As filed with the Securities and Exchange Commission on September 17, 1997
File No. 2-67052
File No. 811-3023
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 46
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 48
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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
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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
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It is proposed that this filing will become effective:
____ immediately upon filing pursuant to Rule 485, paragraph (b)
____ on [ ] pursuant to Rule 485, paragraph (b)
____ 60 days after filing pursuant to Rule 485, paragraph (a)(i)
__X_ 75 days after filing pursuant to Rule 485, paragraph (a)(ii)
____ on [ ] pursuant to Rule 485, paragraph (a)(ii)
____ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment
Registrant has registered an indefinite number of shares of beneficial interest
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Accordingly, no fee is payable herewith. Registrant filed a
Rule 24f-2 notice for its most recent fiscal year ended March 31, 1997, on May
29, 1997.
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(C))
PART A
(Prospectus offering Shares Investors Growth Fund)
FORM N-1A LOCATION IN PROSPECTUS
ITEM NO. (CAPTION)
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Item 1. Cover Page: Cover Page
Item 2. Synopsis: Prospectus Summary
Item 3. Condensed Financial
Information: Not Applicable
Item 4. General Description
of Registrant: Prospectus Summary; Investment
Objective and Policies; Other
Information
Item 5. Management of the Fund: Prospectus Summary; Management
Item 6. Capital Stock and
Other Securities Investment Objective and
Policies; Dividends and Tax
Matters; Other Information -
The Trust and its Shares
Item 7. Purchase of Securities
Being Offered: Purchases and Redemptions of
Shares; Other Information -
Determination of Net Asset
Value; Management
Item 8. Redemption or Repurchase
of Shares: Purchases and Redemptions of
Shares
Item 9. Pending Legal Proceedings Not Applicable
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(C))
PART A
(All other Prospectuses)
Not Applicable in this Filing
<PAGE>
PART B
(SAI offering Shares of Investors Growth Fund)
LOCATION IN STATEMENT
FORM N-1A OF ADDITIONAL INFORMATION
ITEM NO. (CAPTION)
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Item 10. Cover Page: Cover Page
Item 11. Table of Contents: Cover Page
Item 12. General Information and History: Management; Other Information
Item 13. Investment Objectives and
Policies: Investment Policies; Investment
Limitations
Item 14. Management of the Registrant: Management
Item 15. Control Persons and
Principal Holders of
Securities: Other Information
Item 16. Investment Advisory
and Other Services: Management; Other Information -
Custodian, Counsel, Auditors
Item 17. Brokerage Allocation
and Other Practices: Portfolio Transactions
Item 18. Capital Stock and
Other Securities: Determination of Net Asset Value
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered: Determination of Net Asset
Value; Additional Purchase
and Redemption Information
Item 20. Tax Status: Taxation
Item 21. Underwriters: Management
Item 22. Calculation of
Performance Data: Performance Data
Item 23. Financial Statements: Not Applicable
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(C))
PART B
(All other SAIs)
Not Applicable in this Filing
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any sale of these securities in any State in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such State.
FORUM FUNDS
INVESTORS GROWTH FUND
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION
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ACCOUNT INFORMATION AND
SHAREHOLDER SERVICING:
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
(207) 879-0001
(800) 94FORUM
This Prospectus offers shares of the INVESTORS GROWTH FUND (the "Fund"), a
separately-managed, diversified portfolio of Forum Funds (the "Trust"), a
registered open-end management investment company. The Fund seeks to provide
capital appreciation by investing primarily in a portfolio of common stock of
companies domiciled in the United States. The Fund intends to maintain a
portfolio that is broadly diversified across investment sectors.
Shares of the Fund are offered to investors at a price equal to the next
determined net asset value plus a maximum sales charge of 4.0% of the total
public offering price (4.17% of the amount invested).
This prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
(the "SAI") dated December 1, 1997 and as supplemented from time to time
containing additional information about the Fund has been filed with the
Securities and Exchange Commission ("SEC") and is hereby incorporated by
reference into this Prospectus. It is available without charge and may be
obtained by writing or calling the Fund's transfer agent at the address and
telephone numbers printed above.
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 FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE SYSTEM, OR ANY FEDERAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
DECEMBER 1, 1997
<PAGE>
1. PROSPECTUS SUMMARY
HIGHLIGHTS OF THE FUND
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of Investors Growth Fund is long-term capital
appreciation. The Fund intends to pursue its objective by investing primarily in
the common stock of domestic companies that, in the view of the adviser, possess
above average growth potential or attractive valuations when the valuations have
not yet been fully reflected in the market price of the companies' shares.
FUND MANAGEMENT
Forum Advisors, Inc. ("the Adviser") serves as the investment advisor to
the Fund. The Adviser is located at Two Portland Square, Portland, Maine 04101.
See "Management - Adviser " The administrator of the Fund is Forum
Administrative Services, LLC ("FAS") and the distributor of its shares is Forum
Financial Services, Inc. Forum Financial Corp. (the "Transfer Agent"), Two
Portland Square, Portland, Maine 04101, serves as the Fund's transfer agent,
dividend disbursing agent and shareholder servicing agent. See "Management."
PURCHASES AND REDEMPTIONS
Shares of the Fund are offered at their net asset value plus any
applicable sales charge. Shares may be purchased or redeemed by mail, by
bank-wire and through an investor's broker-dealer or other financial
institution. The minimum initial investment is $5,000, ($2,000 for an Individual
Retirement Account) and the minimum subsequent investment is $500. Shareholders
may redeem shares without charge. See "Purchases and Redemption of Shares."
EXCHANGE PROGRAM
Shareholders may exchange their Shares without charge for the shares of
certain other funds of the Trust. See "Purchases and Redemptions of Shares -
Exchanges."
DIVIDENDS AND DISTRIBUTIONS
The Fund distributes its net investment income and net realized
long-term capital gain, if any, at least annually. All distributions are
reinvested automatically in additional shares of the Fund at net asset value
unless the shareholder has notified the Fund in his or her Account Application
or otherwise in writing of the shareholder's election to receive dividends or
distributions in cash. See "Dividends and Taxes."
CERTAIN INVESTMENT CONSIDERATIONS AND RISK FACTORS
There can be no assurance that the Fund will achieve its investment
objective and the Fund's net asset value and total return will fluctuate based
upon changes in the value of the securities in which the Fund invests. Investing
in the Fund is subject to the risks of investing in the stock market including
the risk that the value of the stocks in which the Fund invests might decrease.
Investors in the Fund should be willing to accept the risks of the stock market
should not consider the Fund a complete investment program. See "Investment
Objective and Policies" and "Additional Investment Policies."
<PAGE>
EXPENSES OF INVESTING IN THE FUND
The purpose of the following table is to assist investors in understanding
the expenses that an investor in Shares of the Fund will bear.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(as a percentage of public offering price)(1)...... 4.0%
Exchange Fee....................................... None
ANNUAL FUND OPERATING EXPENSES(2)
(as a percentage of average net assets)
Management Fees.................................... 0.65%
12b-1 Fees......................................... None
Other Expenses (after expense reimbursements)...... 0.45%
Total Fund Operating Expenses...................... 1.10%
(1) Certain shareholders may be eligible for reduced sales charges.
See "Purchases and Redemptions of Shares - Reduced Sales Charges".
(2) The Annual Fund Operating Expenses are based on estimated expenses
and assets during the Fund's initial period of operations ending March 31, 1997.
Management Fees are the investment advisory fees of the Fund. The Adviser has
voluntarily agreed to waive all or a portion of its fees and assume certain
expenses of the Fund through at least March 31, 1998 in order to limit the Total
Fund Operating Expenses to 1.10% of the Fund's average daily net assets. Without
these fee waivers and expense reimbursements, it is estimated that Other
Expenses and Total Operating Expenses, respectively, for the Fund would be:
0.95% and 1.60%. For a further description of the various expenses incurred in
the operation of the Fund, see "Management."
EXAMPLE
Following is a hypothetical example that indicates the dollar amount of
expenses that an investor in Shares would pay assuming a $1,000 investment in
the Fund, a 5% annual return, the reinvestment of all dividends and other
distributions and redemption at the end of each time period:
1 Year 3 Years
------ -------
Investors Growth Fund $11 $34
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
OR RETURNS, AND ACTUAL EXPENSES OR RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
The example is based on the expenses listed in the table. The 5% annual return
is not a prediction of the Fund's return; rather it is required by government
regulation.
<PAGE>
2. INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of the Investors Growth Fund is to seek
long-term capital appreciation.
INVESTMENT STRATEGY
The Fund intends to pursue its objective by investing primarily in
common stock of domestic companies that, in the view of the Adviser, possess
above average growth potential or attractive valuations when the valuations have
not yet been fully reflected in the market price of the companies' shares. Among
the relevant factors considered by the Adviser are the quality of a company's
management, position in the markets in which the company operates, the company's
financial position, and the company's historical and expected return on capital
and rate of earnings growth. In the context of these characteristics the Adviser
may invest in companies that may not have performed well in the recent past, but
have the potential for doing so in the future. Once companies are identified as
possible investments the Adviser utilizes various valuation measures and
technical analysis to determine those companies whose shares are attractively
priced for purchase. Under normal circumstances, the Fund will invest at least
65% of its assets in these companies, without concentration in any one industry.
INVESTMENT POLICIES
The Fund may invest in common and preferred stock. Common stockholders
are the owners of the company issuing the stock and, accordingly, vote on
various corporate governance matters such as mergers. They are not creditors of
the company, but rather, upon liquidation of the company, are entitled to their
pro rata share of the company's assets after creditors (including fixed income
security holders) and, if applicable, preferred stockholders are paid. Preferred
stock is a class of stock having a preference over common stock as to dividends
and, in general, as to the recovery of investment. A preferred stockholder is a
shareholder in the company and not a creditor of the company, as is a holder of
the company's fixed income securities. Dividends paid to common and preferred
stockholders are distributions of the earnings of the company and not interest
payments, which are expenses of the company. Equity securities owned by the Fund
may be traded in the over-the counter market or on a securities exchange, but
may not be traded every day or in the volume typical of securities traded on a
major U.S. national securities exchange. As a result, disposition by the Fund of
a security to meet redemptions by interest holders or otherwise may require the
Fund to sell these securities at a discount from market prices, to sell during
periods when disposition is not desirable, or to make many small sales over a
lengthy period of time. The market value of all securities, including equity
securities, is based upon the market's perception of value and not necessarily
the book value of an issuer or other objective measure of a company's worth. The
Fund may also invest in warrants, which are options to purchase an equity
security at a specified price (usually representing a premium over the
applicable market value of the underlying equity security at the time of the
warrant's issuance) and usually during a specified period of time.
In addition to common and preferred stock, the Fund may invest in
investment-grade convertible debt securities. The Fund also may invest in
American Depository Receipts ("ADRs"), European Depository Receipts ("EDRs") and
other similar securities of foreign issuers. The Fund expects foreign
investments to remain below 15% of the Fund's assets.
CERTAIN RISK CONSIDERATIONS
COMMON STOCK, PREFERRED STOCK AND WARRANTS. The fundamental risk of
investing in common stock is the risk that the value of the stock might
decrease. Stock values fluctuate in response to the activities of an individual
company or in response to general market and/or economic conditions.
Historically, common stocks have provided greater long-term returns and have
entailed greater short-term risks than preferred stocks, fixed-income and money
market investments. The market value of all securities, including equity
securities, is based upon the market's perception of value and not necessarily
the book value of an issuer or other objective measure of a company's worth.
Unlike preferred stocks and convertible securities, warrants do not pay a fixed
dividend. Investments in
<PAGE>
warrants involve certain risks, including the possible lack of a liquid market
for the resale of the warrants, potential price fluctuations as a result of
speculation or other factors and failure of the price of the underlying security
to reach a level at which the warrant can be prudently exercised (in which case
the warrant may expire without being exercised, resulting in the loss of the
Fund's entire investment therein). Investors in the Fund should be willing to
accept the risks of the stock market and should consider an investment in the
Fund only as a part of their overall investment portfolio.
INVESTMENT IN FOREIGN SECURITIES. The Fund may invest in ADRs, EDRs and
other similar investments of foreign issuers. See "Additional Investment
Policies" below. Investments in foreign companies involve certain risks, such as
exchange rate fluctuations, political or economic instability of the issuer or
the country of issue and the possible imposition of exchange controls,
withholding taxes on dividends or interest payments, confiscatory taxes or
expropriation. Foreign securities may also be subject to greater fluctuations in
price than securities of domestic corporations denominated in U.S. dollars.
Foreign securities and their markets may not be as liquid as domestic securities
and their markets, and foreign brokerage commissions and custody fees are
generally higher than those in the United States. In addition, less information
may be publicly available about a foreign company than about a domestic company,
and foreign companies may not be subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to domestic
companies.
3. ADDITIONAL INVESTMENT POLICIES
The investment objective and all investment policies of the Fund that
are designated as fundamental may not be changed without approval of the holders
of a majority of the outstanding voting securities of the Fund. A majority of
outstanding voting securities means the lesser of (i) 67% of the shares present
or represented at a shareholder meeting at which the holders of more than 50% of
the outstanding shares are present or represented, or (ii) more than 50% of
outstanding shares. Unless otherwise indicated, all investment policies are not
fundamental and may be changed by the Board without approval by shareholders of
the Fund. For more information concerning shareholder voting, see "Other
Information --"The Trust and Its Shares"
DIVERSIFICATION AND CONCENTRATION. The Fund is diversified as that term
is defined in the Investment Company Act of 1940 (the "1940 Act"). As a
fundamental policy, with respect to 75% of its assets, a diversified fund may
not purchase a security (other than a U.S. Government Security or shares of
investment companies) if, as a result: (i) more than 5% of the Fund's total
assets would be invested in the securities of a single issuer; or (ii) the Fund
would own more than 10% of the outstanding voting securities of any single
issuer. The Fund is prohibited from concentrating its assets in the securities
of issuers in any industry. As a fundamental policy, the Fund may not purchase
securities if, immediately after the purchase, more than 25% of the value of the
Fund's total assets would be invested in the securities of issuers conducting
their principal business activities in the same industry. This limit does not
apply to investments in U.S. Government Securities, foreign government
securities or repurchase agreements covering U.S. Government Securities. The
Fund reserves the right to invest up to 100% of its investable assets in one or
more investment companies.
ILLIQUID SECURITIES. The Fund limits its purchase of illiquid
securities. As a fundamental policy, the Fund may not knowingly acquire
securities or invest in repurchase agreements with respect to any securities if,
as a result, more than 10 percent of the Fund's net assets taken at current
value would be invested in securities which are not readily marketable. Illiquid
securities are securities that cannot be disposed of within seven days in the
ordinary course of business at approximately the amount at which the Fund has
valued the securities and include, among other things, repurchase agreements not
entitling the holder to payment within seven days and restricted securities
(other than those determined to be liquid pursuant to guidelines established by
the Board). Under the supervision of the Board, the Adviser determines and
monitors the liquidity of the portfolio securities.
REPURCHASE AGREEMENTS AND LENDING OF PORTFOLIO SECURITIES. The Fund may
enter into repurchase agreements and may lend securities from its portfolio to
brokers, dealers and other financial institutions. These investments may entail
certain risks not associated with direct investments in securities. For
instance, in the event that bankruptcy or similar proceedings were commenced
against a counterparty in these transactions or a
<PAGE>
counterparty defaulted on its obligations, the Fund may have difficulties in
exercising its rights to the underlying securities, may incur costs and
experience time delays in disposing of them and may suffer a loss.
Repurchase agreements are transactions in which the Fund purchases a
security and simultaneously commits to resell that security to the seller at an
agreed-upon price on an agreed-upon future date, normally one to seven days
later. The resale price reflects a market rate of interest that is not related
to the coupon rate or maturity of the purchased security. When the Fund lends a
security it receives interest from the borrower or from investing cash
collateral. The Trust maintains possession of the purchased securities and any
underlying collateral in these transactions, the total market value of which on
a continuous basis is at least equal to the repurchase price or value of
securities loaned, plus accrued interest. The Fund may pay fees to arrange
securities loans and the Fund will limit securities lending to not more than 33
1/3% of the value of its total assets.
CONVERTIBLE SECURITIES. Convertible securities, which include
convertible debt, convertible preferred stock and other securities exchangeable
under certain circumstances for shares of common stock, are fixed income
securities or preferred stock which generally may be converted at a stated price
within a specific amount of time into a specified number of shares of common
stock. A convertible security entitles the holder to receive interest paid or
accrued on debt or the dividend paid on preferred stock until the convertible
security matures or is redeemed, converted or exchanged. Before conversion,
convertible securities have characteristics similar to nonconvertible debt
securities in that they ordinarily provide a stream of income with generally
higher yields than those of common stocks of the same or similar issuers. These
securities are usually senior to common stock in a company's capital structure,
but usually are subordinated to non-convertible debt securities. In general, the
value of a convertible security is the higher of its investment value (its value
as a fixed income security) and its conversion value (the value of the
underlying shares of common stock if the security is converted). As a fixed
income security, the value of a convertible security generally increases when
interest rates decline and generally decreases when interest rates rise. The
value of a convertible security is, however, also influenced by the value of the
underlying common stock. The Fund may only invest in convertible securities that
are investment grade. See Appendix A - "Description of Securities Ratings" to
the SAI.
FOREIGN INVESTMENTS. The Fund may invest in sponsored and unsponsored
ADRs, EDRs and other similar investments of foreign issuers. ADRs are receipts
issued by an American bank or trust company evidencing ownership of underlying
securities issued by a foreign issuer. Unsponsored ADRs may be created without
the participation of the foreign issuer. Holders of these ADRs generally bear
all the costs of the ADR facility, whereas foreign issuers typically bear
certain costs in a sponsored ADR. The bank or trust company depository of an
unsponsored ADR may be under no obligation to distribute shareholder
communications received from the foreign issuer or to pass through voting
rights. The Fund also may invest in EDRs, which are receipts issued by a
European financial institution evidencing an arrangement similar to that of
ADRs, and in other similar instruments representing securities of foreign
companies. EDRs, in bearer form, are designed for use in European securities
markets.
CORE AND GATEWAY(R). Shareholders of the Fund have approved an
investment policy that permits the Fund to seek to achieve its investment
objective by converting to a Core and Gateway structure. The Fund, upon future
action by the Board and notice to shareholders, may convert to this structure,
in which the Fund would hold as its only investment security an interest in
another investment company having substantially the same investment objective
and policies as the Fund. The Board will not authorize conversion to a Core and
Gateway structure if it would materially increase costs to a Fund's
shareholders.
TEMPORARY DEFENSIVE POSITION. When business or financial conditions
warrant, the Fund may assume a temporary defensive position and invest without
limit in cash or prime quality cash equivalents, including: (i) short-term U.S.
Government Securities; (ii) certificates of deposit, bankers acceptances and
interest-bearing savings deposits of commercial banks doing business in the
United States; (iii) commercial paper; (iv) repurchase agreements; and (v)
shares of money market funds registered under the 1940 Act within the limits
specified therein. During periods when and to the extent that the Fund has
assumed a temporary defensive position, it may not be pursuing its investment
objective. Prime quality instruments are those that are rated in one of the two
highest short-term rating categories by an NRSRO or, if not rated, determined by
the investment adviser to be of
<PAGE>
comparable quality. Apart from temporary defensive purposes, the Fund may at any
time invest a portion of its assets in cash and cash equivalents as described
above. Except during periods when the Fund assumes a temporary defensive
position, the Fund will have at least 65% of its total assets invested in common
stock.
PORTFOLIO TURNOVER. The frequency of portfolio transactions of the Fund
(the portfolio turnover rate) will vary from year to year depending on market
conditions. The Fund may engage in short-term trading buts their portfolio
turnover rate is no expected to exceed 100%. An annual portfolio turnover rate
of 100% would occur if all the securities in the Fund were replaced in a one
year period. Higher portfolio turnover and short-term trading involve
correspondingly greater commission expenses and transaction costs. The
investment adviser to the Fund weighs the anticipated benefits of short-term
investments against these consequences. Higher portfolio turnover rates may
cause shareholders of the Fund to recognize gains for federal income tax
purposes. See "Taxation" in the SAI.
4. MANAGEMENT
The business and affairs of the Fund are managed under the direction of the
Board. The Trustees of the Trust are John Y. Keffer, Costas Azariadis, James C.
Cheng and J. Michael Parish. Additional information regarding the Trustees and
the executive officers of the Trust may be found in the SAI under the heading
"Management -- Trustees and Officers."
INVESTMENT ADVISER
Forum Advisors, Inc. serves as investment adviser to Investors Growth
Fund pursuant to an investment advisory agreement with the Trust. Subject to the
general control of the Board, the Adviser is responsible for among other things,
developing a continuing investment program for the Fund in accordance with its
investment objective and reviewing the investment strategies and policies of the
Fund. The Adviser was incorporated under the laws of Delaware in 1987 and is
registered under the Investment Advisers Act of 1940. For its services, the
Adviser receives an advisory fee at an annual rate of 0.65% of the Fund's
average daily net assets.
Mark Kaplan, CFA, serves as the portfolio manager of the Fund. Mr. Kaplan
has over thirteen years of experience in the investment industry and has been a
Managing Director at Forum Financial Services, Inc. since September 1995 where
he is responsible for investment advisory services. Prior to that Mr. Kaplan was
Managing Director and Director of Research at H.M. Payson & Co., an investment
advisory and trust services company. Prior thereto, Mr. Kaplan was a securities
analyst in the investment division of UNUM Life Insurance Company. Mr. Kaplan
received a Masters in Business Administration from Boston University.
ADMINISTRATIVE AND DISTRIBUTION SERVICES
On behalf of the Fund, the Trust has entered into an administrative
services contract with Forum Administrative Services, LLC ("FAS"). As provided
in this agreement, FAS is responsible for the supervision of the overall
management of the Trust (including the Trust's receipt of services for which it
must pay), providing the Trust with general office facilities and providing
persons satisfactory to the Board of Trustees to serve as officers of the Trust.
For these services, FAS receives from the Fund a fee computed and paid monthly
at an annual rate of 0.20% of the Fund's average daily net assets. Like the
Adviser, FAS, in its sole discretion, may waive all or any portion of its fees.
Pursuant to a Distribution Agreement with the Trust, Forum Financial
Services, Inc. ("FFSI") acts as distributor of the Fund's shares. FFSI acts as
the agent of the Trust in connection with the offering of shares of the Fund.
FFSI receives no compensation for its services under the Distribution Agreement.
FFSI may enter into arrangements with banks, broker-dealers or other financial
institutions ("Selected Dealers") through which investors may purchase or redeem
shares. FFSI may, at its own expense and from its own resources, compensate
certain persons who provide services in connection with the sale or expected
sale of shares of the Fund. Investors
<PAGE>
purchasing shares of the Fund through another financial institution should read
any materials and information provided by the financial institution to acquaint
themselves with its procedures and any fees that it may charge.
FFSI and FAS are located at Two Portland Square, Portland, Maine 04101.
FFSI was incorporated under the laws of the State of Delaware on February 7,
1986. FFSI is a registered broker-dealer and investment adviser and is a member
of the National Association of Securities Dealers, Inc. FAS was established on
December 29, 1995 under the laws of the State of Delaware. As of the date of
this Prospectus, FAS and FFSI provide management, administration and
distribution services to registered investment companies and collective
investment funds with assets of approximately $21 billion, and FAS, FFSI, the
Adviser and Forum Financial Corp., the transfer agent of the Trust, were
controlled by John Y. Keffer, president and Chairman of the Trust.
SHAREHOLDER SERVICING
Shareholder inquiries and communications concerning the Fund may be
directed to Forum Financial Corp. ("FFC"), the Fund's transfer agent. FFC acts
as the Fund's transfer agent and dividend disbursing agent. FFC maintains for
each shareholder of record, an account (unless such accounts are maintained by
sub-transfer agents) to which all shares purchased are credited, together with
any distributions that are reinvested in additional shares. FFC also performs
other transfer agency functions and acts as dividend disbursing agent for the
Trust. In addition, FFC performs portfolio accounting services for the Fund,
including determination of the Fund's net asset value, pursuant to a separate
agreement with the Trust. For its services, FFC receives a fee at an annual rate
of 0.25% of the Fund's average daily net assets.
FFC is authorized to subcontract any or all of its functions to one or
more qualified sub-transfer agents or processing agents, which may be processing
organizations (as described under "Purchases and Redemptions of Shares -
Purchases and Redemptions Through Financial Institutions"), FAS or affiliates of
FAS, who agree to comply with the terms of the Transfer Agency Agreement. FFC
may pay those agents for their services, but no such payment will increase the
Transfer Agent's compensation from the Trust.
EXPENSES OF THE TRUST
The is obligated to pay for all of its expenses, subject to FAS's
obligation to reimburse the Trust for excess expenses of the Fund. The Fund's
expenses comprise Trust expenses attributable to the Fund and expenses not
attributable to any particular portfolio of the Trust, which are allocated among
the Fund and the portfolios in proportion to their average net assets. The
Fund's expenses include: interest charges; taxes; brokerage fees and
commissions; certain insurance premiums; applicable fees and expenses under the
Trust's contracts with the Adviser, FAS, the Transfer Agent and any
subcustodian; fees of pricing, interest, dividend, credit and other reporting
services; costs of membership in trade associations; auditing, legal and
compliance expenses; costs of preparing and printing the Trust's prospectuses,
statements of additional information and shareholder reports and delivering them
to existing shareholders; compensation of certain of the Trust's trustees,
officers and employees and other personnel performing services for the Trust;
and registration fees and related expenses.
The Adviser, FAS and the Transfer Agent, in their sole discretion, may
waive all or any portion of their respective fees, which are accrued daily and
paid monthly. Any such waiver, which could be discontinued at any time, would
have the effect of increasing the Fund's performance for the period during which
the waiver was in effect and would not be recouped at a later date.
PORTFOLIO TRANSACTIONS
The Adviser monitors the creditworthiness of counterparties to the
Fund's transactions and intends to enter into a transaction only when it
believes that the counterparty presents minimal credit risks and the benefits
from the transaction justify the attendant risks.
The Adviser places orders for the purchase and sale of assets they
manage with brokers and dealers selected by and in the discretion of the
respective adviser. The investment advisers seek "best execution" for all
<PAGE>
portfolio transactions, but the Fund may pay higher than the lowest available
commission rates when an investment adviser believes it is reasonable to do so
in light of the value of the brokerage and research services provided by the
broker effecting the transaction.
The Adviser may effect transactions for the Fund through brokers who
sell Fund shares. The Fund has no obligation to deal with any specific broker or
dealer in the execution of portfolio transactions.
Although the Fund does not currently engage in directed brokerage
arrangements to pay expenses, it may do so in the future. These arrangements,
whereby brokers executing the Fund's portfolio transactions would agree to pay
designated expenses of the Fund if brokerage commissions generated by the Fund
reached certain levels, might reduce the Fund's expenses). As anticipated, these
arrangements would not materially increase the brokerage commissions paid by the
Fund.
5. PURCHASES AND REDEMPTIONS OF SHARES
GENERAL INFORMATION
Investments in the Fund may be made either by an investor directly or
through certain brokers and financial institutions of which the investor is a
customer. All transactions in Fund shares are effected through the Transfer
Agent, which accepts orders for purchases and redemptions from shareholders of
record and new investors. Shareholders of record will receive from the Trust
periodic statements listing all account activity during the statement period.
The Trust reserves the right in the future to modify, limit or terminate any
shareholder privilege upon appropriate notice to shareholders and charge a fee
for certain shareholder services, although no such fees are currently
contemplated.
PURCHASES. Fund shares are sold at a price equal to their net asset
value next-determined after acceptance of an order plus any applicable sales
charge on all weekdays except days when the New York Stock Exchange is closed,
normally, New Year's Day, Dr. Martin Luther King Jr. Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas ("Fund Business Day") (see "Sales Charges" below). Fund shares are
issued immediately after an order for the shares in proper form is accepted by
the Transfer Agent. The Fund's net asset value is calculated at 4:00 p.m.,
Eastern Time on each Fund Business Day. Fund shares become entitled to receive
dividends on the next Fund Business Day after the order is accepted.
The Fund reserves the right to reject any subscription for the purchase
of their shares. Stock certificates are issued only to shareholders of record
upon their written request and no certificates are issued for fractional shares.
REDEMPTIONS. Fund shares may be redeemed without charge at their net
asset value on any Fund Business Day. There is no minimum period of investment
and no restriction on the frequency of redemptions. Fund shares are redeemed as
of the next determination of the Fund's net asset value following acceptance by
the Transfer Agent of the redemption order in proper form (and any supporting
documentation which the Transfer Agent may require). Shares redeemed are not
entitled to receive dividends declared after the day on which the redemption
becomes effective.
Normally, redemption proceeds are paid immediately following, but in no
event later than seven days following, acceptance of a redemption order.
Proceeds of redemption requests (and exchanges), however, will not be paid
unless any check used for investment has been cleared by the shareholder's bank,
which may take up to 15 calendar days. This delay may be avoided by investing
through wire transfers. Unless otherwise indicated, redemption proceeds normally
are paid by check mailed to the shareholder's record address. The right of
redemption may not be suspended nor the payment dates postponed except when the
New York Stock Exchange is closed (or when trading thereon is restricted) for
any reason other than its customary weekend or holiday closings or under any
emergency or other circumstance as determined by the Securities and Exchange
Commission.
Proceeds of redemptions normally are paid in cash. However, payments
may be made wholly or partially in portfolio securities if the Board determines
that payment in cash would be detrimental to the best interests of the Fund. The
Trust will only effect a redemption in portfolio securities if the particular
shareholder is redeeming more than $250,000 or 1% of the Fund's net assets,
whichever is less, during any 90-day period.
<PAGE>
The Trust employs reasonable procedures to insure that telephone orders
are genuine (which include recording certain transactions and the use of
shareholder security codes). If the Trust did not employ such procedures it
could be liable for any losses due to unauthorized or fraudulent telephone
instructions. Shareholders should verify the accuracy of telephone instructions
immediately upon receipt of confirmation statements. During times of drastic
economic or market changes, the telephone redemption and exchange privileges may
be difficult to implement. In the event that a shareholder is unable to reach
the Transfer Agent by telephone, requests may be mailed or hand-delivered to the
Transfer Agent.
Due to the cost to the Trust of maintaining smaller accounts, the Trust
reserves the right to redeem, upon not less than 60 days' written notice, all
shares in any Fund account with an aggregate net asset value of less than
$1,000. The Trust will not redeem accounts that fall below that amount solely as
a result of a reduction in net asset value.
PURCHASE AND REDEMPTION PROCEDURES
The following purchase and redemption procedures and shareholder
services apply to investors who invest in the Fund directly. These investors may
open an account by completing the application at the back of this Prospectus or
by contacting the Transfer Agent at the address on the first page of this
prospectus. For those shareholder services not referenced on the account
application and to change information regarding a shareholder's account (such as
addresses), investors should request an Optional Services Form from the Transfer
Agent.
INITIAL PURCHASE OF SHARES
There is a $5,000 minimum for initial investments in the Fund ($2,000 for
individual retirement accounts).
BY MAIL. Investors may send a check made payable to the Trust along
with a completed account application to the Fund at the address listed above.
Checks are accepted at full value subject to collection. If a check does not
clear, the purchase order will be canceled and the investor will be liable for
any losses or fees incurred by the Trust, the Transfer Agent or FFSI.
BY BANK WIRE. To make an initial investment in the Fund using the wire
system for transmittal of money among banks, an investor should first telephone
the Trust at (207) 879-0009 or 800-94FORUM (800-943-6786) to obtain an account
number. The investor should then instruct a bank to wire the investor's money
immediately to:
BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Financial Corp.
Account #: 541-54171
Re: Investors Growth Fund
Account #:______________
Account Name:_________________
The investor should then promptly complete and mail the account
application. Any investor planning to wire funds should instruct a bank early in
the day so the wire transfer can be accomplished the same day. There may be a
charge imposed by the bank for transmitting payment by wire, and there also may
be a charge for the use of Federal funds.
SUBSEQUENT PURCHASES OF SHARES
There is a $500 minimum for subsequent purchases. Subsequent purchases
may be made by mailing a check or by sending a bank wire as indicated above.
Shareholders using the wire system for purchase should first telephone the Trust
at (207) 879-0009 or 800-94FORUM (800-943-6786) to notify it of the wire
transfer. All payments should clearly indicate the shareholder's name and
account number.
<PAGE>
Shareholders may purchase Fund shares at regular, preselected intervals
by authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders wishing to participate in this
program may obtain the applicable forms from the Transfer Agent. Shareholders
may terminate their automatic investments or change the amount to be invested at
any time by written notification to the Transfer Agent.
REDEMPTION OF SHARES
Shareholders that wish to redeem shares by telephone or by check or
receive redemption proceeds by bank wire must elect these options by properly
completing the appropriate sections of their account application. These
privileges may not be available until several weeks after a shareholder's
application is received. Shares for which certificates have been issued may not
be redeemed by telephone.
BY MAIL. Shareholders may make a redemption in any amount by sending a
written request to the Transfer Agent accompanied by any stock certificate that
may have been issued to the shareholder. All written requests for redemption
must be signed by the shareholder with signature guaranteed and all certificates
submitted for redemption must be endorsed by the shareholder with signature
guaranteed.
BY TELEPHONE. A shareholder that has elected telephone redemption
privileges may make a telephone redemption request by calling the Transfer Agent
at (207) 879-0009 or 800-94FORUM (800-943-6786) and providing the shareholder's
account number, the exact name in which the shareholder's shares are registered
and the shareholder's social security or taxpayer identification number. In
response to the telephone redemption instruction, the Fund will mail a check to
the shareholder's record address or, if the shareholder has elected wire
redemption privileges, wire the proceeds.
BY BANK WIRE. For redemptions of more than $5,000, a shareholder that
has elected wire redemption privileges may request the Fund to transmit the
redemption proceeds by Federal Funds wire to a bank account designated on the
shareholder's account application. To request bank wire redemptions by
telephone, the shareholder also must have elected the telephone redemption
privilege. Redemption proceeds are transmitted by wire on the day the redemption
request in proper form is received by the Transfer Agent.
AUTOMATIC REDEMPTIONS. Shareholders may redeem Fund shares at regular,
preselected intervals by authorizing the automatic redemption of shares from
their Fund account. Redemption proceeds will be sent either by check or by
automatic transfer to a designated bank account maintained with a United States
banking institution which is an Automated Clearing House member. Under this
program, shareholders may authorize the redemption of shares in amounts of $250
or more from their account monthly or quarterly. Shareholders may terminate
their automatic redemptions or change the amount to be redeemed at any time by
written notification to the Transfer Agent.
OTHER REDEMPTION MATTERS. A signature guarantee is required for any
written redemption request and for any endorsement on a stock certificate. In
addition, a signature guarantee also is required for instructions to change a
shareholder's record name or address, designated bank account for wire
redemptions or automatic investment or redemption, dividend election, telephone
redemption or exchange option election or any other option election in
connection with the shareholder's account. Signature guarantees may be provided
by any eligible institution, including a bank, a broker, a dealer, a national
securities exchange, a credit union, or a savings association that is authorized
to guarantee signatures, acceptable to the Transfer Agent. Whenever a signature
guarantee is required, the signature of each person required to sign for the
account must be guaranteed.
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.
<PAGE>
SALES CHARGES
The public offering price for shares of the Fund is the sum of the net
asset value of the shares being purchased plus any applicable sales charge. No
sales charge is assessed on the reinvestment of dividends or other
distributions. The sales charge is assessed for the Fund as follows (net asset
value percentages are rounded to the nearest one-hundredth percent):
<TABLE>
<S> <C> <C> <C> <C>
AMOUNT OF PURCHASE PUBLIC OFFERING NET ASSET DEALERS'
- ------------------ --------------- --------- --------
PRICE VALUE* REALLOWANCE
----- ------ -----------
less than $100,000............................................ 4.00% 4.17% 3.50%
$100,000 but less than $200,000............................... 3.50 3.63 3.10
$200,000 but less than $400,000............................... 3.00 3.09 2.70
$400,000 but less than $600,000............................... 2.50 2.56 2.25
$600,000 but less than $800,000............................... 2.00 2.04 1.75
$800,000 but less than $1,000,000............................. 1.50 1.52 1.30
$1,000,000 and up............................................. 0.50 0.50 0.40
</TABLE>
* Rounded to the nearest one-hundredth percent.
FFSI's commission is the sales charge shown above less any applicable
discount reallowed to selected brokers and dealers (including banks and bank
affiliates purchasing shares as principal or agent). Normally, FFSI will reallow
discounts to selected brokers and dealers in the amounts indicated in the table
above. From time to time, however, FFSI may elect to reallow the entire sales
charge to selected brokers or dealers for all sales with respect to which orders
are placed with FFSI during a particular period. The dealers' reallowance may be
changed from time to time.
In addition, from time to time and at its own expense, FFSI may provide
compensation, including financial assistance, to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns or other dealer-sponsored special events.
Compensation may include: (i) the provision of travel arrangements and lodging,
(ii) tickets for entertainment events and (iii) merchandise.
No sales charge will be assessed on purchases made for investment
purposes by: (a) any bank, trust company, savings association or similar
institution with whom FFSI has entered into a share purchase agreement acting on
behalf of the institution's fiduciary customer accounts or any account
maintained by its trust department (including a pension, profit sharing or other
employee benefit trust created pursuant to a qualified retirement plan); (b) any
registered investment adviser with whom FFSI has entered into a share purchase
agreement and which is acting on behalf of its fiduciary customer accounts; (c)
any registered investment adviser which is acting on behalf of its fiduciary
customer accounts and for which it provides additional investment advisory
services; (d) any broker-dealer with whom FFSI has entered into a Selected
Dealer Agreement and a Fee-Based or Wrap Account Agreement and which is acting
on behalf of its fee-based program clients; (e) directors and officers of the
Trust; directors, officers and full-time employees of the Adviser, FFSI, any of
their affiliates or any organization with which FFSI has entered into a selected
dealer or processing agent agreement; the spouse, sibling, direct ancestor or
direct descendent (collectively, "relatives") of any such person; any trust or
individual retirement account or self-employed retirement plan for the benefit
of any such person or relative; or the estate of any such person or relative;
(f) any person who has, within the preceding 90 days, redeemed Fund shares (but
only on purchases in amounts not exceeding the redeemed amounts) and completes a
reinstatement form upon investment; (g) persons who exchange into the Fund from
a mutual fund other than a fund of the Trust that participates in the Trust's
exchange program, See "Purchases and Redemptions of Shares _ Exchange Program;"
and (h) employee benefit plans qualified under Section 401 of the Internal
Revenue Code of 1986. The Trust may require appropriate documentation from an
investor concerning that investor's eligibility to purchase Fund shares without
a sales charge. Any shares so purchased may not be resold except to the Fund.
<PAGE>
REDUCED SALES CHARGES
For an investor to qualify for a reduced sales charge as described
below, the investor must notify the Transfer Agent at the time of purchase.
Programs for reduced sales charges may be modified or terminated at any time and
are subject to confirmation of an investor's holdings.
RIGHTS OF ACCUMULATION. An investor's purchase of additional shares of
the Fund may qualify for rights of accumulation ("ROA") wherein the applicable
sales charge will be based on the total of the investor's current purchase and
the net asset value (at the end of the previous Fund Business Day) of shares of
the Fund held by the investor. For example, if an investor owned shares of the
Fund worth $400,000 at the then current net asset value and purchased shares of
the Fund worth an additional $50,000, the sales charge for the $50,000 purchase
would be at the 2.50% rate applicable to a single $450,000 purchase, rather than
at the 4.0% rate. To qualify for ROA on a purchase, the investor must inform the
Transfer Agent and supply sufficient information to verify that each purchase
qualifies for the privilege or discount.
LETTER OF INTENT. Investors may also obtain reduced sales charges based
on cumulative purchases by means of a written Letter of Intent ("LOI"), which
expresses the investor's intention to invest $100,000 or more within a period of
13 months in shares of the Fund. Each purchase of shares under a LOI will be
made at the public offering price applicable at the time of the purchase to a
single transaction of the dollar amount indicated in the LOI.
An LOI is not a binding obligation upon the investor to purchase the
full amount indicated. Shares purchased with the first 5% of the amount
indicated in the LOI will be held subject to a registered pledge (while
remaining registered in the name of the investor) to secure payment of the
higher sales charge applicable to the shares actually purchased if the full
amount indicated is not purchased within 13 months. Pledged shares will be
involuntarily redeemed to pay the additional sales charge, if necessary. When
the full amount indicated has been purchased, the shares will be released from
pledge. Share certificates are not issued for shares purchased under an LOI.
Investors wishing to enter into an LOI can obtain a form of LOI from their
broker or financial institution or by contacting the Transfer Agent.
EXCHANGES
Fund shareholders are entitled to exchange their shares for shares of
any other fund of the Trust or any other fund that participates in the exchange
program and whose shares are eligible for sale in the shareholder's state of
residence. Exchanges may only be made between accounts registered in the same
name. A completed account application must be submitted to open a new account in
the Fund through an exchange if the shareholder requests any shareholder
privilege not associated with the existing account. Exchanges are subject to the
fees charged by, and the restrictions listed in the prospectus for, and the fund
into which a shareholder is exchanging, including minimum investment
requirements. The Fund does not charge for exchanges, and there is currently no
limit on the number of exchanges a shareholder may make.
The Trust (and Federal tax law) treats an exchange as a redemption of
the shares owned and the purchase of the shares of the fund being acquired.
Redemptions and purchases are effected at the respective net asset values of the
two funds as next determined following receipt of proper instructions and all
necessary supporting documents by the fund whose shares are being exchanged.
If a shareholder exchanges into a fund that imposes a sales charge,
that shareholder is required to pay the difference between that fund's sales
charge and any sales charge the shareholder has previously paid in connection
with the shares being exchanged. For example, if a shareholder paid a 2% sales
charge in connection with the purchase of the shares of a fund and then
exchanged those shares into another fund with a 3% sales charge, that
shareholder would pay an additional 1% sales charge on the exchange. Shares
acquired through the reinvestment of dividends and distributions are deemed to
have been acquired with a sales charge rate equal to that paid on the shares on
which the dividend or distribution was paid. The exchange privilege may be
modified materially or terminated by the Trust at any time upon 60 days' notice
to shareholders.
BY MAIL. Exchanges may be accomplished by written instructions to the
Transfer Agent accompanied by any stock certificate that may have been issued to
the shareholder. All written requests for exchanges must be signed by the
<PAGE>
shareholder (a signature guaranteed is not required) and all certificates
submitted for exchange must be endorsed by the shareholder with signature
guaranteed.
EXCHANGE BY TELEPHONE. Exchanges may be accomplished by telephone by
any shareholder that has elected telephone exchange privileges by calling the
Transfer Agent at (207) 879-0009 or 800-94FORUM (800-943-6786) and providing the
shareholder's account number, the exact name in which the shareholder's shares
are registered and the shareholder's social security or taxpayer identification
number.
RETIREMENT PROGRAMS
INDIVIDUAL RETIREMENT ACCOUNTS. The Fund should not be considered as a
complete investment vehicle for the assets held in individual retirement
accounts ("IRAs"). The minimum initial investment for an IRA is $2,000, and the
minimum subsequent investment is $500. Individuals may make tax-deductible IRA
contributions of up to a maximum of $2,000 annually. However, this deduction
will be reduced if the individual or, in the case of a married individual filing
jointly, either the individual or the individual's spouse is an active
participant in an employer-sponsored retirement plan and has adjusted gross
income above certain levels.
EMPLOYEE BENEFIT PLANS. The Fund may be a suitable investment vehicle
for part of the assets held in various employee benefit plans, including 401(k)
plans, 403(b) plans and SARSEPs.
PURCHASES AND REDEMPTIONS THROUGH FINANCIAL INSTITUTIONS
Shares may be purchased and redeemed through certain broker-dealer
banks, trust companies and their affiliates, and other financial institutions,
including affiliates of the Transfer Agent ("Processing Organizations").
Processing Organizations may receive as a dealer's reallowance a portion of the
sales charge paid by their customers who purchase Fund shares. In addition,
Processing Organizations may charge their customers a fee for their services and
are responsible for promptly transmitting purchase, redemption and other
requests to the Fund. The Trust is not responsible for the failure of any
institution to promptly forward these requests.
Investors who purchase shares through a Processing Organization may be
charged a fee if they effect transactions in Fund Shares through a broker or
agent and will be subject to the procedures of their Processing Organization,
which may include limitations, investment minimums, cutoff times and
restrictions in addition to, or different from, those applicable to shareholders
who invest in the Fund directly. These investors should acquaint themselves with
their Processing Organization's procedures and should read this Prospectus in
conjunction with any materials and information provided by their Processing
Organization. Customers who purchase Fund shares through a Processing
Organization may or may not be the shareholder of record and, subject to their
Processing Organization's and the Fund's procedures, may have Fund shares
transferred into their name. Under their arrangements with the Trust,
broker-dealer Processing Organizations are not generally required to deliver
payment for purchase orders until several business days after a purchase order
has been received by the Fund. Certain other Processing Organizations may also
enter purchase orders with payment to follow.
Certain shareholder services may not be available to shareholders who
have purchased shares through a Processing Organization. These shareholders
should contact their Processing Organization for further information. The Trust
may confirm purchases and redemptions of a Processing Organization's customers
directly to the Processing Organization, which in turn will provide its
customers with such confirmations and periodic statements as may be required by
law or agreed to between the Processing Organization and its customers. The
Trust is not responsible for the failure of any Processing Organization to carry
out its obligations to its customer. Certain states permit shares of the Fund to
be purchased and redeemed only through registered broker-dealers, including the
Fund's distributor.
<PAGE>
6. DIVIDENDS AND TAX MATTERS
DIVIDENDS
Dividends of the Fund's net investment income are declared and paid
annually. Dividends of net capital gain, if any, realized by the Fund are
distributed annually.
Shareholders may have all dividends reinvested in additional shares of
the Fund in which they invest or received in cash. In addition, shareholders may
have dividends of net capital gain reinvested in additional shares of the Fund
in which they invest and dividends of net investment income paid in cash. All
dividends are treated in the same manner for Federal income tax purposes whether
received in cash or reinvested in shares of the Fund.
All dividends will be reinvested at the Fund's net asset value as of
the payment date of the dividend. All dividends are reinvested unless another
option is selected. All dividends not reinvested will be paid to the shareholder
in cash and may be paid more than seven days following the date on which
dividends would otherwise be reinvested.
TAXES
The Fund intends to continue to qualify for each fiscal year to be
taxed as a "regulated investment company" under the Internal Revenue Code of
1986. As such, the Fund will not be liable for Federal income taxes on the net
investment income and net capital gain distributed to their shareholders.
Because the Fund intend to distribute all of their net investment income and net
capital gain each year, the Fund should avoid all Federal income and excise
taxes.
The Fund intends to elect, pursuant to Section 853 of the Code if the
Fund is eligible to do so, to permit shareholders to take a credit (or a
deduction) for foreign income taxes paid by the Fund. An investor should include
as gross income in its Federal income tax returns both cash dividends received
from the Fund and also the amount that the Fund advises is its pro rata portion
of foreign income taxes paid with respect to, or withheld from, dividends and
interest paid to the Fund from the Fund's foreign investments. An investor would
then be entitled, subject to certain limitations, to take a foreign tax credit
against its Federal income tax liability for the amount of such foreign taxes or
else to deduct such foreign taxes as an itemized deduction from gross income.
Dividends paid by the Fund out of its net investment income (including
any realized net short-term capital gain) are taxable to shareholders as
ordinary income. Distributions by the Fund of realized net long-term capital
gain are taxable to shareholders as long-term capital gain, regardless of the
length of time the shareholder may have held shares in the Fund. If Fund shares
are sold at a loss after being held for six months or less, the loss will be
treated as long-term capital loss to the extent of any long-term capital gain
distribution received on those shares.
Any dividend or distribution received by a shareholder reduces the net
asset value of the shareholder's shares by the amount of the dividend or
distribution. To the extent that the income or gain comprising a dividend or
distribution were accrued by the Fund before the shareholder purchased the
shares, the dividend or distribution would be in effect a return of capital to
the shareholder. All dividends and distributions, including those that operate
as a return of capital, however, are taxable as described above to the
shareholder receiving them regardless of the length of time he may have held
shares prior to the dividend or distribution.
It is expected that a portion of the Fund's dividends to shareholders
will qualify for the dividends received deduction for corporations.
The Fund may be required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and redemption
proceeds) paid to individuals and certain other non-corporate shareholders.
Withholding is not required if a shareholder certifies that the shareholder's
social security or tax identification number provided to the Fund is correct and
that the shareholder is not subject to backup withholding.
Reports containing appropriate information with respect to the Federal
income tax status of dividends and distributions paid during the year by the
Fund will be mailed to shareholders shortly after the close of each year.
The foregoing is only a summary of some of the important Federal tax
considerations generally affecting the Fund and 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.
<PAGE>
7. OTHER INFORMATION
PERFORMANCE INFORMATION
The Fund's performance may be quoted in advertising in terms of yield
or total return. Both types are based on historical results and are not intended
to indicate future performance. The Fund's yield is a way of showing the rate of
income earned by the Fund as a percentage of the Fund's share price. Yield is
calculated by dividing the net investment income of the Fund for the stated
period by the average number of shares entitled to receive dividends and
expressing the result as an annualized percentage rate based on the Fund's share
price at the end of the period. Total return refers to the average annual
compounded rates of return over some representative period that would equate an
initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment, after giving effect to the reinvestment of
all dividends and distributions and deductions of expenses during the period.
The Fund also may advertise its total return over different periods of time or
by means of aggregate, average, year by year, or other types of total return
figures. Because average annual returns tend to smooth out variations in the
Fund's returns, shareholders should recognize that they are not the same as
actual year-by-year results. A computation of yield or total return that does
not take into account the sales load paid by an investor will be higher than a
computation based on the public offering price of the shares purchased that does
take into account payment of a sales load.
The Fund's advertisements may reference ratings and rankings among
similar funds by independent evaluators such as Morningstar, Lipper Analytical
Services, Inc. or IBC/Donoghue, Inc. In addition, the performance of the Fund
may be compared to recognized indices of market performance. The comparative
material found in the Fund's advertisements, sales literature or reports to
shareholders may contain performance ratings. These are not to be considered
representative or indicative of future performance.
BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate
to purchase shares of an investment company as agent for and upon the order of a
customer and in the view of FAS would permit a bank or bank affiliate to serve
as a Processing Organization or perform sub-transfer agent or similar services
for the Trust and its shareholders. If a bank or bank affiliate were prohibited
from performing all or a part of the foregoing services, its shareholder
customers would be permitted to remain shareholders of the Trust and alternative
means for continuing to service them would be sought. It is not expected that
shareholders would suffer adverse financial consequences as a result of any
changes in bank or bank affiliate service arrangements.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of the Fund as of
4:00 p.m., Eastern Time, on each Fund Business Day by dividing the value of the
Fund's net assets (I.E., the value of its portfolio securities and other assets
less its liabilities) by the number of that Fund's shares outstanding at the
time the determination is made. Securities owned by the Fund for which market
quotations are readily available are valued at current market value or, in their
absence, at fair value as determined by the Board or pursuant to procedures
approved by the Board.
THE TRUST AND ITS SHARES
The Trust was originally incorporated in Maryland on March 24, 1980 and
assumed the name of Forum Funds, Inc. on March 16, 1987. On January 5, 1996,
Forum Funds, Inc. was reorganized as a Delaware business trust under the name
Forum Funds. The Trust has an unlimited number of authorized shares of
beneficial interest. The Board may, without shareholder approval, divide the
authorized shares into an unlimited number of separate portfolios or series
(such as the Fund) and may in the future divide portfolios or series into two or
more classes of shares (such as Investor and Institutional Shares). Currently
the authorized shares of the Trust are divided into 16 separate series.
Generally, shares will be voted in the aggregate without reference to a
particular portfolio, except if the matter affects only one portfolio or voting
by portfolio or class is required by law, in which case shares will be voted
<PAGE>
separately by portfolio. Delaware law does not require the Trust to hold annual
meetings of shareholders, and it is anticipated that shareholder meetings will
be held only when specifically required by Federal or state law. Shareholders
have available certain procedures for the removal of Trustees. There are no
conversion or preemptive rights in connection with shares of the Trust. All
shares when issued in accordance with the terms of the offering will be fully
paid and nonassessable. Shares are redeemable at net asset value, at the option
of the shareholders, subject to any contingent deferred sales charge that may
apply. A shareholder in a portfolio is entitled to the shareholder's pro rata
share of all dividends and distributions arising from that portfolio's assets
and, upon redeeming shares, will receive the portion of the portfolio's net
assets represented by the redeemed shares.
From time to time, certain shareholders may own a large percentage of
the shares of the Fund. Accordingly, those shareholders may be able to greatly
affect (if not determine) the outcome of a shareholder vote.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUND'S
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
<PAGE>
TABLE OF CONTENTS
1. Prospectus Summary..................................................
2. Investment Objectives and Policies..................................
3. Additional Investment Policies......................................
4. Management..........................................................
5. Purchases and Redemptions of Shares.................................
6. Dividends and Tax Matters...........................................
7. Other Information...................................................
<PAGE>
[LOGO]
SHAREHOLDER INFORMATION
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
207-879-0001 (IN PORTLAND, ME)
800-94FORUM (ELSEWHERE)
<PAGE>
INVESTORS GROWTH FUND
- --------------------------------------------------------------------------------
Account Information and
Shareholder Servicing: Distributor:
Forum Financial Corp. Forum Financial Services, Inc.
P.O. Box 446 Two Portland Square
Portland, Maine 04112 Portland, Maine 04101
207-879-0001 207-879-1900
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 1, 1997
Forum Funds (the "Trust") is a registered open-end investment company. This
Statement of Additional Information supplements the "Preliminary Prospectus"
dated December 1, 1997 offering shares of Investors Growth Fund (the "Fund"),
and should be read only in conjunction with the Prospectus, a copy of which may
be obtained by an investor without charge by contacting the Trust's Distributor
at the address listed above.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
TABLE OF CONTENTS
PAGE
1. General......................................................
2. Investment Policies..........................................
3. Investment Limitations.......................................
4. Performance Data.............................................
5. Management...................................................
6. Determination of Net Asset Value.............................
7. Portfolio Transactions.......................................
8. Additional Purchase and
Redemption Information.......................................
9. Taxation.....................................................
10. Other Information............................................
Appendix A - Description of Securities Ratings
<PAGE>
1. GENERAL
THE TRUST. The Trust is registered with the SEC as an open-end, management
investment company and was organized as a business trust under the laws of the
State of Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to
the assets and liabilities of Forum Funds, Inc. Forum Funds, Inc. was
incorporated on March 24, 1980 and assumed the name of Forum Funds, Inc. on
March 16, 1987. The Board has the authority to issue an unlimited number of
shares of beneficial interest of separate series with no par value per share and
to create separate classes of shares within each series. The Trust currently
offers shares of fourteen series and has two series that have not commenced
operation as of the date of this SAI. The series of the Trust are as follows:
Investors Bond Fund Maine Municipal Bond Fund
TaxSaver Bond Fund New Hampshire Bond Fund
Daily Assets Cash Fund Austin Global Equity Fund
Daily Assets Treasury Fund Oak Hall Equity Fund
Daily Assets Government Fund Quadra International Equity Fund
Daily Assets Tax Saver Fund Quadra Limited Maturity Treasury Fund
Payson Value Fund Quadra Opportunistic Bond Fund
Payson Balanced Fund Quadra Value Equity Fund
DEFINITIONS. As used in this Statement of Additional Information, the following
terms shall have the meanings listed:
"Board" means the Board of Trustees of Forum Funds.
"FAS" means Forum Administrative Services, LLC.
"FAcS" means Forum Accounting Services, LLC.
"FFC" means Forum Financial Corp.
"FFSI" means Forum Financial Services, Inc.
"Forum Advisors" means Forum Advisors, Inc.
"Fund" means Investors Growth Fund, a separate series of Forum Funds.
"Fund Business Day" has the meaning ascribed thereto in the current Prospectus
of the Fund.
"NRSRO" means a nationally recognized statistical rating organization.
"SAI" means this Statement of Additional Information.
"SEC" means the U.S. Securities and Exchange Commission.
"Trust" means Forum Funds, a Delaware business trust.
"U.S. Government Securities" has the meaning ascribed thereto by the current
Prospectus of the Funds.
"1940 Act" means the Investment Company Act of 1940, as amended.
<PAGE>
2. INVESTMENT POLICIES
INTRODUCTION
The following information supplements the discussion found under "Investment
Objective and Policies" and "Additional Investment Policies" in the Prospectus.
For temporary defensive purposes, to accumulate cash for investments, or to meet
anticipated redemptions, the Fund may invest in (or enter into repurchase
agreements with banks and broker dealers with respect to) short-term debt
securities, including Treasury bills and other U.S. Government securities, and
certificates of deposit and bankers' acceptances of U.S. banks.
ILLIQUID AND RESTRICTED SECURITIES
"Illiquid and Restricted Securities" under "Additional Investment Policies" in
the Prospectus sets forth the circumstances in which the Fund may invest in
"restricted securities". In connection with the Fund's original purchase of
restricted securities it may negotiate rights with the issuer to have such
securities registered for sale at a later time. Further, the registration
expenses of illiquid restricted securities may also be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund. When
registration is required, however, a considerable period may elapse between the
decision to sell the securities and the time the Fund would be permitted to sell
such securities. A similar delay might be experienced in attempting to sell such
securities pursuant to an exemption from registration. Thus, the Fund may not be
able to obtain as favorable a price as that prevailing at the time of the
decision to sell.
U.S. GOVERNMENT SECURITIES
The Fund may invest in obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities which have remaining maturates not
exceeding one year. Agencies and instrumentalities which issue or guarantee debt
securities and which have been established or sponsored by the U.S. Government
include the Bank for Cooperatives, the Export-Import Bank, the Federal Farm
Credit System, the Federal Home Loan Banks, the Federal Home Loan Mortgage
Corporation, the Federal Intermediate Credit Banks, the Federal Land Banks, the
Federal National Mortgage Association, the Government National Mortgage
Association and the Student Loan Marketing Association. Except for obligations
issued by the U.S. Treasury and the Government National Mortgage Association,
none of the obligations of the other agencies or instrumentalities referred to
above are backed by the full faith and credit of the U.S. Government.
BANK OBLIGATIONS
The Fund may invest in obligations of U.S. banks (including certificates of
deposit and bankers' acceptances) having total assets at the time of purchase in
excess of $1 billion. Such banks must be members of the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance Corporation.
The Fund also may invest in certificates of deposit issued by foreign banks,
denominated in any major foreign currency. The Fund will invest in instruments
issued by foreign banks which, in the view of its investment adviser and the
Trustees of the Trust, are of credit-worthiness and financial stature in their
respective countries comparable to U.S. banks used by the Fund.
A certificate of deposit is an interest-bearing negotiable certificate issued by
a bank against funds deposited in the bank. A bankers' acceptance is a
short-term draft drawn on a commercial bank by a borrower, usually in connection
with an international commercial transaction. Although the borrower is liable
for payment of the draft, the bank unconditionally guarantees to pay the draft
at its face value on the maturity date.
<PAGE>
LOANS OF PORTFOLIO SECURITIES
The Fund may lend its portfolio securities subject to the restrictions stated in
the Prospectus. Under applicable regulatory requirements (which are subject to
change), the loan collateral must (a) on each business day, at least equal the
market value of the loaned securities and (b) must consist of cash, bank letters
of credit, U.S. Government securities, or other cash equivalents in which the
Fund is permitted to invest. To be acceptable as collateral, letters of credit
must obligate a bank to pay amounts demanded by the Fund if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to the
Fund. When lending portfolio securities, the Fund receives from the borrower an
amount equal to the interest paid or the dividends declared on the loaned
securities during the term of the loan plus the interest on the collateral
securities (less any finders' or administrative fees the Fund pays in arranging
the loan). A Fund may share the interest it receives on the collateral
securities with the borrower as long as it realizes at least a minimum amount of
interest required by the lending guidelines established by the Board. The Fund
will not lend its portfolio securities to any officer, director, employee or
affiliate of the Fund or the investment adviser to the Fund. The terms of the
Fund's loans must meet certain tests under the Internal Revenue Code and permit
the Fund to reacquire loaned securities on five business days' notice or in time
to vote on any important matter.
SHORT-TERM DEBT SECURITIES
The Fund may invest in commercial paper, that is short-term unsecured promissory
notes issued in bearer form by bank holding companies, corporations and finance
companies. The commercial paper purchased by the Fund for temporary defensive
purposes consists of direct obligations of domestic issuers which, at the time
of investment, are rated "P-1" by Moody's Investors Service, Inc. ("Moody's") or
"A-1" by Standard & Poor's Corporation ("S&P"), or securities which, if not
rated, are issued by companies having an outstanding debt issue currently rated
Aa by Moody's or AAA or AA by S&P. The rating "P-1" is the highest commercial
paper rating assigned by Moody's and the rating "A-1" is the highest commercial
paper ratings assigned by S&P.
REPURCHASE AGREEMENTS
The Fund may invest in securities subject to repurchase agreements with U.S.
banks or broker-dealers maturing in seven days or less. In a typical repurchase
agreement the seller of a security commits itself at the time of the sale to
repurchase that security from the buyer at a mutually agreed-upon time and
price. The repurchase price exceeds the sale price, reflecting an agreed-upon
interest rate effective for the period the buyer owns the security subject to
repurchase. The agreed-upon rate is unrelated to the interest rate on that
security. The Fund's investment adviser will monitor the value of the underlying
security at the time the transaction is entered into and at all times during the
term of the repurchase agreement to insure that the value of the security always
equals or exceeds the repurchase price. In the event of default by the seller
under the repurchase agreement, the Fund may have difficulties in exercising its
rights to the underlying securities and may incur costs and experience time
delays in connection with the disposition of such securities. To evaluate
potential risks, the investment adviser reviews the credit-worthiness of those
banks and dealers with which the Fund enters into repurchase agreements.
CONVERTIBLE SECURITIES
The Fund may invest in convertible preferred stocks and convertible debt
securities. A convertible security is a bond, debenture, note, preferred stock
or other security that may be converted into or exchanged for a prescribed
amount of common stock of the same or a different issuer within a particular
period of time at a specified price or formula. Convertible securities rank
senior to common stocks in a corporation's capital structure and, therefore,
carry less risk than the corporation's common stock. The value of a convertible
security is a function of its "investment value" (its value as if it did not
have a conversion privilege), and its "conversion value" (the security's worth
if it were to be exchanged for the underlying security, at market value,
pursuant to its conversion privilege).
<PAGE>
DEPOSITORY RECEIPTS
Investments in securities of foreign issuers may be in the form of sponsored or
unsponsored American Depository Receipts ("ADRs") or European Depository
Receipts ("EDRs"), or other similar securities convertible into securities of
foreign issuers. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued in the United States by a bank or trust company, evidencing
ownership of the underlying securities. EDRs are typically issued in Europe
under a similar arrangement. Generally, ADRs, in registered form, are designed
for use in the U.S. securities markets and EDRs, in bearer form, are designed
for use in European securities markets. Unsponsored ADRs may be created without
the participation of the foreign issuer. Holders of these ADRs generally bear
all the costs of the ADR facility, whereas foreign issuers typically bear
certain costs in a sponsored ADR. The bank or trust company depository of an
unsponsored ADR may be under no obligation to distribute shareholder
communications received from the foreign issuer or to pass through voting
rights.
FOREIGN SECURITIES
Investment in the securities of foreign issuers may involve risks in addition to
those normally associated with investments in the securities of U.S. issuers.
There may be less publicly available information about foreign issuers than is
available for U.S. issuers, and foreign auditing, accounting and financial
reporting practices may differ from U.S. practices. Foreign securities markets
may be less active than U.S. markets, trading may be thin and consequently
securities prices may be more volatile. The Fund's investment adviser, will, in
general, invest only in securities of companies and governments of countries
which, in its judgment, are both politically and economically stable.
Nevertheless, all foreign investments are subject to risks of foreign political
and economic instability, adverse movements in foreign exchange rates, the
imposition or tightening of exchange controls or other limitations on the
repatriation of foreign capital and changes in foreign governmental attitudes
toward private investment, possibly leading to nationalization, increased
taxation, or confiscation of Fund assets.
WARRANTS AND STOCK RIGHTS
The Fund may invest in warrants, which are options to purchase an equity
security at a specified price (usually representing a premium over the
applicable market value of the underlying equity security at the time of the
warrant's issuance). A Fund may not invest more than 5% of its net assets (at
the time of investment) in warrants (other than those that have been acquired in
units or attached to other securities). No more than 2% of the Fund's net assets
(at the time of investment) may be invested in warrants that are not listed on
the New York or American Stock Exchanges. Investments in warrants involve
certain risks, including the possible lack of a liquid market for the resale of
the warrants, potential price fluctuations as a result of speculation or other
factors and failure of the price of the underlying security to reach a level at
which the warrant can be prudently exercised (in which case the warrant may
expire without being exercised, resulting in the loss of the Fund's entire
investment therein). The prices of warrants do not necessarily move parallel to
the prices of the underlying securities. Warrants have no voting rights, receive
no dividends and have no rights with respect to the assets of the issuer.
In addition, the Fund may invest up to 5% of its assets (at the time of
investment) in stock rights. A stock right is an option given to a shareholder
to buy additional shares at a predetermined price during a specified time
period.
3. INVESTMENT LIMITATIONS
The following investment restrictions restate or are in addition to those
described under "Investment Objective and Policies" and "Additional Investment
Policies and Risk Considerations" in the Prospectus. The Fund has adopted the
following investment limitations which are fundamental policies of the Fund,
unless otherwise stated.
(a) Diversification:
The Fund may not, with respect to 75% of its assets, purchase a
security if as a result: (i) more than 5% of its assets would be
invested in the securities of any single issuer or (ii) the Fund would
own more than 10%
<PAGE>
of the outstanding voting securities of any single issuer. This
restriction does not apply to securities issued by the U.S.
Government, its agencies or instrumentalities.
(b) Illiquid Securities
The Fund will not invest more than 10% of its assets in "illiquid
securities", which are securities that cannot be disposed of within
seven days at their then current value. For purposes of this
limitation, "illiquid securities" includes, except in those
circumstances described below, (i) "restricted securities", which are
securities that cannot be resold to the public without registration
under the Federal securities laws, and (ii) securities of issuers
having a record (together with all predecessors) of less than three
years of continuous operation.
(c) Concentration
The Fund will not invest 25% or more of the value of its total assets
in any one industry.
(d) Underwriting Activities
The Fund will not underwrite securities issued by other persons except
to the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under U.S.
securities laws.
(e) Borrowing
The Fund may borrow money for temporary or emergency purposes,
including the meeting of redemption requests, but no in excess of 33
13% of the value of the Fund's total assets (computed immediately after
the borrowing).
(f) Pledging
As a non-fundamental policy, the Fund may not pledge, mortgage,
hypothecate or encumber any of its assets except to secure permitted
borrowings or to secure other permitted transactions.
(g) Margin and Short Sales
The Fund may not purchase securities on margin; however, the Fund may
make margin deposits in connection with any Hedging Instruments, which
it may use as permitted by any of its other fundamental policies.
The Fund may not sell securities short.
(h) Investing for Control
The Fund may not make investments for the purpose of exercising control
or management.
(i) Real Estate
The Fund may not purchase or sell real estate, provided that the Fund
may invest in securities issued by companies which invest in real
estate or interests therein.
(j) Lending
The Fund will not lend money except in connection with the acquisition
of that portion of publicly-distributed debt securities which the
Fund's investment policies and restrictions permit it to purchase (see
<PAGE>
"Investment Objective" and "Investment Policies" in the Prospectus);
the Fund may also make loans of portfolio securities (see "Loans of
Portfolio Securities") and enter into repurchase agreements (see
"Repurchase Agreements");
(k) Purchases and Sales of Commodities
The Fund will not invest in commodities or commodity contracts (other
than Hedging Instruments which it may use as permitted by any of its
other fundamental policies, whether or not any such Hedging Instrument
is considered to be a commodity or a commodity contract);
(l) Options and Futures Contracts
The Fund may not purchase or write puts or calls except as permitted by
any of its other fundamental investment policies.
(n) Warrants
The Fund may not invest in warrants, valued at the lower of cost or
market, more than 5% of the value of the Fund's net assets (included
within that amount, but not to exceed 2% of the value of the Fund's net
assets, may be warrants which are not listed on the New York or
American Stock Exchange. Warrants acquired by the Fund in units or
attached to securities may be deemed to be without value).
4. PERFORMANCE DATA
The Fund may, from time to time, include quotations of its average annual total
return in advertisements or reports to shareholders or prospective investors.
Quotations of average annual total return will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in the
Fund over periods of 1, 5 and 10 years (up to the life of the Fund), calculated
pursuant to the following formula:
P (1+T)n = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). All total
return figures will reflect the deduction of Fund expenses (net of certain
reimbursed expenses) on an annual basis, and will assume that all dividends and
distributions are reinvested when paid.
For the one year period ended __________, the average annual total return of the
Fund was as follows:
Quotations of total return will reflect only the performance of a hypothetical
investment in the Fund during the particular time period shown. Total return for
the Fund will vary based on changes in market conditions and the level of the
Fund's expenses, and no reported performance figure should be considered an
indication of performance which may be expected in the future.
In connection with communicating total return to current or prospective
investors, the Fund also may compare these figures to the performance of other
mutual funds tracked by mutual fund rating services or to other unmanaged
indexes which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.
Investors who purchase and redeem shares of the Fund through a customer account
maintained at a Service Organization may be charged one or more of the following
types of fees as agreed upon by the Service Organization and the investor, with
respect to the customer services provided by the Service Organization: account
fees (a fixed
<PAGE>
amount per month or per year); transaction fees (a fixed amount per transaction
processed); compensating balance requirements (a minimum dollar amount a
customer must maintain in order to obtain the services offered); or account
maintenance fees (a periodic charge based upon a percentage of the assets in the
account or of the dividends paid on these assets). Such fees will have the
effect of reducing the average annual total return of the Fund for those
investors.
5. MANAGEMENT
TRUSTEES AND OFFICERS
THE TRUST
The trustees and officers of the Trust and their principal occupations during
the past five years are set forth below. Each Trustee who is an "interested
person" (as defined by the 1940 Act) of the Trust is indicated by an asterisk.
John Y. Keffer,* Chairman and President (age 54)
President and Director, Forum Financial Services, Inc. (a registered
broker-dealer), Forum Administrative Services, LLC (a mutual fund
administrator), Forum Financial Corp. (a registered transfer agent)
and Forum Advisors, Inc. (a registered investment adviser). Mr. Keffer
is a Trustee and/or officer of various registered investment companies
for which Forum Administrative Services, LLC serves as manager or
administrator and for which Forum Financial Services, Inc. serves as
distributor. His address is Two Portland Square, Portland, Maine
04101.
Costas Azariadis, Trustee (age 53)
Professor of Economics, University of California, Los Angeles, since
July 1992. Prior thereto, Dr. Azariadis was Professor of Economics at
the University of Pennsylvania. His address is Department of
Economics, University of California, Los Angeles, 405 Hilgard Avenue,
Los Angeles, California 90024.
James C. Cheng, Trustee (age 54)
President of Technology Marketing Associates (a marketing consulting
company) since September 1991. Prior thereto, Mr. Cheng was President
and Chief Executive Officer of Network Dynamics, Incorporated (a
software development company). His address is 27 Temple Street,
Belmont, Massachusetts 02178.
J. Michael Parish, Trustee (age 53)
Partner at the law firm of Winthrop Stimson Putnam & Roberts since
1989. Prior thereto, he was a partner at LeBoeuf, Lamb, Leiby &
MacRae, a law firm of which he was a member from 1974 to 1989. His
address is 40 Wall Street, New York, New York 10005.
Mark D. Kaplan, Vice President, Assistant Treasurer and Assistant Secretary
(age 41)
Managing Director at Forum Financial Services, Inc. since September
1995. Prior thereto, Mr. Kaplan was Managing Director and Director of
Research at H.M. Payson & Co. His address is Two Portland Square,
Portland, Maine 04101.
Robert Campbell, Treasurer (age 36)
Director of Fund Accounting, Forum Financial Corp., with which he has
been associated since April 1997. Prior thereto, Mr. Campbell was the
Vice President of Domestic Operations for State Street Fund Services in
Toronto, Ontario, and prior to that, Mr. Campbell served as Assistant
Vice President/Fund Manager of
<PAGE>
Mutual Fund, State Street Bank & Trust in Boston, Massachusetts. Mr.
Campbell is also treasurer of various registered investment companies
for which Forum Administrative Services, LLC or Forum Financial
Services, Inc. serves as manager, administrator and/or distributor.
His address is Two Portland Square, Portland, Maine 04101.
David I. Goldstein, Secretary (age 35)
Counsel, Forum Financial Services, Inc., with which he has been
associated since 1991. Prior thereto, Mr. Goldstein was associated
with the law firm of Kirkpatrick & Lockhart. Mr. Goldstein is also
Secretary or Assistant Secretary of various registered investment
companies for which Forum Administrative Services, LLC or Forum
Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is Two Portland Square, Portland, Maine
04101.
Max Berueffy, Assistant Secretary (age 44)
Counsel, Forum Financial Services, Inc., with which he has been
associated since 1994. Prior thereto, Mr. Berueffy was on the staff of
the U.S. Securities and Exchange Commission for seven years, first in
the appellate branch of the Office of the General Counsel, then as a
counsel to Commissioner Grundfest and finally as a senior special
counsel in the Division of Investment Management. Mr. Berueffy is also
Secretary or Assistant Secretary of various registered investment
companies for which Forum Administrative Services, LLC or Forum
Financial Services, Inc. serves as manager, administrator and/or
distributor. His address is Two Portland Square, Portland, Maine 04101.
Cheryl O. Tumlin, Assistant Secretary (age 31)
Assistant Counsel, Forum Financial Services, Inc., with which she has
been associated since July 1996. Prior thereto, Ms. Tumlin was on the
staff of the U.S. Securities and Exchange Commission as an attorney in
the Division of Market Regulation and prior thereto Ms. Tumlin was an
associate with the law firm of Robinson Silverman Pearce Aronsohn &
Berman in New York, New York. Ms. Tumlin is also Assistant Secretary of
various registered investment companies for which Forum Administrative
Services, LLC or Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. Her address is Two Portland Square,
Portland, Maine 04101.
M. Paige Turney, Assistant Secretary (age 28).
Fund Administrator, Forum Financial Services, Inc., with which she has
been associated since 1995. Ms. Turney was employed from 1992 as a
Senior Fund Accountant with First Data Corporation in Boston,
Massachusetts. Ms. Turney is also Assistant Secretary of various
registered investment companies for which Forum Administrative
Services, LLC or Forum Financial Services, Inc. serves as manager,
administrator and/or distributor. Prior thereto she was a student at
Montana State University Her address is Two Portland Square, Portland,
Maine 04101.
TRUSTEE COMPENSATION. Each Trustee of the Trust (other than John Y. Keffer, who
is an interested person of the Trust) is paid $1,000 for each Board meeting
attended (whether in person or by electronic communication) and is paid $1,000
for each committee meeting attended on a date when a Board meeting is not held.
As of March 31, 1997, in addition to $1,000 for each Board meeting attended,
each Trustee receives $100 per active portfolio of the Trust. To the extent a
meeting relates to only certain portfolios of the Trust, Trustees are paid the
$100 fee only with respect to those portfolios. Trustees are also reimbursed for
travel and related expenses incurred in attending meetings of the Board. No
officer of the Trust is compensated by the Trust.
The following table provides the aggregate compensation paid to each Trustee.
The Trust has not adopted any form of retirement plan covering Trustees or
officers. Information is presented for the fiscal year ended March 31, 1997.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Keffer None None None None
Mr. Azariadis $4,000 None None $4,000
Mr. Cheng $4,000 None None $4,000
Mr. Parish $4,000 None None $4,000
</TABLE>
INVESTMENT ADVISER
Forum Advisors, Inc. serves as investment adviser to Investors Growth Fund
pursuant to an investment advisory agreement with the Trust. Subject to the
general control of the Board, Forum Advisors is responsible for among other
things, developing a continuing investment program for the Fund in accordance
with its investment objective and reviewing the investment strategies and
policies of the Fund. Forum Advisors was incorporated under the laws of Delaware
in 1987 and is registered under the Investment Advisers Act of 1940. For its
services, Forum Advisors receives an advisory fee at an annual rate of 0.65% of
Investor Growth Fund's average daily net assets.
Pursuant to the investment advisory agreement, Forum Advisors is responsible for
managing the investment and reinvestment of the assets included in the Fund and
for continuously reviewing, supervising and administering the Fund's
investments. In this regard, it is the responsibility of Forum Advisors to make
decisions relating to the Fund's investments and to place purchase and sale
orders regarding such investments with brokers or dealers selected by it in its
discretion. Forum Advisors also furnishes to the Board, which has overall
responsibility for the business and affairs of the Trust, periodic reports on
the investment performance of the Fund.
Under the terms of the investment advisory agreement, Forum Advisors is required
to manage the Fund's investment portfolio in accordance with applicable laws and
regulations. In making its investment decisions, Forum Advisors does not use
material information that may be in its possession or in the possession of its
affiliates.
The investment advisory agreement will continue in effect provided such
continuance is approved annually (i) by the holders of a majority of the
outstanding voting securities of the Fund (as defined by the 1940 Act) or by the
Board and (ii) by a majority of the Trustees who are not parties to such
agreement or "interested persons" (as defined in the 1940 Act) of any such
party. The investment advisory agreement may be terminated without penalty by
vote of the or the shareholders of the Fund on 60 days' written notice to the
Adviser, or by the Adviser on 60 days' written notice to the Trust and it will
terminate automatically if assigned. The investment advisory agreement also
provides that, with respect to the Fund, neither Forum Advisors nor its
personnel shall be liable for any error of judgment or mistake of law or for any
act or omission in the performance of its or their duties to the Fund, except
for willful misfeasance, bad faith or gross negligence in the performance of
Forum Advisors or their duties or by reason of reckless disregard of its or
their obligations and duties under the investment advisory agreement.
ADMINISTRATIVE SERVICES
Forum Administrative Services, LLC ("FAS") acts as administrator to the Trust on
behalf of the Fund pursuant to an Administration Agreement with the Trust. As
administrator, FAS provides management and administrative services necessary to
the operation of the Trust (which include, among other responsibilities,
negotiation of contracts and fees with, and monitoring of performance and
billing of, the transfer agent and custodian and arranging for maintenance of
books and records of the Trust), and provides the Trust with general office
facilities. The Administration Agreement will remain in effect for a period of
twelve months with respect to the Fund and thereafter is automatically renewed
each year for an additional term of one year.
<PAGE>
The Administration Agreement terminates automatically if it is assigned and may
be terminated without penalty with respect to the Fund by vote of the Fund's
shareholders or by either party on not more than 60 days' written notice. The
Administration Agreement also provides that FAS shall not be liable for any
error of judgment or mistake of law or for any act or omission in the
administration or management of the Trust, except for willful misfeasance, bad
faith or gross negligence in the performance of Forum's duties or by reason of
reckless disregard of its obligations and duties under the Administration
Agreement.
At the request of the Board, FAS provides persons satisfactory to the Board to
serve as officers of the Trust. Those officers, as well as certain other
employees and Trustees of the Trust, may be directors, officers or employees of
FAS, the Adviser or their affiliates.
DISTRIBUTOR
Forum Financial Services, Inc. ("Forum"), an affiliate of FAS, is the Trust's
distributor and acts as the agent of the Trust in connection with the offering
of shares of the Fund pursuant to a Distribution Agreement. The Distribution
Agreement will continue in effect for twelve months and will continue in effect
thereafter only if its continuance is specifically approved at least annually by
the Board or by vote of the shareholders entitled to vote thereon, and in either
case, by a majority of the Trustees who (i) are not parties to the Distribution
Agreement, (ii) are not interested persons of any such party or of the Trust and
(iii) with respect to any class for which the Trust has adopted a distribution
plan, have no direct or indirect financial interest in the operation of that
distribution plan or in the Distribution Agreement, at a meeting called for the
purpose of voting on the Distribution Agreement. All subscriptions for shares
obtained by Forum are directed to the Trust for acceptance and are not binding
on the Trust until accepted by it. Forum receives no compensation or
reimbursement of expenses for the distribution services provided pursuant to the
Distribution Agreement and is under no obligation to sell any specific amount of
Fund shares.
The Distribution Agreement provides that Forum shall not be liable for any error
of judgment or mistake of law or in any event whatsoever, except for willful
misfeasance, bad faith or gross negligence in the performance of Forum's duties
or by reason of reckless disregard of its obligations and duties under the
Distribution Agreement.
The Distribution Agreement is terminable with respect to the Fund without
penalty by the Trust on 60 days' written notice when authorized either by vote
of the Fund's shareholders or by a vote of a majority of the Board, or by Forum
on 60 days' written notice. The Distribution Agreement will automatically
terminate in the event of its assignment.
Forum may enter into agreements with selected broker-dealers, banks, or other
financial institutions for distribution of shares of the Fund. These financial
institutions may charge a fee for their services and may receive shareholders
service fees even though shares of the Fund are sold without sales charges or
distribution fees. These financial institutions may otherwise act as processing
agents, and will be responsible for promptly transmitting purchase, redemption
and other requests to the Fund.
Investors who purchase shares in this manner will be subject to the procedures
of the institution through whom they purchase shares, which may include charges,
investment minimums, cutoff times and other restrictions in addition to, or
different from, those listed herein. Information concerning any charges or
services will be provided to customers by the financial institution. Investors
purchasing shares of the Fund in this manner should acquaint themselves with
their institution's procedures and should read this Prospectus in conjunction
with any materials and information provided by their institution. The financial
institution and not its customers will be the shareholder of record, although
customers may have the right to vote shares depending upon their arrangement
with the institution.
TRANSFER AGENT
Forum Financial Corp. ("FFC") acts as transfer agent of the Trust pursuant to a
transfer agency agreement (the "Transfer Agency Agreement"). The Transfer Agency
Agreement provided, with respect to the Fund, for an initial term of one year
from its effective date and for its continuance in effect for successive
twelve-month periods
<PAGE>
thereafter, provided that the agreement is specifically approved at least
annually by the Board or, with respect to either Fund, by a vote of the
shareholders of that Fund, and in either case by a majority of the directors who
are not parties to the Transfer Agency Agreement or interested persons of any
such party at a meeting called for the purpose of voting on the Transfer Agency
Agreement.
Among the responsibilities of FFC as agent for the Trust are: (1) answering
customer inquiries regarding account status and history, the manner in which
purchases and redemptions of shares of the Fund may be effected and certain
other matters pertaining to the Fund; (2) assisting shareholders in initiating
and changing account designations and addresses; (3) providing necessary
personnel and facilities to establish and maintain shareholder accounts and
records, assisting in processing purchase and redemption transactions and
receiving wired funds; (4) transmitting and receiving funds in connection with
customer orders to purchase or redeem shares; (5) verifying shareholder
signatures in connection with changes in the registration of shareholder
accounts; (6) furnishing periodic statements and confirmations of purchases and
redemptions; (7) arranging for the transmission of proxy statements, annual
reports, prospectuses and other communications from the Trust to its
shareholders; (8) arranging for the receipt, tabulation and transmission to the
Trust of proxies executed by shareholders with respect to meetings of
shareholders of the Trust; and (9) providing such other related services as the
Trust or a shareholder may reasonably request.
FFC or any sub-transfer agent or processing agent may also act and receive
compensation as custodian, investment manager, nominee, agent or fiduciary for
its customers or clients who are shareholders of the Fund with respect to assets
invested in the Fund. FFC or any sub-transfer agent or other processing agent
may elect to credit against the fees payable to it by its clients or customers
all or a portion of any fee received from the Trust or from FFC with respect to
assets of those customers or clients invested in the Fund. FFC, FAS or
sub-transfer agents or processing agents retained by FFC may be Processing
Organizations (as defined in the Prospectus) and, in the case of sub- transfer
agents or processing agents, may also be affiliated persons of FFC or Forum.
For its services under the Transfer Agency Agreement, FFC receives: (i) a fee at
an annual rate of 0.25 percent of the average daily net assets of the Fund and
(ii) a fee of $24,000 per year; such amounts to be computed and paid monthly in
arrears by the Fund; and (iii) Annual Shareholder Account Fees of $25.00 for a
retail and $125.00 for an institutional shareholder account; such fees to be
computed as of the last business day of the prior month.
FFC or any sub-transfer agent or processing agent may also act and receive
compensation for acting as custodian, investment manager, nominee, agent or
fiduciary for its customers or clients who are shareholders of the Fund with
respect to assets invested in the Fund.
FUND ACCOUNTING
Forum Accounting Services, LLC ("FAcS") performs portfolio accounting services
for the Fund pursuant to the Fund Accounting Agreement with the Trust. The Fund
Accounting Agreement will continue in effect only if such continuance is
specifically approved at least annually by the Board of Trustees or by a vote of
the shareholders of the Trust and in either case by a majority of the Trustees
who are not parties to the Fund Accounting Agreement or interested persons of
any such party, at a meeting called for the purpose of voting on the Fund
Accounting Agreement. Under its agreement, FAcS prepares and maintains books and
records prepares and maintains books and records of the Fund on behalf of the
Trust as required under the 1940 Act, calculates the net asset value per share
of the Fund and dividends and capital gain distributions and prepares periodic
reports to shareholders and the Securities and Exchange Commission. For its
services, FAcS receives from the Trust with respect to the Fund a fee of
$12,000.
6. DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of the Fund as of
4:00 p.m., Eastern Time, on each Fund Business Day by dividing the value of the
Fund's net assets (I.E., the value of its portfolio securities and other assets
less its liabilities) by the number of that Fund's shares outstanding at the
time the determination is made. Securities owned by the Fund listed on the
recognized stock exchanges are valued at the last reported trade price, prior to
the time
<PAGE>
when the assets are valued, on the exchange on which the securities are
principally traded. Listed securities traded on recognized stock exchanges where
last trade prices are not available are valued at mid-market prices. Securities
traded in over-the-counter markets, or listed securities for which no trade is
reported on the valuation date, are valued at the most recent reported
mid-market price. Other securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith using
methods approved by the Board.
Trading in securities on European and Far Eastern Securities exchanges and
over-the-counter markets may not take place on every day that the New York Stock
Exchange is open for trading. Furthermore, trading takes place in various
foreign markets on days on which the Fund's NAV is not calculated. If events
materially affecting the value of foreign securities occur between the time when
their price is determined and the time when net asset value is calculated, such
securities will be valued at fair value as determined in good faith by the
Board.
All assets and liabilities of the Fund denominated in foreign currencies are
converted to U.S. dollars at the mid price of such currencies against U.S.
dollars last quoted by a major bank prior to the time when NAV of the Fund is
calculated.
7. PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS
Investment decisions for the Fund and for the other investment advisory clients
of the investment advisers are made with a view to achieving their respective
investment objectives. Investment decisions are the product of many factors in
addition to basic suitability for the particular client involved. Thus, a
particular security may be bought or sold for certain clients even though it
could have been bought or sold for other clients at the same time. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling the security. In some instances, one client may sell a
particular security to another client. It also sometimes happens that two or
more clients simultaneously purchase or sell the same security, in which event
each day's transactions in such security are, insofar as is possible, averaged
as to price and allocated between such clients in a manner which in the
investment adviser's opinion is equitable to each and in accordance with the
amount being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients.
BROKERAGE AND RESEARCH SERVICES
Transactions on U.S. stock exchanges and other agency transactions involve the
payment by the Fund of negotiated brokerage commissions. Such commissions vary
among different brokers. Also, a particular broker may charge different
commissions according to such factors as the difficulty and size of the
transaction. Transactions in foreign securities generally involve the payment of
fixed brokerage commissions, which are generally higher than those in the United
States. There is generally no stated commission in the case of securities traded
in the over-the-counter markets, but the price paid by the Fund usually includes
an undisclosed dealer commission or mark-up. In underwritten offerings, the
price paid by the Fund includes a disclosed, fixed commission or discount
retained by the underwriter or dealer.
The Investment Advisory Agreement authorizes and directs the investment adviser
to place orders for the purchase and sale of assets with brokers or dealers
selected by the investment advisers in their discretion and to seek "best
execution" of such portfolio transactions. An investment adviser places all such
orders for the purchase and sale of portfolio securities and buys and sells
securities for the Fund through a substantial number of brokers and dealers. In
so doing, the investment adviser uses its best efforts to obtain for the Fund
the most favorable price and execution available. The Fund may, however, pay
higher than the lowest available commission rates when the investment adviser
believes it is reasonable to do so in light of the value of the brokerage and
research services provided by the broker effecting the transaction. In seeking
the most favorable price and execution, the investment adviser, having in mind
the Fund's best interests, considers all factors it deems relevant, including,
by way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
<PAGE>
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker-dealers involved and the
quality of service rendered by the broker-dealers in other transactions.
It has for many years been a common practice in the investment advisory business
as conducted in certain countries, including the United States, for advisers of
investment companies and other institutional investors to receive research
services from broker-dealers which execute portfolio transactions for the
clients of such advisers. Consistent with this practice, and investment adviser
may receive research services from broker-dealers with which it places the
Fund's portfolio transactions. These services, which in some cases may also be
purchased for cash, include such items as general economic and security market
reviews, industry and company reviews, evaluations of securities and
recommendations as to the purchase and sale of securities. Some of these
services are of value to the investment adviser in advising various of its
clients (including the Fund), although not all of these services are necessarily
useful and of value in managing the Fund. The investment advisory fee paid by
the Fund is not reduced because the investment adviser and its affiliates
receive such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934 (the
"Act"), an investment adviser may cause the Fund to pay a broker-dealer which
provides "brokerage and research services" (as defined in the Act) to it an
amount of disclosed commission for effecting a securities transaction in excess
of the commission which another broker-dealer would have charged for effecting
that transaction.
The annual portfolio turnover rate of the Fund may exceed 50% but will not
ordinarily exceed 100%.
8. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Detailed information pertaining to the purchase of shares of the Fund,
redemption of shares and the determination of the net asset value of Fund shares
is set forth in the Prospectus under "Purchases and Redemptions of Shares".
Shares of the Fund are sold on a continuous basis by the distributor.
Set forth below is an example of the method of computing the offering price of
the Fund's shares. The example assumes a purchase of shares of beneficial
interest aggregating less than $100,000 subject to the schedule of sales charges
set forth in the Prospectus at a price based on the net asset value per share of
the Fund on
- --------.
Net Asset Value Per Share $ X.XX
Sales Charge, 4.00% of offering
price (4.17% of net asset value
per share) $ X.XX
Offering to Public $ X.XX
In addition to the situations described in the Prospectus under "Purchases and
Redemptions of Shares," the Trust may redeem shares involuntarily, from time to
time, to reimburse the Fund for any loss sustained by reason of the failure of a
shareholder to make full payment for shares purchased by the shareholder or to
collect any charge relating to transactions effected for the benefit of a
shareholder which is applicable to the Fund's shares as provided in the
Prospectus.
The Trust has filed a formal election with the Securities and Exchange
Commission pursuant to which the Fund will only effect a redemption in portfolio
securities if a shareholder is redeeming more than $250,000 or 1% of the Fund's
total net assets, whichever is less, during any 90-day period.
<PAGE>
REDEMPTION IN KIND
In the event that payment for redeemed shares is made wholly or partly in
portfolio securities, brokerage costs may be incurred by the shareholder in
converting the securities to cash. An in kind distribution of portfolio
securities will be less liquid than cash. The shareholder may have difficulty in
finding a buyer for portfolio securities received in payment for redeemed
shares. Portfolio securities may decline in value between the time of receipt by
the shareholder and conversion to cash. A redemption in kind of the Fund's
portfolio securities could result in a less diversified portfolio of investments
for the Fund and could affect adversely the liquidity of the Fund's portfolio.
EXCHANGE PRIVILEGE
The exchange privilege permits shareholders of the Fund to exchange their shares
for shares of any other fund of the Trust or shares of certain other portfolios
of investment companies which retain FAS or its affiliates as investment adviser
or distributor and which participate in the Trust's exchange privilege program
("Participating Fund"). For Federal income tax purposes, exchange transactions
are treated as sales on which a purchaser will realize a capital gain or loss
depending on whether the value of the shares redeemed is more or less than his
basis in such shares at the time of the transaction.
By use of the exchange privilege, the shareholder authorizes the Transfer Agent
to act upon the instruction of any person representing himself to either be, or
to have the authority to act on behalf of, the investor and believed by the
Transfer Agent to be genuine. The records of the Transfer Agent of such
instructions are binding. Proceeds of an exchange transaction may be invested in
another Participating Fund in the name of the shareholder.
Exchange transactions will be made on the basis of relative net asset values per
share at the time of the exchange transaction plus any sales charge applicable
to the Participating Fund whose shares are being acquired. Shares of any
Participating Fund may be redeemed and the proceeds used to purchase, without a
sales charge, shares of any other Participating Fund that are offered without a
sales charge. Shares of any Participating Fund purchased with a sales charge may
be redeemed and the proceeds used to purchase, without a sales charge, shares of
any other Participating Fund otherwise sold with the same sales charge. If the
Participating Fund purchased in the exchange transaction imposes a higher sales
charge than was paid originally on the exchanged shares, the shareholder will be
responsible for the difference between the two sales charges. Shares acquired
through the reinvestment of dividends and distributions are deemed to have been
acquired with a sales charge rate equal to that paid on the shares on which the
dividend or distribution was paid.
The terms of the exchange privilege are subject to change, and the privilege may
be terminated by any of the Participating Funds or the Trust. However the
privilege will not be terminated, and no material change that restricts the
availability of the privilege to shareholders will be implemented, without
reasonable advance notice to shareholders.
9. TAXATION
The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"). To qualify as a
regulated investment company the Fund intends to distribute to shareholders at
least 90% of its net investment income (which includes, among other items,
dividends, interest and the excess of any net short-term capital gains over net
long-term capital losses), and to meet certain diversification of assets, source
of income, and other requirements of the Code. By so doing, the Fund will not be
subject to Federal income tax on its net investment income and net realized
capital gains (the excess of net long-term capital gains over net short-term
capital losses) distributed to shareholders. If the Fund does not meet all of
these Code requirements, it will be taxed as an ordinary corporation, and its
distributions will be taxable to shareholders as ordinary income.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a 4% nondeductible excise tax. To
prevent imposition of the excise tax, the Fund must distribute for each calendar
year an amount equal to the sum of (1) at least 98% its ordinary income
(excluding any capital gains or losses) for the calendar year, (2) at least 98%
of the excess of its capital gains over capital losses realized during the
one-year period ending October 31, of such year, and (3) all such ordinary
income and capital gains for previous years that
<PAGE>
were not distributed during such years. A distribution will be treated as paid
during the calendar year if it is declared by the Fund in October, November or
December of the year with a record date in such month and paid by the Fund
during January of the following year. Such distributions will be taxable to
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received.
In addition to satisfying the distribution requirement, a regulated investment
company must derive at least 90% of its gross income from dividends, interest,
certain payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies (to the extent such
currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gain from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies.
Distributions of net investment income (including realized net short-term
capital gain) are taxable to shareholders as ordinary income. It is not expected
that such distributions will be eligible for the dividends received deduction
available to corporations.
Distributions of net long-term capital gain are taxable to shareholders as
long-term capital gain, regardless of the length of time the Fund shares have
been held by a shareholder, and are not eligible for the dividends received
deduction. A loss realized by a shareholder on the sale of shares of the Fund
with respect to which capital gain dividends have been paid will, to the extent
of such capital gain dividends, be treated as long-term capital loss although
such shares may have been held by the shareholder for one year or less. Further,
a loss realized on a disposition will be disallowed to the extent the shares
disposed of are replaced (whether by reinvestment or distributions or otherwise)
within a period of 61 days beginning 30 days before and ending 30 days after the
shares are disposed of. In such a case, the basis of the shares acquired will be
adjusted to reflect the disallowed loss.
All distributions are taxable to the shareholder whether reinvested in
additional shares or received in cash. Shareholders receiving distributions in
the form of additional shares will have a cost basis for Federal income tax
purposes in each share received equal to the net asset value of a share of the
Fund on the reinvestment date. Shareholders will be notified annually as to the
Federal tax status of distributions.
Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value below a shareholder's cost
basis, such distribution nevertheless would be taxable to the shareholder as
ordinary income or capital gain as described above, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will receive a distribution which will nevertheless
be taxable to them.
Upon redemption or sale of his shares, a shareholder will realize a taxable gain
or loss depending upon his basis in his shares. Such gain or loss generally will
be treated as capital gain or loss if the shares are capital assets in the
shareholder's hands. Such gain or loss generally will be long-term or short-term
depending upon the shareholder's holding period for the shares.
The Fund intends to minimize foreign income and withholding taxes by investing
in obligations the payments with respect to which will be subject to minimal or
no such taxes insofar as this objective is consistent with the Fund's income
objective. However, since the Fund may incur foreign taxes, it intends, if it is
eligible to do so, to elect under Section 853 of the Code to treat each
shareholder as having received an additional distribution from the Fund, in the
amount indicated in a notice furnished to him, as his pro rata portion of income
taxes paid to or withheld by foreign governments with respect to interest,
dividends and gain on the Fund's foreign portfolio investments. The shareholder
then may take the amount of such foreign taxes paid or withheld as a credit
against his Federal income tax, subject to certain limitations. If the
shareholder finds it more to his advantage to do so, he may, in the alternative,
deduct the foreign tax withheld as an itemized deduction, in computing his
taxable income. Each shareholder is referred to his tax adviser with respect to
the availability of the foreign tax credit.
<PAGE>
The Fund will be required to report to the Internal Revenue Service (the "IRS")
all distributions as well as gross proceeds from the redemption of the Fund
shares, except in the case of certain exempt shareholders. All such
distributions and proceeds generally will be subject to withholding of Federal
income tax at a rate of 31% ("backup withholding") in the case of nonexempt
shareholders if (1) the shareholder fails to furnish the Fund with and to
certify the shareholder's correct taxpayer identification number or social
security number, (2) the IRS notifies the Fund that the shareholder has failed
to report properly certain interest and dividend income to the IRS and to
respond to notices to that effect, or (3) when required to do so, the
shareholder fails to certify that he is not subject to backup withholding. If
the withholding provisions are applicable, any such distributions or proceeds,
whether reinvested in additional shares or taken in cash, will be reduced by the
amount required to be withheld. Any amounts withheld may be credited against the
shareholder's Federal income tax liability. Investors may wish to consult their
tax advisers about the applicability of the backup withholding provisions.
The foregoing discussion relates only to Federal income tax law as applicable to
U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by the Fund also may be subject
to state and local taxes, and their treatment under state and local income tax
laws may differ from the Federal income tax treatment. Shareholders should
consult their tax advisors with respect to particular questions of Federal,
state and local taxation. Shareholders who are not U.S. persons should consult
their tax advisors regarding U.S. and foreign tax consequences of ownership of
shares of the Fund including the likelihood that distributions to them would be
subject to withholding of U.S. tax at a rate of 30% (or a lower rate under a tax
treaty).
10. OTHER INFORMATION
ORGANIZATION
THE TRUST AND ITS SHARES
The Trust was originally incorporated in Maryland on March 24, 1980 and assumed
the name of Forum Funds, Inc. on March 16, 1987. On January 5, 1996, Forum
Funds, Inc. was reorganized as a Delaware business trust. The Trust has an
unlimited number of authorized shares of beneficial interest. The Board may,
without shareholder approval, divide the authorized shares into an unlimited
number of separate portfolios or series (such as the Fund) and may in the future
divide portfolios or series into two or more classes of shares (such as Investor
and Institutional Shares). Currently the authorized shares of the Trust are
divided into 16 separate series.
Each share of each fund of the Trust and each class of shares has equal
dividend, distribution, liquidation and voting rights, and fractional shares
have those rights proportionately, except that expenses related to the
distribution of the shares of each class (and certain other expenses such as
transfer agency and administration expenses) are borne solely by those shares
and each class votes separately with respect to the provisions of any Rule 12b-1
plan which pertain to the class and other matters for which separate class
voting is appropriate under applicable law. Generally, shares will be voted in
the aggregate without reference to a particular portfolio or class, except if
the matter affects only one portfolio or class or voting by portfolio or class
is required by law, in which case shares will be voted separately by portfolio
or class, as appropriate. Delaware law does not require the Trust to hold annual
meetings of shareholders, and it is anticipated that shareholder meetings will
be held only when specifically required by Federal or state law. Shareholders
have available certain procedures for the removal of Trustees. There are no
conversion or preemptive rights in connection with shares of the Trust. All
shares when issued in accordance with the terms of the offering will be fully
paid and nonassessable. Shares are redeemable at net asset value, at the option
of the shareholders, subject to any contingent deferred sales charge that may
apply. A shareholder in a portfolio is entitled to the shareholder's pro rata
share of all dividends and distributions arising from that portfolio's assets
and, upon redeeming shares, will receive the portion of the portfolio's net
assets represented by the redeemed shares.
COUNSEL
Legal matters in connection with the issuance of shares of beneficial interest
of the Trust are passed upon by the law firm of Seward & Kissel, 1200 G Street,
N.W. Washington, D.C. 20005.
<PAGE>
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, 02110,
independent auditors, act as auditors for the Trust.
<PAGE>
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
1. PREFERRED STOCK
(A) MOODY'S
Moody's rates preferred stock issues as follows:
An issue which is rated aaa is a top-quality preferred stock. This
rating indicates good asset protection and the least risk of dividend impairment
among preferred stock issues.
An issue which is rated "aa" is a high-grade preferred stock. This
rating indicates that there is a reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
An issue which is rated "a" is an upper-medium grade preferred stock.
While risks are judged to be somewhat greater than in the aaa and aa
classification, earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels.
An issue which is rated "baa" is a medium-grade preferred stock,
neither highly protected nor poorly secured. Earnings and asset protection
appear adequate at present but may be questionable over any great length of
time.
An issue which is rated "ba" has speculative elements and its future
cannot be considered well assured. Earnings and asset protection may be very
moderate and not well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.
An issue which is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small.
An issue which is rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future status
of payments.
An issue which is rated "ca" is speculative in a high degree and is
likely to be in arrears on dividends with little likelihood of eventual payment.
An issue which is rated "c" can be regarded as having extremely poor
prospects of ever attaining any real investment standing. This is the lowest
rated class of preferred or preference stock.
(B) STANDARD & POOR'S
Standard & Poor's rates preferred stock issues as follows:
"AAA" is the highest rating that is assigned by S&P to a preferred
stock issue and indicates an extremely strong capacity to pay the preferred
stock obligations.
A preferred stock issue rated "AA" also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated "AAA."
An issue rated "A" is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
An issue rated "BBB" is regarded as backed by an adequate capacity to
pay the preferred stock obligations. While it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
<PAGE>
are more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the "A" category.
Preferred stock rated "BB," "B," and "CCC" are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stock obligations. "BB" indicates the lowest degree of speculation and "CCC" the
highest degree of speculation. While such issues will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
The rating "CC" is reserved for a preferred stock issue in arrears on
dividends or sinking fund payments but that is currently paying.
A preferred stock rated "C" is a non-paying issue.
A preferred stock rated "D" is a non-paying issue with the issuer in
default on debt instruments.
To provide more detailed indications of preferred stock quality, the
ratings from "AA" to "B" may be modified by the addition of a plus (+) or minus
(-) sign to show relative standing
2. CORPORATE BONDS INCLUDING CONVERTIBLE DEBT
(A) MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
Moody's rates corporate bond issues, including convertible debt issues,
as follows:
Bonds which are rated Aaa are judged by Moody's to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payment and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments of or maintenance of
other terms of the contract over any long period of time may be small.
<PAGE>
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Note: Those bonds in the Aa, A, Baa, Ba or B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols Aa1, A1, Baa1, Ba1, and B1.
(B) STANDARD & POOR'S CORPORATION ("S&P")
S&P rates corporate bond issues, including convertible debt issues, as
follows:
Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt rated in higher rated
categories.
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas, they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to weakened capacity to pay interest and repay principal for debt
in this category than in higher rated categories.
Bonds rated BB, B, CCC, CC and C are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and C the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. Bonds rated `BB' have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
Bonds rated `B' have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal payments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
Bonds rated `CCC' have currently identifiable vulnerability to default,
and are dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, they are not likely to have
the capacity to pay interest and repay principal.
The `C' rating may be used to cover a situation where a bankruptcy
petition has been filed, but debt service payments are continued. The rating
`Cl' is reserved for income bonds on which no interest is being paid.
Bonds are rated D when the issue is in payment default, or the obligor
has filed for bankruptcy. Bonds rated `D' are in payment default. The `D' rating
category is used when interest payments or principal payments are not made on
the date due even if the applicable grace period has not expired, unless S&P
believes that such
<PAGE>
payments will made during such grace period. The `D' rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
Note: The ratings from AA to CCC may be modified by the addition of a
plus (+) or minus (-) sign to show the relative standing within the rating
category.
3. COMMERCIAL PAPER
MOODY'S INVESTORS SERVICE, INC.
Moody's two highest ratings for short-term debt, including commercial paper, are
Prime-1 and Prime-2. Both are judged investment grade, to indicate the relative
repayment ability of rated issuers.
Issuers rated Prime-1 have a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics:
-- Leading market positions in well-established industries.
-- High rates of return on funds employed.
-- Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
-- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
-- Well-established access to a range of financial markets
and assured sources of alternate liquidity.
Issuers rated Prime-2 by Moody's have a strong ability for repayment of senior
short-term debt obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
STANDARD AND POOR'S CORPORATION
S&P's two highest commercial paper ratings are A and B. Issues assigned an A
rating are regarded as having the greatest capacity for timely payment. Issues
in this category are delineated with the numbers 1, 2 and 3 to indicate the
relative degree of safety. An A-1 designation indicates that the degree of
safety regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign designation. The capacity for timely payment on issues with
an A-2 designation is strong. However, the relative degree of safety is not as
high as for issues designated A-1. A-3 issues have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations. Issues rated B are regarded as having only an adequate capacity
for timely payment. However, such capacity may be damaged by changing conditions
or short-term adversities.
FITCH INVESTORS SERVICE, INC.
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
F-1+. Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
F-2. Issues assigned this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1 ratings.
<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 March 31, 1997
including Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, Notes to Financial
Statements, Financial Highlights, Portfolio of Investments and Report
of Independent Auditors were filed with the Securities and Exchange
Commission via EDGAR for: (i) Daily Assets Treasury Fund, Investors
Bond Fund, TaxSavers Bond Fund, Maine Municipal Bond Fund, New
Hampshire Bond Fund, Payson Value Fund, and Payson Balanced Fund on
June 6, 1997, accession number 0000912057-97-019701; (ii) Austin Global
Equity Fund on June 9, 1997, accession number 0001004402-97-000009; and
(iii) Oak Hall Equity Fund on June 6, 1997, accession number
0000912057-97-019699 pursuant to Rule 30b2-1 under the Investment
Company Act of 1940, as amended, and incorporated herein by reference.
Unaudited financial statements for the period October 1, 1996 through
February 28, 1997 including Statements of Assets and Liabilities,
Statements of Operations, Statements of Changes in Net Assets, Notes to
Financial Statements, and Financial Highlights for Daily Assets Cash
Fund are set forth in Appendix B to the SAI.
Audited financial statements for the fiscal year ended March 31, 1997
including Statement of Assets and Liabilities, Statement of Operations,
Statement of Changes in Net Assets, Notes to Financial Statements,
Financial Highlights, Portfolio of Investments and Report of
Independent Accountants for Quadra Limited Maturity Treasury Fund,
filed with the Securities and Exchange Commission on June 5, 1997 for
such Fund, accession number 0000912057-97-019598, pursuant to Rule
30b2-1 under the Investment Company Act of 1940, as amended, and
incorporated herein by reference.
Daily Assets Government 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.
<PAGE>
(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).
<PAGE>
(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 Management and Distribution Agreement between Registrant
and Forum Financial Services, Inc. (filed as Exhibit 6(a) to
PEA No. 33 via EDGAR on January 5, 1996, accession number
0000912057-96-000216).
(b)* Form of Distribution Services Agreement between Registrant and
Forum Financial Services, Inc. (filed as Exhibit 6(b) to PEA No.
33 via EDGAR on January 5, 1996, accession number
0000912057-96-000216).
(c)* Form of Selected Dealer Agreement between Forum Financial
Services, Inc. and securities brokers (filed as Exhibit 6(c) to
PEA 21).
(d)* Form of Bank Affiliated Selected Dealer Agreement between Forum
Financial Services, Inc. and bank affiliates filed as Exhibit
6(d) of PEA 21).
<PAGE>
(e) Form of 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).
(f) Form of 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)* Form of Management Agreement between Registrant and Forum
Financial Services, Inc. (filed as Exhibit 9(a) to PEA No. 33
via EDGAR on January 5, 1996, accession number
0000912057-96-000216).
(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 independent auditors (filed as Exhibit 11 to PEA No. 43 via
EDGAR on July 31, 1997, accession number 0000912057-97-025707).
(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*:
owers 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.
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF JULY 31, 1997
---------------------------------------------------
Title Of Class Number Of Holders
-------------- -----------------
Investors Bond Fund 74
TaxSaver Bond Fund 50
Daily Assets Cash Fund 14
Daily Assets Treasury Fund 65
Daily Assets Government Fund 0
Daily Assets TaxSaver Fund 0
Payson Value Fund 308
Payson Balanced Fund 376
Maine Municipal Bond Fund 389
New Hampshire Bond Fund 80
Austin Global Equity Fund 11
Oak Hall Equity Fund 204
Quadra Limited Maturity Treasury Fund 3
Quadra Value Equity Fund 15
Quadra International Equity Fund 10
Quadra Opportunistic Bond Fund 5
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,
<PAGE>
"(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."
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
John H. Walker, Managing Director and President.
Portfolio Manager of H.M. Payson & Co. since 1967, General
Partner from 1974 to 1987, and Managing Director since 1987. 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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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,
(ii) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders relating to the portfolio or class thereof to which the
prospectus relates upon request and without charge.
<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(a) 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 15th
day of September, 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 15th day of September, 1997.
Signatures Title
---------- -----
(a) Principal Executive Officer
/S/ John Y. Keffer President
------------------ and Chariman
John Y. Keffer
(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*
