(File Nos. 33-49570 and 811-6742)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(3)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
FORUM FUNDS
(Name of Registrant as Specified in its Charter)
BOARD OF TRUSTEES OF REGISTRANT
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
1) Title of each class of securities to which transaction applies:
__________________________
2) Aggregate number of securities to which transaction
applies:
__________________________
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
__________________________
5) Total fee paid:
__________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________
2) Form, Schedule or Registration Statement No.:
___________________________
3) Filing Party:
___________________________
4) Date Filed:
___________________________
<PAGE>
F O R U M F U N D S
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Daily Assets Cash Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 1997
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Dear Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of Daily Assets
Cash Fund (the "Fund"), a series of Forum Funds (the "Trust"), will be held at
the offices of Forum Financial Services, Inc., the Trust's manager and
distributor, at Two Portland Square, Portland, Maine 04101, on Friday, December
12, 1997 at 2:00 p.m. Eastern time, for the following purposes:
1. To authorize the Trust, on behalf of the Fund, to vote at a
meeting of Core Trust (Delaware) to approve a new Investment
Advisory Agreement between Core Trust (Delaware) and Forum
Investment Advisors, LLC; and
2. To transact such other business as may properly come before
the meeting.
The Proposal is discussed more fully in the attached Proxy Statement.
You are entitled to vote at the meeting and any adjournment thereof if you owned
shares of any of the Funds at the close of business on November 3, 1997. If you
do not expect to attend the meeting, please complete, date, sign and return the
enclosed proxy card(s) in the enclosed postage paid envelope.
By order of the Board of Trustees,
/s/ David I. Goldstein
David I. Goldstein
Secretary
Portland, Maine
November 12, 1997
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YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE. IN
ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU TO
INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD(S), DATE AND SIGN
IT, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
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<PAGE>
F O R U M F U N D S
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Daily Assets Cash Fund
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 1997
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INTRODUCTORY MATTERS
This proxy statement is being furnished to the shareholders of Daily Assets Cash
Fund (the "Fund"), a series of Forum Funds (the "Trust"), a registered open-end
management investment company in connection with the solicitation on behalf of
the Board of Trustees' (the "Board") of proxies to be voted at a special meeting
of shareholders of the Fund to be held on December 12, 1997 or any
adjournment(s) thereof (the "Meeting"). This proxy statement will first be
mailed to shareholders on or about November 12, 1997.
Shareholders of the Fund on the record date, November 3, 1997, (hereafter
"Shareholders") are entitled to one vote for each share held on that date. One
third of the shares of the Fund outstanding on the record date, represented in
person or by proxy, must be present to form a quorum for the transaction of
business at the Meeting. In the event that a quorum for the Fund is present at
the meeting but sufficient votes to approve the proposal are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares of the Fund represented at the
Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies that they are entitled to vote for the proposal
for such adjournment and will vote those proxies required to be voted against
the proposal against such adjournment. A shareholder vote may be taken on the
proposal in this proxy statement prior to adjournment if sufficient votes have
been received and it is otherwise appropriate.
The persons named as proxies on the enclosed proxy card(s) will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed. If you give no voting instructions, your shares will
be voted in favor of the proposal described in this proxy statement. The proxy
card may be revoked by giving another proxy, by letter or telegram revoking your
proxy received by the Trust prior to the meeting, or by appearing and voting at
the meeting.
Abstentions and broker non-votes will be counted as shares present for
determining whether a quorum is present but will not be voted for or against any
adjournment. Accordingly, abstentions and broker non-votes effectively will be a
vote against adjournment. Abstentions will also be counted as shares present and
entitled to vote. Accordingly, abstentions will effectively be a vote against
the proposal. Broker non-votes will not be counted as shares present and
entitled to vote. Broker non-votes are shares held by a broker or nominee as to
which instructions have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have discretionary voting
power.
The solicitation of proxies, the cost of which will be borne by Forum Financial
Services, Inc. ("Forum"), the Trust's manager and distributor, will be made
primarily by mail but also may include telephone or oral communications by
regular employees of Forum or its affiliates. These persons will not receive any
compensation from the Trust for their solicitation efforts. The Trust will
furnish to each person to whom the Proxy Statement is delivered, a copy of the
Trust's latest annual report to shareholders upon request without charge.
Requests may be directed by phone to shareholder services at (800) 94 FORUM or
in writing, in care of the Trust, at Two Portland Square, Portland, Maine 04101.
<PAGE>
MASTER-FEEDER ARRANGEMENTS
Under a structure commonly referred to as "master-feeder," the Fund invests all
of its investable assets in Cash Portfolio (the "Portfolio"), a series of Core
Trust (Delaware) ("Core Trust"), itself a registered open-end management
investment company. The Portfolio invests directly in securities and the Fund
(as well as other investors in the Portfolio) acquires an indirect interest in
those securities. Under this structure, investment advisory services are
rendered to the Portfolio and not the Fund, but shareholders of the Fund are
afforded the right to vote on the investment advisory agreement of the
Portfolio.
On behalf of the Fund as an interestholder in the Portfolio, at the meeting of
interestholders of the Portfolio the Board will vote the Fund's interest in the
same proportion as Shareholders cast their votes at the Meeting. For example, as
of November 3, the Fund owned 3.5% of the outstanding interests in the Portfolio
(Cash Fund, a separate series of Monarch Funds, a registered open-end management
investment company, owned the other 96.5% in the Portfolio). If, at the Meeting,
60% of the votes cast by the Fund Shareholders are for Proposal 1, the Board
will vote 60% of the Fund's interest in the Portfolio for the investment
advisory agreement amendment. There can be no assurance that a majority of the
Fund's shareholders will be able to determine the outcome of the vote by
interestholders of the Portfolio on the Proposal.
PROPOSAL - APPROVAL OF INVESTMENT ADVISORY AGREEMENT
Linden Asset Management, Inc. ("Linden"), current investment adviser to the
Portfolio, plans to enter into a purchase and sale agreement (the "Purchase and
Sale Agreement") with Forum Advisors, Inc. ("Forum Advisors"), current
investment subadviser to the Portfolio, under which Forum Advisors will acquire
Linden (the "Acquisition"). Management of Forum Advisors anticipates that Forum
Advisors will reorganize into a limited liability company, Forum Investment
Advisors, LLC ("Forum Investment Advisors") prior to the closing of the
Acquisition, which is currently planned for January 2, 1998. The Acquisition
will result in the automatic termination of the current investment advisory
agreement between Linden and Core Trust (the "Current Advisory Agreement").
Accordingly, as a result of the anticipated termination of the Current Advisory
Agreement, the Board is proposing for shareholder approval a new investment
advisory agreement between Core Trust and Forum Investment Advisors with respect
to the Portfolio (the "New Advisory Agreement") that would become effective upon
termination of the Current Advisory Agreement. The Acquisition is contingent
upon approval of the New Advisory Agreement by the interestholders of the
Portfolio as well as the two other portfolios of Core Trust that Linden
currently advises--Government Cash Portfolio and Treasury Cash Portfolio. In the
event the New Advisory Agreement is approved, the current investment sub
advisory agreement between Forum Advisors and Core Trust, will be terminated.
Approval of the New Advisory Agreement requires the affirmative vote of the
lesser of (i) more than 50% of the outstanding interests of the Portfolio or
(ii) 67% of the interests of the Portfolio present or represented at an
interestholders meeting at which the holders of more than 50% of the outstanding
interests of the Portfolio are present or represented. The Portfolio and, to the
best of the Trust's knowledge, the other investment company interestholder in
the Portfolio, will have a shareholders meeting on or about the same date as the
Meeting.
CURRENT ADVISORY AGREEMENT
Under the Current Advisory Agreement, Linden, subject to the control of the
Board of Trustees of Core Trust (the "Core Board"), manages the Portfolio's
investments. In this regard, it is the responsibility of Linden to continuously
provide the Portfolio with investment management, including investment research,
advice and supervision, to determine which securities shall be purchased or sold
by the Portfolio, and to make purchases and sales of securities on behalf of the
Portfolio. The Portfolios are currently the only advisory accounts of Linden.
The Current Advisory Agreement was initially approved by the Core Board on
August 30, 1995. The Current Advisory Agreement was last submitted to
interestholders for approval on December 27, 1996 and is dated January 1, 1997.
The Current Advisory Agreement continues in effect for successive twelve-month
periods with respect to the Portfolio; provided that the continuance is
specifically approved at least annually (i) by the Core Board or by vote of a
majority of the outstanding voting interests of the Portfolio, and in either
case, (ii) by a majority of Core Trust's trustees who are not parties to the
Current Advisory Agreement or interested persons of any such party (other than
as trustees of Core Trust). If the continuation of the Current Advisory
Agreement is not approved as to the Portfolios, Linden will continue to render
services described in the Current Advisory Agreement to the Portfolio,
Government Cash Portfolio and Treasury Cash Portfolio. Continuance of the
Current Advisory Agreement in its present
2
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form was most recently approved by the Core Board at a meeting held on September
22, 1997. The Current Advisory Agreement is terminable without penalty (i) by
the Core Board or by a vote of a majority of the outstanding voting securities
of the Portfolio on 60 days' written notice to Linden or (ii) by Linden on 60
days' written notice to Core Trust. The Current Advisory Agreement will
automatically terminate in the event of its assignment.
Prior to January 1, 1997, Linden received from the Portfolio an advisory fee for
its services based on the total assets of the Portfolio combined with the assets
of Government Cash Portfolio and Treasury Cash Portfolio (the "Total Portfolio
Assets"). That fee is: 0.05% of the first $200 million of Total Portfolio
Assets, 0.03% of the next $300 million of Total Portfolio Assets, and 0.02% of
the remaining Total Portfolio Assets. Since January 1, 1997, Linden has received
from the Portfolio an advisory fee for its services based on Total Portfolio
Assets as follows: 0.06% of the first $200 million of Total Portfolio Assets,
0.04% of the next $300 million of Total Portfolio Assets, and 0.03% of the
remaining Total Portfolio Assets. All advisory fees are paid to Linden monthly.
The advisory fees paid to Linden for the Portfolio's fiscal year ended August
31, 1997 were $72,872.
TERMS OF THE ACQUISITION
Linden is wholly owned by Anthony R. Fischer, Jr., its president and sole
director. Linden's and Mr. Fischer's principal business address is 812 North
Linden Drive, Beverly Hills, California 90210. Under the Purchase and Sale
Agreement, Forum Investment Advisors would pay to Mr. Fischer a purchase price
of $750,000 subject to adjustment for all of Linden's stock. Forum Investment
Advisors is controlled by John Y. Keffer. In connection with the Purchase and
Sale Agreement, Forum Investment Advisors intends to enter into an agreement
(the "Consulting Agreement") with a new company solely owned by Mr. Fischer
under which Mr. Fischer will be obligated to Forum Investment Advisors to
provide services to Forum Investment Advisors with respect to the Portfolio,
subject to the code of ethics, compliance structure and management policies of
Forum Investment Advisors, for a five year period following the Acquisition
closing date. The Acquisition is currently scheduled for January 2, 1998.
Pursuant to the Consulting Agreement, Mr. Fischer will receive $250,000 to
establish the consulting relationship and a monthly fee thereafter.
NEW ADVISORY AGREEMENT
Under the New Advisory Agreement, a copy of which is attached as Exhibit A,
Forum Investment Advisors, subject to the control of the Core Board, will manage
the Portfolio's investments. In this regard, it will be the responsibility of
Forum Investment Advisors to continuously provide the Portfolio with investment
management, including investment research, advice and supervision, to determine
which securities shall be purchased or sold by the Portfolio, and to make
purchases and sales of securities on behalf of the Portfolio. For such services,
Forum Investment Advisors would receive from the Portfolio an advisory fee equal
to that under the Current Advisory Agreement. As described above, Mr. Fischer
will continue to provide portfolio management services to the Portfolio under
the proposed Consulting Agreement.
Like the Current Advisory Agreement, the New Advisory Agreement with respect to
the Portfolio will continue in effect for successive twelve-month periods with
respect to the Portfolio; provided that the continuance is specifically approved
at least annually (i) by the Core Board or by vote of a majority of the
outstanding voting interests of the Portfolio, and in either case, (ii) by a
majority of Core Trust's trustees who are not parties to the New Advisory
Agreement or interested persons of any such party (other than as trustees of
Core Trust). If the continuation of the New Advisory Agreement is not approved
as to the Portfolios, Forum Investment Advisors will continue to render services
described in the New Advisory Agreement to the Portfolio, Government Cash
Portfolio and Treasury Cash Portfolio. The New Advisory Agreement will be
terminable without penalty (i) by the Core Board or by a vote of a majority of
the outstanding voting securities of the Portfolio on 60 days' written notice to
Forum Investment Advisors or (ii) by Forum Investment Advisors on 60 days'
written notice to Core Trust. The New Advisory Agreement will automatically
terminate in the event of its assignment.
3
<PAGE>
FORUM INVESTMENT ADVISORS AND ITS AFFILIATES
As described above, management of Forum Advisors anticipates that Forum Advisors
will reorganize into Forum Investment Advisors, prior to the closing of the
Acquisition. It is also anticipated that Forum Investment Advisors, Forum, Forum
Administrative Services, LLC (the Trust's administrator), Forum Financial Corp.
(the Trust's transfer agent), as well as several other of their affiliated
entities, will become subsidiaries of Forum Financial Group, LLC ("Forum
Financial Group"), a Maine limited liability company which will be owned solely
by John Y. Keffer. The principal business address of Forum Investment Advisors
as well as its affiliates including Forum Financial Group, will be Two Portland
Square, Portland, Maine 04101. At some future time, Forum Investment Advisors,
Forum, Forum Financial Corp., as well as several other of their affiliated
entities, may become subsidiaries of an intermediary company to be owned solely
by Forum Financial Group.
Forum or its affiliates serve as the principal underwriter of each Fund, the
manager of the Trust and the administrator of the Portfolio. Forum and its
affiliates currently have nearly $30 billion in mutual fund assets under
administration. Forum Advisors currently advises five mutual funds including one
money market fund, Treasury Portfolio of Core Trust. It is anticipated that
Forum Investment Advisors will advise, effective as of January 2, 1998,
Government Cash Portfolio and Treasury Cash Portfolio. As of November 3, 1997,
Treasury Portfolio, Government Cash Portfolio and Treasury Cash Portfolio had
assets of approximately $37 million, $518 million and $79 million, respectively.
Forum Advisors receives an advisory fee at an annual rate of 0.05% of the
average daily net assets of Treasury Portfolio. The fees for Government Cash
Portfolio and Treasury Cash Portfolio are the same as the Portfolio (see
"Current Advisory Agreement" above). For the fiscal years ended March 31 and
August 31, 1997, Forum Advisors received $20,637 and $9,064, respectively, in
advisory fees from to Treasury Portfolio, no advisory fees were waived.
John Y. Keffer, Chairman and President of the Trust and Mark D. Kaplan, Vice
President, Assistant Treasurer and Assistant Secretary are the only executive
officers of the Trust. Mr. Kaplan is a Managing Director of Forum. Mr. Keffer is
the president, director and owner of Forum, Forum Advisors and Forum Financial
Corp. Messrs. Keffer and Kaplan also serve other investment companies in
capacities similar to those they hold with the Trust. Their address is Two
Portland Square, Portland, Maine 04101.
COMPARATIVE FEE TABLE
The following table shows, for the Fund's fiscal year ended August 31, 1997, the
operating expenses of the Fund and the pro forma operating expenses of the Fund
assuming the proposed New Advisory Agreement had been in effect throughout the
year. No fee change is proposed in the New Advisory Agreement. The purpose of
the table and example that follows is to assist investors in understanding the
various costs and expenses of investing in the Fund.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)(1)
Actual Expense Pro Forma Expense
-------------- -----------------
Management Fees(2) (after fee waivers) 0.09% 0.09%
Rule 12b-1 Fees None None
Other Expenses (after reimbursements) 0.43% 0.43%
----- -----
Total Operating Expenses 0.52% 0.52%
(1) All information is net of applicable waivers and reimbursements and
includes the Fund's pro rata portion of the expenses of the Portfolio.
Absent expense reimbursements and fee waivers, the actual and pro forma
expenses of the Fund would be: Management Fees; 0.19%(actual) and 0.19%
(pro forma); Other Expenses; 1.03%(actual) and 1.03% (pro forma); and Total
Operating Expenses, 1.22% (actual) and 1.22% (pro forma).
(2) Includes all advisory, management and administration fees.
4
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EXAMPLE
The following illustrates the expenses an investor would pay on a $1,000
investment the Fund under the existing and proposed fees and the expenses stated
above, assuming a five percent annual return, reinvestment of all distributions
and redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Actual and Pro Forma $4 $12 $21 $47
THE FIVE PERCENT ANNUAL RETURN IS NOT PREDICTIVE OF AND DOES NOT REPRESENT THE
FUND'S PROJECTED RETURNS; RATHER IT IS REQUIRED BY GOVERNMENT REGULATION. THE
EXAMPLE SHOULD NOT BE CONSIDERED A PRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
FACTORS CONSIDERED BY THE BOARDS OF TRUSTEES
At a meeting held on September 22, 1997, the Core Board considered various
matters in reviewing the proposed New Advisory Agreement with Forum Investment
Advisors. At a meeting held September 22, 1997, and through additional
information provided to the Board thereafter in connection with the Board's
execution of a unanimous consent, the Board reviewed the same information in
determining to submit this proposal to shareholders. In particular, the Core
Board and the Board (collectively, the "Boards") considered:
* NATURE AND QUALITY OF SERVICES. The Boards considered the nature and
quality of services rendered and the results achieved by Linden in its
management of the Portfolio. The Boards also considered that Mr. Fischer
would continue to provide portfolio management services to the Portfolio
under the supervision of Forum Investment Advisors after the Acquisition.
Also considered were the various services Forum and its affiliates
currently provide to the Trust, including distribution, administration,
fund accounting and transfer agency services.
* ORGANIZATIONAL CAPABILITIES AND FINANCIAL CONDITION OF FORUM INVESTMENT
ADVISORS. The Boards considered the organizational capabilities as well as
the financial condition of Forum Investment Advisors.
* ADVISORY FEES AND EXPENSES. The Boards considered the current advisory fee
rate as well as the fact that there is no proposed advisory fee increase
and, therefore, no impact on the Portfolio's fee rates and annual expenses
(which include the advisory fee and all other operating expenses incurred
by the Portfolio). For information concerning the Portfolio's expense
ratios on both an existing and pro forma basis, see "Comparative Fee Table"
above.
* COMPARISONS WITH OTHER FUNDS. The Boards considered the advisory fees paid
by other funds with similar investment objectives. The Boards also compared
the proposed operating expense ratios of the Portfolio with the ratios of
those other funds.
* PORTFOLIO PERFORMANCE. The Boards considered the performance of the
Portfolio as compared to the performance of securities indices and
performance of other funds having comparable investment objectives and
policies. The Boards also took into account the historical investment
results of the Portfolio.
After full consideration of the matter, the Core Board and the Board recommended
that the New Advisory Agreement be approved and that it be submitted to all
interestholders of the Portfolio, including the Fund.
If approved by the interestholders of the Portfolios, the proposed New Advisory
Agreement will become effective on January 2, 1998, and the New Advisory
Agreement will continue from year to year thereafter if approved in the same
manner as the Current Advisory Agreement. If the New Advisory Agreement is not
approved by interestholders of the Portfolios for which Linden currently serves
as investment adviser, the Current Advisory Agreement will continue in effect in
its present form.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSAL.
5
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OTHER BUSINESS
Management knows of no other business to be presented at the Meeting. If any
additional matters should be properly presented, it is intended that the
enclosed proxy will be voted on such matters in accordance with the judgment of
the persons designated in the proxy.
ADDITIONAL INFORMATION
CERTAIN INFORMATION CONCERNING SHARE OWNERSHIP
As of November 3 (the record date), there were 9,886,141.520 shares of the Fund
outstanding. Also as of November 3, the Trust believed the following persons
beneficially owned five percent or more of the total outstanding shares of the
Fund. Management is not aware of any other person who owns beneficially five
percent or more of the shares of the Fund.
<TABLE>
<S> <C> <C>
Number of Percent of
Shares Fund Shares
------ -----------
H.M. Payson & Co. Trust Account (for its various customers) 5,150,380.010 52.10%
H.M. Payson & Co. Custody Account (for its various customers) 4,217,103.020 42.66%
</TABLE>
As of November 3, none of the Trustees nor the officers of the Trust, in the
aggregate, owned shares of the Fund.
SUBMISSION OF SHAREHOLDER PROPOSALS
Following the Meeting, it is anticipated that neither the Trust nor the Fund
will hold any shareholder meetings except as required by Federal or Delaware
state law. Shareholders wishing to submit proposals, including proposals to
nominate persons for election as trustees, for inclusion in a proxy statement
for a subsequent shareholder meeting should send proposals to the Secretary of
the Trust, David I. Goldstein, in care of Forum.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES
Banks, broker-dealers and voting trustees and their nominees should advise the
Secretary of the Trust, David I. Goldstein, in care of Forum, whether, with
respect to shares of record held by them, other persons are beneficial owners of
shares for which proxies are being solicited and if so, the number of copies of
the Proxy Statement needed in order to supply copies to the beneficial owners of
the shares.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY
November 12, 1997 By order of the Board of Trustees,
/s/ David I. Goldstein
David I. Goldstein
Secretary
6
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EXHIBIT A
CORE TRUST (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 2nd day of January, 1998 between Core Trust
(Delaware) (the "Trust"), a business trust organized under the laws of the State
of Delaware with its principal place of business at Two Portland Square,
Portland, Maine 04101, and Forum Investment Advisors, LLC (the "Adviser"), a
corporation organized under the laws of State of Delaware with its principal
place of business at Two Portland Square, Portland, Maine 04101.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "Act") as an open-end management investment company and
is authorized to issue interests (as defined in the Trust's Trust Instrument) in
separate series; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for the series listed in Appendix A hereto (each such series, together
with all other series subsequently established by the Trust and made subject to
this Agreement in accordance with Section 9, being herein referred to as a
"Portfolio," and collectively the "Portfolios"), and the Adviser is willing to
provide those services on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Trust Instrument and Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the Act, as may be
supplemented from time to time, all in such manner and to such extent as may
from time to time be authorized by the Trust's Board of Trustees (the "Board").
The Trust is currently authorized to issue eight series of interests and the
Board is authorized to issue interests in any number of additional series. The
Trust has delivered to the Adviser copies of the Trust's Trust Instrument and
Registration Statement and will from time to time furnish the Adviser with any
amendments thereof.
SECTION 2. INVESTMENT ADVISER; APPOINTMENT
The Trust hereby employs the Adviser, subject to the direction and
supervision of the Board, to manage the investment and reinvestment of the
assets in each Portfolio and, without limiting the generality of the foregoing,
to provide other services specified in Section 3 hereof.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in each Portfolio. To carry out
such decisions, the Adviser is hereby authorized, as agent and attorney-in-fact
for the Trust, for the account of, at the risk of and in the name of the Trust,
to place orders and issue instructions with respect to those transactions of the
Portfolios. In all purchases, sales and other transactions in securities for the
Portfolios, the Adviser is authorized to exercise full discretion and act for
the Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in each Portfolio since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Portfolios and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in the
Portfolios' holdings, the industries in which they engage, or the economic,
social or political conditions prevailing in each country in which the
Portfolios' maintain investments. The Adviser will also furnish the Board with
such statistical and analytical information with respect to securities in the
Portfolios as the Adviser may believe appropriate or as the Board reasonably may
request.
(c) In making purchases and sales of securities for the Portfolios, the
Adviser will follow and comply with the policies set from time to time by the
Board as well as the limitations imposed by the Trust's Trust Instrument and
Registration Statement
A-1
<PAGE>
under the Act, the limitations in the Act and in the Internal Revenue Code of
1986, as amended, in respect of regulated investment companies and the
investment objectives, policies and restrictions of the Portfolios.
(d) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly qualified to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(e) The Adviser shall either monitor the performance of brokers,
dealers and other persons who introduce or execute purchases, sales and other
transactions of securities and other investment assets of the Portfolios or
select an introducing broker who shall, as part of its transaction charges,
monitor such performance. Such persons may be affiliated with the Adviser, any
investment subadviser or other affiliates of the Trust to the extent permitted
by the Act.
(f) The Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust which are in possession
of the Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Adviser's normal business hours. Upon the reasonable request of
the Trust, copies of any such books and records shall be provided promptly by
the Adviser to the Trust or the Trust's authorized representatives.
SECTION 4. DELEGATION OF THE ADVISER'S DUTIES
The Adviser may carry out any of its obligations under this Agreement
by entering into a contract with a person(s) who (i) is registered as an
investment adviser pursuant to the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), or who is exempt from registration thereunder each
SubAdviser; or (ii) is under the control of, and is supervised by, the Adviser
("Controlled Person") with respect to any investment advisory functions
performed by such Controlled Person. The Adviser may not delegate any of its
obligations under this Agreement unless it has instituted appropriate procedures
for the supervision of the Controlled Person's activities.
SECTION 5. EXPENSES
The Trust hereby confirms that the Trust shall be responsible and shall
assume the obligation for payment of all the Trust's expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the Trust's custodian and
transfer agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of the Trust's formation and maintaining its existence; costs of
preparing the Trust's registration statement, account application forms and
interestholder reports and delivering them to existing and prospective
interestholders; costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts and of calculating the net
asset value of interests in the Trust; costs of reproduction, stationery and
supplies; compensation of the Trust's trustees, officers and employees and the
costs of other personnel performing services for the Trust; costs of Trust
meetings; registration fees and related expenses for registration with the
Commission and the securities regulatory authorities of other countries in which
the Trust's interests are sold; state securities law registration fees and
related expenses; and fees and out-of-pocket expenses payable to Forum Financial
Services, Inc. under any placement agent, management or similar agreement.
SECTION 6. STANDARD OF CARE
(a) The Adviser shall give the Trust the benefit of its best judgment
and efforts in rendering its services to the Trust and shall not be liable for
error of judgment or mistake of law, for any loss arising out of any investment,
or in any event whatsoever, provided that nothing herein shall be deemed to
protect, or purport to protect, the Adviser against any liability to the Trust
or to the security holders of the Trust to which it would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of reckless disregard of its
obligations and duties hereunder. No provision of this Agreement shall be
construed to protect any Trustee or officer of the Trust, or the Adviser, from
liability in violation of Sections 17(h), 17(i) or 36(b) of the Act.
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(b) The Adviser shall not be held responsible for any loss incurred by
reason of any act or omission of any dealer, broker or custodian; provided that
such loss in not the result of the Adviser's willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or the result of
the Adviser's reckless disregard of its obligations and duties hereunder.
(c) This Section shall survive the termination of this Agreement and
shall be binding upon the Trust's and the Adviser's successors and personal
representatives.
SECTION 7. COMPENSATION
For the services provided by the Adviser pursuant to this Agreement,
the Trust shall pay the Adviser an advisory fee as set forth in Appendix B.
SECTION 8. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Portfolio
immediately upon approval by a majority of the outstanding voting interests of
that Portfolio.
(b) This Agreement shall remain in effect with respect to a Portfolio
for a period of two years from the date of its effectiveness and shall continue
in effect for successive twelve-month periods (computed from each anniversary
date of the approval) with respect to the Portfolio; provided that such
continuance is specifically approved at least annually (i) by the Board or by
the vote of a majority of the outstanding voting interests of the Portfolio,
and, in either case, (ii) by a majority of the Trust's trustees who are not
parties to this Agreement or interested persons of any such party (other than as
trustees of the Trust); provided further, however, that if this Agreement or the
continuation of this Agreement is not approved as to a Portfolio, the Adviser
may continue to render to that Portfolio the services described herein in the
manner and to the extent permitted by the Act and the rules and regulations
thereunder.
(c) This Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Adviser or (ii) by the Adviser on 60 days' written notice
to the Trust. This agreement shall terminate upon assignment.
SECTION 9. ADDITIONAL PORTFOLIOS
In the event that the Trust establishes one or more series of
after the effectiveness of this Agreement, such series shall become a Portfolio
under this Agreement. Forum or the Trust may elect not to make any such series
subject to this Agreement.
SECTION 10. ACTIVITIES OF THE ADVISER
(a) Except to the extent necessary to perform its obligations
hereunder, nothing herein shall be deemed to limit or restrict the Adviser's
right, or the right of any of the Adviser's officers, directors or employees who
may also be a trustee, officer or employee of the Trust, or persons otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) The Adviser represents that it is currently registered, and will
during the entire period this Agreement is in effect be registered, as an
investment adviser under the Advisers Act.
SECTION 11. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the interestholders of each Portfolio
shall not be liable for any obligations of the Trust or of the Portfolios under
this Agreement, and the Adviser agrees that, in asserting any rights or claims
under this Agreement, it shall look only to the assets and property of the Trust
or the Portfolio to which the Adviser's rights or claims relate in settlement of
such rights or claims, and not to the Trustees of the Trust or the
interestholders of the Portfolios.
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SECTION 12. NOTICE
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing or by telex and shall be effective upon receipt.
Notices and communications shall be given, if to the Trust, at:
Two Portland Square
Portland, Maine 04101
Attention: Secretary
and if to the Adviser at:
Two Portland Square
Portland, Maine 04101
Attention: Secretary
SECTION 13. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting interests of the Portfolios thereby affected. No amendment to
this Agreement or the termination of this Agreement with respect to a Portfolio
shall effect this Agreement as it pertains to any other Portfolio.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(e) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Delaware.
(f) The terms "vote of a majority of the outstanding voting interests,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act to the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated person" and
"assignment," respectively.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
CORE TRUST (DELAWARE)
--------------------------
[ ]
Trustee
FORUM INVESTMENT ADVISORS, LLC
------------------------
John Y. Keffer
President
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CORE TRUST (DELAWARE)
INVESTMENT ADVISORY AGREEMENT
APPENDIX A
PORTFOLIOS OF THE TRUST
AS OF JANUARY 2, 1998
Cash Portfolio
Government Cash Portfolio
Treasury Cash Portfolio
APPENDIX B
FEE SCHEDULE
Cash Portfolio
Government Cash Portfolio
Treasury Cash Portfolio
With respect to each of the Portfolios, the Trust shall pay the Adviser
a fee based upon the total average daily net assets of the Portfolios ("Total
Portfolio Assets"). The Trust shall pay the Adviser a total fee of 0.06% for the
first $200 million of Total Portfolio Assets, 0.04% of the next $300 million of
Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. Such
fees shall be accrued by the Trust daily with respect to each Portfolio in the
proportion that Portfolio's average daily net assets bear to Total Portfolio
Assets and shall be payable monthly in arrears on the first day of each calendar
month. Upon the termination of this Agreement, the Trust shall pay to the
Adviser such compensation as shall be payable prior to the effective date of
such termination. The Adviser shall be paid a minimum annual fee of $50,000 for
its services to the Trust with respect to the Portfolios. To the extent the
Adviser has delegated its responsibilities with respect to a Portfolio to a
SubAdviser, the Adviser shall be responsible for payment of compensation to the
SubAdviser.
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F O R U M F U N D S
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Daily Assets Cash Fund
PROXY
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 12, 1997
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints David I.
Goldstein and Robert B. Campbell (or, if only one shall act, that one) proxies
with the power of substitution to vote all of the shares of Daily Assets Cash
Fund (the "Fund"), a series of Forum Funds (the "Trust"), registered in the name
of the undersigned at the Special Meeting of Shareholders of the Funds to be
held at the offices of Forum Financial Services, Inc., the Trust's manager and
distributor, at Two Portland Square, Portland, Maine 04101, on Friday, December
12, 1997 at 2:00 p.m. Eastern time, and at any adjournment or adjournments
thereof.
PROPOSAL 1:
To consider and act upon a proposal to authorize the Trust, on behalf
of the Funds, to vote at a meeting of Core Trust (Delaware) to approve
a new Investment Advisory Agreement between Core Trust (Delaware) and
Forum Investment Advisors, LLC with respect to Cash Portfolio.
For [ ] Against [ ] Abstain [ ]
Receipt is acknowledged of the Proxy Statement for the Special Meeting of
Shareholders to be held on December 12, 1997. (NOTE: Checking the box labeled
ABSTAIN will effectively be a vote AGAINST the proposal.)
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Authorized Signature Date
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Printed Name (and Title if Applicable)
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Authorized Signature (Joint Investor) Date
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Printed Name (and Title if Applicable)
