secondary market for these obligations. To
the extent a demand note does not have a seven day or shorter demand feature and
there is no readily available market for the obligation, it is treated as an
illiquid security.
Investment Company Securities
In connection with managing their cash positions, the Portfolios may invest in
the securities of other investment companies within the limits proscribed by the
1940 Act. Under normal circumstances, each Portfolio intends to invest less than
5% of the value of its net assets in the securities of other investment
companies. In addition to a Portfolio's expenses (including the various fees),
as a shareholder in another investment company, a Portfolio would bear its pro
rata portion of the other investment company's expenses (including fees).
Zero-Coupon Securities.
Treasury Portfolio may invest in zero-coupon securities such as Treasury bills
and separately traded principal and interest components of Treasury Securities
issued or guaranteed under the U.S. Treasury's Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program. These securities are
sold at original issue discount and pay no interest to holders prior to
maturity. Because of this, zero-coupon securities may be subject to greater
fluctuation of market value than the other securities in which the Portfolios
may invest. All zero-coupon securities in which the Portfolio invests will have
a maturity of less than 13 months.
3. INVESTMENT LIMITATIONS
Fundamental investment limitations of a Fund or of a Portfolio cannot be changed
without the affirmative vote of the lesser of (i) more than 50% of the
outstanding interests of the respective Fund or Portfolio or (ii) 67% of the
shares of the Fund or Portfolio present or represented at a shareholders or
interestholders meeting at which the holders of more than 50% of the outstanding
interests of the Fund or Portfolio are present or represented.
Except as required by the 1940 Act, if a percentage restriction on investment or
utilization of assets is adhered to at the time an investment is made, a later
change in percentage resulting from a change in the market values of a
Portfolio's assets, the change in status of a security or purchases and
redemptions of shares will not be considered a violation of the limitation.
Each Fund has adopted the same fundamental and nonfundamental investment
limitations as its corresponding Portfolio. In addition, the Portfolios and the
Funds have adopted a fundamental policy which provides that, notwithstanding any
other investment policy or restriction (whether fundamental), the Portfolio or
Fund, as applicable, may invest all of its assets in the securities of a single
pooled investment fund having substantially the same investment objectives,
policies and restrictions as the Fund or Portfolio, as applicable.
Daily Assets Treasury Fund/Treasury Portfolio
Treasury Portfolio has adopted the following fundamental investment limitations
which are in addition to those contained in the Prospectuses of Daily Assets
Treasury Fund and which may not be changed without shareholder approval. The
Portfolio may not:
(1) With respect to 75% of its assets, purchase securities, other than U.S.
Government Securities, of any one issuer if more than 5% of the value
of the Portfolio's total assets would at the time of purchase be
invested in any one issuer.
(2) Purchase securities, other than U.S. Government Securities, if more
than 25% of the value of the Portfolio's total assets would be invested
in securities of issuers conducting their principal business activity
in the same industry, provided that consumer finance companies and
industrial finance companies are considered to be separate industries
and that there is no limit on the purchase of the securities of
domestic commercial banks.
(3) Act as an underwriter of securities of other issuers, except to the
extent that, in connection with the disposition of portfolio
securities, the Portfolio may be deemed to be an underwriter for
purposes of the Securities Act of 1933.
(4) Purchase or sell real estate or any interest therein, except that the
Portfolio may invest in debt obligations secured by real estate or
interests therein or issued by companies that invest in real estate or
interests therein.
(5) Purchase or sell physical commodities or contracts relating to physical
commodities, provided that currencies and currency-related contracts
will not be deemed to be physical commodities.
(6) Borrow money, except for temporary or emergency purposes (including the
meeting of redemption requests). Total borrowings may not exceed 33
1/3% of the Portfolio's total assets and borrowing for purposes other
than meeting redemptions may not exceed 5% of the value of each the
Portfolio's total assets. Outstanding borrowings in excess of 5% of the
value of the Portfolio's total assets must be repaid before any
subsequent investments are made by the Portfolio.
(7) Issue senior securities except pursuant to Section 18 of the 1940
Act and except that the Portfolio may borrow money subject to
investment limitations specified in the Portfolio's Prospectus.
(8) Make loans, except that the Portfolio may (i) purchase debt securities
which are otherwise permissible investments, (ii) enter into repurchase
agreements and (iii) lend portfolio securities.
(9) Purchase or sell real property (including limited partnership
interests, but excluding readily marketable interests in real estate
investment trusts or readily marketable securities of companies which
invest in real estate.)
(10) Pledge, mortgage or hypothecate its assets, except to secure
permitted indebtedness. Collateralized loans of securities are
not deemed to be pledges or hypothecations for this purpose.
(11) Write put and call options.
(12) Invest for the purpose of exercising control over any person.
(13) Purchase restricted securities.
Daily Assets Treasury Portfolio has adopted the following nonfundamental
investment limitations that may be changed by the Core Trust Board without
shareholder approval. The Portfolio may not:
(a) Purchase securities having voting rights, except the Portfolio may
invest in securities of other investment companies to the extent
permitted by the 1940 Act.
(b) Purchase securities on margin, or make short sales of securities,
except for the use of short-term credit necessary for the clearance of
purchases and sales of portfolio securities.
(c) Invest in securities (other than fully-collateralized debt obligations)
issued by companies that have conducted continuous operations for less
than three years, including the operations of predecessors, unless
guaranteed as to principal and interest by an issuer in whose
securities the Portfolio could invest.
(d) Invest in or hold securities of any issuer if officers and Trustees of
the Trust or the Adviser, individually owning beneficially more than
1/2 of 1% of the securities of the issuer, in the aggregate own more
than 5% of the issuer's securities.
(e) Invest in interests in oil or gas or interests in other mineral exploration
or development programs.
Treasury Cash Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal
Cash Portfolio have adopted the following fundamental investment limitations
which are in addition to those contained in the Prospectuses offering Daily
Assets Treasury Obligations Fund, Daily Assets Government Fund, Daily Assets
Cash Fund and Daily Assets Tax-Exempt Fund and which may not be changed without
shareholder approval. No Portfolio may:
(1) With respect to 75% of its assets, purchase a security other than a U.S.
Government Security (or, in the case of Municipal cash Portfolio, other
than a security of an investment company) if, as a result, more than 5% of
the Portfolio's total assets would be invested in the securities of a
single issuer.
(2) Purchase securities if, immediately after the purchase, more than 25% of
the value of the Portfolio's total assets would be invested in the
securities of issuers having their principal business activities in the
same industry; provided, however, that there is no limit on investments in
U.S. Government Securities.
(3) Underwrite securities of other issuers, except to the extent that the
Portfolio may be considered to be acting as an underwriter in connection
with the disposition of portfolio securities.
(4) Purchase or sell real estate or any interest therein, except that the
Portfolio may invest in debt obligations secured by real estate or
interests therein or issued by companies that invest in real estate or
interests therein.
(5) Purchase or sell physical commodities or contracts relating to physical
commodities, provided that currencies and currency-related contracts will
not be deemed to be physical commodities.
(6) Borrow money, except for temporary or emergency purposes (including the
meeting of redemption requests) and except for entering into reverse
repurchase agreements, provided that borrowings do not exceed 33 1/3% of
the value of the Portfolio's total assets.
(7) Issue senior securities except as appropriate to evidence indebtedness that
the Portfolio is permitted to incur, and provided that the Portfolio may
issue shares of additional series or classes that the Trustees may
establish.
(8) Make loans except for loans of portfolio securities, through the use of
repurchase agreements, and through the purchase of debt securities that are
otherwise permitted investments.
(9) With respect to Government Cash Portfolio, purchase or hold any security
that (i) a Federally chartered savings association may not invest in, sell,
redeem, hold or otherwise deal pursuant to law or regulation, without limit
as to percentage of the association's assets and (ii) pursuant to 12 C.F.R.
Section 566.1 would cause shares of the Portfolio not to be deemed to be
short term liquid assets when owned by Federally chartered savings
associations.
For purposes of limitation (2): (i) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (ii)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.
Treasury Cash Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal
Cash Portfolio have adopted the following nonfundamental investment limitations
that may be changed by the Core Trust Board without shareholder approval. Each
Portfolio may not:
(a) With respect to 100% of its assets, purchase a security other than a
U.S. Government Security if, as a result, more than 5% of the
Portfolio's total assets would be invested in the securities of a
single issuer, unless the investment is permitted by Rule 2a-7 under
the 1940 Act.
(b) Purchase securities for investment while any borrowing equaling 5% or
more of the Portfolio's total assets is outstanding; and if at any time
the Portfolio's borrowings exceed the Portfolio's investment
limitations due to a decline in net assets, such borrowings will be
promptly (within three days) reduced to the extent necessary to comply
with the limitations. Borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's
total assets.
(c) Purchase securities that have voting rights, except the Portfolio may
invest in securities of other investment companies to the extent
permitted by the 1940 Act.
(d) Purchase securities on margin, or make short sales of securities,
except for the use of short-term credit necessary for the clearance of
purchases and sales of portfolio securities.
(e) Invest in securities (other than fully-collateralized debt obligations)
issued by companies that have conducted continuous operations for less
than three years, including the operations of predecessors (unless
guaranteed as to principal and interest by an issuer in whose
securities the Portfolio could invest), if as a result, more than 5% of
the value of the Portfolio's total assets would be so invested.
(f) Invest in oil, gas or other mineral exploration or development
programs, or leases, or in real estate limited partnerships; provided
that the Portfolio may invest in securities issued by companies engaged
in such activities.
(g) Acquire securities or invest in repurchase agreements with respect to
any securities if, as a result, more than 10% of the Portfolio's net
assets (taken at current value) would be invested in repurchase
agreements not entitling the holder to payment of principal within
seven days and in securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily
available market.
4. INVESTMENTS BY FINANCIAL INSTITUTIONS
Investment by Shareholders that are Banks - Daily Assets Government Fund
Government Cash Portfolio invests only in instruments which, if held directly by
a bank or bank holding company organized under the laws of the United States or
any state thereof, would be assigned to a risk-weight category of no more than
20% under the current risk based capital guidelines adopted by the Federal bank
regulators (the "Guidelines"). In the event that the Guidelines are revised, the
Portfolio's portfolio will be modified accordingly, including by disposing of
portfolio securities or other instruments that no longer qualify under the
Guidelines. In addition, the Portfolio does not intend to hold in its portfolio
any securities or instruments that would be subject to restriction as to amount
held by a National bank under Title 12, Section 24 (Seventh) of the United
States Code. If the Portfolio's portfolio includes any instruments that would be
subject to a restriction as to amount held by a National bank, investment in the
Portfolio may be limited.
The Guidelines provide that shares of an investment fund are generally assigned
to the risk-weight category applicable to the highest risk-weighted security or
instrument that the fund is permitted to hold. Accordingly, Portfolio shares
should qualify for a 20% risk weighting under the Guidelines. The Guidelines
also provide that, in the case of an investment fund whose shares should qualify
for a risk weighting below 100% due to limitations on the assets which it is
permitted to hold, bank examiners may review the treatment of the shares to
ensure that they have been assigned an appropriate risk-weight. In this
connection, the Guidelines provide that, regardless of the composition of an
investment fund's assets, shares of a fund may be assigned to the 100%
risk-weight category if it is determined that the fund engages in activities
that appear to be speculative in nature or has any other characteristics that
are inconsistent with a lower risk weighting. The Adviser has no reason to
believe that such a determination would be made with respect to the Portfolio.
Their are various subjective criteria for making this determination and,
therefore, it is not possible to provide any assurance as to how Portfolio
shares will be evaluated by bank examiners.
Before acquiring Fund shares, prospective investors that are banks or bank
holding companies, particularly those that are organized under the laws of any
country other than the United States or of any state, territory or other
political subdivision of the United States, and prospective investors that are
U.S. branches and agencies of foreign banks or Edge Corporations, should consult
all applicable laws, regulations and policies, as well as appropriate regulatory
bodies, to confirm that an investment in Fund Shares is permissible and in
compliance with any applicable investment or other limits.
Fund Shares held by National banks are generally required to be revalued
periodically and reported at the lower of cost or market value. Such shares may
also be subject to special regulatory reporting, accounting and tax treatment.
In addition, a bank may be required to obtain specific approval from its board
of directors before acquiring Fund shares, and thereafter may be required to
review its investment in a Fund for the purpose of verifying compliance with
applicable Federal banking laws, regulations and policies.
National banks generally must review their holdings of shares of a Fund at least
quarterly to ensure compliance with established bank policies and legal
requirements. Upon request, the Portfolios will make available to the Funds
investors information relating to the size and composition of their portfolio
for the purpose of providing Fund shareholders with this information.
Investment by Shareholders that are Credit Unions - Daily Assets Government Fund
and Daily Assets Treasury Obligations Fund
Treasury Cash Portfolio and Government Cash Portfolio limit their investments to
investments that are legally permissible for Federally chartered credit unions
under applicable provisions of the Federal Credit Union Act (including 12 U.S.C.
Section 1757(7), (8) and (15)) and the applicable rules and regulations of the
National Credit Union Administration (including 12 C.F.R. Part 703, Investment
and Deposit Activities), as such statutes and rules and regulations may be
amended. The Portfolios limit their investments to U.S. Government Securities
(including Treasury STRIPS) and repurchase agreements fully collateralized by
U.S. Government Securities. Certain U.S. Government Securities owned by a
Portfolio may be mortgage or asset backed, but, except to reduce interest rate
risk, no such security will be (i) a stripped mortgage backed security ("SMBS"),
(ii) a collateralized mortgage obligation ("CMO") or real estate mortgage
investment conduit ("REMIC") that meets any of the tests outlined in 12 C.F.R.
Section 703.5(g) or (iii) a residual interest in a CMO or REMIC. In order to
reduce interest rate risk, the Portfolios may purchase a SMBS, CMO, REMIC or
residual interest in a CMO or REMIC but only in accordance with 12 C.F.R.
Section 703.5(i). Treasury Cash Portfolio and Government Cash Portfolio have no
current intention to make any such investment. The Portfolios also may invest in
reverse repurchase agreements in accordance with 12 C.F.R. 703.4(e) to the
extent otherwise permitted hereunder and in the Prospectus.
Investments by Shareholders that are Savings Associations - Daily Assets
Treasury Obligations Fund and Daily Assets Government Portfolio
Treasury Cash Portfolio and Government Cash Portfolio limit their investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage under applicable provisions of the
Home Owners' Loan Act (including 12 U.S.C. Section 1464) and the applicable
rules and regulations of the Office of Thrift Supervision, as such statutes and
rules and regulations may be amended. In addition, the Portfolios limit their
investments to investments that are permissible for an open-end investment
company to hold and would permit shares of the investment company to qualify as
liquid assets under 12 C.F.R. Section 566.1(g) and as short-term liquid assets
under 12 C.F.R. Section 566.1(h). These policies may be amended only by approval
of a Portfolio's or Fund's shareholders, as applicable.
5. PERFORMANCE DATA
For a listing of certain performance data as of August 31, 1997, see Appendix B.
Yield Information
Each Fund may provide current annualized and effective annualized yield
quotations for each class based on its daily dividends. These quotations may
from time to time be used in advertisements, shareholder reports or other
communications to shareholders. All performance information supplied by a Fund
is historical and is not intended to indicate future returns.
In performance advertising the Funds may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC/Donoghue, Inc. or CDA/Wiesenberger or
other companies which track the investment performance of investment companies
("Fund Tracking Companies"). The Funds may also compare any of their performance
information with the performance of recognized stock, bond and other indices.
The Funds may also refer in such materials to mutual fund performance rankings
and other data published by Fund Tracking Companies. Performance advertising may
also refer to discussions of a Fund and comparative mutual fund data and ratings
reported in independent periodicals, such as newspapers and financial magazines.
Any current yield quotation of a class of a Fund which is used in such a manner
as to be subject to the provisions of Rule 482(d) under the Securities Act of
1933, as amended, shall consist of an annualized historical yield, carried at
least to the nearest hundredth of one percent, based on a specific
seven-calendar-day period and shall be calculated by dividing the net change
during the seven-day period in the value of an account having a balance of one
share at the beginning of the period by the value of the account at the
beginning of the period, and multiplying the quotient by 365/7. For this
purpose, the net change in account value would reflect the value of additional
shares purchased with dividends declared on the original share and dividends
declared on both the original share and any such additional shares, but would
not reflect any realized gains or losses from the sale of securities or any
unrealized appreciation or depreciation on portfolio securities. In addition,
any effective annualized yield quotation used by a Fund shall be calculated by
compounding the current yield quotation for such period by adding 1 to the
product, raising the sum to a power equal to 365/7, and subtracting 1 from the
result.
Although published yield information is useful to investors in reviewing a
class' performance, investors should be aware that each Fund's yield fluctuates
from day to day and that the class' yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Fund's shares. Also, Participating Organizations (as that term is used in
the Prospectus) may charge their customers direct fees in connection with an
investment in a Fund, which will have the effect of reducing the class' net
yield to those shareholders. The yields of a class are not fixed or guaranteed,
and an investment in the Fund is not insured or guaranteed. Accordingly, yield
information may not necessarily be used to compare shares of the Fund with
investment alternatives which, like money market instruments or bank accounts,
may provide a fixed rate of interest. Also, it may not be appropriate directly
to compare a Fund's yield information to similar information of investment
alternatives which are insured or guaranteed.
Income calculated for the purpose of determining a class' yield differs from
income as determined for other accounting purposes. Because of the different
accounting methods used, and because of the compounding assumed in yield
calculations, the yield quoted for a class may differ from the rate of
distribution the class paid over the same period or the rate of income reported
in the Fund's financial statements.
Other Performance and Sales Literature Matters
Total returns quoted in sales literature reflect all aspects of a Fund's return,
including the effect of reinvesting dividends and capital gain distributions.
Average annual returns generally are calculated by determining the growth or
decline in value of a hypothetical historical investment in a Fund over a stated
period, and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant over the period. While average annual returns are a convenient means of
comparing investment alternatives, investors should realize that the performance
is not constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Funds.
Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment over such periods
according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000 T = average
annual total return n = number of years
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 payment made at the
beginning of the applicable period.
Other Advertising Matters
The Funds may advertise other forms of performance. For example, average annual
and cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of investments,
and/or a series of redemptions over any time period. Total returns may be broken
down into their components of income and capital (including capital gains and
changes in share price) in order to illustrate the relationship of the se
factors and their contributions to total return. Any performance information may
be presented numerically or in a table, graph or similar illustration.
A Fund may also include various information in its advertisements. Information
included in the Fund's advertisements may include, but is not limited to: (i)
the Fund's (or the Fund's corresponding Portfolios) portfolio holdings and
portfolio allocation as of certain dates, such as portfolio diversification by
instrument type, by instrument or by maturity, (ii) descriptions of the
portfolio managers of the Fund or the Fund's corresponding Portfolio and the
portfolio management staff of Linden or Forum Advisors or summaries of the views
of the portfolio managers with respect to the financial markets, (iii) the
results of a hypothetical investment in a Fund over a given number of years,
including the amount that the investment would be at the end of the period, (iv)
the effects of earning Federally and, if applicable, state tax-exempt income
from the Fund or investing in a tax-deferred account, such as an individual
retirement account and (v) the net asset value, net assets or number of
shareholders of a Fund as of one or more dates.
In connection with its advertisements a Fund may provide "shareholders' letters"
which serve to provide shareholders or investors an introduction into the
Fund's, the Portfolio's, the Trust's, the Core Trust's or any of the Trust's or
the Core Trust's service providers' policies or business practices.
6. MANAGEMENT
Trustees and Officers of 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.
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 Accounting Services, LLC., 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)
General 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 LLP. 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. Prior
thereto she was a student at Montana State University. 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. Her address is Two Portland
Square, Portland, Maine 04101.
Trustees and Officers of Core Trust
The Trustees and officers of Core Trust and their principal occupations during
the past five years are set forth below. Each of the Trustees of the Trust is
also a Trustee of Core Trust and several officers of the Trust serve as officers
of Core Trust . Each Trustee who is an "interested person" (as defined by the
1940 Act) of Core Trust is indicated by an asterisk. Accordingly, for background
information pertaining to the Trustees and these officers, see "Trustees and
Officers of the Trust" above.
John Y. Keffer,* Chairman and President.
Costas Azariadis, Trustee.
James C. Cheng, Trustee.
J. Michael Parish, Trustee.
Robert Campbell, Treasurer
David I. Goldstein, Secretary
Renee A. Walker, Assistant Secretary (age 26).
Fund Administrator, Forum Financial Services, Inc., with which she has
been associated since 1994. Prior thereto, Ms. Walker was an
administrator at Longwood Partners (the manager of a hedge fund
partnership) for a year. After graduating from college, from 1991 to
1993 Ms. Walker was a sales representative assistant at PaineWebber
Incorporated (a broker-dealer). Her address is Two Portland Square,
Portland, Maine 04101.
Sara M. Clark, Vice President, Assistant Secretary and Assistant Treasurer
(age 33).
Managing Director, Forum Financial Services, Inc., with which she has
been associated since 1994. Prior thereto, from 1991 to 1994 Ms. Clark
was Controller of Wright Express Corporation (a national credit card
company) and for six years prior thereto was employed at Deloitte &
Touche LLP as an accountant. Ms. Clark is also an officer of various
registered investment companies for which Forum Financial Services,
Inc. serves as manager, administrator and/or distributor. Her address
is Two Portland Square, Portland, Maine 04101.
Thomas G. Sheehan, Vice President and Assistant Secretary (age 42)
Counsel, Forum Financial Services, Inc. since October, 1993. Prior
thereto, Mr. Sheehan was a Special Counsel in the Division of
Investment Management of the U.S. Securities and Exchange Commission
in Washington, D.C. His address is Two Portland Square, Portland,
Maine 04101.
Trustee Compensation
Each Trustee of the Trust (other than John Y. Keffer, who is an interested
person of the Trust) is paid $1,000 for each Board meeting attended (whether in
person or by electronic communication) and $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 the $1,000 for each Board meeting attended, each Trustee is paid
$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 period April 1, 1997 through August
31, 1997.
<TABLE>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
<S> <C> <C> <C> <C>
Mr. Keffer None None None None
Mr. Azariadis $ None None $
Mr. Cheng $ None None $
Mr. Parish $ None None $
</TABLE>
Each of the Trustees of the Trust is also a Trustee of Core Trust. Each Trustee
of Core Trust (other than John Y. Keffer, who is an interested person of Core
Trust) is paid $1,000 for each Core Trust Board meeting attended (whether in
person or by electronic communication) plus $100 per active portfolio of Core
Trust and is paid $1,000 for each committee meeting attended on a date when a
Core Trust Board meeting is not held. To the extent a meeting relates to only
certain portfolios of Core Trust, trustees are paid the $100 fee only with
respect to those 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 of the Portfolios ended August 31, 1997, each Core Trust trustee
received fees totalling $2,238.
Investment Advisers
Forum Advisors, Inc., Treasury Portfolio's and Municipal Cash Portfolio's
investment adviser and Linden Asset Management, Inc., Treasury Cash Portfolio's,
Government Cash Portfolio's and Cash Portfolio's investment adviser, each
furnishes to the Portfolio(s) which it advises at its own expense all services,
facilities and personnel necessary in connection with managing the Portfolio's
investments and effecting portfolio transactions for the Portfolio, pursuant to
an investment advisory agreement between the Adviser and Core Trust (an
"Advisory Agreement"). Each Advisory Agreement provides, with respect to the
Portfolio, for an initial term of one year from its effective date and for its
continuance in effect for successive twelve-month periods thereafter, provided
the Advisory Agreement is specifically approved at least annually by the Core
Trust Board or by vote of the shareholders of the Portfolio, and in either case
by a majority of the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party.
Table 1 in Appendix C shows the dollar amount of fees paid under the Investment
Advisory Agreement between Core Trust and the applicable Adviser with respect to
each Portfolio or, prior to Daily Assets Treasury Fund investing in Treasury
Portfolio, the dollar amount of fees paid under the Investment Advisory
Agreement between the Trust and Forum Advisors with respect to the Fund. This
information is provided for the past three years (or shorter time a Portfolio
has been operational).
Each Advisory Agreement is terminable without penalty by Core Trust with respect
to the Portfolio on 60 days' written notice when authorized either by vote of
the Portfolio's shareholders or by a vote of a majority of the Core Trust Board,
or by the Adviser on not more than 60 days' nor less than 30 days' written
notice, and will automatically terminate in the event of its assignment. The
Advisory Agreement also provides that, with respect to the Portfolio, the
Adviser shall not be liable for any error of judgment or mistake of law or for
any act or omission in the performance of its duties to the Portfolio, except
for willful misfeasance, bad faith or gross negligence in the performance of the
Adviser's duties or by reason of reckless disregard of its obligations and
duties under the Advisory Agreement. The Advisory Agreement provides that the
Adviser may render services to others.
In addition to receiving an advisory fee from a Portfolio it advises, an Adviser
may also act and be compensated as investment manager for its clients with
respect to assets which are invested in the Portfolio. In some instances the
Adviser may elect to credit against any investment management fee received from
a client who is also a shareholder in the Portfolio an amount equal to all or a
portion of the fees received by the Adviser or any affiliate of the Adviser from
the Portfolio with respect to the client's assets invested in the Portfolio.
Each Adviser has agreed, with respect to each portfolio(s) it manages, to
reimburse Core Trust for certain of the Portfolio's operating expenses
(exclusive of interest, taxes, brokerage, fees and organization expenses, all to
the extent permitted by applicable state law or regulation) which in any year
exceed the limits prescribed by any state in which the Portfolio's shares are
qualified for sale.
Subject to the above obligations to reimburse Core Trust for its excess
expenses, Core Trust and the Trust have confirmed their respective obligations
to pay all their other expenses, including: interest charges, taxes, brokerage
fees and commissions; certain insurance premiums; fees, interest charges and
expenses of the custodian, transfer agent and dividend disbursing agent;
telecommunications expenses; auditing, legal and compliance expenses; costs of
forming the corporation and maintaining corporate existence; costs of preparing
and printing the Trust's prospectuses, statements of additional information,
account application forms and shareholder reports and delivering them to
existing and prospective shareholders; costs of maintaining books of original
entry for portfolio and fund accounting and other required books and accounts
and of calculating the net asset value of shares of Core Trust and the Trust;
costs of reproduction, stationery and supplies; compensation of Trustees,
officers and employees of Core and costs of other personnel performing services
for Core Trust and the Trust who are not officers of an Adviser, the manager and
distributor or their respective affiliates; costs of corporate meetings; SEC
registration fees and related expenses; state securities laws registration fees
and related expenses; and fees payable to the Adviser under the Investment
Advisory Agreement.
Investment Subadvisers. Linden serves as an investment subadviser to Treasury
Portfolio under an Investment Subadvisory Agreement with Forum Advisors and Core
Trust. Forum Advisors serves as an investment advisor to Government Cash
Portfolio, Cash Portfolio under an Investment Subadvisory Agreement with Linden
and Core Trust. Pursuant to each Investment Subadvisory Agreement, from time to
time the Subadviser provides the Adviser with assistance regarding certain of
the Adviser's responsibilities to the Portfolio, including management of all or
part of the Portfolio's investment portfolios. Each Investment Subadvisory
Agreement will remain in effect for a period of 24 months and will continue in
effect thereafter only if its continuance is specifically approved at least
annually by the Core Trust Board or by vote of the Portfolio's shareholders, and
in either case, by a majority of the Trustees of Core Trust who are not parties
to the Investment Subadvisory Agreement or interested persons of any such party
at a meeting called for the purpose of voting on the Investment Subadvisory
Agreement. To the extent and for the period of time the Adviser has delegated
its responsibilities to the Subadviser, the Adviser pays the advisory fee for
such period to the Subadviser.
Each Investment Subadvisory Agreement is terminable with respect to the
Portfolio without penalty by Core Trust on 60 days' written notice when
authorized either by vote of the Portfolio's shareholders or by vote of a
majority of the Core Trust Board, or by the Subadviser on 60 days' written
notice, and will automatically terminate in the event of its assignment. The
Investment Subadvisory Agreement also provides that, with respect to the
Portfolio, the Subadviser shall not be liable for any error of judgment or
mistake of law or for any act or omission in the performance of its duties to
the Portfolio, except for willful misfeasance, bad faith or gross negligence in
the performance of the Subadvisers' duties or by reason of reckless disregard of
the Subadvisers' obligations and duties under the Investment Subadvisory
Agreement.
Investment Advisory Services to the Funds. The Trust has retained Forum Advisors
as investment adviser to the Funds under arrangements and an agreement
substantially similar to the arrangements and agreement described above with
respect to the Portfolios and Forum Advisors. Forum's fee from each Fund is
0.05% of the Fund's average annual daily net assets; however, no fee is payable
for investment advisory services under these agreements as long as a Fund is
invested in its corresponding Portfolio or a similar investment.
Administration
Table 2 in Appendix C shows the dollar amount of fees paid for administrative
services by the Funds and the Portfolios. This information is provided for the
past three years (or shorter time a Portfolio has been operational).
The Trust. Pursuant to an administration agreement (the "Trust Administration
Agreement"), FAS supervises the overall management of the Trust (which includes,
among other responsibilities, negotiation of contracts and fees with, and
monitoring of performance and billing of, the transfer agent and custodian and
arranging for maintenance of books and records of the Trust) and provides the
Trust with general office facilities. The Trust Administration Agreement may be
terminated by either party without penalty on 60 days' written notice and may
not be assigned except upon written consent by both parties. The Trust
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 Trust Administration
Agreement. Prior to June 19, 1997, FFSI provided administration services to the
Trust.
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 Trustees, officers or employees of (and persons providing services
to the Trust may include) FAS, FFSI, their affiliates or affiliates of Forum
Advisors.
Core Trust. Pursuant to a management agreement with Core Trust (the "Core Trust
Management Agreement"), FAS supervises the overall management of Core Trust
(which includes, among other responsibilities, negotiation of contracts and fees
with, and monitoring of performance and billing of, the custodian and arranging
for maintenance of books and records of Core Trust) and provides Core Trust with
general office facilities. The Core Trust Management Agreement provides, with
respect to the Portfolios, for an initial term of one year from its effective
date and for its continuance in effect for successive twelve-month periods
thereafter, provided the agreement is specifically approved at least annually by
the Core Trust Board or by the shareholders of the Portfolios, and in either
case by a majority of the Trustees who are not parties to the Core Trust
Management Agreement or interested persons of any such party. Prior to November
15, 1997, FFSI provided administration services to Core Trust.
The Core Trust Management Agreement terminates automatically if it is assigned
and may be terminated without penalty with respect to the Portfolio by vote of a
Portfolio's shareholders or by either party on 60 days' written notice. The Core
Trust Management Agreement also provides that FFSI shall not be liable for any
error of judgment or mistake of law or for any act or omission in the
administration or management of Core Trust, except for willful misfeasance, bad
faith or gross negligence in the performance of Forum's duties or by reason of
reckless disregard of its obligations and duties under the Core Trust Management
Agreement.
Athe request of the Core Trust Board, FAS provides persons satisfactory to the
Core Trust Board to serve as officers of Core Trust.
Distribution
FFSI was incorporated under the laws of the State of Delaware on February 7,
1986 and serves as distributor of shares of the Portfolio pursuant to a
Distribution Agreement between FFSI and the Trust (the "Trust Distribution
Agreement"). The Trust Distribution Agreement provides, with respect to each
Fund, for an initial term of one year from its effective date and for its
continuance in effect for successive twelve-month periods thereafter, provided
the Trust Distribution Agreement is specifically approved at least annually by
the Board or by the shareholders of the Fund, and in either case by a majority
of the Trustees who are not parties to the Trust Distribution Agreement or
interested persons of any such party.
The Trust Distribution Agreement terminates automatically if it is assigned and
may be terminated without penalty with respect to each Fund by vote of the
Fund's shareholders or by either party on 60 days' written notice. The Trust
Distribution Agreement also provides that FFSI shall not be liable for any error
of judgment or mistake of law or for any act or omission in the performance of
services to the Trust, except for willful misfeasance, bad faith or gross
negligence in the performance of FFSI's duties or by reason of reckless
disregard of its obligations and duties under the Trust Distribution Agreement.
With respect to any class that has adopted a distribution plan, the Trust
Distribution Agreement is also terminable upon similar notice by a majority of
the Trustees who (i) are not interested persons of the Trust and (ii) have no
direct or indirect financial interest in the operation of that distribution plan
or in the Trust Distribution Agreement ("Qualified Trustees").
FFSI acts as sole placement agent for interests in the Portfolios and receives
no compensation for those services from the portfolios.
Investor Class Distribution Plan. In accordance with Rule 12b-1 under the 1940
Act, with respect to the Investor Class of each Fund, the Trust adopted a
distribution plan (the "Investor Class Plan") which provides for the payment to
Forum of a Rule 12b-1 fee at the annual rate of 0.15% of the average daily net
assets of the Investor class of each Fund as compensation for Forum's services
as distributor.
The Investor Class Plan provides that all written agreements relating to that
plan must be approved by the Board, including a majority of the Qualified
Trustees. In addition, the Investor Class Plan (as well as the Distribution
Agreement) requires the Trust and Forum to prepare and submit to the Board, at
least quarterly, and the Board will review, written reports setting forth all
amounts expended under the Investor Class Plan and identifying the activities
for which those expenditures were made.
The Investor Class Plan provides that it will remain in effect for one year from
the date of its adoption and thereafter shall continue in effect provided it is
approved at least annually by the shareholders or by the Board, including a
majority of the Qualified Trustees. The Investor Class Plan further provides
that it may not be amended to increase materially the costs which may be borne
by the Trust for distribution pursuant to the Investor Class Plan without
shareholder approval and that other material amendments of the Investor Class
Plan must be approved by the Qualified Trustees. The Investor Class Plan may be
terminated at any time by the Board, by a majority of the Qualified Trustees, or
by a Fund's Investor class shareholders.
Table 3 in Appendix C shows the dollar amount of fees payable under the Investor
Class Plan with respect to each Fund. This information is provided for the past
three years (or shorter time a Fund has been operational).
Transfer Agent
Forum Financial Corp. ("FFC") acts as transfer agent of the Trust pursuant to a
transfer agency agreement with the Trust (the "Transfer Agency Agreement"). The
Transfer Agency Agreement provides, with respect to the Funds, for an initial
term of one year from its effective date and for its continuance in effect for
successive twelve-month periods thereafter, provided that the Transfer Agency
Agreement is specifically approved at least annually by the Board or by a vote
of the shareholders of each Fund, and in either case by a majority of the
Trustees who are not parties to the Transfer Agency Agreement or interested
persons of any such party at a meeting called for the purpose of voting on the
Transfer Agency Agreement.
Among the responsibilities of FFC as transfer agent for the Trust are: (1)
answering customer inquiries regarding account status and history, the manner in
which purchases and redemptions of shares of each Fund may be effected and
certain other matters pertaining to each Fund; (2) assisting shareholders in
initiating and changing account designations and addresses; (3) providing
necessary personnel and facilities to establish and maintain shareholder
accounts and records, assisting in processing purchase and redemption
transactions and receiving wired funds; (4) transmitting and receiving funds in
connection with customer orders to purchase or redeem shares; (5) verifying
shareholder signatures in connection with changes in the registration of
shareholder accounts; (6) furnishing periodic statements and confirmations of
purchases and redemptions; (7) arranging for the transmission of proxy
statements, annual reports, prospectuses and other communications from the Trust
to its shareholders; (8) arranging for the receipt, tabulation and transmission
to the Trust of proxies executed by shareholders with respect to meetings of
shareholders of the Trust; and (9) providing such other related services as the
Trust or a shareholder may reasonably request.
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 a Fund with respect to assets
invested in that 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 the Transfer Agent
with respect to assets of those customers or clients invested in the Portfolio.
FFC, FAS or sub-transfer agents or processing agents retained by the 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 an annual fee
from each Fund of (i) 0.02% of each Fund's average daily net assets attributable
to institutional Shares and 0.25% of each Fund's average daily net assets
attributable to Institutional Service Shares and Investor Shares (computed and
paid monthly in arrears by the Fund), (ii) $12,000 per year (computed and paid
monthly in arrears by the Fund) and (iii) Annual Shareholder Account Fees of
$125 per shareholder account in Institutional Shares and $18.00 per shareholder
account in Institutional Service Shares and Investor Shares (computed as of the
last business day of the prior month).
Table 4 in Appendix C shows the dollar amount of fees paid for transfer agency
services by the Funds. This information is provided for the past three years (or
shorter time a Fund has been operational).
Shareholder Service Plan and Agreements
The Trust has adopted a shareholder service plan ("Shareholder Service Plan")
with respect to the Institutional Service class and the Investor class of each
Fund which provides that Forum may obtain the services of financial institutions
to act as shareholder servicing agents for their customers invested in those
classes. The Shareholder Service Plan was effective on November 15, 1997 for the
Institutional Service class of those Funds then operating.
The Shareholder Service Plan provides that all written agreements relating to
that plan must be approved by the Board, including a majority of the Qualified
Trustees. In addition, the Shareholder Service Plan (as well as the various
shareholder service agreements) requires the Trust and Forum to prepare and
submit to the Board, at least quarterly, and the Board will review written
reports setting forth all amounts expended under the plan and identifying the
activities for which those expenditures were made.
The Shareholder Service Plan provides that it will remain in effect for one year
from the date of its adoption and thereafter shall continue in effect provided
it is approved at least annually by the shareholders or by the Board. The
Shareholder Service Plan further provides material amendments of the plan must
be approved by the Qualified Trustees. The Shareholder Service Plan may be
terminated at any time by the Board or by a majority of the Qualified Trustees.
The Trust may enter into shareholder servicing agreements with various
Shareholder Servicing Agents pursuant to which those agents, as agent for their
customers, may agree among other things to: (i) answer shareholder inquiries
regarding the manner in which purchases, exchanges and redemptions of shares of
the Trust may be effected and other matters pertaining to the Trust's services;
(ii) provide necessary personnel and facilities to establish and maintain
shareholder accounts and records; (iii) assist shareholders in arranging for
processing purchase, exchange and redemption transactions; (iv) arrange for the
wiring of funds; (v) guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
(vi) integrate periodic statements with other shareholder transactions; and
(vii) provide such other related services as the shareholder may request.
As Participating Organizations, some Shareholder Servicing Agents also may
impose certain conditions on their customers, subject to the terms of the
Trust's Prospectus, in addition to or different from those imposed by the Trust,
such as requiring a minimum initial investment or by charging their customers a
direct fee for their services. Some Shareholder Servicing Agents 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
Funds with respect to assets invested in the Funds. These Shareholder Servicing
Agents 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 with respect to
assets of those customers or clients invested in the Funds.
Table 4 in Appendix C shows the dollar amount of fees payable under the
Shareholder Service Plan with respect to Institutional Service Shares and
Investor Shares of each Fund.
Fund Accounting
Pursuant to a Fund Accounting Agreement, Forum Accounting Services, LLC.
provides the Funds with accounting services, including the calculation of the
Fund's net asset value. For these services, Forum Accounting Services, LLC.
receives an annual fee ranging from $12,000 to $36,000 depending upon the number
of securities in which the Fund invests and the number of classes in the Fund.
Pursuant to a Fund Accounting Agreement with Core Trust, Forum Accounting
Services, LLC. also provides portfolio accounting services to each Portfolio,
including the calculation of each Portfolio's net asset value. For these
services, Forum Accounting Services, LLC. receives an annual fee of $48,000 per
year plus surcharges depending upon the amount and type of the Fund's portfolio
transactions and positions. The Fee for Treasury Cash Portfolio, Government Cash
Portfolo and Cash Portfolio is the lesser of 0.05% of the average daily net
assets of the Portfolios or $48,000 plus, for each investor in a Portfolio above
one (excluding FFSI and its affiliates), $6,000 per year.
Forum Accounting Services, LLC is required to use its best judgment and efforts
in rendering fund accounting services and is not be liable to Core Trust for any
action or inaction in the absence of bad faith, willful misconduct or gross
negligence. Forum Accounting Services, LLC is not responsible or liable for any
failure or delay in performance of its fund accounting obligations arising out
of or caused, directly or indirectly, by circumstances beyond its reasonable
control and Core Trust has agreed to indemnify and hold harmless Forum
Accounting Services, LLC , its employees, agents, officers and directors against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, counsel fees and other expenses of every nature
and character arising out of or in any way related to Forum Accounting Services,
LLC 's actions taken or failures to act with respect to a Portfolio or based, if
applicable, upon information, instructions or requests with respect to a
Portfolio given or made to Forum Accounting Services, LLC by an officer of the
Trust duly authorized. This indemnification does not apply to Forum Accounting
Services, LLC's actions taken or failures to act in cases of Forum Accounting
Services, LLC 's own bad faith, willful misconduct or gross negligence.
Table 6 in Appendix C shows the dollar amount of fees paid for accounting
services by the Funds and the Portfolios. This information is provided for the
past three years (or shorter time a Fund or Portfolio has been operational).
7. DETERMINATION OF NET ASSET VALUE
The Fund does not determine net asset value on the following holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas. Purchases and redemptions are effected at the time of the next
determination of net asset value following the receipt of any purchase or
redemption order.
Pursuant to the rules of the SEC, both the Board and the Core Trust Board have
established procedures to stabilize each Fund's and each Portfolio's, as
applicable, net asset value at $1.00 per share. These procedures include a
review of the extent of any deviation of net asset value per share as a result
of fluctuating interest rates, based on available market rates, from each Fund's
and Portfolio's, as applicable, $1.00 amortized cost price per share. Should
that deviation exceed 1/2 of 1%, the Board and the Core Trust Board,
respectively, will consider whether any action should be initiated to eliminate
or reduce material dilution or other unfair results to shareholders. Such action
may include redemption of shares in kind, selling portfolio securities prior to
maturity, reducing or withholding dividends and utilizing a net asset value per
share as determined by using available market quotations.
In determining the approximate market value of portfolio investments, the
Portfolios may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried at their face value.
Each investor in a Portfolio, including the Funds, may add to or reduce its
investment in that Portfolio on each business day of the Portfolios (which
corresponds to Fund Business Days). The Portfolios maintain the same Business
Days as do the Funds. As of the close of regular trading on any Fund Business
Day, the value of a Fund's beneficial interest in a Portfolio is determined by
multiplying the net asset value of the Portfolio by the percentage, effective
for that day, which represents the Fund's share of the aggregate beneficial
interests in the Portfolio. Any additions or reductions, which are to be
effected as of the close of the Fund Business Day, are then effected. The Fund's
percentage of the aggregate beneficial interests in the Portfolio are then
recomputed as the percentage equal to the fraction (i) the numerator of which is
the value of the Fund's investment in the Portfolio as of the close of the Fund
Business Day plus or minus, as the case may be, the amount of net additions to
or reductions from the Fund's investment in the Portfolio effected as of that
time, and (ii) the denominator of which is the aggregate net asset value of the
Portfolio as of the close of the Fund Business Day plus or minus, as the case
may be, the amount of net additions to or reductions from the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
determined is then applied to determine the value of the Fund's interest in the
Portfolio as of the close of the next Fund Business Day.
8. PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities for the Portfolio usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. Although Core
Trust does not anticipate that the Portfolio will pay any amounts of commission,
in the event the Portfolio pays brokerage commissions or other
transaction-related compensation, the payments may be made to broker-dealers who
pay expenses of the Portfolio that it would otherwise be obligated to pay
itself. Any transaction for which the Portfolio pays transaction-related
compensation will be effected at the best price and execution available, taking
into account the amount of any payments made on behalf of the Portfolio by the
broker-dealer effecting the transaction. Purchases from underwriters of
portfolio securities include a commission or concession paid by the issuer to
the underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked prices.
Since each Fund's and Portfolio's inception, no brokerage fees were paid by any
Fund (during those periods of the Funds invested directly in securities), nor
any Portfolio.
Allocations of transactions to dealers and the frequency of transactions are
determined for each Portfolio by the Advisers in their best judgment and in a
manner deemed to be in the best interest of shareholders of that Portfolio
rather than by any formula. The primary consideration is prompt execution of
orders in an effective manner and at the most favorable price available to the
Portfolio.
Investment decisions for the Portfolios will be made independently from those
for any other account or investment company that is or may in the future become
managed by an Adviser or their respective affiliates. If, however, a Portfolio
and other investment companies or accounts managed by an Adviser are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by a Portfolio or the size of the position obtainable for the
Portfolio. In addition, when purchases or sales of the same security for a
Portfolio and for other investment companies managed by an Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
No portfolio transactions are executed with Forum Advisors, Linden or any of
their affiliates.
9. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Funds are sold on a continuous basis by the distributor without
any sales charge.
In addition to the situations described in the Prospectus under "Purchases and
Redemptions of Shares," the Trust may redeem shares involuntarily to reimburse a
Fund for any loss sustained by reason of the failure of a shareholder to make
full payment for shares purchased by the shareholder or to collect any charge
relating to transactions effected for the benefit of a shareholder which is
applicable to a Fund's shares as provided in the Prospectus from time to time.
The Trust has filed a formal election with the SEC pursuant to which the Funds
will only effect a redemption in portfolio securities in kind if a shareholder
is redeeming more than $250,000 or 1% of the Fund's total net assets, whichever
is less, during any 90-day period.
The Funds may wire proceeds of redemptions to shareholders that have elected
wire redemption privileges only if the wired amount is greater than $5,000. In
addition, the Funds will only wire redemption proceeds to financial institutions
located in the United States.
By use of the telephone redemption or exchange privilege, the shareholder
authorizes the Transfer Agent to act upon the instruction of any person
representing himself to either be, or to have the authority to act on behalf of,
the investor and believed by the Transfer Agent to be genuine. The records of
the Transfer Agent of such instructions are binding.
The Transfer Agent will deem a shareholder's account "lost" if correspondence to
the shareholder's address of record is returned for six months, 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.
Exchange Privilege
The exchange privilege permits shareholders of the Funds to exchange their
shares for shares of any Participating Fund, which includes (i) the other Funds
and (ii) any other mutual fund for which Forum or its affiliates act as
investment adviser, manager or distributor and which participates in the Trust's
exchange privilege program.
Exchange transactions are made on the basis of relative net asset values per
share at the time of the exchange transaction plus any applicable sales charge
of the Participating Fund whose shares are acquired. Exchanges are accomplished
by (i) a redemption of the shares of the Fund exchanged at the next
determination of that Fund's net asset value after the exchange order in proper
form (including any necessary supporting documents required by the Fund whose
shares are being exchanged) is accepted by the Transfer Agent and (ii) a
purchase of the shares of the fund acquired at the next determination of that
fund's net asset value after (or occurring simultaneously with) the time of
redemption.
Shares of any Participating Fund may be exchanged without a sales charge for
shares of any Participating Fund that are offered without a sales charge. If the
Participating Fund whose shares are purchased in the exchange transaction
imposes a higher sales charge the shareholder will be required to pay the sales
charge on the purchased shares. Shareholders are entitled to any reduced sales
charges of the Participating Fund into which they are exchanging to the extent
those reduced sales charges would be applicable to that shareholder's purchase
of shares.
The Funds do not charge for the exchange privilege and there is currently no
limit on the number of exchanges a shareholder may make, but each Fund reserves
the right to limit excessive exchanges by any shareholder. A pattern of frequent
exchanges may be deemed by the Transfer Agent to be contrary to the best
interests of the Fund's other shareholders and, at the discretion of the
Transfer Agent, may be limited by that Fund's refusal to accept additional
exchanges from the investor.
The terms of the exchange privilege are subject to change, and the privilege may
be terminated by any Participating Fund or the Trust. However the privilege will
not be terminated, and no material change that restricts the availability of the
privilege to shareholders will be implemented, without 60 days' advance notice
to shareholders. No notice need be given of an amendment whose only material
effect is to reduce amount of sales charge required to be paid on the exchange
and no notice need be given if redemptions of shares of a Fund are suspended or
a Fund temporarily delays or ceases the sale of its shares.
Individual Retirement Custodial Account
The Funds (other than Daily Assets Tax-Exempt Fund) offer an individual
retirement plan (the "IRA") for individuals who wish to use shares of a Fund as
a medium for funding individual retirement savings. Under the IRA, distributions
of net investment income and capital gain will be automatically reinvested in
the IRA established for the investor. The Funds' custodian furnishes custodial
services to the IRAs for a service fee. Shareholders wishing to invest in a Fund
through an IRA should contact the Transfer Agent for further information.
10. TAXATION
Qualification as a regulated investment company under the Internal Revenue Code
of 1986 does not involve governmental supervision of management or investment
practices or policies. Investors should consult their own counsel for a complete
understanding of the requirements the Funds must meet to qualify for such
treatment. The information set forth in the Prospectus and the following
discussion relate solely to Federal income taxes on dividends and distributions
by each Fund and assume that the Funds qualify as regulated investment
companies. Investors should consult their own counsel for further details and
for the application of state and local tax laws to the investor's particular
situation.
The Funds expect to derive substantially all of their gross income (exclusive of
capital gain) from sources other than dividends. Accordingly, it is expected
that none of the Funds' dividends or distributions will qualify for the
dividends-received deduction for corporations.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term capital loss to the extent of any long-term
capital gain distribution received on those shares.
Any capital gain distribution received by a shareholder reduces the net asset
value of his shares by the amount of the distribution. To the extent that
capital gain was accrued by a Fund before the shareholder purchased his shares,
the distribution would be in effect a return of capital to that shareholder. All
capital gain distributions, including those that operate as a return of capital,
are taxable to the shareholder receiving them as described above regardless of
the length of time he may have held his shares prior to the distribution.
11. OTHER INFORMATION
Custodian
Pursuant to a Custodian Agreement with Core Trust, The First National Bank of
Boston, 100 Federal Street, Boston, Massachusetts 02106, acts as the custodian
of Treasury Portfoio's and Municipal Cash Portfolio's assets. Pursuant to a
Custodian Agreement with Core Trust, Imperial Trust Company, 201 North Figueroa
Street, Suite 610, Los Angeles, California 90012, acts as the custodian of each
other Portfolio's assets. The custodians' responsibilities include safeguarding
and controlling the Portfolios cash and securities and determining income
payable on and collecting interest on Portfolio investments.
Counsel
Legal matters in connection with the issuance of beneficial interest of the
Trust are passed upon by Seward & Kissel, 1200 G Street, N.W., Washington, D.C.
20005.
Auditors
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110, independent
auditors, acts as auditors for the Funds and as auditors for the Portfolios.
The Trust and its Shares
The Trust is a business trust organized under Delaware law. Delaware law
provides that shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
securities regulators of some states, however, have indicated that they and the
courts in their state may decline to apply Delaware law on this point.
The Trust Instrument contains an express disclaimer of shareholder liability for
the debts, liabilities, obligations, and expenses of the Trust and requires that
a disclaimer be given in each contract entered into or executed by the Trust or
the Trustees. The Trust Instrument provides for indemnification out of each
series' property of any shareholder or former shareholder held personally liable
for the obligations of the series. The Trust Instrument also provides that each
series shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the series and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which Delaware law does not
apply, no contractual limitation of liability was in effect and the portfolio is
unable to meet its obligations. (FAS) believes that, in view of the above, there
is no risk of personal liability to shareholders.
The Trust Instrument further provides that the Trustees shall not be liable to
any person other than the Trust or its shareholders; moreover, the Trustees
shall not be liable for any conduct whatsoever, provided that a Trustee is not
protected against any liability to which he would otherwise by subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The Board is required to call a meeting of shareholders for the purpose of
voting upon the removal of any trustee when so requested in writing by the
shareholders of record holding at least 10% of the Trust's outstanding shares.
Each series' capital consists of shares of beneficial interest. Shares are fully
paid and nonassessable, except as set forth above with respect to Trustee and
shareholder liability. Shareholders representing 10% or more of the Trust or a
series may, as set forth in the Trust Instrument, call meetings of the Trust or
series for any purpose related to the Trust or series, as the case may be,
including, in the case of a meeting of the entire Trust, the purpose of voting
on removal of one or more Trustees. The Trust or any series may be terminated
upon the sale of its assets to, or merger with, another open-end management
investment company or series thereof, or upon liquidation and distribution of
its assets. Generally such terminations must be approved by the vote of the
holders of a majority of the outstanding shares of the Trust or the series;
however, the Trustees may, without prior shareholder approval, change the form
of organization of the Trust by merger, consolidation or incorporation. If not
so terminated or reorganized, the Trust and its series will continue
indefinitely. Under the Trust Instrument, the Trustees may, without shareholder
vote, cause the Trust to merge or consolidate into one or more trusts,
partnerships or corporations or cause the Trust to merge or consolidate into one
or more trusts, partnerships or corporations or cause the Trust to be
incorporated under Delaware law, so long as the surviving entity is an open-end
management investment company that will succeed to or assume the Trust's
registration statement.
Fund Structure
Core and Gateway. The Funds seek to achieve their objective by investing all of
their investable assets in a separate portfolio of a registered, open-end
management investment company with substantially the same investment objective
and policies as the Fund. This "Core and Gateway" fund structure is an
arrangement whereby one or more investment companies or other collective
investment vehicles that share investment objectives -- but offer their shares
through distinct distribution channels -- pool their assets by investing in a
single investment company having substantially the same investment objective and
policies (a "Core Portfolio"). This means that the only investment securities
that will be held by a Fund will be the Fund's interest in the Core Portfolio.
This structure permits other collective investment vehicles to invest
collectively in a Core Portfolio, allowing for greater economies of scale in
managing operations of the single Core Portfolio. The Board retains the right to
withdraw a Fund's investments from a Core Portfolio at any time; the Fund would
then resume investing directly in individual securities of other issuers or
could re-invest all of its assets in another Core Portfolio.
Fund Shareholders' Voting Rights. A Core Portfolio normally will not hold
meetings of its investors except as required under the 1940 Act. As a
shareholder in a Core Portfolio, a Fund is entitled to vote in proportion to its
relative interest in the Core Portfolio. On any issue, a Fund will vote its
shares in a Core Portfolio in proportion to the votes cast by its shareholders.
If there are other investors in a Core Portfolio, there can be no assurance that
any issue that receives a majority of the votes cast by the Fund's shareholders
will receive a majority of votes cast by all Core Portfolio shareholders.
Generally, a Fund will hold a meeting of its shareholders to obtain instructions
on how to vote its interest in a Core Portfolio when the Core Portfolio is
conducting a meeting of its shareholders. However, subject to applicable
statutory and regulatory requirements, a Fund will not seek instructions from
its shareholders with respect to (i) any proposal relating to a Core Portfolio
that, if made with respect to the Fund, would not require the vote of Fund
shareholders, or (ii) any proposal relating to the Core Portfolio that is
identical to a proposal previously approved by the Fund's shareholders.
In addition to a vote to remove a trustee or change a fundamental policy,
examples of matters that will require approval of shareholders of a Core
Portfolio include, subject to applicable statutory and regulatory requirements:
the election of trustees; approval of an investment advisory contract; the
dissolution of a Core Portfolio; certain amendments of the organizational
documents for the Core Portfolio; a merger, consolidation or sale of
substantially all of a Core Portfolio's assets; or any additional matters
required or authorized by the charter or trust instrument and by-laws of a Core
Portfolio or any registration statement of a Core Portfolio, or as the directors
or trustees of the Core Portfolio may consider desirable. The board of trustees
of a Core Portfolio will typically reserve the power to change nonfundamental
policies without prior shareholder approval.
Considerations of Investing in a Portfolio. A Fund's investment in a Core
Portfolio may be affected by the actions of other large investors in the Core
Portfolio, if any. For example, if the Core Portfolio had a large investor other
than the Fund that redeemed its interest in the Core Portfolio, the Core
Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from the Core Portfolio at any time,
if the Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if other investors in
the Core Portfolio, by a vote of shareholders, changed the investment objective
or policies of the Core Portfolio in a manner not acceptable to the Board. A
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Core Portfolio. That distribution could
result in a less diversified portfolio of investments for the Fund and could
affect adversely the liquidity of the Fund's portfolio. If the Fund decided to
convert those securities to cash, it normally would incur transaction costs. If
a Fund withdrew its investment from the Core Portfolio, the Board would consider
what action might be taken, including the management of the Fund's assets in
accordance with its investment objective and policies by Forum Advisors or the
investment of all of the Fund's investable assets in another pooled investment
entity having substantially the same investment objective as the Fund.
12. FINANCIAL STATEMENTS
The Statements of Assets and Liabilities, Statements of Operations, Statements
of Changes in Net Assets, notes thereto and Financial Highlights of Daily Assets
Treasury Fund and Daily Assets Cash Fund for the fiscal year ended August 31,
1997 and the Independent Auditors' Report thereon (included in the Annual Report
to Shareholders), which are delivered along with this SAI, are incorporated
herein by reference. Also incorporated by reference into this SAI are the
Schedules of Investments, Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, and notes thereto, of Treasury
Portfolio and Cash Portfolio for the fiscal year ended August 31, 1997 and the
Independent Auditors' Report thereon.
As Daily Assets Treasury Obligations Fund, Daily Assets Government Fund, Daily
Assets Tax-Exempt Fund and Municipal Cash Portfolio had not as of the date
hereof commenced operations, no financial statements are available.
<PAGE>
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
1. Corporate Bonds
Moody's Investors Service, Inc. ("Moody's")
Bonds which are rated Aaa are judged by Moody's to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the 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 some time in the future.
Note: Those bonds in the Aa and A groups which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa1 and A1.
Standard and Poor's Corporation ("S&P")
Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.
Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt rated in higher rated
categories.
Note: The ratings for AA and A may be modified by the addition of a plus (+) or
minus (-) sign to show the relative standing within the rating category.
Fitch Investors Service, Inc. ("Fitch")
AAA Bonds are considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA Bonds are considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, shorter-term debt of these issuers is generally rate F-1+.
A Bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA categories.
2. Commercial Paper
Moody's Investors Service, Inc.
Moody's two highest ratings for short-term debt, including commercial paper, are
Prime-1 and Prime-2. Both are judged investment grade, to indicate the relative
repayment ability of rated issuers.
Issuers rated Prime-1 have a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics:
o -- Leading market positions in well-established industries.
o -- High rates of return on funds employed.
o -- Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
o -- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
o -- 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.
<PAGE>
APPENDIX B - PERFORMANCE INFORMATION
For the seven day period ended August 31, 1997, the annualized yields of each of
the classes of the Funds that were then operating were as follows:
<TABLE>
Tax Equivalent Tax Equivalent
Current Yield Effective Yield Current Yield Effective Yield
<S> <C> <C> <C> <C>
Daily Assets Treasury Fund
Investor Shares -- -- -- --
Institutional Service Shares 4.76% 4.87% -- --
Institutional Shares -- -- -- --
Daily Assets Treasury
Obligations Fund
Investor Shares -- -- -- --
Institutional Service Shares -- -- -- --
Institutional Shares -- -- -- --
Daily Assets Government Fund
Investor Shares -- -- -- --
Institutional Service Shares -- -- -- --
Institutional Shares -- -- -- --
Daily Assets Cash Fund
Investor Shares -- -- -- --
Institutional Service Shares 5.19% 5.33% -- --
Institutional Shares -- -- -- --
Daily Assets Tax-ExemptFund
Investor Shares -- -- -- --
Institutional Service Shares -- -- -- --
Institutional Shares -- -- -- --
</TABLE>
As of August 31, 1997, there were no outstanding Institutional Shares, Investor
Shares or Institutional Service Shares of each Fund other than Daily Assets
Treasury Fund and Daily Assets Cash Fund.
<PAGE>
APPENDIX C- MISCELLANEOUS TABLES
Table 1 - Investment Advisory Fees
<TABLE>
Gross Fee Fee Waived Net Fee Paid
<S> <C> <C> <C>
Treasury Portfolio
Period ended August 31, 1997 $9,064 $0 $9,064
Year ended March 31, 1997 $20,637 $0 $20,637
Year ended March 31, 1996(1) $69,466 $0 $69,466
Year ended March 31, 1995(1) $59,382 $53,382 $6,000
Treasury Cash Portfolio
Year ended August 31, 1997 $0
Year ended August 31, 1996 $12,930 $0 $12,930
Government Cash Portfolio
Year ended August 31, 1997 $196,857 $0 $196,857
Year ended August 31, 1996 $156,552 $0 $156,552
Cash Portfolio
Year ended August 31, 1997 $72,872 $0 $72,872
Year ended August 31, 1996 $38,083 $0 $38,083
Municipal Cash Portfolio
Year ended August 31, 1997 -- -- --
</TABLE>
(1) Prior to January 15, 1996 Forum Advisors acted as Daily Assets Treasury
Fund's investment adviser under an investment advisory agreement with Forum
Funds, Inc. Under this investment advisory agreement, Forum received a fee at an
annual rate of 0.20% of the average daily net assets of the Fund.
<PAGE>
Table 2 - Administration Fees
<TABLE>
<S> <C> <C> <C>
Gross Fee Fee Waived Net Fee Paid
Treasury Portfolio
Period ended August 31, 1997 $18,128 $18,128 $0
Year ended March 31, 1997 41,274 $41,274 $0
Year ended March 31, 1996(1)
Treasury Cash Portfolio
Year ended August 31, 1997 $24,287 $14,346 9,941
Year ended August 31, 1996 $19,198 $9,307 $9,891
Government Cash Portfolio
Year ended August 31, 1997 $252,821 $0 $252,821
Year ended August 31, 1996 $230,547 $104,558 $125,989
Cash Portfolio
Year ended August 31, 1997 $92,652 $7,621 $85,031
Year ended August 31, 1996 $56,125 $3,719 $52,406
Municipal Cash Portfolio
Year ended August 31, 1997 -- -- --
Daily Assets Treasury Fund
Period ended August 31, 1997 $18,123 $0 $18,123
Year ended March 31, 1997 $41,232 $7,453 $33,779
Year ended March 31, 1996
Daily Assets Treasury Obligations Fund
Year ended August 31, 1997 -- -- --
Daily Assets Government Fund
Year ended August 31, 1997 -- -- --
Daily Assets Cash Fund
Year ended August 31, 1997 $7,453 $7,453 $0
Daily Assets Tax-Exempt Fund
Year ended August 31, 1997 -- -- --
</TABLE>
<PAGE>
Table 3 - Investor Shares Rule 12b-1 Fees
<TABLE>
<S> <C> <C> <C>
Gross Fee Fee Waived Net Fee Paid
Daily Assets Treasury Fund
Period ended August 31, 1997 -- -- --
Daily Assets Treasury Obligations Fund
Year ended August 31, 1997 -- -- --
Daily Assets Government Fund
Year ended August 31, 1997 -- -- --
Daily Assets Cash Fund
Period ended August 31, 1997 -- -- --
Daily Assets Tax-Exempt Fund
Year ended August 31, 1997 -- -- --
For the fiscal year ended August 31, 1997, no Investor Shares were outstanding
and, accordingly, no fees were payable under the Investor Class Plan.
</TABLE>
<PAGE>
Table 4 - Transfer Agency Fees
<TABLE>
<S> <C> <C> <C>
Gross Fee Fee Waived Net Fee Paid
Daily Assets Treasury Fund
Institutional Service Shares
Period ended August 31, 1997 $50,810 $44,054 $6,756
Year ended March 31, 1997 $116,051 $101,485 $14,566
Year ended March 31, 1996 $110,792 $96,881 13,911
Daily Assets Treasury Obligations Fund
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Daily Assets Government Fund
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Daily Assets Cash Fund
Institutional Service Shares
Period ended August 31, 1997 $29,772 $17,766 12,006
Daily Assets Tax-Exempt Fund
Institutional Service Shares
Year ended August 31, 1997 -- -- --
</TABLE>
As of August 31, 1997, there were no outstanding Institutional Shares, Investor
Shares or Institutional Service Shares of each Fund other than Daily Assets
Treasury Fund and Daily Assets Cash Fund.
<PAGE>
<TABLE>
Table 5 - Shareholder Service Fees
<S> <C> <C> <C>
Gross Fee Fee Waived Net Fee Paid
Daily Assets Treasury Fund
Institutional Service Shares
Period ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
Daily Assets Treasury Obligations Fund
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
Daily Assets Government Fund
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
Daily Assets Cash Fund
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
Daily Assets Tax-Exempt Fund
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
</TABLE>
As of August 31, 1997, there were no outstanding Investor Shares and no
effective Shareholder Plan with respect to Institutional Service Shares of any
Fund.
<PAGE>
Table 6 - Fund Accounting Fees
<TABLE>
<S> <C> <C> <C>
Gross Fee Fee Waived Net Fee Paid
Treasury Portfolio
Period ended August 31, 1997 $20,000 $0 $20,000
Year ended March 31, 1997 $48,000 $0 $48,000
Year ended March 31, 1996(1)
Treasury Cash Portfolio
Year ended August 31, 1997 $24,279 $0 $24,279
Year ended August 31, 1996 $28,518 $19,955 $8,563
Government Cash Portfolio
Year ended August 31, 1997 $48,000 $0 $48,000
Year ended August 31, 1996 $42,000 $0 $42,000
Cash Portfolio
Year ended August 31, 1997 $48,000 $0 $48,000
Year ended August 31, 1996 $42,000 $14,957 $27,043
Municipal Cash Portfolio
Year ended August 31, 1997 -- -- --
Daily Assets Treasury Fund
Period ended August 31, 1997 $5,000 $0 $5,000
Year ended March 31, 1997 $12,000 $0 $12,000
Year ended March 31, 1996
Daily Assets Treasury Obligations Fund
Year ended August 31, 1997 -- -- --
Daily Assets Government Fund
Year ended August 31, 1997 -- -- --
Daily Assets Cash Fund
Year ended August 31, 1997
Daily Assets Tax-Exempt Fund
Year ended August 31, 1997 -- -- --
</TABLE>
<PAGE>
Table 7 - 5% Shareholders
As of October 31, 1997, the officers and Trustees of the Trust as a group owned
less than 1% of the outstanding shares of each Fund. Also as of that date, the
shareholders listed below owned more than 5% of each Fund. Shareholders owning
25% or more of the shares of a Fund or of the Trust as a whole may be deemed to
be controlling persons. By reason of their substantial holdings of shares, these
persons may be able to require the Trust to hold a shareholder meeting to vote
on certain issues and may be able to determine the outcome of any shareholder
vote. As noted, certain of these shareholders are known to the Trust to hold
their shares of record only and have no beneficial interest, including the right
to vote, in the shares.
<TABLE>
Percentage of Percentage of Shares of
Shares Owned Fund Owned
<S> <C> <C>
Daily Assets Treasury Fund
Institutional Service Shares
H.M. Payson & Co. Custody Account 41.11% 15,437,654.710
P.O. Box 31, Portland, ME 04112
H.M. Payson & Co. Custody Account 33.77% 12,681,768.470
P.O. Box 31, Portland, ME 04112
Daily Assets Cash Fund
Institutional Service Shares
H.M. Payson & Co. Custody Account 50.63% 5,274,716.100
P.O. Box 31, Portland, ME 04112
H.M. Payson & Co. Custody Account 44.39% 4,624,133.160
P.O. Box 31, Portland, ME 04112
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
Included in the Prospectus:
Financial Highlights.
Included in the Statement of Additional Information:
Audited financial statements for the fiscal year ended August 31, 1997,
including Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, Notes to Financial
Statements, Financial Highlights and Independent Auditors' Report
thereon were filed with the Securities and Exchange Commission via
EDGAR for: Daily Assets Treasury Fund and Daily Assets Cash Fund on
November 12, 1997, accession number 0001004402-97-000179 pursuant to
Rule 30b2-1 under the Investment Company Act of 1940, as amended, and
incorporated herein by reference. Audited financial statements for the
fiscal year ended August 31, 1997, including Schedules of Investments,
Statements of Assets and Liabilities, Statements of Operations,
Statements of Changes in Net Assets, Notes to Financial Statements,
Financial Highlights and Independent Auditors' Report thereon were
filed with the Securities and Exchange Commission via EDGAR for:
Treasury Portfolio and Cash Portfolio on November 12, 1997, accession
number 0001004402-97-000179 pursuant to Rule 30b2-1 under the
Investment Company Act of 1940, as amended, and incorporated herein by
reference.
Daily Assets Government Fund, Daily Assets Tax-Exempt Fund, Daily
Assets Treasury Obligations Fund, S&P 500 Index Fund, Investors Growth
Fund, International Equity Fund, Small Cap Fund and Emerging Markets
Fund. Not Applicable to this filing.
(b) Exhibits.
Note:* Indicates that the exhibit is incorporated herein by reference. All
references to a Post-Effective Amendment ("PEA") or Pre-Effective Amendment
("PreEA") are to PEAs and PreEAs to Registrant's Registration Statement on
Form N-1A, File No. 2-67052.
(1)* Copy of the Trust Instrument of the Registrant dated August 29, 1995
(filed 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 or classes thereof as the Trustees may
from time to time determine, to divide or combine the Shares or
any Series or classes thereof into a greater or lesser number, to
classify or reclassify any issued Shares or any Series or classes
thereof into one or more Series or classes of Shares, and to take
such other action with respect to the Shares as the Trustees may
deem desirable. The establishment and designation of any Series
shall be effective upon the adoption of a resolution by a
majority of the Trustees setting forth such establishment and
designation and the relative rights and preferences of the Shares
of such Series. A Series may issue any number of Shares and need
not issue shares. At any time that there are no Shares
outstanding of any particular Series previously established and
designated, the Trustees may by a majority vote abolish that
Series and the establishment and designation thereof.
"All references to Shares in this Trust Instrument shall be
deemed to be Shares of any or all Series, or classes thereof, as
the context may require. All provisions herein relating to the
Trust shall apply equally to each Series of the Trust, and each
class thereof, except as the context otherwise requires.
"Each Share of a Series of the Trust shall represent an
equal beneficial interest in the net assets of such Series. Each
holder of Shares of a Series shall be entitled to receive his pro
rata share of all distributions made with respect to such Series.
Upon redemption of his Shares, such Shareholder shall be paid
solely out of the funds and property of such Series of the
Trust."
(5) (a)* Form of Investment Advisory Agreement between Registrant and
Forum Advisors, Inc. (filed as Exhibit 5(a) to PEA No. 33 via EDGAR on
January 5, 1996, accession number 0000912057-96-000216).
(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).
(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 as Exhibit 6(f) to PEA No. 43 via EDGAR on July
31, 1997, accession number 0000912057-97-025707).
(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) Consent of Indepent Auditors (filed herewith).
(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
<TABLE>
Title of Class Number of Holders
<S> <C>
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
</TABLE>
Item 27. Indemnification.
In accordance with Section 3803 of the Delaware Business Trust Act,
SECTION 5.2 of the Registrant's Trust Instrument provides as follows:
"5.2. Indemnification.
"(a) Subject to the exceptions and limitations contained in Section
(b) below:
"(i) Every Person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person")
shall be indemnified by the Trust to the fullest extent
permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any
claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of being or
having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof;
"(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 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
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
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.
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.
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.
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.
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.
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.
(c) Not Applicable.
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.
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>
INDEX TO EXHIBITS
EXHIBIT
(11) Consent of Independent Auditors
<PAGE>
Consent of Independent Auditors
The Board of Trustees
Forum Funds:
We consent to the use of our reports dated October 3, 1997 for Daily
Assets Treasury Fund and Daily Assets Cash Fund, series of Forum
Funds, and for Treasury Portfolio and Cash Portfolio, series of Core
Trust (Delaware), incorporated by reference into the Statement of
Additional Information and to the references to our Firm under the
headings "Financial Highlights" in the Prospectuses and "Auditors" in
the Statement of Additional Information.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
November 17, 1997
<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 17th
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 17th day of November, 1997.
Signatures Title
(a) Principal Executive Officer
/s/ John Y. Keffer President
John Y. Keffer and Chairman
(b) Principal Financial and Accounting Officer
/s/ Robert B. Campbell Treasurer
Robert B. Campbell
(c) A majority of the Trustees
/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*