PROSPECTUS
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INSTITUTIONAL
SHARES
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[Picture graphics of safe dial,
world map, calendar, compass and
countryside on left half of page.]
DAILY ASSETS
TREASURY
OBLIGATIONS FUND
DAILY ASSETS
GOVERNMENT FUND
DAILY ASSETS
GOVERNMENT
OBLIGATIONS FUND
DAILY ASSETS
CASH FUND
DAILY ASSETS
MUNICIPAL FUND
F O R U M
F U N D S
MAY 27, 1998
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FORUM FUNDS
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
(FORMERLY DAILY ASSETS TREASURY FUND)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
(FORMERLY DAILY ASSETS GOVERNMENT FUND)
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND
(FORMERLY DAILY ASSETS TAX-EXEMPT FUND)
PROSPECTUS
May 27, 1998
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THIS PROSPECTUS OFFERS INSTITUTIONAL SHARES OF DAILY ASSETS TREASURY OBLIGATIONS
FUND, DAILY ASSETS GOVERNMENT FUND, DAILY ASSETS GOVERNMENT OBLIGATIONS FUND,
DAILY ASSETS CASH FUND AND DAILY ASSETS MUNICIPAL FUND (EACH A "FUND"). EACH
FUND IS A DIVERSIFIED NO-LOAD, MONEY MARKET PORTFOLIO OF FORUM FUNDS (THE
"TRUST"), A REGISTERED OPEN-END, MANAGEMENT INVESTMENT COMPANY. EACH FUND SEEKS
TO PROVIDE ITS SHAREHOLDERS WITH HIGH CURRENT INCOME (WHICH, IN THE CASE OF
DAILY ASSETS MUNICIPAL FUND, IS EXEMPT FROM FEDERAL INCOME TAXES) TO THE EXTENT
CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY.
EACH FUND SEEKS TO ACHIEVE ITS OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE
ASSETS IN A SEPARATE PORTFOLIO OF AN OPEN-END, MANAGEMENT INVESTMENT COMPANY
WITH AN IDENTICAL INVESTMENT OBJECTIVE. SEE "OTHER INFORMATION - FUND
STRUCTURE." THROUGH THE PORTFOLIO IN WHICH IT INVESTS:
DAILY ASSETS TREASURY OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Treasury and in repurchase
agreements backed by these obligations.
DAILY ASSETS GOVERNMENT FUND invests substantially all of its assets
in obligations of the U.S. Government, its agencies and
instrumentalities with a view toward providing income that is
generally considered exempt from state and local income taxes.
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Government, its agencies and
instrumentalities and in repurchase agreements backed by these
obligations.
DAILY ASSETS CASH FUND invests in a broad spectrum of high-quality
money market instruments.
DAILY ASSETS MUNICIPAL FUND invests primarily in high-quality
obligations of the states, territories and possessions of the U.S. and
of their subdivisions, authorities and corporations ("municipal
securities") with a view toward providing income that is exempt from
federal income taxes.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated May 27, 1998 (the "SAI"), which contains more
detailed information about the Trust and the Funds and is available together
with other related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). The SAI, which is incorporated into this Prospectus by
reference, also is available without charge by contacting the Funds' transfer
agent, Forum Shareholder Services, LLC, at P.O. Box 446, Portland, Maine 04112,
(207) 879-0001 or (800) 94FORUM.
Investors should read this Prospectus and retain it for future reference.
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TABLE OF CONTENTS
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1. Prospectus Summary..............................2 5. Purchases and Redemptions of Shares.............13
2. Financial Highlights............................4 6. Distributions and Tax Matters...................17
3. Investment Objectives and Policies..............5 7. Other Information...............................19
4. Management......................................11
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FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.
THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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1. PROSPECTUS SUMMARY
HIGHLIGHTS OF THE FUNDS
This prospectus offers shares of the Institutional class ("Institutional
Shares") of each of the Funds. The Funds operate in accordance with the
provisions of Rule 2a-7 under the Investment Company Act of 1940 (the "1940
Act"). Each Fund invests all of its investable assets in a separate portfolio
(each a "Portfolio") of Core Trust (Delaware), an open-end, management
investment company ("Core Trust") as follows:
Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Portfolio
Daily Assets Government Obligations Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Municipal Fund Municipal Cash Portfolio
Accordingly, the investment experience of each Fund will correspond
directly with the investment experience of its corresponding Portfolio. See
"Other Information - Fund Structure." Each Fund currently offers three separate
classes of shares: Institutional Shares, Institutional Service Shares and
Investor Shares. Institutional Shares are sold through this Prospectus.
Institutional Service Shares and Investor Shares are each offered by a separate
prospectus. See "Other Information -- Fund Structure -- Other Classes of
Shares."
MANAGEMENT. Forum Administrative Services, LLC ("FAdS") supervises the
overall management of the Funds and the Portfolios and Forum Financial Services,
Inc. ("FFSI") is the distributor of the Funds' shares. Forum Investment
Advisors, LLC ("FIA") is the investment adviser of each Portfolio and provides
professional management of the Portfolios' investments. The Funds' transfer
agent, dividend disbursing agent and shareholder servicing agent is Forum
Shareholder Services, LLC (the "FSS"). See "Management" for a description of the
services provided and fees charged to the Funds.
PURCHASES AND REDEMPTIONS. The minimum initial investment in Institutional
Shares is $1,000,000. Institutional Shares may be purchased and redeemed Monday
through Friday, between 9:00 a.m. and 6:00 p.m., Eastern time, except on Federal
holidays and days that the Federal Reserve Bank of San Francisco (Boston in the
case of Daily Assets Government Fund) is closed ("Fund Business Days"). To be
eligible to receive that day's income, purchase orders must be received by FSS
in good order no later than 2:00 p.m., Eastern time (noon in the case of Daily
Assets Government Fund and Daily Assets Municipal Fund). Shareholders may have
redemption proceeds over $5,000 transferred by bank wire to a designated bank
account. To be able to receive redemption proceeds by wire on the day of the
redemption, redemption orders must be received by FSS in good order no later
than 2:00 p.m., Eastern time (noon in the case of Daily Assets Government Fund
and Daily Assets Municipal Fund). All times may be changed without notice by
Fund management due to market activities. See "Purchase and Redemption of
Shares."
EXCHANGES. Shareholders of a Fund may exchange Institutional Shares without
charge for Institutional Shares of the other Funds. See "Purchases and
Redemptions of Shares - Exchanges."
DISTRIBUTIONS. Distributions of net investment income are declared daily
and paid monthly by each Fund and are automatically reinvested in additional
Fund shares unless the shareholder has requested payment in cash. See
"Distributions and Tax Matters."
INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be
able to maintain a stable net asset value of $1.00 per share. Although the
Portfolios invest only in money market instruments, an investment in any Fund
involves certain risks, depending on the types of investments made and the types
of investment techniques employed. Investment in any security, including U.S.
Government Securities, involves some level of investment risk. An investment in
a Fund is not insured by the
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FDIC, nor is it insured or guaranteed against loss of principal.
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding
the various expenses that an investor in Institutional
Shares will bear directly or indirectly. There are no transaction expenses
associated with purchases, redemptions or exchanges of Fund shares.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(1)
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Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Government Government Cash Municipal
Obligations Fund Fund Obligations Fund Fund Fund
---------------- ---- ---------------- ---- ----
Management Fees(2) 0.14% 0.15% 0.14% 0.14% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.06% 0.05% 0.06% 0.06% 0.05%
----- ----- ----- ----- -----
Total Operating Expenses 0.20% 0.20% 0.20% 0.20% 0.20%
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(1) For a further description of the various expenses incurred in the
operation of the Funds and the Portfolios, see "Management." The amount of fees
and expenses for each Fund is based on estimated annualized expenses for the
Funds' fiscal year ending August 31, 1998. Each Fund's expenses include the
Fund's pro rata portion of all expenses of its corresponding Portfolio, which
are borne indirectly by Fund shareholders.
(2) Management Fees include all administration fees and investment advisory
fees incurred by the Funds and the Portfolios; as long as its assets are
invested in a Portfolio, a Fund pays no investment advisory fees directly.
(3) Absent estimated reimbursements by FIA and its affiliates, Other
Expenses and Total Fund Operating Expenses would be: 0.15% and 0.29%,
respectively, for Daily Assets Treasury Obligations Fund; 0.17 % and 0.32%,
respectively, for Daily Assets Government Fund; 0.17% and 0.31%, respectively,
for Daily Assets Government Obligations Fund; 0.19% and 0.33%, respectively, for
Daily Assets Cash Fund; 0.19% and 0.34%, respectively, for Daily Assets
Municipal Fund. Expense reimbursements are voluntary and may be reduced or
eliminated at any time.
EXAMPLE
Following is a hypothetical example that indicates the dollar amount of
expenses that an investor in Institutional Shares would pay assuming (1) the
investment of all of the Fund's assets in the Portfolio, (2) a $1,000 investment
in the Fund, (3) a 5% annual return, (4) the reinvestment of all distributions
and (5) redemption at the end of each period:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
Each Fund $2 $6 $11 $26
The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Funds' projected returns; rather, it is required by government
regulation. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS
THAN INDICATED.
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2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Institutional Share of the Funds that offered Institutional Shares prior to
February 28, 1998. The following information also represents selected data for a
single outstanding Institutional Service Share of Daily Assets Government Fund
and Daily Assets Cash Fund. That class was the first offered by the these two
Funds and, accordingly, represent data since each of those Fund's inception.
Information for the period ended August 31, 1997, was audited by KPMG Peat
Marwick LLP, independent auditors. Information for prior periods was audited by
other independent auditors and information for the period ended February 28,
1998 is unaudited. The financial statements and independent auditors' report
thereon for the fiscal year ended August 31, 1997 and the financial statements
for the semi-annual period ended February 28, 1998 are incorporated by reference
into the SAI and may be obtained from the Trust without charge. As of May 20,
1998, Daily Assets Municipal Fund had not commenced operations.
As of February 28, 1998, Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio and Cash Portfolio had net assets of $168,183,226;
$46,711,943; $603,202,130 and $391,807,519, respectively.
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RATIO TO AVERAGE NET
ASSETS
BEGINNING DISTRIBUTIONS --------------------
NET ASSET NET FROM NET ENDING NET NET
VALUE PER INVESTMENT INVESTMENT ASSET NET INVESTMENT
SHARE INCOME INCOME VALUE PER EXPENSES INCOME
----- ------ ------ SHARE -------- ------
-----
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, $1.00 0.01 (0.01) $1.00 0.20%(2) 2.13%(2)
1998 (unaudited)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.02 (0.02) $1.00 0.47%(2) 4.86%(2)
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(2) 4.76%(2)
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.32%(2) 2.92%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.01 (0.01) $1.00 0.20%(2) 1.76%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.03 (0.03) $1.00 0.47%(2) 5.23%(2)
October 1, 1996 to August 31, 1997 1.00 0.05 (0.05) 1.00 0.52%(2) 5.06%(2)%
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RATIO OF
NET ASSETS GROSS
END OF EXPENSES
PERIOD TO AVERAGE
TOTAL (000S NET ASSETS
RETURN OMITTED) (1)
------ -------- ----------
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)0.55% 60,926 0.35%(2)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)2.43% 46,519 0.78%(2)
April 1, 1997 to August 31, 1997 2.01% 44,116 0.95%(2)
Year Ended March 31, 1997 4.80% 43,975 0.99%
Year Ended March 31, 1996 5.18% 43,103 1.06%
Year Ended March 31, 1995 4.45% 36,329 1.10%
Year Ended March 31, 1994 2.83% 26,505 1.17%
July 1, 1992 to March 31, 1993 3.13%(2) 4,687 2.43%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)0.46% 4,952 1.33%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)2.62% 13,034 0.89%(2)
October 1, 1996 to August 31, 1997 4.70% 12,076 1.22%(2)
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(1) During each period, various fees and expenses were waived and
reimbursed, respectively. The ratio of Gross Expenses to Average Net Assets
reflects the expense ratio in the absence of any waivers and reimbursements
for the Fund and its respective Portfolio.
(2) Annualized.
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3. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of each Fund except Daily Assets Municipal Fund is
to provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of Daily
Assets Municipal Fund is to provide high current income which is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity.
THERE CAN BE NO ASSURANCE THAT ANY FUND OR PORTFOLIO WILL ACHIEVE ITS
INVESTMENT OBJECTIVE OR MAINTAIN A STABLE NET ASSET VALUE.
Each Fund currently seeks to achieve its investment objective by investing
all of its investable assets in its corresponding Portfolio, which has the same
investment objective and substantially similar investment policies. Therefore,
although the following discusses the investment policies of the Portfolios (and
the responsibilities of Core Trust's board of trustees (the "Core Trust
Board")), it applies equally to the Funds (and the Trust's board of trustees
(the "Board")).
INVESTMENT POLICIES
Each Portfolio invests only in high quality, short-term money market
instruments that are determined by FIA, pursuant to procedures adopted by the
Core Trust Board, to be eligible for purchase and to present minimal credit
risks. High quality instruments include those that (1) are rated (or, if
unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in the highest rating category by two nationally recognized
statistical rating organizations ("NRSROs") or, if only one NRSRO has issued a
rating, by that NRSRO or (2) are otherwise unrated and determined by FIA to be
of comparable quality. A description of the rating categories of certain NRSROs,
such as Standard & Poor's and Moody's Investors Service, Inc., is contained in
the SAI.
Each Portfolio invests only in U.S. dollar-denominated instruments that
have a remaining maturity of 397 days or less (as calculated under Rule 2a-7)
and maintains a dollar-weighted average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, each Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. As used herein, "U.S. Government
Securities" means obligations issued or guaranteed as to principal and interest
by the United States government, its agencies or instrumentalities and "Treasury
Securities" means U.S. Treasury bills and notes and other U.S. Government
Securities which are guaranteed as to principal and interest by the U.S.
Treasury.
In the case of municipal securities, when the assets and revenues of an
issuer are separate from those of the government creating the issuer and a
security is backed only by the assets and revenues of the issuer, the issuer and
not the creating government is deemed to be the sole issuer of the security.
Similarly, in the case of a security issued by or on behalf of public
authorities to finance various privately operated facilities that is backed only
by the assets and revenues of the non-governmental user, the non-governmental
user will be deemed to be the sole issuer of the security.
Yields on money market securities are dependent on a variety of factors,
including the general conditions of the money markets and the fixed income
markets in general, the size of a particular offering, the maturity of the
obligation and the rating of the issue. A Fund's yield will tend to fluctuate
inversely with prevailing market interest rates. For instance, in periods of
falling market interest rates, yields will tend to be somewhat higher. Although
each Portfolio only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at
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maturity. All money market instruments, including U.S. Government Securities and
municipal securities, can change in value when there is a change in interest
rates, the issuer's actual or perceived creditworthiness or the issuer's ability
to meet its obligations. The achievement of a Fund's investment objective is
dependent in part on the continuing ability of the issuers of the securities in
which the Portfolio invests to meet their obligations for the payment of
principal and interest when due.
DAILY ASSETS TREASURY OBLIGATIONS FUND
Treasury Cash Portfolio seeks to attain its investment objective by
investing substantially all of its assets in Treasury Securities and in
repurchase agreements backed by Treasury Securities.
DAILY ASSETS GOVERNMENT FUND
Government Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities. The Portfolio
invests with a view toward providing income that is generally considered exempt
from state and local income taxes.
Among the U.S. Government Securities in which the Portfolio may invest are
U.S. Treasury Securities and obligations of the Farm Credit System, Farm Credit
System Financial Assistance Corporation, Federal Financing Bank, Federal Home
Loan Banks, General Services Administration, Student Loan Marketing Association,
and Tennessee Valley Authority. Income on these obligations and the obligations
of certain other agencies and instrumentalities is generally not subject to
state and local income taxes by Federal law. In addition, the income received by
Fund shareholders that is attributable to these investments will also be exempt
in most states from state and local income taxes. Shareholders should determine
through consultation with their own tax advisers whether and to what extent
dividends payable by the Fund from interest received with respect to its
investments will be considered to be exempt from state and local income taxes in
the shareholder's state. Shareholders similarly should determine whether the
capital gain and other income, if any, payable by the Fund will be subject to
state and local income taxes in the shareholder's state. See "Distributions and
Tax Matters."
The U.S. Government Securities in which the Portfolio may invest include
securities supported primarily or solely by the creditworthiness of the issuer.
There is no guarantee that the U.S. government will support securities not
backed by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than securities backed by the U.S. government's full faith
and credit.
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Government Cash Portfolio seeks to attain its investment objective by
investing substantially all of its assets in U.S. Government Securities and in
repurchase agreements backed by U.S. Government Securities. The U.S. Government
Securities in which the Portfolio may invest include Treasury Securities and
securities supported primarily or solely by the creditworthiness of the issuer,
such as securities of the Federal National Mortgage Association, Federal Home
Loan Banks and Student Loan Marketing Association. There is no guarantee that
the U.S. Government will support securities not backed by its full faith and
credit. Accordingly, although these securities have historically involved little
risk of loss of principal if held to maturity, they may involve more risk than
securities backed by the U.S. Government's full faith and credit.
DAILY ASSETS CASH FUND
Cash Portfolio seeks to attain its investment objective by investing in a
broad spectrum of money market instruments. The Portfolio may invest in (1)
obligations of domestic financial institutions, (2) U.S. Government Securities
(see
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"Investment Objectives and Policies - Daily Assets Government Fund") and (3)
corporate debt obligations of domestic issuers.
Financial institution obligations include negotiable certificates of
deposit, bank notes, bankers' acceptances and time deposits of banks (including
savings banks and savings associations) and their foreign branches. The
Portfolio limits its investments in bank obligations to banks which at the time
of investment have total assets in excess of one billion dollars. Certificates
of deposit represent an institution's obligation to repay funds deposited with
it that earn a specified interest rate over a given period. Bank notes are debt
obligations of a bank. Bankers' acceptances are negotiable obligations of a bank
to pay a draft which has been drawn by a customer and are usually backed by
goods in international trade. Time deposits are non-negotiable deposits with a
banking institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" that are restricted as to
disposition under the Federal securities laws ("restricted securities"). Any
sale of these securities may not be made absent registration under the
Securities Act of 1933 or the availability of an appropriate exemption
therefrom. Some of these restricted securities, however, are eligible for resale
to institutional investors, and accordingly, a liquid market may exist for them.
Pursuant to guidelines adopted by the Core Trust Board, the investment adviser
will determine whether each such investment is liquid.
DAILY ASSETS MUNICIPAL FUND
Municipal Cash Portfolio seeks to attain its investment objective by
investing substantially all of its assets in municipal securities. The Portfolio
attempts to maintain 100% of its assets invested in federally tax-exempt
municipal securities; during periods of normal market conditions the Portfolio
will have at least 80% of its net assets invested in federally tax-exempt
instruments the income from which may be subject to the federal alternative
minimum tax ("AMT").
The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.
THE SHORT-TERM MUNICIPAL SECURITIES MARKET. It is anticipated that a
substantial amount of the municipal securities held by the Portfolio will be
supported by credit and liquidity enhancements, such as letters of credit (which
are not covered by federal deposit insurance) or put or demand features of third
party financial institutions, generally domestic and foreign banks. Accordingly,
the credit quality and liquidity of the Portfolio will be dependent in part upon
the credit quality of the banks supporting the Portfolio's investments. This
will result in exposure to risks pertaining to the banking industry, including
the foreign banking industry. These risks include a sustained increase in
interest rates, which can adversely affect the availability and cost of a bank's
lending activities; exposure to credit losses during times of economic decline;
concentration of loan portfolios in certain industries; regulatory developments;
and competi-
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tion among financial institutions. Brokerage firms and insurance companies also
provide certain liquidity and credit support. The Portfolio's policy is to
purchase municipal securities with third party credit or liquidity support only
after FIA has considered the creditworthiness of the financial institution
providing the support and believes that the security presents minimal credit
risk.
The Portfolio may purchase long term municipal securities with various
maturity shortening provisions. For instance, variable rate demand notes
("VRDN") are municipal bonds with maturities of up to 40 years that are sold
with a demand feature (an option for the holder of the security to sell the
security back to the issuer) which may be exercised by the security holder at
predetermined intervals, usually daily or weekly. The interest rate on the
security is typically reset by a remarketing or similar agent at prevailing
interest rates. VRDNs may be issued directly by the municipal issuer or created
by a bank, broker-dealer or other financial institution by selling a previously
issued long-term bond with a demand feature attached. Similarly, tender option
bonds (also referred to as certificates of participation) are municipal
securities with relatively long original maturities and fixed rates of interest
that are coupled with an agreement of a third party financial institution under
which the third party grants the security holders the option to tender the
securities to the institution and receive the face value thereof. The option may
be exercised at periodic intervals, usually six months to a year. As
consideration for providing the option, the financial institution receives a fee
equal to the difference between the underlying municipal security's fixed rate
and the rate, as determined by a remarketing or similar agent, that would cause
the securities, coupled with the tender option, to trade at par on the date of
the interest rate determination. These bonds effectively provide the holder with
a demand obligation that bears interest at the prevailing short-term municipal
securities interest rate.
The Portfolio also may acquire "puts" on municipal securities it purchases.
A put gives the Portfolio the right to sell the municipal security at a
specified price at any time before a specified date. The Portfolio will acquire
puts only to enhance liquidity, shorten the maturity of the related municipal
security or permit the Portfolio to invest its funds at more favorable rates.
Generally, the Portfolio will buy a municipal security that is accompanied by a
put only if the put is available at no extra cost. In some cases, however, the
Portfolio may pay an extra amount to acquire a put, either in connection with
the purchase of the related municipal security or separately from the purchase
of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
MUNICIPAL BONDS. Municipal bonds are long term fixed-income securities.
"General obligation" bonds are secured by a municipality's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
"Revenue" bonds are
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usually payable only from the revenues derived from a particular facility or
class of facilities or, in some cases, from the proceeds of a special excise or
other tax, but not from general tax revenues. Under a "moral obligation" bond
(which is normally issued by special purpose public authorities), if the issuer
is unable to meet its obligations under the bonds from current revenues, it may
draw on a reserve fund that is backed by the moral commitment (but not the legal
obligation) of the state or municipality that created the issuer. The Portfolio
may invest in industrial development bonds, which in most cases are revenue
bonds. The payment of the principal and interest on these bonds is dependent
solely on the ability of an initial or subsequent user of the facilities
financed by the bonds to meet its financial obligations and the pledge, if any,
of real and personal property so financed as security for such payment.
MUNICIPAL NOTES AND LEASES. Municipal notes, which may be either "general
obligation" or "revenue" securities, are short-term fixed income securities
intended to fulfill short-term capital needs of a municipality. Municipal
leases, which may take various forms, are issued by municipalities to acquire a
wide variety of equipment and facilities. Municipal leases frequently have
special risks not normally associated with other municipal securities. Municipal
leases (which normally provide for title to the leased assets to pass eventually
to the government issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
PARTICIPATION INTERESTS. The Portfolio may purchase participation interests
in municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.
TAXABLE INVESTMENTS. The Portfolio may invest up to 20% of the value of its
net assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain
investment limitations, as described in the SAI, are fundamental and therefore
may not be changed without approval of the holders of a majority of the Fund's
or Portfolio's, as applicable, outstanding voting securities (as defined in the
1940 Act). Except as otherwise indicated herein or in the SAI, investment
policies of a Fund or a Portfolio may be changed by the applicable board of
trustees without shareholder approval. Each Portfolio is permitted to hold cash
in any amount pending investment in securities and may invest in other
investment companies that intend to comply with Rule 2a-7 and have substantially
similar investment objectives and policies. A further description of the Funds'
and the Portfolios' investment policies is contained in the SAI.
BORROWING. Each Portfolio may borrow money for temporary or emergency
purposes (including the meeting of redemption requests), but not in excess of 33
1/3% of the value of the Portfolio's total assets. Borrowing for purposes other
than meeting redemption requests will not
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<PAGE>
exceed 5% of the value of the Portfolio's total assets.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or
liquidity by entering into repurchase agreements. Repurchase agreements are
transactions in which a Portfolio purchases a security and simultaneously
commits to resell that security to the seller at an agreed-upon price on an
agreed-upon future date, normally one to seven days later. The resale price
reflects a market rate of interest that is not related to the coupon rate or
maturity of the purchased security. The Portfolios' custodian holds the
underlying collateral, which is maintained at not less than 100% of the
repurchase price. Repurchase agreements involve certain credit risks not
associated with direct investment in securities. Each Portfolio, however,
intends to enter into repurchase agreements only with sellers which FIA believes
present minimal credit risks in accordance with guidelines established by the
Core Trust Board. In the event that a seller defaulted on its repurchase
obligation, however, a Portfolio might suffer a loss.
LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more
than 10% of its net assets in illiquid securities, including repurchase
agreements not entitling the Portfolio to payment of principal within seven
days. There may not be an active secondary market for securities held by a
Portfolio. The value of securities that have a limited market tend to fluctuate
more than those that have an active market. FIA monitors the liquidity of each
Portfolio's investments, but there can be no guarantee that an active secondary
market will exist.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. In order to assure itself of
being able to obtain securities at prices which FIA believes might not be
available at a future time, FIA may purchase securities on a when-issued or
delayed delivery basis. When these transactions are negotiated, the price or
yield is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Securities so purchased are subject
to market price fluctuation and no interest on the securities accrues to a
Portfolio until delivery and payment take place. Accordingly, the value of the
securities on the delivery date may be more or less than the purchase price.
Commitments for when-issued or delayed delivery transactions will be entered
into only when a Portfolio has the intention of actually acquiring the
securities, but the Portfolio may sell the securities before the settlement date
if deemed advisable. Failure by the other party to deliver a security purchased
by a Portfolio may result in a loss or missed opportunity to make an alternative
investment. As a result of entering into forward commitments, the Funds are
exposed to greater potential fluctuations in the value of their assets and net
asset values per share.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which each
Portfolio invest may have variable or floating rates of interest. These
securities pay interest at rates that are adjusted periodically according to a
specified formula, usually with reference to some interest rate index or market
interest rate. The interest paid on these securities is a function primarily of
the index or market rate upon which the interest rate adjustments are based.
Those securities with ultimate maturities of greater than 397 days may be
purchased only in accordance with the provisions of Rule 2a-7. Under that Rule,
only those long-term instruments that have demand features which comply with
certain requirements and certain U.S. Government Securities may be purchased.
Similar to fixed rate debt instruments, variable and floating rate instruments
are subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose
interest rate is adjusted based on a long-term interest rate or index, on more
than one interest rate or index, or on an
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<PAGE>
interest rate or index that materially lags behind short-term market rates
(these prohibited securities are often referred to as "derivative" securities).
All variable and floating rate securities purchased by a Portfolio will have an
interest rate that is adjusted based on a single short-term rate or index, such
as the Prime Rate.
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government
Cash Portfolio invests only in instruments which, if held directly by a bank or
bank holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. These Portfolios do not intend to hold in their portfolio any
securities or instruments that would be subject to restriction as to amount held
by a national bank under Title 12, Section 24 (Seventh) of the United States
Code. In addition, these Portfolios limit their investments to those permissible
for Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act and the applicable rules and regulations of the National Credit
Union Administration. Government Cash Portfolio limits its investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage and to investments that permit Fund
shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and
the business of Core Trust is managed under the direction the Core Trust Board.
The Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The
Core Trust Board performs similar functions for the Portfolios and Core
Trust. The SAI contains general background information about the trustees and
officers of the Trust and Core Trust.
ADMINISTRATION AND DISTRIBUTION
Subject to the supervision of the Board, FAdS supervises the overall
management of the Trust, including overseeing the Trust's receipt of services,
advising the Trust and the Trustees on matters concerning the Trust and its
affairs, and providing the Trust with general office facilities and certain
persons to serve as officers. For these services and facilities, FAdS receives a
fee at an annual rate of 0.05% of the daily net assets of each Fund. FAdS also
serves as administrator of the Portfolios and provides administrative services
for each Portfolio that are similar to those provided to the Funds. For its
administrative services to the Portfolios, FAdS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("FAcS") performs portfolio accounting services for the Funds and
Portfolios pursuant to agreements with the Trust and Core Trust and is paid a
separate fee for these services.
FFSI acts as the agent of the Trust in connection with the offering of
shares of the Funds but receives no compensation for these services. FFSI is a
registered broker-dealer and is a member of the National Association of
Securities Dealers, Inc.
FAdS, FFSI, FIA, FAcS and FSS are members of the Forum Financial Group of
Companies and together provide a full range of services to the investment
company and financial services industry. As of the date of this Prospectus, each
of these companies was controlled by John Y. Keffer, President and Chairman of
the Trust, and FAdS and FFSI provided administration services to registered
investment companies with assets of approximately $30 billion.
INVESTMENT ADVISER
Subject to the general supervision of the Core Trust Board, FIA makes
investment decisions for
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<PAGE>
each Portfolio and monitors the Portfolios' investments. FIA, which is located
at Two Portland Square, Portland, Maine 04101, provides investment advisory
services to six other mutual funds. Prior to January 2, 1998, Linden Asset
Management, Inc. ("Linden") served as investment adviser to Treasury Cash
Portfolio, Government Cash Portfolio and Cash Portfolio and provided
professional management of those Portfolios' investments, and Forum Advisors,
Inc. served as investment adviser to Government Portfolio and provided
professional management of that Portfolio's investments. Linden and Forum
Advisors, Inc. also acted as investment subadvisors to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into a new company named Forum Investment
Advisors, LLC.
Anthony R. Fischer, Jr. is primarily responsible for the day-to-day
management of the Portfolios. Mr. Fischer was the sole stockholder and President
of Linden Asset Management, Inc. from 1992 until January 2, 1998. He has been
primarily responsible for the day-to-day management of Treasury Cash Portfolio,
Government Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio since
their inception. Mr. Fischer has over twenty-five years experience in the money
market industry and during that time has managed money market investment
portfolios for various banks and investment firms.
For its services, FIA receives an advisory fee at an annual rate of 0.05%
of Government Portfolio's and Municipal Cash Portfolio's average daily net
assets For services provided to Treasury Cash Portfolio, Government Cash
Portfolio and Cash Portfolio, FIA receives an advisory fee based upon the total
average daily net assets of those Portfolios ("Total Portfolio Assets"). FIA's
fee is calculated at an annual rate on a cumulative basis as follows: 0.06% of
the first $200 million of Total Portfolio Assets, 0.04% of the next $300 million
of Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. A
Fund's expenses include the Fund's pro rata portion of the advisory fee paid by
the corresponding Portfolio.
SHAREHOLDER SERVICING
Shareholder inquiries and communications concerning the Funds may be
directed to FSS at the address and telephone numbers on the first page of this
Prospectus. FSS maintains an account for each shareholder of the Funds (unless
such accounts are maintained by sub-transfer agents or processing agents) and
performs other transfer agency and related functions. FSS is authorized to
subcontract any or all of its functions to one or more qualified sub-transfer
agents or processing agents, which may be its affiliates, who agree to comply
with the terms of FSS's agreement with the Trust. FSS may pay those agents for
their services, but no such payment will increase FSS's compensation from the
Trust. For its services, FSS is paid a transfer agent fee at an annual rate of
0.05% of the average daily net assets of each Fund attributable to Institutional
Shares plus $12,000 per year for each Fund and certain account and additional
class charges and is reimbursed for certain expenses incurred on behalf of the
Funds.
EXPENSES OF THE FUNDS
Each Fund's expenses comprise Trust expenses attributable to the Fund,
which are charged to the Fund, and expenses not attributable to a particular
fund of the Trust, which are allocated among the Fund and all other funds of the
Trust in proportion to their average net assets. Each service provider in its
sole discretion may elect to waive (or continue to waive) all or any portion of
its fees, which are accrued daily and paid monthly, and may reimburse a Fund for
certain expenses. Any such waivers or reimbursements would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.
Each Fund's expenses include the service fees described in this Prospectus,
the fees and expenses
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of the Board, applicable insurance and bonding expenses and state and SEC
registration fees. Each Fund bears its pro rata portion of the expenses of the
Portfolio in which it invests along with all other investors in the Portfolio.
5. PURCHASES AND REDEMPTIONS OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through FSS, which accepts
orders for purchases and redemptions from shareholders of record and new
investors. Shareholders of record will receive from the Trust periodic
statements listing all account activity during the statement period. The Trust
reserves the right in the future to modify, limit or terminate any shareholder
privilege, upon appropriate notice to shareholders, and may charge a fee for
certain shareholder services, although no such fees are currently contemplated.
PURCHASES. Fund shares are sold at a price equal to their net asset value
next-determined after receipt of an order in proper form, on each Fund Business
Day. Fund shares are issued immediately after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by FSS. Each Fund's net asset value is calculated at 4:00
p.m., Eastern time.
Fund shares become entitled to receive distributions on the day the
purchase order is accepted if the order and payment are received by FSS as
follows:
<TABLE>
<S> <C> <C>
Order Must be Received by Payment Must be Received by
------------------------- ---------------------------
Daily Assets Government Fund and
Daily Assets Municipal Fund .............. 12:00 p.m., Eastern time 4:00 p.m., Eastern time
All other Funds........................... 2:00 p.m., Eastern time 4:00 p.m., Eastern time
</TABLE>
If a purchase order is transmitted to FSS (or the wire is received) after
the times listed above, the investor will not receive a distribution on that
day. On days that the New York Stock Exchange or Federal Reserve Bank of San
Francisco (Boston in the case of Daily Assets Government Fund) closes early or
the Public Securities Association recommends that the government securities
markets close early, the Trust may advance the time by which FSS must receive
completed wire purchase orders and the cut-off times set forth above.
Each Fund reserves the right to reject any subscription for the purchase of
Fund shares. Stock certificates are issued only to shareholders of record upon
their written request and no certificates are issued for fractional shares.
REDEMPTIONS. Fund shares may be redeemed without charge at their net asset
value on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following receipt by FSS of the
redemption order in proper form (and any supporting documentation which FSS may
require). Shares redeemed are not entitled to receive distributions declared on
or after the day on which the redemption becomes effective.
For wire redemption orders received after 12:00 p.m., Eastern time, in the
case of Daily Assets Government Fund and Daily Assets Municipal Fund, and after
2:00 p.m., Eastern time, in the case of each other Fund, FSS will wire proceeds
the next Fund Business Day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco (Boston in the case of Daily Assets Government
Fund) closes early or the Public Securities Association recommends that the
government securities markets close early, the Trust may advance the time by
which FSS must receive completed wire redemption orders.
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Normally, redemption proceeds are paid immediately, but in no event later
than seven days, following acceptance of a redemption order. Proceeds of
redemption requests (and exchanges), however, will not be paid unless any check
used to purchase the shares has been cleared by the shareholder's bank, which
may take up to 15 calendar days. This delay may be avoided by investing through
wire transfers. Unless otherwise indicated, redemption proceeds normally are
paid by check mailed to the shareholder's record address. The right of
redemption may not be suspended nor the payment dates postponed for more than
seven days after the tender of the shares to the Fund except when the New York
Stock Exchange is closed (or when trading thereon is restricted) for any reason
other than its customary weekend or holiday closings or under any emergency or
other circumstance as determined by the SEC.
Proceeds of redemptions normally are paid in cash. However, payments may be
made wholly or partially in portfolio securities if the Board determines that
payment in cash would be detrimental to the best interests of the Fund.
The Trust employs reasonable procedures to ensure that telephone orders are
genuine (which include recording certain transactions and the use of shareholder
security codes). If the Trust did not employ such procedures, it could be liable
for any losses due to unauthorized or fraudulent telephone instructions.
Shareholders should verify the accuracy of telephone instructions immediately
upon receipt of confirmation statements. During times of drastic economic or
market changes, telephone redemption and exchange privileges may be difficult to
implement. In the event that a shareholder is unable to reach FSS by telephone,
requests may be mailed or hand-delivered to FSS.
Due to the cost to the Trust of maintaining smaller accounts, the Trust
reserves the right to redeem, upon not less than 60 days' written notice, all
shares in any Fund account with an aggregate net asset value of less than
$5,000.
PURCHASE AND REDEMPTION PROCEDURES
Investors may open an account by completing the application at the back of
this Prospectus or by contacting FSS at the address on the first page of this
Prospectus. To request shareholder services not referenced on the account
application and to change information regarding a shareholder's account (such as
addresses), investors should request an Optional Services Form from FSS.
INITIAL PURCHASE OF SHARES
There is a $1,000,000 minimum for initial investments in each Fund.
BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to FSS. Checks are accepted at full value subject
to collection. Payment by a check drawn on any member of the Federal Reserve
System can normally be converted into Federal Funds within two business days
after receipt of the check. Checks drawn on some non-member banks may take
longer.
For individual or Uniform Gift to Minors Act accounts, the check or money
order used to purchase shares of a Fund must be made payable to "Forum Funds" or
to one or more owners of that account and endorsed to Forum Funds. For
corporation, partnership, trust, 401(k) plan or other non-individual type
accounts, the check used to purchase shares of a Fund must be made payable on
its face to "Forum Funds." No other method of payment by check will be accepted.
All purchases must be paid in U.S. dollars; checks must be drawn on U.S. banks.
Payment by Traveler's Checks is prohibited.
BY BANK WIRE. To make an initial investment in a Fund using the wire system
for transmittal of money among banks, an investor should first telephone the
Trust at 800-94FORUM (800-943-6786) or (207) 879-0001 to obtain an account
number.
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<PAGE>
The investor should then instruct a bank to wire the investor's money
immediately to:
BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Shareholder Services, LLC
Account #: 541-54171
Re: [Name of Fund] - Institutional Shares
Account #:______________________
Account Name:___________________
The investor should then promptly complete and mail the account
application. Any investor planning to wire funds should instruct a bank early in
the day so the wire transfer can be accomplished the same day. There may be a
charge imposed by the bank for transmitting payment by wire, and there also may
be a charge for the use of Federal Funds.
THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed
through certain broker-dealers, banks or other financial institutions
("Processing Organizations"), including affiliates of FSS. Processing
Organizations may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
a Fund. The Trust is not responsible for the failure of any Processing
Organization to promptly forward these requests.
Investors who purchase or redeem shares in this manner will be subject to
the procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Investors who purchase Fund shares
through a Processing Organization may or may not be the shareholder of record
and, subject to their institution's and the Fund's procedures, may have Fund
shares transferred into their name. Certain Processing Organizations may enter
purchase orders with payment to follow.
The Trust may confirm purchases and redemptions of a Processing
Organization's customers directly to the Processing Organization, which in turn
will provide its customers with such confirmations and periodic statements as
may be required by law or agreed to between the Processing Organization and its
customers.
SUBSEQUENT PURCHASES OF SHARES
Subsequent purchases may be made by mailing a check, by sending a bank wire
or through a financial institution as indicated above. Shareholders using the
wire system for purchase should first telephone the Trust at 800-94FORUM
(800-943-6786) or (207) 879-0001 to notify it of the wire transfer. All payments
should clearly indicate the shareholder's name and account number.
Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to FSS.
REDEMPTION OF SHARES
Shareholders who wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several days after a shareholder's application is received.
Shares for which certificates have been issued may not be redeemed by telephone.
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<PAGE>
BY MAIL. Shareholders may make a redemption in any amount by sending a
written request to FSS accompanied by any stock certificate that may have been
issued to the shareholder. All written requests for redemption must be signed by
the shareholder with signature guaranteed and all certificates submitted for
redemption must be endorsed by the shareholder with signature guaranteed.
BY TELEPHONE. A shareholder who has elected telephone redemption privileges
may make a telephone redemption request by calling FSS at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number. In response to
the telephone redemption instruction, the Fund will mail a check to the
shareholder's record address or, if the shareholder has elected wire redemption
privileges, wire the proceeds.
BY BANK WIRE. For redemptions of more than $5,000, a shareholder who has
elected wire redemption privileges may request the Fund to transmit the
redemption proceeds by Federal Funds wire to a bank account designated on the
shareholder's account application. To request bank wire redemptions by
telephone, the shareholder also must have elected the telephone redemption
privilege. Redemption proceeds are transmitted by wire on the day the redemption
request in proper form is received by FSS .
OTHER REDEMPTION MATTERS. To protect shareholders and the Funds against
fraud, signatures on certain requests must have a signature guarantee. Requests
must be made in writing and include a signature guarantee for any of the
following transactions: (1) any endorsement on a stock certificate; (2) written
instruction to redeem Shares whose value exceeds $50,000; (3) instructions to
change a shareholder's record name; (4) redemption in an account in which the
account address or account registration has changed within the last 30 days; (5)
the proceeds are not being sent to the address of record, preauthorized bank
account, or preauthorized brokerage firm account; (6) proceeds are to be paid to
someone other than the registered owners or to an account with a different
registration; (7) change of automatic investment or redemption, dividend
election, telephone redemption or exchange option election or any other option
election in connection with the shareholder's account.
Signature guarantees may be provided by any eligible institution acceptable
to FSS, including a bank, a broker, a dealer, a national securities exchange, a
credit union, or a savings association that is authorized to guarantee
signatures. Whenever a signature guarantee is required, the signature of each
person required to sign for the account must be guaranteed. A notarized
signature is not sufficient.
FSS will deem a shareholder's account "lost" if correspondence to the
shareholder's address of record is returned as undeliverable, unless FSS
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 FSS will be reinvested and
the checks will be canceled.
EXCHANGES
Shareholders may exchange their shares for Institutional Shares of any
other Fund. Exchanges are subject to the fees charged by, and the restrictions
listed in the prospectus for, the fund into which a shareholder is exchanging,
including minimum investment requirements. The Funds do not charge for
exchanges, and there is currently no limit on the number of exchanges a
shareholder may make, but each Fund reserves the right to limit excessive
exchanges by any shareholder. See "Additional Purchase and Redemption
Information" in the SAI.
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<PAGE>
Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the new account. Shareholders may only exchange into a fund if
that fund's shares may legally be sold in the shareholder's state of residence.
The Trust (and Federal tax law) treats an exchange as a redemption of the
shares owned and the purchase of the shares of the fund being acquired.
Accordingly, a shareholder may realize a capital gain or loss with respect to
the shares redeemed. Redemptions and purchases are effected at the respective
net asset values of the two funds as next determined following receipt of proper
instructions and all necessary supporting documents by the fund whose shares are
being exchanged. The exchange privilege may be modified materially or terminated
by the Trust at any time upon 60 days' notice to shareholders.
BY MAIL. Exchanges may be accomplished by written instruction to FSS
accompanied by any stock certificate that may have been issued to the
shareholder. All written requests for exchanges must be signed by the
shareholder (a signature guarantee is not required) and all certificates
submitted for exchange must be endorsed by the shareholder with signature
guaranteed.
BY TELEPHONE. Exchanges may be accomplished by telephone by any shareholder
who has elected telephone exchange privileges by calling FSS at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number.
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and
paid monthly following the close of the last Fund Business Day of the month.
Each type of net capital gain realized by a Fund, if any, will be distributed
annually. Shareholders may choose to have all distributions reinvested in
additional shares of the Fund or received in cash. In addition, shareholders may
have all distributions of net capital gain reinvested in additional shares of
the Fund and distributions of net investment income paid in cash. All
distributions are treated in the same manner for Federal income tax purposes
whether received in cash or reinvested in shares of the Fund.
All distributions will be reinvested at the Fund's net asset value as of
the payment date of the dividend. All distributions are reinvested unless
another option is selected. All distributions not reinvested will be paid to the
shareholder in cash and may be paid more than seven days following the date on
which distribution would otherwise be reinvested.
TAXES
TAX STATUS OF THE FUNDS. Each Fund intends to qualify or continue to
qualify to be taxed as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended. Accordingly, no Fund will be liable for
Federal income taxes on the net investment income and capital gain distributed
to its shareholders. Because each Fund intends to distribute all of its net
investment income and net capital gain each year, the Funds should also avoid
Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Two different tax rates apply to net capital gain --
that is, the excess
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<PAGE>
of net gain from capital assets held for more than one year over net losses from
capital assets held for not more than one year. One rate (generally 28%) applies
to net gain on capital assets held for more than one year but not more than 18
months and a second rate (generally 20%) applies to the balance of such net
capital gains. Distributions of net capital gain will be taxable to shareholders
as such, regardless of how long a shareholder has held shares in the Fund.
THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes
on their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
DAILY ASSETS MUNICIPAL FUND. Distributions paid by Daily Assets Municipal
Fund out of federally tax-exempt interest income earned by the Fund
("exempt-interest dividends") generally will not be subject to federal income
tax in the hands of the Fund's shareholders. Substantially all of the
distributions paid by the Fund are anticipated to be exempt-interest dividends.
Persons who are "substantial users" or "related persons" thereof of facilities
financed by private activity securities held by the Fund, however, may be
subject to federal income tax on their pro rata share of the interest income
from those securities and should consult their tax advisers before purchasing
Shares. Exempt-interest dividends are included in the "adjusted current
earnings" of corporations for purposes of the federal alternative minimum tax
("AMT").
Interest on indebtedness incurred by shareholders to purchase or carry
shares of the Fund generally is not deductible for federal income tax purposes.
Under rules for determining when borrowed funds are used for purchasing or
carrying particular assets, shares of the Fund may be considered to have been
purchased or carried with borrowed funds even though those funds are not
directly linked to the shares.
The income from the Portfolio's investments may be subject to the AMT.
Interest on certain municipal securities issued to finance "private activities"
("private activity securities") is a "tax preference item" for purposes of the
AMT applicable to certain individuals and corporations even though such interest
will continue to be fully tax-exempt for regular federal income tax purposes.
The Portfolio may purchase private activity securities, the interest on which
may constitute a "tax preference item" for purposes of the AMT.
STATE AND LOCAL TAXES. Daily Assets Government Fund's investment policies
are structured to provide shareholders, to the extent permissible by Federal and
state law, with income that is exempt or excluded from income taxation at the
state and local level. Many states (by statute, judicial decision or
administrative action) do not tax dividends from a regulated investment company
that are attributable to interest on obligations of the U.S. Treasury and
certain U.S. Government agencies and instrumentalities if the interest on those
obligations would not be taxable to a shareholder that held the obligation
directly. As a result, substantially all distributions paid by the Fund to
shareholders residing in certain states will be exempt or excluded from state
income taxes. A portion of the distributions paid by the other Funds to
shareholders may be exempt or excluded from state income taxes, but these Funds
are not managed to provide any specific amount of state tax-free income to
shareholders.
The exemption for federal income tax purposes of distributions derived from
interest on municipal securities does not necessarily result in an exemption
under the income or other tax laws of any state or local taxing authority.
Shareholders of Daily Assets Municipal Fund may be exempt from state and local
taxes on distributions of tax-
18
<PAGE>
exempt interest income derived from obligations of the state and/or
municipalities of the state in which they reside but may be subject to tax on
income derived from the municipal securities of other jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in a Fund which may differ
from the federal income tax consequences described above.
GENERAL. Each Fund may be required by Federal law to withhold 31% of
reportable payments (which may include taxable distributions and redemption
proceeds) paid to individuals and certain other non-corporate shareholders.
Withholding is not required if a shareholder certifies that the shareholder's
social security or tax identification number provided to a Fund is correct and
that the shareholder is not subject to backup withholding.
Each Fund must include a portion of the original issue discount of
zero-coupon securities, if any, as income even though these securities do not
pay any interest until maturity. Because each Fund distributes all of its net
investment income, a Fund may have to sell portfolio securities to distribute
imputed income, which may occur at a time when the investment adviser would not
have chosen to sell such securities and which may result in a taxable gain or
loss.
Shortly after the close of each year, a statement is sent to each
shareholder of the Funds advising the shareholder of the portion of total
distributions paid to the shareholder that is (1) derived from each type of
obligation in which a Fund has invested, (2) derived from the obligations of
issuers in the various states and (3) exempt from federal income taxes. These
portions are determined for the entire year and on a monthly basis and, thus,
are an annual or monthly average, rather than a day-by-day determination for
each shareholder.
The foregoing is only a summary of some of the important Federal and state
tax considerations generally affecting the Funds and their shareholders. There
may be other Federal, state or local tax considerations applicable to a
particular investor. Prospective investors are urged to consult their tax
advisers.
7. OTHER INFORMATION
PERFORMANCE INFORMATION
Institutional Shares' performance may be advertised. All performance
information is based on historical results, is not intended to indicate future
performance and, unless otherwise indicated, is net of all expenses. The Funds
may advertise yield, which shows the rate of income a Fund has earned on its
investments as a percentage of the Fund's share price. To calculate yield, a
Fund takes the interest income it earned from its portfolio of investments for a
specified period (net of expenses), divides it by the average number of shares
entitled to receive distributions, and expresses the result as an annualized
percentage rate based on the Fund's share price at the end of the period. A
Fund's compounded annualized yield assumes the reinvestment of distributions
paid by the Fund, and, therefore will be somewhat higher than the annualized
yield for the same period. A Fund may also quote tax-equivalent yields, which
show the taxable yields a shareholder would have to earn to equal the Fund's
tax-free yield, after taxes. A tax-equivalent yield is calculated by dividing
the Fund's tax-free yield by one minus a stated federal, state or combined
federal and state tax rate. Each class' performance will vary.
The Funds' advertisements may also reference ratings and rankings among
similar funds by independent evaluators such as Morningstar, Lipper Analytical
Services, Inc. or IBC Financial Data, Inc. In addition, the performance of the
Funds may be compared to recognized indices of market performance. The
comparative material
19
<PAGE>
found in a Fund's advertisements, sales literature, or reports to shareholders
may contain performance rankings. This material is not to be considered
representative or indicative of future performance.
BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a Processing
Organization or perform sub-transfer agent or similar services for the Trust and
its shareholders. If a bank or bank affiliate were prohibited from performing
all or a part of the foregoing services, its shareholder customers would be
permitted to remain shareholders of the Trust and alternative means for
continuing to service them would be sought.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 4:00
p.m., Eastern time, on each Fund Business Day by dividing the value of the
Fund's net assets (the value of its interest in the Portfolio and other assets
less its liabilities) by the number of shares outstanding at the time the
determination is made. In order to more easily maintain a stable net asset value
per share, each Portfolio's portfolio securities are valued at their amortized
cost (acquisition cost adjusted for amortization of premium or accretion of
discount) in accordance with Rule 2a-7. The Portfolios will only value their
portfolio securities using this method if the Core Trust Board believes that it
fairly reflects the market-based net asset value per share. The Portfolios'
other assets, if any, are valued at fair value by or under the direction of the
Core Trust Board.
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end, management investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc., which was incorporated in 1980. The
Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create classes of
shares within each series. There are currently sixteen series of the Trust.
Each share of each fund of the Trust and each class of shares has equal
distribution, liquidation and voting rights, and fractional shares have those
rights proportionately, except that expenses related to the distribution of the
shares of each class (and certain other expenses such as transfer agency and
administration expenses) are borne solely by those shares and each class votes
separately with respect to the provisions of any Rule 12b-1 plan which pertain
to the class and other matters for which separate class voting is appropriate
under applicable law. Generally, shares will be voted in the aggregate without
reference to a particular fund or class, except if the matter affects only one
fund or class or voting by fund or class is required by law, in which case
shares will be voted separately by fund or class, as appropriate. Delaware law
does not require the Trust to hold annual meetings of shareholders, and it is
anticipated that shareholder meetings will be held only when specifically
required by Federal or state law. Shareholders (and Trustees) have available
certain procedures for the removal of Trustees. There are no conversion or
preemptive rights in connection with shares of the Trust. All shares when issued
in accordance with the terms of the offering will be fully paid and
nonassessable. Shares are redeemable at net asset value, at the option of the
shareholders. A shareholder in a fund is entitled to the shareholder's pro rata
share of all distributions arising from that fund's assets and, upon redeeming
shares, will receive the portion of the fund's net assets represented by the
redeemed shares.
As of May 1, 1998, Babb & Co. may be deemed to have controlled Daily Assets
Treasury
20
<PAGE>
Obligations Fund and Daily Assets Government Obligations Fund, H.M. Payson
& Co. may be deemed to have controlled Daily Assets Government Fund and Daily
Assets Cash Fund and Allagash & Co. may be deemed to have controlled Daily
Assets Government Obligations Fund and Daily Assets Cash Fund, through
investment in the Funds by their customers. From time to time, these
shareholders or other shareholders may own a large percentage of the Shares of a
Fund and accordingly, may be able to greatly affect (if not determine) the
outcome of a shareholder vote.
FUND STRUCTURE
OTHER CLASSES OF SHARES. In addition to Institutional Shares, each Fund may
create and issue shares of other classes of securities. Each Fund currently has
two other classes of shares authorized, Institutional Service Shares and
Investor Shares. Institutional Services Shares are offered solely through banks,
trust companies and certain other financial institutions, and their affiliates
and correspondents, for investment of their funds or funds for which they act in
a fiduciary, agency or custodial capacity. Investor Shares are offered to the
general public, have a $10,000 minimum investment and bear shareholder service
and distribution fees. Institutional Service Shares and Investor Shares incur
more expenses than Institutional Shares. See, "Additional Information" below.
Except for certain differences, each share of each class represents an
undivided, proportionate interest in a Fund. Each share of each Fund is entitled
to participate equally in distributions and the proceeds of any liquidation of
that Fund except that, due to the differing expenses borne by the various
classes, the amount of distributions will differ among the classes.
CORE TRUST STRUCTURE. Each Fund invests all of its assets in its
corresponding Portfolio of Core Trust, a business trust organized under the laws
of the State of Delaware in September 1994 and registered under the 1940 Act as
an open-end, management investment company. Accordingly, a Portfolio directly
acquires its own securities and its corresponding Fund acquires an indirect
interest in those securities. The assets of each Portfolio belong only to, and
the liabilities of the Portfolio are borne solely by, the Portfolio and no other
portfolio of Core Trust. Upon liquidation of a Portfolio, investors in the
Portfolio would be entitled to share pro rata in the net assets of the Portfolio
available for distribution to investors.
THE PORTFOLIOS. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, Daily
Assets Government Fund and Daily Assets Municipal Fund are the only investors
(other than FAdS or its affiliates) that have invested in Government Portfolio
and Municipal Cash Portfolio, respectively. Each of the other Portfolios has
another investor besides the Funds (and FAdS and its affiliates). All investors
in a Portfolio invest on the same terms and conditions as the Funds and will pay
a proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio is entitled to vote in proportion to the relative value of its
interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. There can be no assurance that
any issue that receives a majority of the votes cast by a Fund's shareholders
will receive a majority of votes cast by all investors in the Portfolio.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a
Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. If a large investor other than a Fund redeemed its interest
in a Portfolio, the Portfolio's remaining investors (including the Fund) might,
as a result, experience higher pro rata operating expenses, thereby producing
lower returns. A
21
<PAGE>
Fund may withdraw its entire investment from a Portfolio at any time, if the
Board determines that it is in the best interests of the Fund and its
shareholders to do so. The Fund might withdraw, for example, if other investors
in the Portfolio, by a vote of shareholders, changed the investment objective or
policies of the Portfolio in a manner not acceptable to the Board or not
permissible by the Fund. A withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. If
the Fund decided to convert those securities to cash, it usually would incur
transaction costs. If the Fund withdrew its investment from the Portfolio, the
Board would consider what action might be taken, including the management of the
Fund's assets in accordance with its investment objective and policies by the
investment adviser to the Portfolio or the investment of all of the Fund's
investable assets in another pooled investment entity having substantially the
same investment objective as the Fund. The inability of the Fund to find a
suitable replacement investment, in the event the Board decided not to permit
the Portfolio's investment adviser to manage the Fund's assets, could have a
significant impact on shareholders of the Fund.
ADDITIONAL INFORMATION. Each class of a Fund (and any other investment
company that invests in a Portfolio) may have a different expense ratio and
different sales charges, including distribution fees, and each class' (and
investment company's) performance will be affected by its expenses and sales
charges. For more information on any other class of shares of the Funds or
concerning any other investment companies that invest in a Portfolio, investors
may contact FFSI at 207-879-1900. If an investor invests through a financial
institution, the investor may also contact their financial institution to obtain
information about the other classes or any other investment company investing in
a Portfolio.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
22
<PAGE>
[FORUM FUNDS ACCOUNT APPLICATION]
<PAGE>
[FORUM FUNDS ACCOUNT APPLICATION, CONT.]
<PAGE>
[Picture graphics of world map in background
and globe on right half of page.]
[FORUM LOGO]
SHAREHOLDER INFORMATION:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, ME 04112
207-879-0001 (IN PORTLAND, ME)
800-94FORUM (ELSEWHERE)
<PAGE>
PROSPECTUS
------------------------------
INSTITUTIONAL
SERVICE SHARES
------------------------------
[Picture graphics of safe dial,
world map, calendar, compass and
countryside on left half of page.]
DAILY ASSETS
TREASURY
OBLIGATIONS FUND
DAILY ASSETS
GOVERNMENT FUND
DAILY ASSETS
GOVERNMENT
OBLIGATIONS FUND
DAILY ASSETS
CASH FUND
DAILY ASSETS
MUNICIPAL FUND
F O R U M
F U N D S
MAY 27, 1998
<PAGE>
FORUM FUNDS
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
(FORMERLY DAILY ASSETS TREASURY FUND)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
(FORMERLY DAILY ASSETS GOVERNMENT FUND)
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND
(FORMERLY DAILY ASSETS TAX-EXEMPT FUND)
PROSPECTUS
May 27, 1998
- --------------------------------------------------------------------------------
THIS PROSPECTUS OFFERS INSTITUTIONAL SERVICE SHARES OF DAILY ASSETS TREASURY
FUND, DAILY ASSETS TREASURY OBLIGATIONS FUND, DAILY ASSETS GOVERNMENT FUND,
DAILY ASSETS CASH FUND AND DAILY ASSETS MUNICIPAL FUND (EACH A "FUND"). EACH
FUND IS A DIVERSIFIED NO-LOAD, MONEY MARKET PORTFOLIO OF FORUM FUNDS (THE
"TRUST"), A REGISTERED, OPEN-END, MANAGEMENT INVESTMENT COMPANY. EACH FUND SEEKS
TO PROVIDE ITS SHAREHOLDERS WITH HIGH CURRENT INCOME (WHICH, IN THE CASE OF
DAILY ASSETS MUNICIPAL FUND, IS EXEMPT FROM FEDERAL INCOME TAXES) TO THE EXTENT
CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY.
EACH FUND SEEKS TO ACHIEVE ITS OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE
ASSETS IN A SEPARATE PORTFOLIO OF AN OPEN-END, MANAGEMENT INVESTMENT COMPANY
WITH AN IDENTICAL INVESTMENT OBJECTIVE. SEE "OTHER INFORMATION - FUND
STRUCTURE." THROUGH THE PORTFOLIO IN WHICH IT INVESTS:
DAILY ASSETS TREASURY OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Treasury and in repurchase
agreements backed by these obligations.
DAILY ASSETS GOVERNMENT FUND invests substantially all of its assets
in obligations of the U.S. Government, its agencies and
instrumentalities with a view toward providing income that is
generally considered exempt from state and local income taxes.
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Government, its agencies and
instrumentalities and in repurchase agreements backed by these
obligations.
DAILY ASSETS CASH FUND invests in a broad spectrum of high-quality
money market instruments.
DAILY ASSETS MUNICIPAL FUND invests primarily in high-quality
obligations of the states, territories and possessions of the U.S. and
of their subdivisions, authorities and corporations ("municipal
securities") with a view toward providing income that is exempt from
federal income taxes.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated May 27, 1998 (the "SAI"), which contains more
detailed information about the Trust and the Funds and is available together
with other related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). The SAI, which is incorporated into this Prospectus by
reference, also is available without charge by contacting the Funds' transfer
agent, Forum Shareholder Services, LLC, at P.O. Box 446, Portland, Maine 04112,
(207) 879-0001 or (800) 94FORUM.
Investors should read this Prospectus and retain it for future reference.
<TABLE>
TABLE OF CONTENTS
<S> <C> <C> <C> <C>
1. Prospectus Summary..............................2 5. Purchases and Redemptions of Shares.............13
2. Financial Highlights............................4 6. Distributions and Tax Matters...................18
3. Investment Objectives and Policies..............5 7. Other Information...............................20
4. Management.....................................11
</TABLE>
FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.
THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
<PAGE>
1. PROSPECTUS SUMMARY
HIGHLIGHTS OF THE FUNDS
This prospectus offers shares of the Institutional Service class
("Institutional Service Shares") of each of the Funds. Institutional Services
Shares are offered solely through banks, trust companies and certain other
financial institutions, and their affiliates and correspondents, for investment
of their funds or funds for which they act in a fiduciary, agency or custodial
capacity. The Funds operate in accordance with the provisions of Rule 2a-7 under
the Investment Company Act of 1940 (the "1940 Act"). Each Fund invests all of
its investable assets in a separate portfolio (each a "Portfolio") of Core Trust
(Delaware), an open-end, management investment company ("Core Trust") as
follows:
Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Portfolio
Daily Assets Government Obligations Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Municipal Fund Municipal Cash Portfolio
Accordingly, the investment experience of each Fund will correspond
directly with the investment experience of its corresponding Portfolio. See
"Other Information Fund Structure." Each Fund currently offers three separate
classes of shares: Institutional Shares, Institutional Service Shares and
Investor Shares. Institutional Service Shares are sold through this Prospectus.
Institutional Shares and Investor Shares are each offered by a separate
prospectus. See "Other Information -- Fund Structure -- Other Classes of
Shares."
MANAGEMENT. Forum Administrative Services, LLC ("FAdS") supervises the
overall management of the Funds and the Portfolios and Forum Financial Services,
Inc. ("FFSI") is the distributor of the Funds' shares. Forum Investment
Advisors, LLC ("FIA") is the investment adviser of each Portfolio and provides
professional management of the Portfolios' investments. The Funds' transfer
agent, dividend disbursing agent and shareholder servicing agent is Forum
Shareholder Services, LLC (the "FSS"). See "Management" for a description of the
services provided and fees charged to the Funds.
SHAREHOLDER SERVICING. The Trust has adopted a Shareholder Service Plan
relating to Institutional Service Shares under which FAdS is compensated for
various shareholder servicing activities. See "Management - Shareholder
Servicing" and "- Administration and Distribution."
PURCHASES AND REDEMPTIONS. The minimum initial investment in Institutional
Service Shares is $100,000. Institutional Service Shares may be purchased and
redeemed Monday through Friday, between 9:00 a.m. and 6:00 p.m., Eastern time,
except on Federal holidays and days that the Federal Reserve Bank of San
Francisco (Boston in the case of Daily Assets Government Fund) is closed ("Fund
Business Days"). To be eligible to receive that day's income, purchase orders
must be received by FSS in good order no later than 2:00 p.m., Eastern time
(noon in the case of Daily Assets Government Fund and Daily Assets Municipal
Fund). Shareholders may have redemption proceeds over $5,000 transferred by bank
wire to a designated bank account. To be able to receive redemption proceeds by
wire on the day of the redemption, redemption orders must be received by FSS in
good order no later than 2:00 p.m., Eastern time (noon in the case of Daily
Assets Government Fund and Daily Assets Municipal Fund). All times may be
changed without notice by Fund management due to market activities. See
"Purchase and Redemption of Shares."
EXCHANGES. Shareholders of a Fund may exchange Institutional Service Shares
without charge for Institutional Service Shares of the other Funds. See
"Purchases and Redemptions of Shares - Exchanges."
DISTRIBUTIONS. Distributions of net investment income are declared daily
and paid monthly by each Fund and are automatically reinvested in additional
Fund shares unless the shareholder has requested payment in cash. See
"Distributions and Tax Matters."
2
<PAGE>
INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be
able to maintain a stable net asset value of $1.00 per share. Although the
Portfolios invest only in money market instruments, an investment in any Fund
involves certain risks, depending on the types of investments made and the types
of investment techniques employed. Investment in any security, including U.S.
Government Securities, involves some level of investment risk. An investment in
a Fund is not insured by the FDIC, nor is it insured or guaranteed against loss
of principal.
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding
the various expenses that an investor in Institutional Service Shares will bear
directly or indirectly. There are no transaction expenses associated with
purchases, redemptions or exchanges of Fund shares.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
<S> <C> <C> <C> <C> <C>
Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Government Government Cash Municipal
Obligations Fund Fund Obligations Fund Fund Fund
---------------- ---- ---------------- ---- ----
Management Fees(2) 0.14% 0.15% 0.14% 0.14% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.31% 0.30% 0.31% 0.31% 0.30%
----- ----- ----- ----- -----
Total Operating Expenses 0.45% 0.45% 0.45% 0.45% 0.45%
</TABLE>
(1) For a further description of the various expenses incurred in the
operation of the Funds and the Portfolios, see "Management." The amount of fees
and expenses for Daily Assets Government Fund and Daily Assets Cash Fund is
based on the Fund's expenses for its last fiscal year ended August 31, 1997
restated to reflect current fees; the amount of expenses for each other Fund is
based on estimated annualized expenses for those Funds' fiscal year ending
August 31, 1998. Each Fund's expenses include the Fund's pro rata portion of all
expenses of its corresponding Portfolio, which are borne indirectly by Fund
shareholders.
(2) Management Fees include all administration fees and investment advisory
fees incurred by the Funds and the Portfolios; as long as its assets are
invested in a Portfolio, a Fund pays no investment advisory fees directly.
(3) Absent estimated reimbursements by FIA and its affiliates, Other
Expenses and Total Fund Operating Expenses would be: 0.36% and 0.50%,
respectively, for Daily Assets Treasury Obligations Fund; 0.40% and 0.55%,
respectively, for Daily Assets Government Fund; 0.40% and 0.54%, respectively,
for Daily Assets Government Obligations Fund; 0.43% and 0.57%, respectively, for
Daily Assets Cash Fund; 0.43% and 0.58%, respectively, for Daily Assets
Municipal Fund. Expense reimbursements are voluntary and may be reduced or
eliminated at any time.
EXAMPLE
Following is a hypothetical example that indicates the dollar amount of
expenses that an investor in Institutional Service Shares would pay assuming (1)
the investment of all of the Fund's assets in the Portfolio, (2) a $1,000
investment in the Fund, (3) a 5% annual return, (4) the reinvestment of all
distributions and (5) redemption at the end of each period:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
Each Fund $5 $14 $25 $57
The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Funds' projected returns; rather, it is required by government
regulation. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS
THAN INDICATED.
3
<PAGE>
2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Institutional Service Share of the Funds that offered Institutional Service
Shares prior to February 28, 1998. The following information also represents
selected data for a single outstanding Institutional Share of Daily Assets
Government Obligations Fund and Daily Assets Government Cash Fund. That class
was the first offered by the these two Funds and, accordingly, represent data
since each of those Fund's inception. Information for the period ended August
31, 1997, was audited by KPMG Peat Marwick LLP, independent auditors.
Information for prior periods was audited by other independent auditors and
information for the period ended February 28, 1998 is unaudited. The financial
statements and independent auditors' report thereon for the fiscal year ended
August 31, 1997 and the financial statements for the semi-annual period ended
February 28, 1998 are incorporated by reference into the SAI and may be obtained
from the Trust without charge. As of May 20, 1998, Daily Assets Municipal Fund
had not commenced operations.
As of February 28, 1998, Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio and Cash Portfolio had net assets of $168,183,226;
$46,711,943; $603,202,130 and $391,807,519, respectively.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
RATIO TO AVERAGE NET
ASSETS
BEGINNING DISTRIBUTIONS ---------------------
NET ASSET NET FROM NET ENDING NET NET
VALUE PER INVESTMENT INVESTMENT ASSET NET INVESTMENT
SHARE INCOME INCOME VALUE PER EXPENSES INCOME
----- ------ ------ SHARE -------- ------
-----
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.01 (0.01) $1.00 0.20%(2) 2.13%(2)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.02 (0.02) $1.00 0.47%(2) 4.86%(2)
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(2) 4.76%(2)
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.32%(2) 2.92%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998 (unaudited)$1.00 0.01 (0.01) $1.00 0.20%(2) 1.76%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998 $1.00 0.03 (0.03) $1.00 0.47%(2) 5.23%(2)
October 1, 1996 to August 31, 1997 (unaudited) 1.00 0.05 (0.05) 1.00 0.52%(2) 5.06%(2)%
</TABLE>
<TABLE>
<S> <C> <C> <C>
RATIO OF
NET ASSETS GROSS
END OF EXPENSES
PERIOD TO AVERAGE
TOTAL (000S NET ASSETS
RETURN OMITTED) (1)
------ -------- ----
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) 0.55% 60,926 0.35%(2)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) 2.43% 46,519 0.78%(2)
April 1, 1997 to August 31, 1997 2.01% 44,116 0.95%(2)
Year Ended March 31, 1997 4.80% 43,975 0.99%
Year Ended March 31, 1996 5.18% 43,103 1.06%
Year Ended March 31, 1995 4.45% 36,329 1.10%
Year Ended March 31, 1994 2.83% 26,505 1.17%
July 1, 1992 to March 31, 1993 3.13%(2) 4,687 2.43%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) 0.46% 4,952 1.33%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) 2.62% 13,034 0.89%(2)
October 1, 1996 to August 31, 1997 4.70% 12,076 1.22%(2)
</TABLE>
(1) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements for the
Fund and its respective Portfolio.
(2) Annualized.
4
<PAGE>
3. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of each Fund except Daily Assets Municipal Fund is
to provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of Daily
Assets Municipal Fund is to provide high current income which is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity.
THERE CAN BE NO ASSURANCE THAT ANY FUND OR PORTFOLIO WILL ACHIEVE ITS
INVESTMENT OBJECTIVE OR MAINTAIN A STABLE NET ASSET VALUE.
Each Fund currently seeks to achieve its investment objective by investing
all of its investable assets in its corresponding Portfolio, which has the same
investment objective and substantially similar investment policies. Therefore,
although the following discusses the investment policies of the Portfolios (and
the responsibilities of Core Trust's board of trustees (the "Core Trust
Board")), it applies equally to the Funds (and the Trust's board of trustees
(the "Board")).
INVESTMENT POLICIES
Each Portfolio invests only in high quality, short-term money market
instruments that are determined by FIA, pursuant to procedures adopted by the
Core Trust Board, to be eligible for purchase and to present minimal credit
risks. High quality instruments include those that (1) are rated (or, if
unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in the highest rating category by two nationally recognized
statistical rating organizations ("NRSROs") or, if only one NRSRO has issued a
rating, by that NRSRO or (2) are otherwise unrated and determined by FIA to be
of comparable quality. A description of the rating categories of certain NRSROs,
such as Standard & Poor's and Moody's Investors Service, Inc., is contained in
the SAI.
Each Portfolio invests only in U.S. dollar-denominated instruments that
have a remaining maturity of 397 days or less (as calculated under Rule 2a-7)
and maintains a dollar-weighted average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, each Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. As used herein, "U.S. Government
Securities" means obligations issued or guaranteed as to principal and interest
by the United States government, its agencies or instrumentalities and "Treasury
Securities" means U.S. Treasury bills and notes and other U.S. Government
Securities which are guaranteed as to principal and interest by the U.S.
Treasury.
In the case of municipal securities, when the assets and revenues of an
issuer are separate from those of the government creating the issuer and a
security is backed only by the assets and revenues of the issuer, the issuer and
not the creating government is deemed to be the sole issuer of the security.
Similarly, in the case of a security issued by or on behalf of public
authorities to finance various privately operated facilities that is backed only
by the assets and revenues of the non-governmental user, the non-governmental
user will be deemed to be the sole issuer of the security.
Yields on money market securities are dependent on a variety of factors,
including the general conditions of the money markets and the fixed income
markets in general, the size of a particular offering, the maturity of the
obligation and the rating of the issue. A Fund's yield will tend to fluctuate
inversely with prevailing market interest rates. For instance, in periods of
falling market interest rates, yields will tend to be somewhat higher. Although
each Portfolio only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at
5
<PAGE>
maturity. All money market instruments, including U.S. Government Securities and
municipal securities, can change in value when there is a change in interest
rates, the issuer's actual or perceived creditworthiness or the issuer's ability
to meet its obligations. The achievement of a Fund's investment objective is
dependent in part on the continuing ability of the issuers of the securities in
which the Portfolio invests to meet their obligations for the payment of
principal and interest when due.
DAILY ASSETS TREASURY OBLIGATIONS FUND
Treasury Cash Portfolio seeks to attain its investment objective by
investing substantially all of its assets in Treasury Securities and in
repurchase agreements backed by Treasury Securities.
DAILY ASSETS GOVERNMENT FUND
Government Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities. The Portfolio
invests with a view toward providing income that is generally considered exempt
from state and local income taxes.
Among the U.S. Government Securities in which the Portfolio may invest are
U.S. Treasury Securities and obligations of the Farm Credit System, Farm Credit
System Financial Assistance Corporation, Federal Financing Bank, Federal Home
Loan Banks, General Services Administration, Student Loan Marketing Association,
and Tennessee Valley Authority. Income on these obligations and the obligations
of certain other agencies and instrumentalities is generally not subject to
state and local income taxes by Federal law. In addition, the income received by
Fund shareholders that is attributable to these investments will also be exempt
in most states from state and local income taxes. Shareholders should determine
through consultation with their own tax advisers whether and to what extent
dividends payable by the Fund from interest received with respect to its
investments will be considered to be exempt from state and local income taxes in
the shareholder's state. Shareholders similarly should determine whether the
capital gain and other income, if any, payable by the Fund will be subject to
state and local income taxes in the shareholder's state. See "Distributions and
Tax Matters."
The U.S. Government Securities in which the Portfolio may invest include
securities supported primarily or solely by the creditworthiness of the issuer.
There is no guarantee that the U.S. government will support securities not
backed by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than securities backed by the U.S. government's full faith
and credit.
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Government Cash Portfolio seeks to attain its investment objective by
investing substantially all of its assets in U.S. Government Securities and in
repurchase agreements backed by U.S. Government Securities. The U.S. Government
Securities in which the Portfolio may invest include Treasury Securities and
securities supported primarily or solely by the creditworthiness of the issuer,
such as securities of the Federal National Mortgage Association, Federal Home
Loan Banks and Student Loan Marketing Association. There is no guarantee that
the U.S. Government will support securities not backed by its full faith and
credit. Accordingly, although these securities have historically involved little
risk of loss of principal if held to maturity, they may involve more risk than
securities backed by the U.S. Government's full faith and credit.
DAILY ASSETS CASH FUND
Cash Portfolio seeks to attain its investment objective by investing in a
broad spectrum of money market instruments. The Portfolio may invest in (1)
obligations of domestic financial institutions, (2) U.S. Government Securities
(see
6
<PAGE>
"Investment Objectives and Policies - Daily Assets Government Fund") and (3)
corporate debt obligations of domestic issuers.
Financial institution obligations include negotiable certificates of
deposit, bank notes, bankers' acceptances and time deposits of banks (including
savings banks and savings associations) and their foreign branches. The
Portfolio limits its investments in bank obligations to banks which at the time
of investment have total assets in excess of one billion dollars. Certificates
of deposit represent an institution's obligation to repay funds deposited with
it that earn a specified interest rate over a given period. Bank notes are debt
obligations of a bank. Bankers' acceptances are negotiable obligations of a bank
to pay a draft which has been drawn by a customer and are usually backed by
goods in international trade. Time deposits are non-negotiable deposits with a
banking institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" that are restricted as to
disposition under the Federal securities laws ("restricted securities"). Any
sale of these securities may not be made absent registration under the
Securities Act of 1933 or the availability of an appropriate exemption
therefrom. Some of these restricted securities, however, are eligible for resale
to institutional investors, and accordingly, a liquid market may exist for them.
Pursuant to guidelines adopted by the Core Trust Board, the investment adviser
will determine whether each such investment is liquid.
DAILY ASSETS MUNICIPAL FUND
Municipal Cash Portfolio seeks to attain its investment objective by
investing substantially all of its assets in municipal securities. The Portfolio
attempts to maintain 100% of its assets invested in federally tax-exempt
municipal securities; during periods of normal market conditions the Portfolio
will have at least 80% of its net assets invested in federally tax-exempt
instruments the income from which may be subject to the federal alternative
minimum tax ("AMT").
The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.
THE SHORT-TERM MUNICIPAL SECURITIES MARKET. It is anticipated that a
substantial amount of the municipal securities held by the Portfolio will be
supported by credit and liquidity enhancements, such as letters of credit (which
are not covered by federal deposit insurance) or put or demand features of third
party financial institutions, generally domestic and foreign banks. Accordingly,
the credit quality and liquidity of the Portfolio will be dependent in part upon
the credit quality of the banks supporting the Portfolio's investments. This
will result in exposure to risks pertaining to the banking industry, including
the foreign banking industry. These risks include a sustained increase in
interest rates, which can adversely affect the availability and cost of a bank's
lending activities; exposure to credit losses during times of economic decline;
concentration of loan portfolios in certain industries; regulatory developments;
and competi-
7
<PAGE>
tion among financial institutions. Brokerage firms and insurance companies also
provide certain liquidity and credit support. The Portfolio's policy is to
purchase municipal securities with third party credit or liquidity support only
after FIA has considered the creditworthiness of the financial institution
providing the support and believes that the security presents minimal credit
risk.
The Portfolio may purchase long term municipal securities with various
maturity shortening provisions. For instance, variable rate demand notes
("VRDN") are municipal bonds with maturities of up to 40 years that are sold
with a demand feature (an option for the holder of the security to sell the
security back to the issuer) which may be exercised by the security holder at
predetermined intervals, usually daily or weekly. The interest rate on the
security is typically reset by a remarketing or similar agent at prevailing
interest rates. VRDNs may be issued directly by the municipal issuer or created
by a bank, broker-dealer or other financial institution by selling a previously
issued long-term bond with a demand feature attached. Similarly, tender option
bonds (also referred to as certificates of participation) are municipal
securities with relatively long original maturities and fixed rates of interest
that are coupled with an agreement of a third party financial institution under
which the third party grants the security holders the option to tender the
securities to the institution and receive the face value thereof. The option may
be exercised at periodic intervals, usually six months to a year. As
consideration for providing the option, the financial institution receives a fee
equal to the difference between the underlying municipal security's fixed rate
and the rate, as determined by a remarketing or similar agent, that would cause
the securities, coupled with the tender option, to trade at par on the date of
the interest rate determination. These bonds effectively provide the holder with
a demand obligation that bears interest at the prevailing short-term municipal
securities interest rate.
The Portfolio also may acquire "puts" on municipal securities it purchases.
A put gives the Portfolio the right to sell the municipal security at a
specified price at any time before a specified date. The Portfolio will acquire
puts only to enhance liquidity, shorten the maturity of the related municipal
security or permit the Portfolio to invest its funds at more favorable rates.
Generally, the Portfolio will buy a municipal security that is accompanied by a
put only if the put is available at no extra cost. In some cases, however, the
Portfolio may pay an extra amount to acquire a put, either in connection with
the purchase of the related municipal security or separately from the purchase
of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
MUNICIPAL BONDS. Municipal bonds are long term fixed-income securities.
"General obligation" bonds are secured by a municipality's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
"Revenue" bonds are
8
<PAGE>
usually payable only from the revenues derived from a particular facility or
class of facilities or, in some cases, from the proceeds of a special excise or
other tax, but not from general tax revenues. Under a "moral obligation" bond
(which is normally issued by special purpose public authorities), if the issuer
is unable to meet its obligations under the bonds from current revenues, it may
draw on a reserve fund that is backed by the moral commitment (but not the legal
obligation) of the state or municipality that created the issuer. The Portfolio
may invest in industrial development bonds, which in most cases are revenue
bonds. The payment of the principal and interest on these bonds is dependent
solely on the ability of an initial or subsequent user of the facilities
financed by the bonds to meet its financial obligations and the pledge, if any,
of real and personal property so financed as security for such payment.
MUNICIPAL NOTES AND LEASES. Municipal notes, which may be either "general
obligation" or "revenue" securities, are short-term fixed income securities
intended to fulfill short-term capital needs of a municipality. Municipal
leases, which may take various forms, are issued by municipalities to acquire a
wide variety of equipment and facilities. Municipal leases frequently have
special risks not normally associated with other municipal securities. Municipal
leases (which normally provide for title to the leased assets to pass eventually
to the government issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
PARTICIPATION INTERESTS. The Portfolio may purchase participation interests
in municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.
TAXABLE INVESTMENTS. The Portfolio may invest up to 20% of the value of its
net assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain
investment limitations, as described in the SAI, are fundamental and therefore
may not be changed without approval of the holders of a majority of the Fund's
or Portfolio's, as applicable, outstanding voting securities (as defined in the
1940 Act). Except as otherwise indicated herein or in the SAI, investment
policies of a Fund or a Portfolio may be changed by the applicable board of
trustees without shareholder approval. Each Portfolio is permitted to hold cash
in any amount pending investment in securities and may invest in other
investment companies that intend to comply with Rule 2a-7 and have substantially
similar investment objectives and policies. A further description of the Funds'
and the Portfolios' investment policies is contained in the SAI.
BORROWING. Each Portfolio may borrow money for temporary or emergency
purposes (including the meeting of redemption requests), but not in excess of 33
1/3% of the value of the Portfolio's total assets. Borrowing for purposes other
than meeting redemption requests will not
9
<PAGE>
exceed 5% of the value of the Portfolio's total assets.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or
liquidity by entering into repurchase agreements. Repurchase agreements are
transactions in which a Portfolio purchases a security and simultaneously
commits to resell that security to the seller at an agreed-upon price on an
agreed-upon future date, normally one to seven days later. The resale price
reflects a market rate of interest that is not related to the coupon rate or
maturity of the purchased security. The Portfolios' custodian holds the
underlying collateral, which is maintained at not less than 100% of the
repurchase price. Repurchase agreements involve certain credit risks not
associated with direct investment in securities. Each Portfolio, however,
intends to enter into repurchase agreements only with sellers whichFIA believes
present minimal credit risks in accordance with guidelines established by the
Core Trust Board. In the event that a seller defaulted on its repurchase
obligation, however, a Portfolio might suffer a loss.
LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more
than 10% of its net assets in illiquid securities, including repurchase
agreements not entitling the Portfolio to payment of principal within seven
days. There may not be an active secondary market for securities held by a
Portfolio. The value of securities that have a limited market tend to fluctuate
more than those that have an active market. FIA monitors the liquidity of each
Portfolio's investments, but there can be no guarantee that an active secondary
market will exist.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. In order to assure itself of
being able to obtain securities at prices which FIA believes might not be
available at a future time, FIA may purchase securities on a when-issued or
delayed delivery basis. When these transactions are negotiated, the price or
yield is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Securities so purchased are subject
to market price fluctuation and no interest on the securities accrues to a
Portfolio until delivery and payment take place. Accordingly, the value of the
securities on the delivery date may be more or less than the purchase price.
Commitments for when-issued or delayed delivery transactions will be entered
into only when a Portfolio has the intention of actually acquiring the
securities, but the Portfolio may sell the securities before the settlement date
if deemed advisable. Failure by the other party to deliver a security purchased
by a Portfolio may result in a loss or missed opportunity to make an alternative
investment. As a result of entering into forward commitments, the Funds are
exposed to greater potential fluctuations in the value of their assets and net
asset values per share.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which each
Portfolio invest may have variable or floating rates of interest. These
securities pay interest at rates that are adjusted periodically according to a
specified formula, usually with reference to some interest rate index or market
interest rate. The interest paid on these securities is a function primarily of
the index or market rate upon which the interest rate adjustments are based.
Those securities with ultimate maturities of greater than 397 days may be
purchased only in accordance with the provisions of Rule 2a-7. Under that Rule,
only those long-term instruments that have demand features which comply with
certain requirements and certain U.S. Government Securities may be purchased.
Similar to fixed rate debt instruments, variable and floating rate instruments
are subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose
interest rate is adjusted based on a long-term interest rate or index, on more
than one interest rate or index, or on an
10
<PAGE>
interest rate or index that materially lags behind short-term market rates
(these prohibited securities are often referred to as "derivative" securities).
All variable and floating rate securities purchased by a Portfolio will have an
interest rate that is adjusted based on a single short-term rate or index, such
as the Prime Rate.
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government
Cash Portfolio invests only in instruments which, if held directly by a bank or
bank holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. These Portfolios do not intend to hold in their portfolio any
securities or instruments that would be subject to restriction as to amount held
by a national bank under Title 12, Section 24 (Seventh) of the United States
Code. In addition, these Portfolios limit their investments to those permissible
for Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act and the applicable rules and regulations of the National Credit
Union Administration. Government Cash Portfolio limits its investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage and to investments that permit Fund
shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and
the business of Core Trust is managed under the direction the Core Trust Board.
The Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The Core Trust Board
performs similar functions for the Portfolios and Core Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust.
ADMINISTRATION AND DISTRIBUTION
Subject to the supervision of the Board, FAdS supervises the overall
management of the Trust, including overseeing the Trust's receipt of services,
advising the Trust and the Trustees on matters concerning the Trust and its
affairs, and providing the Trust with general office facilities and certain
persons to serve as officers. For these services and facilities, FAdS receives a
fee at an annual rate of 0.05% of the daily net assets of each Fund. FAdS also
serves as administrator of the Portfolios and provides administrative services
for each Portfolio that are similar to those provided to the Funds. For its
administrative services to the Portfolios, FAdS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("FAcS") performs portfolio accounting services for the Funds and
Portfolios pursuant to agreements with the Trust and Core Trust and is paid a
separate fee for these services.
FFSI acts as the agent of the Trust in connection with the offering of
shares of the Funds but receives no compensation for these services. FFSI is a
registered broker-dealer and is a member of the National Association of
Securities Dealers, Inc.
FAdS, FFSI, FIA, FAcS and FSS are members of the Forum Financial Group of
companies and together provide a full range of services to the investment
company and financial services industry. As of the date of this Prospectus, each
of these companies was controlled by John Y. Keffer, President and Chairman of
the Trust, and FAdS and FFSI provided administration services to registered
investment companies with assets of approximately $30 billion.
INVESTMENT ADVISER
Subject to the general supervision of the Core Trust Board, FIA makes
investment decisions for
11
<PAGE>
each Portfolio and monitors the Portfolios' investments. FIA, which is located
at Two Portland Square, Portland, Maine 04101, provides investment advisory
services to six other mutual funds. Prior to January 2, 1998, Linden Asset
Management, Inc. ("Linden") served as investment adviser to Treasury Cash
Portfolio, Government Cash Portfolio and Cash Portfolio and provided
professional management of those Portfolios' investments, and Forum Advisors,
Inc. served as investment adviser to Government Portfolio and provided
professional management of that Portfolio's investments. Linden and Forum
Advisors, Inc. also acted as investment subadvisors to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into a new company named Forum Investment
Advisors, LLC.
Anthony R. Fischer, Jr. is primarily responsible for the day-to-day
management of the Portfolios. Mr. Fischer was the sole stockholder and President
of Linden Asset Management, Inc. from 1992 until January 2, 1998. He has been
primarily responsible for the day-to-day management of Treasury Cash Portfolio,
Government Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio since
their inception. Mr. Fischer has over twenty-five years experience in the money
market industry and during that time has managed money market investment
portfolios for various banks and investment firms.
For its services, FIA receives an advisory fee at an annual rate of 0.05%
of Government Portfolio's and Municipal Cash Portfolio's average daily net
assets For services provided to Treasury Cash Portfolio, Government Cash
Portfolio and Cash Portfolio, FIA receives an advisory fee based upon the total
average daily net assets of those Portfolios ("Total Portfolio Assets"). FIA's
fee is calculated at an annual rate on a cumulative basis as follows: 0.06% of
the first $200 million of Total Portfolio Assets, 0.04% of the next $300 million
of Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. A
Fund's expenses include the Fund's pro rata portion of the advisory fee paid by
the corresponding Portfolio.
SHAREHOLDER SERVICING
TRANSFER AND DIVIDEND DISBURSING AGENT. Shareholder inquiries and
communications concerning the Funds may be directed to FSS at the address and
telephone numbers on the first page of this Prospectus. FSS maintains an account
for each shareholder of the Funds (unless such accounts are maintained by
sub-transfer agents or processing agents) and performs other transfer agency and
related functions. FSS is authorized to subcontract any or all of its functions
to one or more qualified sub-transfer agents or processing agents, which may be
its affiliates, who agree to comply with the terms of FSS's agreement with the
Trust. FSS may pay those agents for their services, but no such payment will
increase FSS's compensation from the Trust. For its services, FSS is paid a
transfer agent fee at an annual rate of 0.10% of the average daily net assets of
each Fund attributable to Institutional Service Shares plus $12,000 per year for
each Fund and certain account and additional class charges and is reimbursed for
certain expenses incurred on behalf of the Funds.
SHAREHOLDER SERVICE AGENTS. The Trust has adopted a shareholder service
plan ("Shareholder Service Plan") which provides that, as compensation for
FAdS's service activities with respect to the Institutional Service Shares, the
Trust shall pay FAdS a fee at an annual rate of 0.25% of the average daily net
assets attributable to Institutional Service Shares. FAdS is authorized to enter
into shareholder servicing agreements pursuant to which a shareholder servicing
agent, on behalf of its customers, performs certain shareholder services not
otherwise provided by FSS. As compensation for its services, the shareholder
servicing agent is paid a fee by FAdS of up to 0.25% of the average daily net
assets of Institutional Service Shares owned by investors for which the
shareholder service agent maintains a servicing rela-
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tionship. Certain shareholder servicing agents may be subtransfer or processing
agents.
Among the services provided by shareholder servicing agents are answering
customer inquiries regarding the manner in which purchases, exchanges and
redemptions of shares of the Trust may be effected and other matters pertaining
to the Trust's services; providing necessary personnel and facilities to
establish and maintain shareholder accounts and records; assisting shareholders
in arranging for processing purchase, exchange and redemption transactions;
arranging for the wiring of funds; guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request.
EXPENSES OF THE FUNDS
Each Fund's expenses comprise Trust expenses attributable to the Fund,
which are charged to the Fund, and expenses not attributable to a particular
fund of the Trust, which are allocated among the Fund and all other funds of the
Trust in proportion to their average net assets. Each service provider in its
sole discretion may elect to waive (or continue to waive) all or any portion of
its fees, which are accrued daily and paid monthly, and may reimburse a Fund for
certain expenses. Any such waivers or reimbursements would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.
Each Fund's expenses include the service fees described in this Prospectus,
the fees and expenses of the Board, applicable insurance and bonding expenses
and state and SEC registration fees. Each Fund bears its pro rata portion of the
expenses of the Portfolio in which it invests along with all other investors in
the Portfolio.
5. PURCHASES AND REDEMPTIONS OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through FSS, which accepts
orders for purchases and redemptions from shareholders of record and new
investors. Shareholders of record will receive from the Trust periodic
statements listing all account activity during the statement period. The Trust
reserves the right in the future to modify, limit or terminate any shareholder
privilege, upon appropriate notice to shareholders, and may charge a fee for
certain shareholder services, although no such fees are currently contemplated.
PURCHASES. Fund shares are sold at a price equal to their net asset value
next-determined after receipt of an order in proper form, on each Fund Business
Day. Fund shares are issued immediately after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by FSS. Each Fund's net asset value is calculated at 4:00
p.m., Eastern time.
Fund shares become entitled to receive distributions on the day the
purchase order is accepted if the order and payment are received by FSS as
follows:
<TABLE>
<S> <C> <C>
Order Must be Received by Payment Must be Received by
------------------------- ---------------------------
Daily Assets Government Fund and
Daily Assets Municipal Fund 12:00 p.m., Eastern time 4:00 p.m., Eastern time
All other Funds 2:00 p.m., Eastern time 4:00 p.m., Eastern time
</TABLE>
If a purchase order is transmitted to FSS (or the wire is received) after
the times listed above, the investor will not receive a distribution on that
day. On days that the New York Stock Exchange or Federal Reserve Bank of San
Francisco (Boston in the case of Daily Assets Government Fund) closes early or
the Public Securities Association recommends that the government securities mar-
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<PAGE>
kets close early, the Trust may advance the time by which FSS must receive
completed wire purchase orders and the cut-off times set forth above.
Each Fund reserves the right to reject any subscription for the purchase of
Fund shares. Stock certificates are issued only to shareholders of record upon
their written request and no certificates are issued for fractional shares.
REDEMPTIONS. Fund shares may be redeemed without charge at their net asset
value on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following receipt by FSS of the
redemption order in proper form (and any supporting documentation which FSS may
require). Shares redeemed are not entitled to receive distributions declared on
or after the day on which the redemption becomes effective.
For wire redemption orders received after 12:00 p.m., Eastern time, in the
case of Daily Assets Government Fund and Daily Assets Municipal Fund, and after
2:00 p.m., Eastern time, in the case of each other Fund, FSS will wire proceeds
the next Fund Business Day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco (Boston in the case of Daily Assets Government
Fund) closes early or the Public Securities Association recommends that the
government securities markets close early, the Trust may advance the time by
which FSS must receive completed wire redemption orders.
Normally, redemption proceeds are paid immediately, but in no event later
than seven days, following acceptance of a redemption order. Proceeds of
redemption requests (and exchanges), however, will not be paid unless any check
used to purchase the shares has been cleared by the shareholder's bank, which
may take up to 15 calendar days. This delay may be avoided by investing through
wire transfers. Unless otherwise indicated, redemption proceeds normally are
paid by check mailed to the shareholder's record address. The right of
redemption may not be suspended nor the payment dates postponed for more than
seven days after the tender of the shares to the Fund except when the New York
Stock Exchange is closed (or when trading thereon is restricted) for any reason
other than its customary weekend or holiday closings or under any emergency or
other circumstance as determined by the SEC.
Proceeds of redemptions normally are paid in cash. However, payments may be
made wholly or partially in portfolio securities if the Board determines that
payment in cash would be detrimental to the best interests of the Fund.
The Trust employs reasonable procedures to ensure that telephone orders are
genuine (which include recording certain transactions and the use of shareholder
security codes). If the Trust did not employ such procedures, it could be liable
for any losses due to unauthorized or fraudulent telephone instructions.
Shareholders should verify the accuracy of telephone instructions immediately
upon receipt of confirmation statements. During times of drastic economic or
market changes, telephone redemption and exchange privileges may be difficult to
implement. In the event that a shareholder is unable to reach FSS by telephone,
requests may be mailed or hand-delivered to FSS.
Due to the cost to the Trust of maintaining smaller accounts, the Trust
reserves the right to redeem, upon not less than 60 days' written notice, all
shares in any Fund account with an aggregate net asset value of less than
$5,000.
PURCHASE AND REDEMPTION PROCEDURES
Investors may open an account by completing the application at the back of
this Prospectus or by contacting FSS at the address on the first page of this
Prospectus. To request shareholder services not referenced on the account
application and to change information regarding a shareholder's
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<PAGE>
account (such as addresses), investors should request an Optional Services Form
from FSS.
INITIAL PURCHASE OF SHARES
There is a $100,000 minimum for total initial investments through of by any
financial institution in each Fund.
BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to FSS. Checks are accepted at full value subject
to collection. Payment by a check drawn on any member of the Federal Reserve
System can normally be converted into Federal Funds within two business days
after receipt of the check. Checks drawn on some non-member banks may take
longer.
For individual or Uniform Gift to Minors Act accounts, the check or money
order used to purchase shares of a Fund must be made payable to "Forum Funds" or
to one or more owners of that account and endorsed to Forum Funds. For
corporation, partnership, trust, 401(k) plan or other non-individual type
accounts, the check used to purchase shares of a Fund must be made payable on
its face to "Forum Funds." No other method of payment by check will be accepted.
All purchases must be paid in U.S. dollars; checks must be drawn on U.S. banks.
Payment by Traveler's Checks is prohibited.
BY BANK WIRE. To make an initial investment in a Fund using the wire system
for transmittal of money among banks, an investor should first telephone the
Trust at 800-94FORUM (800-943-6786) or (207) 879-0001 to obtain an account
number. The investor should then instruct a bank to wire the investor's money
immediately to:
BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Shareholder Services, LLC
Account #: 541-54171
Re: [Name of Fund] - Institutional Service Shares
Account #:___________________
Account Name:________________
The investor should then promptly complete and mail the account
application. Any investor planning to wire funds should instruct a bank early in
the day so the wire transfer can be accomplished the same day. There may be a
charge imposed by the bank for transmitting payment by wire, and there also may
be a charge for the use of Federal Funds.
THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed
through certain broker-dealers, banks or other financial institutions
("Processing Organizations"), including affiliates of FSS. Processing
Organizations may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
a Fund. The Trust is not responsible for the failure of any Processing
Organization to promptly forward these requests.
Investors who purchase or redeem shares in this manner will be subject to
the procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Investors who purchase Fund shares
through a Processing Organization may or may not be the shareholder of record
and, subject to
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<PAGE>
their institution's and the Fund's procedures, may have Fund shares transferred
into their name. Certain Processing Organizations may enter purchase orders with
payment to follow.
The Trust may confirm purchases and redemptions of a Processing
Organization's customers directly to the Processing Organization, which in turn
will provide its customers with such confirmations and periodic statements as
may be required by law or agreed to between the Processing Organization and its
customers.
SUBSEQUENT PURCHASES OF SHARES
Subsequent purchases may be made by mailing a check, by sending a bank wire
or through a financial institution as indicated above. Shareholders using the
wire system for purchase should first telephone the Trust at 800-94FORUM
(800-943-6786) or (207) 879-0001 to notify it of the wire transfer. All payments
should clearly indicate the shareholder's name and account number.
Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to FSS.
REDEMPTION OF SHARES
Shareholders who wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several days after a shareholder's application is received.
Shares for which certificates have been issued may not be redeemed by telephone.
BY MAIL. Shareholders may make a redemption in any amount by sending a
written request to FSS accompanied by any stock certificate that may have been
issued to the shareholder. All written requests for redemption must be signed by
the shareholder with signature guaranteed and all certificates submitted for
redemption must be endorsed by the shareholder with signature guaranteed.
BY TELEPHONE. A shareholder who has elected telephone redemption privileges
may make a telephone redemption request by calling FSS at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number. In response to
the telephone redemption instruction, the Fund will mail a check to the
shareholder's record address or, if the shareholder has elected wire redemption
privileges, wire the proceeds.
BY BANK WIRE. For redemptions of more than $5,000, a shareholder who has
elected wire redemption privileges may request the Fund to transmit the
redemption proceeds by Federal Funds wire to a bank account designated on the
shareholder's account application. To request bank wire redemptions by
telephone, the shareholder also must have elected the telephone redemption
privilege. Redemption proceeds are transmitted by wire on the day the redemption
request in proper form is received by FSS .
OTHER REDEMPTION MATTERS. To protect shareholders and the Funds against
fraud, signatures on certain requests must have a signature guarantee. Requests
must be made in writing and include a signature guarantee for any of the
following transactions: (1) any endorsement on a stock certificate; (2) written
instruction to redeem Shares whose value exceeds $50,000; (3) instructions to
change a shareholder's record name; (4) redemption in an account in which the
account
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<PAGE>
address or account registration has changed within the last 30 days; (5) the
proceeds are not being sent to the address of record, preauthorized bank
account, or preauthorized brokerage firm account; (6) proceeds are to be paid to
someone other than the registered owners or to an account with a different
registration; (7) change of automatic investment or redemption, dividend
election, telephone redemption or exchange option election or any other option
election in connection with the shareholder's account.
Signature guarantees may be provided by any eligible institution acceptable
to FSS, including a bank, a broker, a dealer, a national securities exchange, a
credit union, or a savings association that is authorized to guarantee
signatures. Whenever a signature guarantee is required, the signature of each
person required to sign for the account must be guaranteed. A notarized
signature is not sufficient.
FSS will deem a shareholder's account "lost" if correspondence to the
shareholder's address of record is returned as undeliverable, unless FSS
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 FSS will be reinvested and
the checks will be canceled.
EXCHANGES
Shareholders may exchange their shares for Institutional Service Shares of
any other Fund or for shares of any other mutual fund administered by FAdS that
participates with the Funds in the exchange program. Exchanges are subject to
the fees charged by, and the restrictions listed in the prospectus for, the fund
into which a shareholder is exchanging, including minimum investment
requirements. The Funds do not charge for exchanges, and there is currently no
limit on the number of exchanges a shareholder may make, but each Fund reserves
the right to limit excessive exchanges by any shareholder. See "Additional
Purchase and Redemption Information" in the SAI.
Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the new account. Shareholders may only exchange into a Fund if
that Fund's shares may legally be sold in the shareholder's state of residence.
The Trust (and Federal tax law) treats an exchange as a redemption of the
shares owned and the purchase of the shares of the fund being acquired.
Accordingly, a shareholder may realize a capital gain or loss with respect to
the shares redeemed. Redemptions and purchases are effected at the respective
net asset values of the two Funds as next determined following receipt of proper
instructions and all necessary supporting documents by the Fund whose shares are
being exchanged. The exchange privilege may be modified materially or terminated
by the Trust at any time upon 60 days' notice to shareholders.
BY MAIL. Exchanges may be accomplished by written instruction to FSS
accompanied by any stock certificate that may have been issued to the
shareholder. All written requests for exchanges must be signed by the
shareholder (a signature guarantee is not required) and all certificates
submitted for exchange must be endorsed by the shareholder with signature
guaranteed.
BY TELEPHONE. Exchanges may be accomplished by telephone by any shareholder
who has elected telephone exchange privileges by calling FSS at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number.
17
<PAGE>
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and
paid monthly following the close of the last Fund Business Day of the month.
Each type of net capital gain realized by a Fund, if any, will be distributed
annually. Shareholders may choose to have all distributions reinvested in
additional shares of the Fund or received in cash. In addition, shareholders may
have all distributions of net capital gain reinvested in additional shares of
the Fund and distributions of net investment income paid in cash. All
distributions are treated in the same manner for Federal income tax purposes
whether received in cash or reinvested in shares of the Fund.
All distributions will be reinvested at the Fund's net asset value as of
the payment date of the dividend. All distributions are reinvested unless
another option is selected. All distributions not reinvested will be paid to the
shareholder in cash and may be paid more than seven days following the date on
which distribution would otherwise be reinvested.
TAXES
TAX STATUS OF THE FUNDS. Each Fund intends to qualify or continue to
qualify to be taxed as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended. Accordingly, no Fund will be liable for
Federal income taxes on the net investment income and capital gain distributed
to its shareholders. Because each Fund intends to distribute all of its net
investment income and net capital gain each year, the Funds should also avoid
Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Two different tax rates apply to net capital gain --
that is, the excess of net gain from capital assets held for more than one year
over net losses from capital assets held for not more than one year. One rate
(generally 28%) applies to net gain on capital assets held for more than one
year but not more than 18 months and a second rate (generally 20%) applies to
the balance of such net capital gains. Distributions of net capital gain will be
taxable to shareholders as such, regardless of how long a shareholder has held
shares in the Fund.
THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes
on their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
DAILY ASSETS MUNICIPAL FUND. Distributions paid by Daily Assets Municipal
Fund out of federally tax-exempt interest income earned by the Fund
("exempt-interest dividends") generally will not be subject to federal income
tax in the hands of the Fund's shareholders. Substantially all of the
distributions paid by the Fund are anticipated to be exempt-interest dividends.
Persons who are "substantial users" or "related persons" thereof of facilities
financed by private activity securities held by the Fund, however, may be
subject to federal income tax on their pro rata share of the interest income
from those securities and should consult their tax advisers before purchasing
shares. Exempt-interest dividends are included in the "adjusted current
earnings" of corporations for purposes of the federal alternative minimum tax
("AMT").
Interest on indebtedness incurred by shareholders to purchase or carry
shares of the Fund generally is not deductible for federal income tax purposes.
Under rules for determining when borrowed funds are used for purchasing or
carrying
18
<PAGE>
particular assets, shares of the Fund may be considered to have been purchased
or carried with borrowed funds even though those funds are not directly linked
to the shares.
The income from the Portfolio's investments may be subject to the AMT.
Interest on certain municipal securities issued to finance "private activities"
("private activity securities") is a "tax preference item" for purposes of the
AMT applicable to certain individuals and corporations even though such interest
will continue to be fully tax-exempt for regular federal income tax purposes.
The Portfolio may purchase private activity securities, the interest on which
may constitute a "tax preference item" for purposes of the AMT.
STATE AND LOCAL TAXES. Daily Assets Government Fund's investment policies
are structured to provide shareholders, to the extent permissible by Federal and
state law, with income that is exempt or excluded from income taxation at the
state and local level. Many states (by statute, judicial decision or
administrative action) do not tax dividends from a regulated investment company
that are attributable to interest on obligations of the U.S. Treasury and
certain U.S. Government agencies and instrumentalities if the interest on those
obligations would not be taxable to a shareholder that held the obligation
directly. As a result, substantially all distributions paid by the Fund to
shareholders residing in certain states will be exempt or excluded from state
income taxes. A portion of the distributions paid by the other Funds to
shareholders may be exempt or excluded from state income taxes, but these Funds
are not managed to provide any specific amount of state tax-free income to
shareholders.
The exemption for federal income tax purposes of distributions derived from
interest on municipal securities does not necessarily result in an exemption
under the income or other tax laws of any state or local taxing authority.
Shareholders of Daily Assets Municipal Fund may be exempt from state and local
taxes on distributions of tax-exempt interest income derived from obligations of
the state and/or municipalities of the state in which they reside but may be
subject to tax on income derived from the municipal securities of other
jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in a Fund which may differ
from the federal income tax consequences described above.
GENERAL. Each Fund may be required by Federal law to withhold 31% of
reportable payments (which may include taxable distributions and redemption
proceeds) paid to individuals and certain other non-corporate shareholders.
Withholding is not required if a shareholder certifies that the shareholder's
social security or tax identification number provided to a Fund is correct and
that the shareholder is not subject to backup withholding.
Each Fund must include a portion of the original issue discount of
zero-coupon securities, if any, as income even though these securities do not
pay any interest until maturity. Because each Fund distributes all of its net
investment income, a Fund may have to sell portfolio securities to distribute
imputed income, which may occur at a time when the investment adviser would not
have chosen to sell such securities and which may result in a taxable gain or
loss.
Shortly after the close of each year, a statement is sent to each
shareholder of the Funds advising the shareholder of the portions of total
distributions paid to the shareholder that is (1) derived from each type of
obligation in which a Fund has invested, (2) derived from the obligations of
issuers in the various states and (3) exempt from federal income taxes. These
portions are determined for the entire year and on a monthly basis and, thus,
are an annual or monthly average, rather than a day-by-day determination for
each shareholder.
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<PAGE>
The foregoing is only a summary of some of the important Federal and state
tax considerations generally affecting the Funds and their shareholders. There
may be other Federal, state or local tax considerations applicable to a
particular investor. Prospective investors are urged to consult their tax
advisers.
7. OTHER INFORMATION
PERFORMANCE INFORMATION
Institutional Service Shares' performance may be advertised. All
performance information is based on historical results, is not intended to
indicate future performance and, unless otherwise indicated, is net of all
expenses. The Funds may advertise yield, which shows the rate of income a Fund
has earned on its investments as a percentage of the Fund's share price. To
calculate yield, a Fund takes the interest income it earned from its portfolio
of investments for a specified period (net of expenses), divides it by the
average number of shares entitled to receive distributions, and expresses the
result as an annualized percentage rate based on the Fund's share price at the
end of the period. A Fund's compounded annualized yield assumes the reinvestment
of distributions paid by the Fund, and, therefore will be somewhat higher than
the annualized yield for the same period. A Fund may also quote tax-equivalent
yields, which show the taxable yields a shareholder would have to earn to equal
the Fund's tax-free yield, after taxes. A tax-equivalent yield is calculated by
dividing the Fund's tax-free yield by one minus a stated federal, state or
combined federal and state tax rate. Each class' performance will vary.
The Funds' advertisements may also reference ratings and rankings among
similar funds by independent evaluators such as Morningstar, Lipper Analytical
Services, Inc. or IBC Financial Data, Inc. In addition, the performance of the
Funds may be compared to recognized indices of market performance. The
comparative material found in a Fund's advertisements, sales literature, or
reports to shareholders may contain performance rankings. This material is not
to be considered representative or indicative of future performance.
BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a Processing
Organization or perform sub-transfer agent or similar services for the Trust and
its shareholders. If a bank or bank affiliate were prohibited from performing
all or a part of the foregoing services, its shareholder customers would be
permitted to remain shareholders of the Trust and alternative means for
continuing to service them would be sought.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 4:00
p.m., Eastern time, on each Fund Business Day by dividing the value of the
Fund's net assets (the value of its interest in the Portfolio and other assets
less its liabilities) by the number of shares outstanding at the time the
determination is made. In order to more easily maintain a stable net asset value
per share, each Portfolio's portfolio securities are valued at their amortized
cost (acquisition cost adjusted for amortization of premium or accretion of
discount) in accordance with Rule 2a-7. The Portfolios will only value their
portfolio securities using this method if the Core Trust Board believes that it
fairly reflects the market-based net asset value per share. The Portfolios'
other assets, if any, are valued at fair value by or under the direction of the
Core Trust Board.
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end, management investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc., which was incorporated in 1980. The
Board has the authority
20
<PAGE>
to issue an unlimited number of shares of beneficial interest of separate series
with no par value per share and to create classes of shares within each series.
There are currently sixteen series of the Trust.
Each share of each fund of the Trust and each class of shares has equal
distribution, liquidation and voting rights, and fractional shares have those
rights proportionately, except that expenses related to the distribution of the
shares of each class (and certain other expenses such as transfer agency and
administration expenses) are borne solely by those shares and each class votes
separately with respect to the provisions of any Rule 12b-1 plan which pertain
to the class and other matters for which separate class voting is appropriate
under applicable law. Generally, shares will be voted in the aggregate without
reference to a particular fund or class, except if the matter affects only one
fund or class or voting by fund or class is required by law, in which case
shares will be voted separately by fund or class, as appropriate. Delaware law
does not require the Trust to hold annual meetings of shareholders, and it is
anticipated that shareholder meetings will be held only when specifically
required by Federal or state law. Shareholders (and Trustees) have available
certain procedures for the removal of Trustees. There are no conversion or
preemptive rights in connection with shares of the Trust. All shares when issued
in accordance with the terms of the offering will be fully paid and
nonassessable. Shares are redeemable at net asset value, at the option of the
shareholders. A shareholder in a fund is entitled to the shareholder's pro rata
share of all distributions arising from that fund's assets and, upon redeeming
shares, will receive the portion of the fund's net assets represented by the
redeemed shares.
As of May 1, 1998, Babb & Co. may be deemed to have controlled Daily Assets
Treasury Obligations Fund and Daily Assets Government Obligations Fund, H.M.
Payson & Co. may be deemed to have controlled Daily Assets Government Fund and
Daily Assets Cash Fund and Allagash & Co. may be deemed to have controlled Daily
Assets Government Obligations Fund and Daily Assets Cash Fund, through
investment in the Funds by their customers. From time to time, these
shareholders or other shareholders may own a large percentage of Shares of a
Fund and accordingly, may be able to greatly affect (if not determine) the
outcome of a shareholder vote.
FUND STRUCTURE
OTHER CLASSES OF SHARES. In addition to Institutional Service Shares, each
Fund may create and issue shares of other classes of securities. Each Fund
currently has two other classes of shares authorized, Institutional Shares and
Investor Shares. Institutional Shares have an investment minimum of $1,000,000.
Investor Shares are offered to the general public, have a $10,000 minimum
investment and bear shareholder service and distribution fees. Institutional
Shares incur less expenses and Investor Shares incur more expenses than
Institutional Service Shares. See, "Additional Information" below. Except for
certain differences, each share of each class represents an undivided,
proportionate interest in a Fund. Each share of each Fund is entitled to
participate equally in distributions and the proceeds of any liquidation of that
Fund except that, due to the differing expenses borne by the various classes,
the amount of distributions will differ among the classes.
CORE TRUST STRUCTURE. Each Fund invests all of its assets in its
corresponding Portfolio of Core Trust, a business trust organized under the laws
of the State of Delaware in September 1994 and registered under the 1940 Act as
an open-end, management investment company. Accordingly, a Portfolio directly
acquires its own securities and its corresponding Fund acquires an indirect
interest in those securities. The assets of each Portfolio belong only to, and
the liabilities of the Portfolio are borne solely by, the Portfolio and no other
portfolio of Core Trust. Upon liquidation of a Portfolio, investors in the
Portfolio would be entitled to share pro rata in the net assets of the Portfolio
available for distribution to investors.
21
<PAGE>
THE PORTFOLIOS. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, Daily
Assets Government Fund and Daily Assets Municipal Fund are the only investors
(other than FAdS or its affiliates) that have invested in Government Portfolio
and Municipal Cash Portfolio, respectively. Each of the other Portfolios has
another investor besides the Funds (and FAdS and its affiliates). All investors
in a Portfolio invest on the same terms and conditions as the Funds and will pay
a proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio is entitled to vote in proportion to the relative value of its
interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. There can be no assurance that
any issue that receives a majority of the votes cast by a Fund's shareholders
will receive a majority of votes cast by all investors in the Portfolio.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a
Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. If a large investor other than a Fund redeemed its interest
in a Portfolio, the Portfolio's remaining investors (including the Fund) might,
as a result, experience higher pro rata operating expenses, thereby producing
lower returns. A Fund may withdraw its entire investment from a Portfolio at any
time, if the Board determines that it is in the best interests of the Fund and
its shareholders to do so. The Fund might withdraw, for example, if other
investors in the Portfolio, by a vote of shareholders, changed the investment
objective or policies of the Portfolio in a manner not acceptable to the Board
or not permissible by the Fund. A withdrawal could result in a distribution in
kind of portfolio securities (as opposed to a cash distribution) by the
Portfolio. If the Fund decided to convert those securities to cash, it usually
would incur transaction costs. If the Fund withdrew its investment from the
Portfolio, the Board would consider what action might be taken, including the
management of the Fund's assets in accordance with its investment objective and
policies by the investment adviser to the Portfolio or the investment of all of
the Fund's investable assets in another pooled investment entity having
substantially the same investment objective as the Fund. The inability of the
Fund to find a suitable replacement investment, in the event the Board decided
not to permit the Portfolio's investment adviser to manage the Fund's assets,
could have a significant impact on shareholders of the Fund.
ADDITIONAL INFORMATION. Each class of a Fund (and any other investment
company that invests in a Portfolio) may have a different expense ratio and
different sales charges, including distribution fees, and each class' (and
investment company's) performance will be affected by its expenses and sales
charges. For more information on any other class of shares of the Funds or
concerning any other investment companies that invest in a Portfolio, investors
may contact FFSI at 207-879-1900. If an investor invests through a financial
institution, the investor may also contact their financial institution to obtain
information about the other classes or any other investment company investing in
a Portfolio.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
22
<PAGE>
[FORUM FUNDS ACCOUNT APPLICATION]
<PAGE>
[FORUM FUNDS ACCOUNT APPLICATION, CONT.]
<PAGE>
[Picure graphics of map in background
and globe on right half of page.]
[FORUM LOGO]
SHAREHOLDER INFORMATION:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, ME 04112
207-879-0001 (IN PORTLAND, ME)
800-94FORUM (ELSEWHERE)
<PAGE>
PROSPECTUS
------------------------------
INVESTOR
SHARES
------------------------------
[Picture graphics of safe dial,
world map, calendar, compass and
countryside on left half of page.]
DAILY ASSETS
TREASURY
OBLIGATIONS FUND
DAILY ASSETS
GOVERNMENT FUND
DAILY ASSETS
GOVERNMENT
OBLIGATIONS FUND
DAILY ASSETS
CASH FUND
DAILY ASSETS
MUNICIPAL FUND
F O R U M
F U N D S
MAY 27, 1998
<PAGE>
FORUM FUNDS
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
(FORMERLY DAILY ASSETS TREASURY FUND)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
(FORMERLY DAILY ASSETS GOVERNMENT FUND)
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND
(FORMERLY DAILY ASSETS TAX-EXEMPT FUND)
PROSPECTUS
May 27, 1998
- --------------------------------------------------------------------------------
THIS PROSPECTUS OFFERS INVESTOR SHARES OF DAILY ASSETS TREASURY FUND, DAILY
ASSETS TREASURY OBLIGATIONS FUND, DAILY ASSETS GOVERNMENT FUND, DAILY ASSETS
CASH FUND AND DAILY ASSETS MUNICIPAL FUND (EACH A "FUND"). EACH FUND IS A
DIVERSIFIED NO-LOAD, MONEY MARKET PORTFOLIO OF FORUM FUNDS (THE "TRUST"), A
REGISTERED, OPEN-END, MANAGEMENT INVESTMENT COMPANY. EACH FUND SEEKS TO PROVIDE
ITS SHAREHOLDERS WITH HIGH CURRENT INCOME (WHICH, IN THE CASE OF DAILY ASSETS
MUNICIPAL FUND, IS EXEMPT FROM FEDERAL INCOME TAXES) TO THE EXTENT CONSISTENT
WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY.
EACH FUND SEEKS TO ACHIEVE ITS OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE
ASSETS IN A SEPARATE PORTFOLIO OF AN OPEN-END, MANAGEMENT INVESTMENT COMPANY
WITH AN IDENTICAL INVESTMENT OBJECTIVE. SEE "OTHER INFORMATION - FUND
STRUCTURE." THROUGH THE PORTFOLIO IN WHICH IT INVESTS:
DAILY ASSETS TREASURY OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Treasury and in repurchase
agreements backed by these obligations.
DAILY ASSETS GOVERNMENT FUND invests substantially all of its assets
in obligations of the U.S. Government, its agencies and
instrumentalities with a view toward providing income that is
generally considered exempt from state and local income taxes.
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Government, its agencies and
instrumentalities and in repurchase agreements backed by these
obligations.
DAILY ASSETS CASH FUND invests in a broad spectrum of high-quality
money market instruments.
DAILY ASSETS MUNICIPAL FUND invests primarily in high-quality
obligations of the states, territories and possessions of the U.S. and
of their subdivisions, authorities and corporations ("municipal
securities") with a view toward providing income that is exempt from
federal income taxes.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated May 27, 1998 (the "SAI"), which contains more
detailed information about the Trust and the Funds and is available together
with other related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). The SAI, which is incorporated into this Prospectus by
reference, also is available without charge by contacting the Funds' transfer
agent, Forum Shareholder Services, LLC., at P.O. Box 446, Portland, Maine 04112,
(207) 879-0001 or (800) 94FORUM.
Investors should read this Prospectus and retain it for future reference.
<TABLE>
TABLE OF CONTENTS
<S> <C> <C> <C> <C>
1. Prospectus Summary..............................2 5. Purchases and Redemptions of Shares.............13
2. Financial Highlights............................4 6. Distributions and Tax Matters...................18
3. Investment Objectives and Policies..............5 7. Other Information...............................20
4. Management......................................11
</TABLE>
FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.
THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
1. PROSPECTUS SUMMARY
HIGHLIGHTS OF THE FUNDS
This prospectus offers shares of the Investor class ("Investor Shares") of
each of the Funds. The Funds operate in accordance with the provisions of Rule
2a-7 under the Investment Company Act of 1940 (the "1940 Act"). Each Fund
invests all of its investable assets in a separate portfolio (each a
"Portfolio") of Core Trust (Delaware), an open-end, management investment
company ("Core Trust") as follows:
Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Portfolio
Daily Assets Government Obligations Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Municipal Fund Municipal Cash Portfolio
Accordingly, the investment experience of each Fund will correspond
directly with the investment experience of its corresponding Portfolio. See
"Other Information Fund Structure." Each Fund currently offers three separate
classes of shares: Institutional Shares, Institutional Service Shares and
Investor Shares. Investor Shares are sold through this Prospectus. Institutional
Shares and Institutional Service Shares are each offered by a separate
prospectus. See "Other Information --Fund Structure -- Other Classes of Shares."
MANAGEMENT. Forum Administrative Services, LLC ("FAdS") supervises the
overall management of the Funds and the Portfolios and Forum Financial Services,
Inc. ("FFSI") is the distributor of the Funds' shares. Forum Investment
Advisors, LLC ("FIA") is the investment adviser of each Portfolio and provides
professional management of the Portfolios' investments. The Funds' transfer
agent, dividend disbursing agent and shareholder servicing agent is Forum
Shareholder Services, LLC (the "FSS"). See "Management" for a description of the
services provided and fees charged to the Funds.
SHAREHOLDER SERVICING AND DISTRIBUTION. The Trust has adopted a Shareholder
Service Plan and a Plan of Distribution relating to Investor Shares under which
FAdS and FFSI, respectively, are compensated for various shareholder servicing
and distribution related activities. See "Management - Shareholder Servicing"
and "Administration and Distribution."
PURCHASES AND REDEMPTIONS. The minimum initial investment in Investor
Shares is $10,000 ($2,000 for IRAs, $2,500 for exchanges). The minimum
subsequent investment is $500. Investor Shares may be purchased and redeemed
Monday through Friday, between 9:00 a.m. and 6:00 p.m., Eastern time, except on
Federal holidays and days that the Federal Reserve Bank of San Francisco (Boston
in the case of Daily Assets Government Fund) is closed ("Fund Business Days").
To be eligible to receive that day's income, purchase orders must be received by
FSS in good order no later than 2:00 p.m., Eastern time (noon in the case of
Daily Assets Government Fund and Daily Assets Municipal Fund). Shareholders may
have redemption proceeds over $5,000 transferred by bank wire to a designated
bank account. To be able to receive redemption proceeds by wire on the day of
the redemption, redemption orders must be received by FSS in good order no later
than 2:00 p.m., Eastern time (noon in the case of Daily Assets Government Fund
and Daily Assets Municipal Fund). All times may be changed without notice by
Fund management due to market activities. See "Purchase and Redemption of
Shares."
EXCHANGES. Shareholders of a Fund may exchange Investor Shares without
charge for Investor Shares of the other Funds and for the shares of certain
other mutual funds not offered by this Prospectus. See "Purchases and
Redemptions of Shares - Exchanges."
DISTRIBUTIONS. Distributions of net investment income are declared daily
and paid monthly by each Fund and are automatically reinvested in additional
Fund shares unless the shareholder has requested payment in cash. See
"Distributions and Tax Matters."
2
<PAGE>
INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be
able to maintain a stable net asset value of $1.00 per share. Although the
Portfolios invest only in money market instruments, an investment in any Fund
involves certain risks, depending on the types of investments made and the types
of investment techniques employed. Investment in any security, including U.S.
Government Securities, involves some level of investment risk. An investment in
a Fund is not insured by the FDIC, nor is it insured or guaranteed against loss
of principal.
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding
the various expenses that an investor in Investor Shares will bear directly or
indirectly. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares.
EXPENSES OF INVESTING IN THE FUNDS
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
<S> <C> <C> <C> <C> <C>
Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Government Government Cash Municipal
Obligations Fund Fund Obligations Fund Fund Fund
---------------- ---- ---------------- ---- ----
Management Fees(2) 0.14% 0.15% 0.14% 0.14% 0.15%
Rule 12b-1 Fees 0.15% 0.15% 0.15% 0.15% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.46% 0.45% 0.46% 0.46% 0.45%
----- ----- ----- ----- -----
Total Operating Expenses 0.75% 0.75% 0.75% 0.75% 0.75%
</TABLE>
(1) For a further description of the various expenses incurred in the
operation of the Funds and the Portfolios, see "Management." The amount of fees
and expenses for each Fund is based on estimated annualized expenses for the
Funds' fiscal year ending August 31, 1998. Each Fund's expenses include the
Fund's pro rata portion of all expenses of its corresponding Portfolio, which
are borne indirectly by Fund shareholders.
(2) Management Fees include all administration fees and investment advisory
fees incurred by the Funds and the Portfolios; as long as its assets are
invested in a Portfolio, a Fund pays no investment advisory fees directly.
(3) Absent estimated reimbursements by FIA and its affiliates, Other
Expenses and Total Fund Operating Expenses would be: 0.70% and 0.99%,
respectively, for Daily Assets Treasury Obligations Fund; 0.75% and 1.05%,
respectively, for Daily Assets Government Fund; 0.75% and 1.04%, respectively,
for Daily Assets Government Obligations Fund; 0.80% and 1.09%, respectively, for
Daily Assets Cash Fund; 0.80% and 1.10%, respectively, for Daily Assets
Municipal Fund. Expense reimbursements are voluntary and may be reduced or
eliminated at any time.
EXAMPLE
Following is a hypothetical example that indicates the dollar amount of
expenses that an investor in Investor Shares would pay assuming (1) the
investment of all of the Fund's assets in the Portfolio, (2) a $1,000 investment
in the Fund, (3) a 5% annual return, (4) the reinvestment of all distributions
and (5) redemption at the end of each period:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
Each Fund $8 $24 $42 $93
The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Funds' projected returns; rather, it is required by government
regulation. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS
THAN INDICATED.
3
<PAGE>
2. FINANCIAL HIGHLIGHTS
As of February 28, 1998, Investor Shares were not offered. The following
information represents selected data for a single outstanding Institutional
Service Share of Daily Assets Government Fund and Daily Assets Cash Fund and for
a single outstanding Institutional Share of Daily Assets Treasury Obligations
Fund and Daily Assets Government Obligations Fund. Those classes were the first
offered by the respective Funds and, accordingly, represent data since each
Fund's inception. Information for the period ended August 31, 1997, was audited
by KPMG Peat Marwick LLP, independent auditors. Information for prior periods
was audited by other independent auditors and information for the period ended
February 28, 1998 is unaudited. The financial statements and independent
auditors' report thereon for the fiscal year ended August 31, 1997 and the
financial statements for the semi-annual period ended February 28, 1998 are
incorporated by reference into the SAI and may be obtained from the Trust
without charge. As of May 20, 1998, Daily Assets Municipal Fund had not
commenced operations.
As of February 28, 1998, Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio and Cash Portfolio had net assets of $168,183,226;
$46,711,943; $603,202,130 and $391,807,519, respectively.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
RATIO TO AVERAGE NET
ASSETS
BEGINNING DISTRIBUTIONS
NET ASSET NET FROM NET ENDING NET NET
VALUE PER INVESTMENT INVESTMENT ASSET NET INVESTMENT
SHARE INCOME INCOME VALUE PER EXPENSES INCOME
----- ------ ------ SHARE -------- ------
-----
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.01 (0.01) $1.00 0.20%(2) 2.13%(2)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.02 (0.02) $1.00 0.47%(2) 4.86%(2)
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(2) 4.76%(2)
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.32%(2) 2.92%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.01 (0.01) $1.00 0.20%(2) 1.76%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.03 (0.03) $1.00 0.47%(2) 5.23%(2)
October 1, 1996 to August 31, 1997 1.00 0.05 (0.05) 1.00 0.52%(2) 5.06%(2)%
</TABLE>
<TABLE>
<S> <C> <C> <C>
RATIO OF
NET ASSETS GROSS
END OF EXPENSES
PERIOD TO AVERAGE
TOTAL (000S NET ASSETS
RETURN OMITTED) (1)
------ -------- -----
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)0.55% 60,926 0.35%(2)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)2.43% 46,519 0.78%(2)
April 1, 1997 to August 31, 1997 2.01% 44,116 0.95%(2)
Year Ended March 31, 1997 4.80% 43,975 0.99%
Year Ended March 31, 1996 5.18% 43,103 1.06%
Year Ended March 31, 1995 4.45% 36,329 1.10%
Year Ended March 31, 1994 2.83% 26,505 1.17%
July 1, 1992 to March 31, 1993 3.13%(2) 4,687 2.43%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) 0.46% 4,952 1.33%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)2.62% 13,034 0.89%(2)
October 1, 1996 to August 31, 1997 4.70% 12,076 1.22%(2)
</TABLE>
(1) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects
the expense ratio in the absence of any waivers and reimbursements for the
Fund and its respective Portfolio.
(2) Annualized.
4
<PAGE>
3. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of each Fund except Daily Assets Municipal Fund is
to provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of Daily
Assets Municipal Fund is to provide high current income which is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity.
THERE CAN BE NO ASSURANCE THAT ANY FUND OR PORTFOLIO WILL ACHIEVE ITS
INVESTMENT OBJECTIVE OR MAINTAIN A STABLE NET ASSET VALUE.
Each Fund currently seeks to achieve its investment objective by investing
all of its investable assets in its corresponding Portfolio, which has the same
investment objective and substantially similar investment policies. Therefore,
although the following discusses the investment policies of the Portfolios (and
the responsibilities of Core Trust's board of trustees (the "Core Trust
Board")), it applies equally to the Funds (and the Trust's board of trustees
(the "Board")).
INVESTMENT POLICIES
Each Portfolio invests only in high quality, short-term money market
instruments that are determined by FIA, pursuant to procedures adopted by the
Core Trust Board, to be eligible for purchase and to present minimal credit
risks. High quality instruments include those that (1) are rated (or, if
unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in the highest rating category by two nationally recognized
statistical rating organizations ("NRSROs") or, if only one NRSRO has issued a
rating, by that NRSRO or (2) are otherwise unrated and determined by FIA to be
of comparable quality. A description of the rating categories of certain NRSROs,
such as Standard & Poor's and Moody's Investors Service, Inc., is contained in
the SAI.
Each Portfolio invests only in U.S. dollar-denominated instruments that
have a remaining maturity of 397 days or less (as calculated under Rule 2a-7)
and maintains a dollar-weighted average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, each Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. As used herein, "U.S. Government
Securities" means obligations issued or guaranteed as to principal and interest
by the United States government, its agencies or instrumentalities and "Treasury
Securities" means U.S. Treasury bills and notes and other U.S. Government
Securities which are guaranteed as to principal and interest by the U.S.
Treasury.
In the case of municipal securities, when the assets and revenues of an
issuer are separate from those of the government creating the issuer and a
security is backed only by the assets and revenues of the issuer, the issuer and
not the creating government is deemed to be the sole issuer of the security.
Similarly, in the case of a security issued by or on behalf of public
authorities to finance various privately operated facilities that is backed only
by the assets and revenues of the non-governmental user, the non-governmental
user will be deemed to be the sole issuer of the security.
Yields on money market securities are dependent on a variety of factors,
including the general conditions of the money markets and the fixed income
markets in general, the size of a particular offering, the maturity of the
obligation and the rating of the issue. A Fund's yield will tend to fluctuate
inversely with prevailing market interest rates. For instance, in periods of
falling market interest rates, yields will tend to be somewhat higher. Although
each Portfolio only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at
5
<PAGE>
maturity. All money market instruments, including U.S. Government Securities and
municipal securities, can change in value when there is a change in interest
rates, the issuer's actual or perceived creditworthiness or the issuer's ability
to meet its obligations. The achievement of a Fund's investment objective is
dependent in part on the continuing ability of the issuers of the securities in
which the Portfolio invests to meet their obligations for the payment of
principal and interest when due.
DAILY ASSETS TREASURY OBLIGATIONS FUND
Treasury Cash Portfolio seeks to attain its investment objective by
investing substantially all of its assets in Treasury Securities and in
repurchase agreements backed by Treasury Securities.
DAILY ASSETS GOVERNMENT FUND
Government Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities. The Portfolio
invests with a view toward providing income that is generally considered exempt
from state and local income taxes.
Among the U.S. Government Securities in which the Portfolio may invest are
U.S. Treasury Securities and obligations of the Farm Credit System, Farm Credit
System Financial Assistance Corporation, Federal Financing Bank, Federal Home
Loan Banks, General Services Administration, Student Loan Marketing Association,
and Tennessee Valley Authority. Income on these obligations and the obligations
of certain other agencies and instrumentalities is generally not subject to
state and local income taxes by Federal law. In addition, the income received by
Fund shareholders that is attributable to these investments will also be exempt
in most states from state and local income taxes. Shareholders should determine
through consultation with their own tax advisers whether and to what extent
dividends payable by the Fund from interest received with respect to its
investments will be considered to be exempt from state and local income taxes in
the shareholder's state. Shareholders similarly should determine whether the
capital gain and other income, if any, payable by the Fund will be subject to
state and local income taxes in the shareholder's state. See "Distributions and
Tax Matters."
The U.S. Government Securities in which the Portfolio may invest include
securities supported primarily or solely by the creditworthiness of the issuer.
There is no guarantee that the U.S. government will support securities not
backed by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than securities backed by the U.S. government's full faith
and credit.
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Government Cash Portfolio seeks to attain its investment objective by
investing substantially all of its assets in U.S. Government Securities and in
repurchase agreements backed by U.S. Government Securities. The U.S. Government
Securities in which the Portfolio may invest include Treasury Securities and
securities supported primarily or solely by the creditworthiness of the issuer,
such as securities of the Federal National Mortgage Association, Federal Home
Loan Banks and Student Loan Marketing Association. There is no guarantee that
the U.S. Government will support securities not backed by its full faith and
credit. Accordingly, although these securities have historically involved little
risk of loss of principal if held to maturity, they may involve more risk than
securities backed by the U.S. Government's full faith and credit.
DAILY ASSETS CASH FUND
Cash Portfolio seeks to attain its investment objective by investing in a
broad spectrum of money market instruments. The Portfolio may invest in (1)
obligations of domestic financial institutions, (2) U.S. Government Securities
(see
6
<PAGE>
"Investment Objectives and Policies - Daily Assets Government Fund") and (3)
corporate debt obligations of domestic issuers.
Financial institution obligations include negotiable certificates of
deposit, bank notes, bankers' acceptances and time deposits of banks (including
savings banks and savings associations) and their foreign branches. The
Portfolio limits its investments in bank obligations to banks which at the time
of investment have total assets in excess of one billion dollars. Certificates
of deposit represent an institution's obligation to repay funds deposited with
it that earn a specified interest rate over a given period. Bank notes are debt
obligations of a bank. Bankers' acceptances are negotiable obligations of a bank
to pay a draft which has been drawn by a customer and are usually backed by
goods in international trade. Time deposits are non-negotiable deposits with a
banking institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" that are restricted as to
disposition under the Federal securities laws ("restricted securities"). Any
sale of these securities may not be made absent registration under the
Securities Act of 1933 or the availability of an appropriate exemption
therefrom. Some of these restricted securities, however, are eligible for resale
to institutional investors, and accordingly, a liquid market may exist for them.
Pursuant to guidelines adopted by the Core Trust Board, the investment adviser
will determine whether each such investment is liquid.
DAILY ASSETS MUNICIPAL FUND
Municipal Cash Portfolio seeks to attain its investment objective by
investing substantially all of its assets in municipal securities. The Portfolio
attempts to maintain 100% of its assets invested in federally tax-exempt
municipal securities; during periods of normal market conditions the Portfolio
will have at least 80% of its net assets invested in federally tax-exempt
instruments the income from which may be subject to the federal alternative
minimum tax ("AMT").
The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.
THE SHORT-TERM MUNICIPAL SECURITIES MARKET. It is anticipated that a
substantial amount of the municipal securities held by the Portfolio will be
supported by credit and liquidity enhancements, such as letters of credit (which
are not covered by federal deposit insurance) or put or demand features of third
party financial institutions, generally domestic and foreign banks. Accordingly,
the credit quality and liquidity of the Portfolio will be dependent in part upon
the credit quality of the banks supporting the Portfolio's investments. This
will result in exposure to risks pertaining to the banking industry, including
the foreign banking industry. These risks include a sustained increase in
interest rates, which can adversely affect the availability and cost of a bank's
lending activities; exposure to credit losses during times of economic decline;
concentration of loan portfolios in certain industries; regulatory developments;
and competi-
7
<PAGE>
tion among financial institutions. Brokerage firms and insurance companies also
provide certain liquidity and credit support. The Portfolio's policy is to
purchase municipal securities with third party credit or liquidity support only
after FIA has considered the creditworthiness of the financial institution
providing the support and believes that the security presents minimal credit
risk.
The Portfolio may purchase long term municipal securities with various
maturity shortening provisions. For instance, variable rate demand notes
("VRDN") are municipal bonds with maturities of up to 40 years that are sold
with a demand feature (an option for the holder of the security to sell the
security back to the issuer) which may be exercised by the security holder at
predetermined intervals, usually daily or weekly. The interest rate on the
security is typically reset by a remarketing or similar agent at prevailing
interest rates. VRDNs may be issued directly by the municipal issuer or created
by a bank, broker-dealer or other financial institution by selling a previously
issued long-term bond with a demand feature attached. Similarly, tender option
bonds (also referred to as certificates of participation) are municipal
securities with relatively long original maturities and fixed rates of interest
that are coupled with an agreement of a third party financial institution under
which the third party grants the security holders the option to tender the
securities to the institution and receive the face value thereof. The option may
be exercised at periodic intervals, usually six months to a year. As
consideration for providing the option, the financial institution receives a fee
equal to the difference between the underlying municipal security's fixed rate
and the rate, as determined by a remarketing or similar agent, that would cause
the securities, coupled with the tender option, to trade at par on the date of
the interest rate determination. These bonds effectively provide the holder with
a demand obligation that bears interest at the prevailing short-term municipal
securities interest rate.
The Portfolio also may acquire "puts" on municipal securities it purchases.
A put gives the Portfolio the right to sell the municipal security at a
specified price at any time before a specified date. The Portfolio will acquire
puts only to enhance liquidity, shorten the maturity of the related municipal
security or permit the Portfolio to invest its funds at more favorable rates.
Generally, the Portfolio will buy a municipal security that is accompanied by a
put only if the put is available at no extra cost. In some cases, however, the
Portfolio may pay an extra amount to acquire a put, either in connection with
the purchase of the related municipal security or separately from the purchase
of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
MUNICIPAL BONDS. Municipal bonds are long term fixed-income securities.
"General obligation" bonds are secured by a municipality's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
"Revenue" bonds are
8
<PAGE>
usually payable only from the revenues derived from a particular facility or
class of facilities or, in some cases, from the proceeds of a special excise or
other tax, but not from general tax revenues. Under a "moral obligation" bond
(which is normally issued by special purpose public authorities), if the issuer
is unable to meet its obligations under the bonds from current revenues, it may
draw on a reserve fund that is backed by the moral commitment (but not the legal
obligation) of the state or municipality that created the issuer. The Portfolio
may invest in industrial development bonds, which in most cases are revenue
bonds. The payment of the principal and interest on these bonds is dependent
solely on the ability of an initial or subsequent user of the facilities
financed by the bonds to meet its financial obligations and the pledge, if any,
of real and personal property so financed as security for such payment.
MUNICIPAL NOTES AND LEASES. Municipal notes, which may be either "general
obligation" or "revenue" securities, are short-term fixed income securities
intended to fulfill short-term capital needs of a municipality. Municipal
leases, which may take various forms, are issued by municipalities to acquire a
wide variety of equipment and facilities. Municipal leases frequently have
special risks not normally associated with other municipal securities. Municipal
leases (which normally provide for title to the leased assets to pass eventually
to the government issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
PARTICIPATION INTERESTS. The Portfolio may purchase participation interests
in municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.
TAXABLE INVESTMENTS. The Portfolio may invest up to 20% of the value of its
net assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain
investment limitations, as described in the SAI, are fundamental and therefore
may not be changed without approval of the holders of a majority of the Fund's
or Portfolio's, as applicable, outstanding voting securities (as defined in the
1940 Act). Except as otherwise indicated herein or in the SAI, investment
policies of a Fund or a Portfolio may be changed by the applicable board of
trustees without shareholder approval. Each Portfolio is permitted to hold cash
in any amount pending investment in securities and may invest in other
investment companies that intend to comply with Rule 2a-7 and have substantially
similar investment objectives and policies. A further description of the Funds'
and the Portfolios' investment policies is contained in the SAI.
BORROWING. Each Portfolio may borrow money for temporary or emergency
purposes (including the meeting of redemption requests), but not in excess of 33
1/3% of the value of the Portfolio's total assets. Borrowing for purposes other
than meeting redemption requests will not
9
<PAGE>
exceed 5% of the value of the Portfolio's total assets.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or
liquidity by entering into repurchase agreements. Repurchase agreements are
transactions in which a Portfolio purchases a security and simultaneously
commits to resell that security to the seller at an agreed-upon price on an
agreed-upon future date, normally one to seven days later. The resale price
reflects a market rate of interest that is not related to the coupon rate or
maturity of the purchased security. The Portfolios' custodian holds the
underlying collateral, which is maintained at not less than 100% of the
repurchase price. Repurchase agreements involve certain credit risks not
associated with direct investment in securities. Each Portfolio, however,
intends to enter into repurchase agreements only with sellers which FIA believes
present minimal credit risks in accordance with guidelines established by the
Core Trust Board. In the event that a seller defaulted on its repurchase
obligation, however, a Portfolio might suffer a loss.
LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more
than 10% of its net assets in illiquid securities, including repurchase
agreements not entitling the Portfolio to payment of principal within seven
days. There may not be an active secondary market for securities held by a
Portfolio. The value of securities that have a limited market tend to fluctuate
more than those that have an active market. FIA monitors the liquidity of each
Portfolio's investments, but there can be no guarantee that an active secondary
market will exist.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. In order to assure itself of
being able to obtain securities at prices which FIA believes might not be
available at a future time, FIA may purchase securities on a when-issued or
delayed delivery basis. When these transactions are negotiated, the price or
yield is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Securities so purchased are subject
to market price fluctuation and no interest on the securities accrues to a
Portfolio until delivery and payment take place. Accordingly, the value of the
securities on the delivery date may be more or less than the purchase price.
Commitments for when-issued or delayed delivery transactions will be entered
into only when a Portfolio has the intention of actually acquiring the
securities, but the Portfolio may sell the securities before the settlement date
if deemed advisable. Failure by the other party to deliver a security purchased
by a Portfolio may result in a loss or missed opportunity to make an alternative
investment. As a result of entering into forward commitments, the Funds are
exposed to greater potential fluctuations in the value of their assets and net
asset values per share.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which each
Portfolio invest may have variable or floating rates of interest. These
securities pay interest at rates that are adjusted periodically according to a
specified formula, usually with reference to some interest rate index or market
interest rate. The interest paid on these securities is a function primarily of
the index or market rate upon which the interest rate adjustments are based.
Those securities with ultimate maturities of greater than 397 days may be
purchased only in accordance with the provisions of Rule 2a-7. Under that Rule,
only those long-term instruments that have demand features which comply with
certain requirements and certain U.S. Government Securities may be purchased.
Similar to fixed rate debt instruments, variable and floating rate instruments
are subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose
interest rate is adjusted based on a long-term interest rate or index, on more
than one interest rate or index, or on an
10
<PAGE>
interest rate or index that materially lags behind short-term market rates
(these prohibited securities are often referred to as "derivative" securities).
All variable and floating rate securities purchased by a Portfolio will have an
interest rate that is adjusted based on a single short-term rate or index, such
as the Prime Rate.
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government
Cash Portfolio invests only in instruments which, if held directly by a bank or
bank holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. These Portfolios do not intend to hold in their portfolio any
securities or instruments that would be subject to restriction as to amount held
by a national bank under Title 12, Section 24 (Seventh) of the United States
Code. In addition, these Portfolios limit their investments to those permissible
for Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act and the applicable rules and regulations of the National Credit
Union Administration. Government Cash Portfolio limits its investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage and to investments that permit Fund
shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and
the business of Core Trust is managed under the direction the Core Trust Board.
The Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The Core Trust Board
performs similar functions for the Portfolios and Core Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust.
ADMINISTRATION AND DISTRIBUTION
Subject to the supervision of the Board, FAdS supervises the overall
management of the Trust, including overseeing the Trust's receipt of services,
advising the Trust and the Trustees on matters concerning the Trust and its
affairs, and providing the Trust with general office facilities and certain
persons to serve as officers. For these services and facilities, FAdS receives a
fee at an annual rate of 0.05% of the daily net assets of each Fund. FAdS also
serves as administrator of the Portfolios and provides administrative services
for each Portfolio that are similar to those provided to the Funds. For its
administrative services to the Portfolios, FAdS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("FAcS") performs portfolio accounting services for the Funds and
Portfolios pursuant to agreements with the Trust and Core Trust and is paid a
separate fee for these services.
FFSI acts as the agent of the Trust in connection with the offering of
shares of the Funds. FFSI is a registered broker-dealer and is a member of the
National Association of Securities Dealers, Inc. In order to facilitate the
distribution of Investor Shares, the Trust has adopted a plan of distribution
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to each
Fund's Investor Shares. Under the Plan, FFSIreceives a fee at an annual rate of
0.15% of the average daily net assets of each Fund attributable to Investor
Shares as compensation for FFSIs services as distributor. From this amount, FFSI
may make payments to various financial institutions, including broker-dealers,
banks and trust companies as compensation for services or reimbursement of
expenses in connection with the distribution of shares or the provision of
various shareholder services. If the distribution related expenses of FFSI
exceed its Rule 12b-1 fees for any Fund, the Fund
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<PAGE>
will not be obligated to pay Forum an additional amount and if Forum's
distribution related expenses are less than its Rule 12b-1 fees, Forum will
realize a profit.
FAdS, FFSI, FIA, FAcS and FSS are members of the Forum Financial Group of
Companies and together provide a full range of services to the investment
company and financial services industry. As of the date of this Prospectus, each
of these companies was controlled by John Y. Keffer, President and Chairman of
the Trust and FAdS and FFSI provide administration services to registered
investment companies with assets of approximately $30 billion.
INVESTMENT ADVISER
Subject to the general supervision of the Core Trust Board, FIA makes
investment decisions for each Portfolio and monitors the Portfolios'
investments. FIA, which is located at Two Portland Square, Portland, Maine
04101, provides investment advisory services to six other mutual funds. Prior to
January 2, 1998, Linden Asset Management, Inc. ("Linden") served as investment
adviser to Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio
and provided professional management of those Portfolios' investments, and Forum
Advisors, Inc. served as investment adviser to Government Portfolio and provided
professional management of that Portfolio's investments. Linden and Forum
Advisors, Inc. also acted as investment subadvisors to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into a new company named Forum Investment
Advisors, LLC.
Anthony R. Fischer, Jr. is primarily responsible for the day-to-day
management of the Portfolios. Mr. Fischer was the sole stockholder and President
of Linden Asset Management, Inc. from 1992 until January 2, 1998. He has been
primarily responsible for the day-to-day management of Treasury Cash Portfolio,
Government Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio since
their inception. Mr. Fischer has over twenty-five years experience in the money
market industry and during that time has managed money market investment
portfolios for various banks and investment firms.
For its services, FIA receives an advisory fee at an annual rate of 0.05%
of Government Portfolio's and Municipal Cash Portfolio's average daily net
assets For services provided to Treasury Cash Portfolio, Government Cash
Portfolio and Cash Portfolio, FIA receives an advisory fee based upon the total
average daily net assets of those Portfolios ("Total Portfolio Assets"). FIA's
fee is calculated at an annual rate on a cumulative basis as follows: 0.06% of
the first $200 million of Total Portfolio Assets, 0.04% of the next $300 million
of Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. A
Fund's expenses include the Fund's pro rata portion of the advisory fee paid by
the corresponding Portfolio.
SHAREHOLDER SERVICING
TRANSFER AND DIVIDEND DISBURSING AGENT. Shareholder inquiries and
communications concerning the Funds may be directed to FSS at the address and
telephone numbers on the first page of this Prospectus. FSS maintains an account
for each shareholder of the Funds (unless such accounts are maintained by
sub-transfer agents or processing agents) and performs other transfer agency and
related functions. FSS is authorized to subcontract any or all of its functions
to one or more qualified sub-transfer agents or processing agents, which may be
its affiliates, who agree to comply with the terms of FSS's agreement with the
Trust. FSS may pay those agents for their services, but no such payment will
increase FSS's compensation from the Trust. For its services, FSS is paid a fee
at an annual rate of 0.25% of the average daily net assets of each Fund
attributable to Investor Shares plus $12,000 per year for each Fund and certain
account and additional class charges and is reimbursed for certain expenses
incurred on behalf of the Funds.
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<PAGE>
SHAREHOLDER SERVICE AGENTS. The Trust has adopted a shareholder service
plan ("Shareholder Service Plan") which provides that, as compensation for
FAdS's service activities with respect to the Investor Shares, the Trust shall
pay FAdS a fee at an annual rate of 0.25% of the average daily net assets
attributable to Investor Shares. FAdS is authorized to enter into shareholder
servicing agreements pursuant to which a shareholder servicing agent, on behalf
of its customers, performs certain shareholder services not otherwise provided
by FSS. As compensation for its services, the shareholder servicing agent is
paid a fee by FAdS of up to 0.25% of the average daily net assets of Investor
Shares owned by investors for which the shareholder service agent maintains a
servicing relationship. Certain shareholder servicing agents may be subtransfer
or processing agents.
Among the services provided by shareholder servicing agents are answering
customer inquiries regarding the manner in which purchases, exchanges and
redemptions of shares of the Trust may be effected and other matters pertaining
to the Trust's services; providing necessary personnel and facilities to
establish and maintain shareholder accounts and records; assisting shareholders
in arranging for processing purchase, exchange and redemption transactions;
arranging for the wiring of funds; guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request.
EXPENSES OF THE FUNDS
Each Fund's expenses comprise Trust expenses attributable to the Fund,
which are charged to the Fund, and expenses not attributable to a particular
fund of the Trust, which are allocated among the Fund and all other funds of the
Trust in proportion to their average net assets. Each service provider in its
sole discretion may elect to waive (or continue to waive) all or any portion of
its fees, which are accrued daily and paid monthly, and may reimburse a Fund for
certain expenses. Any such waivers or reimbursements would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.
Each Fund's expenses include the service fees described in this Prospectus,
the fees and expenses of the Board, applicable insurance and bonding expenses
and state and SEC registration fees. Each Fund bears its pro rata portion of the
expenses of the Portfolio in which it invests along with all other investors in
the Portfolio.
5. PURCHASES AND REDEMPTIONS OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through FSS, which accepts
orders for purchases and redemptions from shareholders of record and new
investors. Shareholders of record will receive from the Trust periodic
statements listing all account activity during the statement period. The Trust
reserves the right in the future to modify, limit or terminate any shareholder
privilege, upon appropriate notice to shareholders, and may charge a fee for
certain shareholder services, although no such fees are currently contemplated.
PURCHASES. Fund shares are sold at a price equal to their net asset value
next-determined after receipt of an order in proper form, on each Fund Business
Day. Fund shares are issued immediately after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by FSS. Each Fund's net asset value is calculated at 4:00
p.m., Eastern time.
Fund shares become entitled to receive distributions on the day the
purchase order is accepted
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<PAGE>
if the order and payment are received by FSS as follows:
<TABLE>
<S> <C> <C>
Order Must be Received by Payment Must be Received by
------------------------- ---------------------------
Daily Assets Government Fund and
Daily Assets Municipal Fund 12:00 p.m., Eastern time 4:00 p.m., Eastern time
All other Funds 2:00 p.m., Eastern time 4:00 p.m., Eastern time
</TABLE>
If a purchase order is transmitted to FSS (or the wire is received) after
the times listed above, the investor will not receive a distribution on that
day. On days that the New York Stock Exchange or Federal Reserve Bank of San
Francisco (Boston in the case of Daily Assets Government Fund) closes early or
the Public Securities Association recommends that the government securities
markets close early, the Trust may advance the time by which FSS must receive
completed wire purchase orders and the cut-off times set forth above.
Each Fund reserves the right to reject any subscription for the purchase of
Fund shares. Stock certificates are issued only to shareholders of record upon
their written request and no certificates are issued for fractional shares.
REDEMPTIONS. Fund shares may be redeemed without charge at their net asset
value on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following receipt by FSS of the
redemption order in proper form (and any supporting documentation which FSS may
require). Shares redeemed are not entitled to receive distributions declared on
or after the day on which the redemption becomes effective.
For wire redemption orders received after 12:00 p.m., Eastern time, in the
case of Daily Assets Government Fund and Daily Assets Municipal Fund, and after
2:00 p.m., Eastern Time, in the case of each other Fund, FSS will wire proceeds
the next Fund Business Day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco (Boston in the case of Daily Assets Government
Fund) closes early or the Public Securities Association recommends that the
government securities markets close early, the Trust may advance the time by
which FSS must receive completed wire redemption orders.
Normally, redemption proceeds are paid immediately, but in no event later
than seven days, following acceptance of a redemption order. Proceeds of
redemption requests (and exchanges), however, will not be paid unless any check
used to purchase the shares has been cleared by the shareholder's bank, which
may take up to 15 calendar days. This delay may be avoided by investing through
wire transfers. Unless otherwise indicated, redemption proceeds normally are
paid by check mailed to the shareholder's record address. The right of
redemption may not be suspended nor the payment dates postponed for more than
seven days after the tender of the shares to the Fund except when the New York
Stock Exchange is closed (or when trading thereon is restricted) for any reason
other than its customary weekend or holiday closings or under any emergency or
other circumstance as determined by the SEC.
Proceeds of redemptions normally are paid in cash. However, payments may be
made wholly or partially in portfolio securities if the Board determines that
payment in cash would be detrimental to the best interests of the Fund.
The Trust employs reasonable procedures to ensure that telephone orders are
genuine (which include recording certain transactions and the use of shareholder
security codes). If the Trust did not employ such procedures, it could be liable
for any losses due to unauthorized or fraudulent telephone instructions.
Shareholders should verify the accuracy of telephone instructions immediately
upon receipt of confirmation statements. During times of drastic economic or
market changes, tele-
14
<PAGE>
phone redemption and exchange privileges may be difficult to implement. In the
event that a shareholder is unable to reach FSS by telephone, requests may be
mailed or hand-delivered to FSS.
Due to the cost to the Trust of maintaining smaller accounts, the Trust
reserves the right to redeem, upon not less than 60 days' written notice, all
shares in any Fund account with an aggregate net asset value of less than
$5,000.
PURCHASE AND REDEMPTION PROCEDURES
Investors may open an account by completing the application at the back of
this Prospectus or by contacting FSS at the address on the first page of this
Prospectus. To request shareholder services not referenced on the account
application and to change information regarding a shareholder's account (such as
addresses), investors should request an Optional Services Form from FSS.
INITIAL PURCHASE OF SHARES
There is a $10,000 minimum for initial investments in each Fund ($2,000 for
individual retirement accounts, $2,500 for exchanges).
BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to FSS. Checks are accepted at full value subject
to collection. Payment by a check drawn on any member of the Federal Reserve
System can normally be converted into Federal Funds within two business days
after receipt of the check. Checks drawn on some non-member banks may take
longer.
For individual or Uniform Gift to Minors Act accounts, the check or money
order used to purchase shares of a Fund must be made payable to "Forum Funds" or
to one or more owners of that account and endorsed to Forum Funds. For
corporation, partnership, trust, 401(k) plan or other non-individual type
accounts, the check used to purchase shares of a Fund must be made payable on
its face to "Forum Funds." No other method of payment by check will be accepted.
All purchases must be paid in U.S. dollars; checks must be drawn on U.S. banks.
Payment by Traveler's Checks is prohibited.
BY BANK WIRE. To make an initial investment in a Fund using the wire system
for transmittal of money among banks, an investor should first telephone the
Trust at 800-94FORUM (800-943-6786) or (207) 879-0001 to obtain an account
number. The investor should then instruct a bank to wire the investor's money
immediately to:
BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Shareholder Services, LLC
Account #: 541-54171
Re: [Name of Fund] - Investor Shares
Account #:________________________
Account Name:_____________________
The investor should then promptly complete and mail the account
application. Any investor planning to wire funds should instruct a bank early in
the day so the wire transfer can be accomplished the same day. There may be a
charge imposed by the bank for transmitting payment by wire, and there also may
be a charge for the use of Federal Funds.
THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed
through certain broker-dealers, banks or other financial institutions
("Processing Organizations"), including affiliates of FSS. Processing
Organizations may charge their customers a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
a Fund. The Trust is not responsible for the failure of any Processing
Organization to promptly forward these requests.
Investors who purchase or redeem shares in this manner will be subject to
the procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different
15
<PAGE>
from, those applicable to shareholders who invest in a Fund directly. These
investors should acquaint themselves with their institution's procedures and
should read this Prospectus in conjunction with any materials and information
provided by their institution. Investors who purchase Fund shares through a
Processing Organization may or may not be the shareholder of record and, subject
to their institution's and the Fund's procedures, may have Fund shares
transferred into their name. Certain Processing Organizations may enter purchase
orders with payment to follow.
The Trust may confirm purchases and redemptions of a Processing
Organization's customers directly to the Processing Organization, which in turn
will provide its customers with such confirmations and periodic statements as
may be required by law or agreed to between the Processing Organization and its
customers.
SUBSEQUENT PURCHASES OF SHARES
There is a $500 minimum for subsequent purchases. Subsequent purchases may
be made by mailing a check, by sending a bank wire or through a financial
institution as indicated above. Shareholders using the wire system for purchase
should first telephone the Trust at 800-94FORUM (800-943-6786) or (207) 879-0001
to notify it of the wire transfer. All payments should clearly indicate the
shareholder's name and account number.
Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to FSS.
REDEMPTION OF SHARES
Shareholders who wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several days after a shareholder's application is received.
Shares for which certificates have been issued may not be redeemed by telephone.
BY MAIL. Shareholders may make a redemption in any amount by sending a
written request to FSS accompanied by any stock certificate that may have been
issued to the shareholder. All written requests for redemption must be signed by
the shareholder with signature guaranteed and all certificates submitted for
redemption must be endorsed by the shareholder with signature guaranteed.
BY TELEPHONE. A shareholder who has elected telephone redemption privileges
may make a telephone redemption request by calling FSS at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number. In response to
the telephone redemption instruction, the Fund will mail a check to the
shareholder's record address or, if the shareholder has elected wire redemption
privileges, wire the proceeds.
BY BANK WIRE. For redemptions of more than $5,000, a shareholder who has
elected wire redemption privileges may request the Fund to transmit the
redemption proceeds by Federal Funds wire to a bank account designated on the
shareholder's account application. To request bank wire redemptions by
telephone, the shareholder also must have elected the telephone redemption
privilege. Redemption proceeds are
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transmitted by wire on the day the redemption request in proper form is received
by FSS.
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 FSS.
OTHER REDEMPTION MATTERS. To protect shareholders and the Funds against
fraud, signatures on certain requests must have a signature guarantee. Requests
must be made in writing and include a signature guarantee for any of the
following transactions: (1) any endorsement on a stock certificate; (2) written
instruction to redeem Shares whose value exceeds $50,000; (3) instructions to
change a shareholder's record name; (4) redemption in an account in which the
account address or account registration has changed within the last 30 days; (5)
the proceeds are not being sent to the address of record, preauthorized bank
account, or preauthorized brokerage firm account; (6) proceeds are to be paid to
someone other than the registered owners or to an account with a different
registration; (7) change of automatic investment or redemption, dividend
election, telephone redemption or exchange option election or any other option
election in connection with the shareholder's account.
Signature guarantees may be provided by any eligible institution acceptable
to FSS, including a bank, a broker, a dealer, a national securities exchange, a
credit union, or a savings association that is authorized to guarantee
signatures. Whenever a signature guarantee is required, the signature of each
person required to sign for the account must be guaranteed. A notarized
signature is not sufficient.
FSS will deem a shareholder's account "lost" if correspondence to the
shareholder's address of record is returned as undeliverable, unless FSS
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 FSS will be reinvested and
the checks will be canceled.
EXCHANGES
Shareholders may exchange their shares for Investor Shares of any other
Fund, for shares of the other funds of the Trust or for shares of any other
mutual fund administered by FAdS that participates with the Funds in the
exchange program.. Exchanges are subject to the fees charged by, and the
restrictions listed in the prospectus for, the fund into which a shareholder is
exchanging, including minimum investment requirements. The minimum amount
required to open an account in a Fund through an exchange from another fund
(other than the Funds) is $2,500. The Funds do not charge for exchanges, and
there is currently no limit on the number of exchanges a shareholder may make,
but each Fund reserves the right to limit excessive exchanges by any
shareholder. See "Additional Purchase and Redemption Information" in the SAI.
Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the new account. Shareholders may only exchange into a fund if
that fund's shares may legally be sold in the shareholder's state of residence.
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The Trust (and Federal tax law) treats an exchange as a redemption of the
shares owned and the purchase of the shares of the fund being acquired.
Accordingly, a shareholder may realize a capital gain or loss with respect to
the shares redeemed. Redemptions and purchases are effected at the respective
net asset values of the two funds as next determined following receipt of proper
instructions and all necessary supporting documents by the fund whose shares are
being exchanged.
If a shareholder exchanges into a fund that imposes a sales charge, that
shareholder is required to pay the difference between that fund's sales charge
and any sales charge the shareholder has previously paid in connection with the
shares being exchanged. For example, if a shareholder paid a 2% sales charge in
connection with the purchase of the shares of a fund and then exchanged those
shares into another fund with a 3% sales charge, that shareholder would pay an
additional 1% sales charge on the exchange. Shares acquired through the
reinvestment of dividends and distributions are deemed to have been acquired
with a sales charge rate equal to that paid on the shares on which the dividend
or distribution was paid. The exchange privilege may be modified materially or
terminated by the Trust at any time upon 60 days' notice to shareholders.
BY MAIL. Exchanges may be accomplished by written instruction to FSS
accompanied by any stock certificate that may have been issued to the
shareholder. All written requests for exchanges must be signed by the
shareholder (a signature guarantee is not required) and all certificates
submitted for exchange must be endorsed by the shareholder with signature
guaranteed.
BY TELEPHONE. Exchanges may be accomplished by telephone by any shareholder
who has elected telephone exchange privileges by calling FSS at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number.
INDIVIDUAL RETIREMENT ACCOUNTS
Each Fund (other than Daily Assets Municipal Fund) may be a suitable
investment vehicle for part or all of the assets held in individual retirement
accounts ("IRAs"). The minimum initial investment for IRAs is $2,000, and the
minimum subsequent investment is $500. There are limits on the amount of
tax-deductible contributions individuals may make into the various types of
IRAs. Individuals should consult their tax advisers with respect to their
specific tax situations as well as with respect to state and local taxes and
read any materials supplied by the Funds concerning Fund sponsored IRAs.
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and
paid monthly following the close of the last Fund Business Day of the month.
Each type of net capital gain realized by a Fund, if any, will be distributed
annually. Shareholders may choose to have all distributions reinvested in
additional shares of the Fund or received in cash. In addition, shareholders may
have all distributions of net capital gain reinvested in additional shares of
the Fund and distributions of net investment income paid in cash. All
distributions are treated in the same manner for Federal income tax purposes
whether received in cash or reinvested in shares of the Fund.
All distributions will be reinvested at the Fund's net asset value as of
the payment date of the dividend. All distributions are reinvested unless
another option is selected. All distributions not reinvested will be paid to the
shareholder in cash and may be paid more than seven days fol-
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lowing the date on which distribution would otherwise be reinvested.
TAXES
TAX STATUS OF THE FUNDS. Each Fund intends to qualify or continue to
qualify to be taxed as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended. Accordingly, no Fund will be liable for
Federal income taxes on the net investment income and capital gain distributed
to its shareholders. Because each Fund intends to distribute all of its net
investment income and net capital gain each year, the Funds should also avoid
Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Two different tax rates apply to net capital gain --
that is, the excess of net gain from capital assets held for more than one year
over net losses from capital assets held for not more than one year. One rate
(generally 28%) applies to net gain on capital assets held for more than one
year but not more than 18 months and a second rate (generally 20%) applies to
the balance of such net capital gains. Distributions of net capital gain will be
taxable to shareholders as such, regardless of how long a shareholder has held
shares in the Fund.
THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes
on their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
DAILY ASSETS MUNICIPAL FUND. Distributions paid by Daily Assets Municipal
Fund out of federally tax-exempt interest income earned by the Fund
("exempt-interest dividends") generally will not be subject to federal income
tax in the hands of the Fund's shareholders. Substantially all of the
distributions paid by the Fund are anticipated to be exempt-interest dividends.
Persons who are "substantial users" or "related persons" thereof of facilities
financed by private activity securities held by the Fund, however, may be
subject to federal income tax on their pro rata share of the interest income
from those securities and should consult their tax advisers before purchasing
Shares. Exempt-interest dividends are included in the "adjusted current
earnings" of corporations for purposes of the AMT.
Interest on indebtedness incurred by shareholders to purchase or carry
shares of the Fund generally is not deductible for federal income tax purposes.
Under rules for determining when borrowed funds are used for purchasing or
carrying particular assets, shares of the Fund may be considered to have been
purchased or carried with borrowed funds even though those funds are not
directly linked to the shares.
The income from the Municipal Cash Portfolio's investments may be subject
to the AMT. Interest on certain municipal securities issued to finance "private
activities" ("private activity securities") is a "tax preference item" for
purposes of the AMT applicable to certain individuals and corporations even
though such interest will continue to be fully tax-exempt for regular federal
income tax purposes. The Portfolio may purchase private activity securities, the
interest on which may constitute a "tax preference item" for purposes of the
AMT.
STATE AND LOCAL TAXES. Daily Assets Government Fund's investment policies
are structured to provide shareholders, to the extent permissible by Federal and
state law, with income that is exempt or excluded from income taxation at the
state and local level. Many states (by statute, judicial decision or
administrative action) do not tax dividends from a regulated investment company
that are attributable to interest on obligations of the U.S.
19
<PAGE>
Treasury and certain U.S. Government agencies and instrumentalities if the
interest on those obligations would not be taxable to a shareholder that held
the obligation directly. As a result, substantially all distributions paid by
the Fund to shareholders residing in certain states will be exempt or excluded
from state income taxes. A portion of the distributions paid by the other Funds
to shareholders may be exempt or excluded from state income taxes, but these
Funds are not managed to provide any specific amount of state tax-free income to
shareholders.
The exemption for federal income tax purposes of distributions derived from
interest on municipal securities does not necessarily result in an exemption
under the income or other tax laws of any state or local taxing authority.
Shareholders of Daily Assets Municipal Fund may be exempt from state and local
taxes on distributions of tax-exempt interest income derived from obligations of
the state and/or municipalities of the state in which they reside but may be
subject to tax on income derived from the municipal securities of other
jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in a Fund which may differ
from the federal income tax consequences described above.
GENERAL. Each Fund may be required by Federal law to withhold 31% of
reportable payments (which may include taxable distributions and redemption
proceeds) paid to individuals and certain other non-corporate shareholders.
Withholding is not required if a shareholder certifies that the shareholder's
social security or tax identification number provided to a Fund is correct and
that the shareholder is not subject to backup withholding.
Each Fund must include a portion of the original issue discount of
zero-coupon securities, if any, as income even though these securities do not
pay any interest until maturity. Because each Fund distributes all of its net
investment income, a Fund may have to sell portfolio securities to distribute
imputed income, which may occur at a time when the investment adviser would not
have chosen to sell such securities and which may result in a taxable gain or
loss.
Shortly after the close of each year, a statement is sent to each
shareholder of the Funds advising the shareholder of the portions of total
distributions paid to the shareholder that is (1) derived from each type of
obligation in which a Fund has invested, (2) derived from the obligations of
issuers in the various states and (3) exempt from federal income taxes. These
portions are determined for the entire year and on a monthly basis and, thus,
are an annual or monthly average, rather than a day-by-day determination for
each shareholder.
The foregoing is only a summary of some of the important Federal and state
tax considerations generally affecting the Funds and their shareholders. There
may be other Federal, state or local tax considerations applicable to a
particular investor. Prospective investors are urged to consult their tax
advisers.
7. OTHER INFORMATION
PERFORMANCE INFORMATION
Investor Shares' performance may be advertised. All performance information
is based on historical results, is not intended to indicate future performance
and, unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of
20
<PAGE>
the period. A Fund's compounded annualized yield assumes the reinvestment of
distributions paid by the Fund, and, therefore will be somewhat higher than the
annualized yield for the same period. A Fund may also quote tax-equivalent
yields, which show the taxable yields a shareholder would have to earn to equal
the Fund's tax-free yield, after taxes. A tax-equivalent yield is calculated by
dividing the Fund's tax-free yield by one minus a stated federal, state or
combined federal and state tax rate. Each class' performance will vary.
The Funds' advertisements may also reference ratings and rankings among
similar funds by independent evaluators such as Morningstar, Lipper Analytical
Services, Inc. or IBC Financial Data, Inc. In addition, the performance of the
Funds may be compared to recognized indices of market performance. The
comparative material found in a Fund's advertisements, sales literature, or
reports to shareholders may contain performance rankings. This material is not
to be considered representative or indicative of future performance.
BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a Processing
Organization or perform sub-transfer agent or similar services for the Trust and
its shareholders. If a bank or bank affiliate were prohibited from performing
all or a part of the foregoing services, its shareholder customers would be
permitted to remain shareholders of the Trust and alternative means for
continuing to service them would be sought.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 4:00
p.m., Eastern time, on each Fund Business Day by dividing the value of the
Fund's net assets (the value of its interest in the Portfolio and other assets
less its liabilities) by the number of shares outstanding at the time the
determination is made. In order to more easily maintain a stable net asset value
per share, each Portfolio's portfolio securities are valued at their amortized
cost (acquisition cost adjusted for amortization of premium or accretion of
discount) in accordance with Rule 2a-7. The Portfolios will only value their
portfolio securities using this method if the Core Trust Board believes that it
fairly reflects the market-based net asset value per share. The Portfolios'
other assets, if any, are valued at fair value by or under the direction of the
Core Trust Board.
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end, management investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc., which was incorporated in 1980. The
Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create classes of
shares within each series. There are currently sixteen series of the Trust.
Each share of each fund of the Trust and each class of shares has equal
distribution, liquidation and voting rights, and fractional shares have those
rights proportionately, except that expenses related to the distribution of the
shares of each class (and certain other expenses such as transfer agency and
administration expenses) are borne solely by those shares and each class votes
separately with respect to the provisions of any Rule 12b-1 plan which pertain
to the class and other matters for which separate class voting is appropriate
under applicable law. Generally, shares will be voted in the aggregate without
reference to a particular fund or class, except if the matter affects only one
fund or class or voting by fund or class is required by law, in which case
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<PAGE>
shares will be voted separately by fund or class, as appropriate. Delaware law
does not require the Trust to hold annual meetings of shareholders, and it is
anticipated that shareholder meetings will be held only when specifically
required by Federal or state law. Shareholders (and Trustees) have available
certain procedures for the removal of Trustees. There are no conversion or
preemptive rights in connection with shares of the Trust. All shares when issued
in accordance with the terms of the offering will be fully paid and
nonassessable. Shares are redeemable at net asset value, at the option of the
shareholders. A shareholder in a fund is entitled to the shareholder's pro rata
share of all distributions arising from that fund's assets and, upon redeeming
shares, will receive the portion of the fund's net assets represented by the
redeemed shares.
As of May 1, 1998, Babb & Co. may be deemed to have controlled Daily Assets
Treasury Obligations Fund and Daily Assets Government Obligations Fund, H.M.
Payson & Co. may be deemed to have controlled Daily Assets Government Fund and
Daily Assets Cash Fund and Allagash & Co. may be deemed to have controlled Daily
Assets Government Obligations Fund and Daily Assets Cash Fund, through
investment in the Funds by their customers. From time to time, these
shareholders or other shareholders may own a large percentage of Shares of a
Fund and accordingly, may be able to greatly affect (if not determine) the
outcome of a shareholder vote.
FUND STRUCTURE
OTHER CLASSES OF SHARES. In addition to Investor Shares, each Fund may
create and issue shares of other classes of securities. Each Fund currently has
two other classes of shares authorized, Institutional Shares and Institutional
Service Shares. Institutional Shares have an investment minimum of $1,000,000.
Institutional Service Shares are offered solely through banks, trust companies
and certain other financial institutions, and their affiliates and
correspondents, for investment of their funds or funds for which they act in a
fiduciary, agency or custodial capacity. Institutional Shares and Institutional
Service Shares incur less expenses than Investor Shares. See, "Additional
Information" below. Except for certain differences, each share of each class
represents an undivided, proportionate interest in a Fund. Each share of each
Fund is entitled to participate equally in distributions and the proceeds of any
liquidation of that Fund except that, due to the differing expenses borne by the
various classes, the amount of distributions will differ among the classes.
CORE TRUST STRUCTURE. Each Fund invests all of its assets in its
corresponding Portfolio of Core Trust, a business trust organized under the laws
of the State of Delaware in September 1994 and registered under the 1940 Act as
an open-end, management investment company. Accordingly, a Portfolio directly
acquires its own securities and its corresponding Fund acquires an indirect
interest in those securities. The assets of each Portfolio belong only to, and
the liabilities of the Portfolio are borne solely by, the Portfolio and no other
portfolio of Core Trust. Upon liquidation of a Portfolio, investors in the
Portfolio would be entitled to share pro rata in the net assets of the Portfolio
available for distribution to investors.
THE PORTFOLIOS. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, Daily
Assets Government Fund and Daily Assets Municipal Fund are the only investors
(other than FAdS or its affiliates) that have invested in Government Portfolio
and Municipal Cash Portfolio, respectively. Each of the other Portfolios has
another investor besides the Funds (and FAdS and its affiliates). All investors
in a Portfolio invest on the same terms and conditions as the Funds and will pay
a proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio is entitled to
22
<PAGE>
vote in proportion to the relative value of its interest in the Portfolio. On
most issues subject to a vote of investors, as required by the 1940 Act and
other applicable law, a Fund will solicit proxies from shareholders of the Fund
and will vote its interest in a Portfolio in proportion to the votes cast by its
shareholders. There can be no assurance that any issue that receives a majority
of the votes cast by a Fund's shareholders will receive a majority of votes cast
by all investors in the Portfolio.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a
Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. If a large investor other than a Fund redeemed its interest
in a Portfolio, the Portfolio's remaining investors (including the Fund) might,
as a result, experience higher pro rata operating expenses, thereby producing
lower returns. A Fund may withdraw its entire investment from a Portfolio at any
time, if the Board determines that it is in the best interests of the Fund and
its shareholders to do so. The Fund might withdraw, for example, if other
investors in the Portfolio, by a vote of shareholders, changed the investment
objective or policies of the Portfolio in a manner not acceptable to the Board
or not permissible by the Fund. A withdrawal could result in a distribution in
kind of portfolio securities (as opposed to a cash distribution) by the
Portfolio. If the Fund decided to convert those securities to cash, it usually
would incur transaction costs. If the Fund withdrew its investment from the
Portfolio, the Board would consider what action might be taken, including the
management of the Fund's assets in accordance with its investment objective and
policies by the investment adviser to the Portfolio or the investment of all of
the Fund's investable assets in another pooled investment entity having
substantially the same investment objective as the Fund. The inability of the
Fund to find a suitable replacement investment, in the event the Board decided
not to permit the Portfolio's investment adviser to manage the Fund's assets,
could have a significant impact on shareholders of the Fund.
ADDITIONAL INFORMATION. Each class of a Fund (and any other investment
company that invests in a Portfolio) may have a different expense ratio and
different sales charges, including distribution fees, and each class' (and
investment company's) performance will be affected by its expenses and sales
charges. For more information on any other class of shares of the Funds or
concerning any other investment companies that invest in a Portfolio, investors
may contact FFSI at 207-879-1900. If an investor invests through a financial
institution, the investor may also contact their financial institution to obtain
information about the other classes or any other investment company investing in
a Portfolio.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
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<PAGE>
[FORUM FUNDS ACCOUNT APPLICATION]
<PAGE>
[FORUM FUNDS ACCOUNT APPLICATION CONT.]
<PAGE>
[Picture graphics of map in background
and globe on right half of page.]
[FORUM LOGO]
SHAREHOLDER INFORMATION:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, ME 04112
207-879-0001 (IN PORTLAND, ME)
800-94FORUM (ELSEWHERE)
<PAGE>
FORUM FUNDS
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
(FORMERLY DAILY ASSETS TREASURY FUND)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
(FORMERLY DAILY ASSETS GOVERNMENT FUND)
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND
(FORMERLY DAILY ASSETS TAX-EXEMPT FUND)
<TABLE>
<S><C> <C>
Account Information and
Shareholder Servicing: Distributor:
Forum Shareholder Services, LLC Forum Financial Services, Inc.
P.O. Box 446 Two Portland Square
Portland, Maine 04112 Portland, Maine 04101
(207) 879-0001 (207) 879-1900
</TABLE>
- ------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
May 27, 1998
This Statement of Additional Information supplements the Prospectuses dated May
27, 1998, offering Investor Shares, Institutional Service Shares and
Institutional Shares of Daily Assets Treasury Obligations Fund, Daily Assets
Government Fund, Daily Assets Government Obligations Fund, Daily Assets Cash
Fund and Daily Assets Municipal Fund, five portfolios of the Trust, and should
be read only in conjunction with the applicable Prospectus, a copy of which may
be obtained by an investor without charge by contacting the Trust's Distributor
at the address listed above.
TABLE OF CONTENTS
Page
----
1. General 2
2. Investment Policies 3
3. Investment Limitations 8
4. Investment by Financial Institutions 11
5. Performance Data 12
6. Management 14
7. Determination of Net Asset Value 23
8. Portfolio Transactions 23
9. Additional Purchase and Redemption Information 24
10. Taxation 26
11. Other Information 26
12. Financial Statements 29
Appendix A - Description of Securities Ratings A-1
Appendix B - Performance Information B-1
Appendix C - Miscellaneous Tables C-1
Appendix D -Additional Advertising Materials D-1
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
1. GENERAL
THE TRUST
The Trust is registered with the SEC as an open-end, management, investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc. Forum Funds, Inc. was incorporated
on March 24, 1980 and assumed the name of Forum Funds, Inc. on March 16, 1987.
The Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create separate
classes of shares within each series. The Trust currently offers shares of 23
series. The series of the Trust are as follows:
Daily Assets Treasury Obligations Fund Payson Value Fund
Daily Assets Government Fund Payson Balanced Fund.
Daily Assets Government Obligations Fund Polaris Global Value Fund
Daily Assets Cash Fund Austin Global Equity Fund
Daily Assets Municipal Fund Oak Hall Equity Fund
Investors Bond Fund Quadra Growth Fund
TaxSaver Bond Fund Quadra Value Equity Fund
Investors High Grade Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Investors Index Fund
Investors Equity Fund
Investors Growth Fund
Small Company Opportunities Fund
International Fund
Emerging Markets Fund
DEFINITIONS
As used in this Statement of Additional Information, the following terms shall
have the meanings listed:
"FIA" means Forum Investment Advisors, LLC.
"Board" means the Board of Trustees of the Trust.
"Core Trust" means Core Trust (Delaware).
"Core Trust Board" means the Board of Trustees of Core Trust.
"FAdS" means Forum Administrative Services, LLC.
"FSS" means Forum Forum Shareholder Services, LLC
"FFSI" means Forum Financial Services, Inc.
"FAcS" means Forum Accounting Services, LLC.
"Fund" means Daily Assets Treasury Obligations Fund, Daily Assets Government
Fund, Daily Assets Government Obligations Fund, Daily Assets Cash Fund or Daily
Assets Municipal Fund.
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"Fund Business Day" has the meaning ascribed thereto in the current Prospectus
of the Funds.
"NRSRO" means a nationally recognized statistical rating organization.
"Portfolio" means Treasury Cash Portfolio, Government Portfolio, Government Cash
Portfolio, Cash Portfolio or Municipal Cash Portfolio, each a portfolio of Core
Trust.
"SAI" means this Statement of Additional Information.
"SEC" means the U.S. Securities and Exchange Commission.
"Treasury Securities" has the meaning ascribed thereto by the current Prospectus
of the Funds.
"Trust" means Forum Funds.
"U.S. Government Securities" has the meaning ascribed thereto by the current
Prospectus of the Funds.
"1940 Act" means the Investment Company Act of 1940, as amended.
2. INVESTMENT POLICIES
Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio. The corresponding
Portfolios of each Fund are:
<TABLE>
<S><C> <C>
Fund Portfolio
---- ---------
Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Portfolio
Daily Assets Government Obligations Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Municipal Fund Municipal Cash Portfolio
</TABLE>
Each Fund has an investment policy that allows it to invest all of its
investable assets in its corresponding Portfolio. All other investment policies
of each Fund and its corresponding Portfolio are identical. Therefore, although
this and the following sections provide supplemental information regarding the
investment policies of the Portfolios (and the responsibilities of the Core
Trust Board), they apply equally to the investment policies of the Funds (and
the responsibilities of the Board). Information with respect to Daily Assets
Government Fund for periods prior to December 5, 1995 (for instance, investment
advisory fees paid), the date that Fund began investing in Treasury Portfolio,
reflects information with respect to the Fund and the Fund's direct investment
in securities.
Debt securities with longer maturities tend to produce higher yields and are
generally subject to greater price movements than obligations with shorter
maturities. An increase in interest rates will generally reduce the market value
of portfolio investments, and a decline in interest rates will generally
increase the value of portfolio investments.
Each Portfolio invests at least 95% of its total assets in securities in the
highest rating category (as determined pursuant to Rule 2a-7 under the 1940
Act).
Government Cash Portfolio and Cash Portfolio currently are prohibited from
purchasing any security issued by the Federal Home Loan Mortgage Corporation.
This does not prohibit the Portfolios from entering into repurchase agreements
collateralized with securities issued by the Federal Home Loan Mortgage
Corporation.
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Except for U.S. Government Securities and to the limited extent otherwise
permitted by Rule 2a-7 under the 1940 Act, the Portfolios may not invest more
than five percent of their total assets in (i) the securities of any one issuer
or (ii) securities that are rated (or are issued by an issuer with comparable
outstanding short-term debt that is rated) in the second highest rating category
or are unrated and determined by an Adviser to be of comparable quality.
RATINGS AS INVESTMENT CRITERIA
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P") and other NRSROs are private services that provide ratings of the credit
quality of debt obligations. A description of the higher quality ratings
assigned to debt securities by several NRSROs is included in Appendix A to this
SAI. The Portfolios use these ratings in determining whether to purchase, sell
or hold a security. It should be emphasized, however, that ratings are general
and are not absolute standards of quality. Consequently, securities with the
same maturity, interest rate and rating may have different market prices.
Subsequent to its purchase by a Portfolio, an issue of securities may cease to
be rated or its rating may be reduced. FIA , and in certain cases the Core Trust
Board, will consider such an event in determining whether the Portfolio should
continue to hold the obligation. Credit ratings attempt to evaluate the safety
of principal and interest payments and do not evaluate the risks of fluctuations
in market value. Also, rating agencies may fail to make timely changes in credit
ratings in response to developments and events, so that an issuer's current
financial condition may be better or worse than the rating indicates.
ADJUSTABLE RATE MORTGAGE/ASSET BACKED SECURITIES
The Portfolios may purchase adjustable rate mortgage backed or other asset
backed securities that are U.S. Government Securities. Treasury Cash Portfolio
may purchase mortgage backed or asset backed securities that are U.S. Treasury
Securities. These types of securities directly or indirectly represent a
participation in, or are secured by and payable from, adjustable rate mortgages
or other loans which may be secured by real estate or other assets. Unlike
traditional debt instruments, payments on these securities include both interest
and a partial payment of principal. Prepayments of the principal of underlying
loans may shorten the effective maturities of these securities. Some adjustable
rate securities (or the underlying loans) are subject to caps or floors that
limit the maximum change in interest rate during a specified period or over the
life of the security.
Adjustable rate mortgage backed securities ("MBSs") are securities that have
interest rates that are reset at periodic intervals, usually by reference to
some interest rate index or market interest rate. MBSs represent interests in
pools of mortgages made by lenders such as commercial banks, savings
associations, mortgage bankers and mortgage brokers and may be issued by
governmental or government-related entities or by non-governmental entities such
as commercial banks, savings associations, mortgage bankers and other secondary
market issuers.
MBSs differ from other forms of debt securities, which normally provide for
periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates in that MBSs provide periodic payments which
consist of interest and, in most cases, principal. In effect, these payments are
a "pass-through" of the periodic payments and optional prepayments made by the
individual borrowers on their mortgage loans, net of any fees paid to the issuer
or guarantor of such securities. Additional payments to holders of MBSs are
caused by prepayments resulting from the sale of the underlying property or the
refinancing or foreclosure of the underlying mortgage loans. Such prepayments
may significantly shorten the effective maturities of MBSs, and occur more often
during periods of declining interest rates.
Although the rate adjustment feature of MBSs may act as a buffer to reduce sharp
changes in the value of MBSs, these securities are still subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rate is reset only periodically, changes
in the interest rate on MBSs may lag behind changes in prevailing market
interest rates. Also, some MBSs (or
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the underlying mortgages) are subject to caps or floors that limit the maximum
change in interest rate during a specified period or over the life of the
security.
During periods of declining interest rates, income to the Portfolios derived
from mortgages which are not prepaid will decrease as the coupon rate resets
along with the decline in interest rates in contrast to the income on fixed-rate
mortgages, which will remain constant. At times, some of the MBSs in which the
Portfolios will invest will have higher-than-market interest rates, and will
therefore be purchased at a premium above their par value. Unscheduled
prepayments, which are made at par, will cause the Portfolios to suffer a loss
equal to the unamortized premium, if any.
During periods of rising interest rates, changes in the coupon rates of the
mortgages underlying the Portfolios' investments may lag behind changes in
market interest rates. This may result in a slightly lower value until the
coupons reset to market rates. Many MBSs in the Portfolios' portfolios will have
"caps" that limit the maximum amount by which the interest rate paid by the
borrower may change at each reset date or over the life of the loan and
fluctuation in interest rates above these levels could cause these securities to
"cap out" and to behave more like fixed-rate debt securities.
The Portfolios may purchase collateralized mortgage obligations ("CMOs"), which
are collateralized by MBSs or by pools of conventional mortgages. CMOs are
typically structured with a number of classes or series that have different
maturities and are generally retired in sequence. Each class of bonds receives
periodic interest payments according to the coupon rate on the bonds. However,
all monthly principal payments and any prepayments from the collateral pool are
paid first to the "Class 1" bondholders. The principal payments are such that
the Class 1 bonds will be completely repaid no later than, for example, five
years after the offering date. Thereafter, all payments of principal are
allocated to the next most senior class of bonds until that class of bonds has
been fully repaid. Although full payoff of each class of bonds is contractually
required by a certain date, any or all classes of bonds may be paid off sooner
than expected because of an acceleration in pre-payments of the obligations
comprising the collateral pool.
Since the inception of the mortgage-related pass-through security in 1970, the
market for these securities has expanded considerably. The size of the primary
issuance market and active participation in the secondary market by securities
dealers and many types of investors make government and government-related
pass-through pools highly liquid.
Governmental or private entities may create new types of MBSs in response to
changes in the market or changes in government regulation of such securities. As
new types of these securities are developed and offered to investors, the FAI
may, consistent with the investment objective and policies of a Portfolio,
consider making investments in such new types of securities.
SMALL BUSINESS ADMINISTRATION SECURITIES. Government Cash Portfolio and Cash
Portfolio may purchase securities issued by the Small Business Administration
("SBA"). SBA securities are variable rate securities that carry the full faith
and credit of the United States Government, and generally have an interest rate
that resets monthly or quarterly based on a spread to the Prime rate. SBA
securities generally have maturities at issue of up to 30 years. No Portfolio
may purchase an SBA security if, immediately after the purchase, (i) the
Portfolio would have more than 15% of its net assets invested in SBA securities
or (ii) either the unamortized premium or unaccreted discount on SBA securities
held by the Portfolio divided by the sum of the premium or discount securities'
par amount, respectively, would exceed 2.5% (0.025).
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY SECURITIES
Each Portfolio may purchase securities on a when-issued or delayed delivery
basis. In those cases, the purchase price and the interest rate payable on the
securities are fixed on the transaction date and delivery and payment may take
place a month or more after the date of the transaction. At the time a Portfolio
makes the commitment to purchase securities on a when-issued or delayed delivery
basis, the Portfolio will record the transactions as a purchase and thereafter
reflect the value each day of such securities in
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<PAGE>
determining its net asset value. If a Portfolio chooses to dispose of the right
to acquire a when-issued security prior to its acquisition, it could, as with
the disposition of any other portfolio obligation, incur a gain or loss due to
market fluctuation. Failure of an issuer to deliver the security may result in
the Portfolio incurring a loss or missing an opportunity to make an alternative
investment. When a Portfolio agrees to purchase a security on a when-issued or
delayed delivery basis, its custodian will set aside and maintain in a
segregated account cash, U.S. Government Securities or other liquid assets with
a market value at all times at least equal to the amount of its commitment.
Core Trust's custodian will set aside and maintain in a segregated account cash
and securities with a market value at all times equal to the amount of each
Portfolio's forward commitment obligations.
ILLIQUID SECURITIES
Each Portfolio may invest up to 10% of its net assets in illiquid securities.
The term "illiquid securities" for this purpose means repurchase agreements not
entitling the holder to payment of principal within seven days and securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market.
The Core Trust Board has ultimate responsibility for determining whether
specific securities are liquid or illiquid. The Core Trust Board has delegated
the function of making day-to-day determinations of liquidity to the FAI and,
with respect to certain types of restricted securities which may be deemed to be
liquid, has adopted guidelines to be followed by the FAI. FAI takes into account
a number of factors in reaching liquidity decisions, including but not limited
to (1) the frequency of trades and quotations for the security; (2) the number
of dealers willing to purchase or sell the security and the number of other
potential buyers; (3) the willingness of dealers to undertake to make a market
in the security; (4) the nature of the marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer; (5) whether the security is registered; and (6) if
the security is not traded in the United States, whether it can be freely traded
in a liquid foreign securities market. FAI monitors the liquidity of the
securities in each Portfolio's portfolio and report periodically to the Core
Trust Board.
Certificates of deposit and other fixed time deposits that carry an early
withdrawal penalty or mature in greater than seven days are treated by the
Portfolio as illiquid securities if there is no readily available market for the
instrument.
REPURCHASE AGREEMENTS AND SECURITIES LENDING
In order to obtain additional income, the Portfolios may from time to time lend
securities from their portfolio to brokers, dealers and financial institutions.
Securities loans must be callable at any time and must be continuously secured
by collateral from the borrower in the form of cash or U.S. Government
Securities. The Portfolios receive fees in respect of securities loans from the
borrower or interest from investing the cash collateral. The Portfolios may pay
fees to arrange the loans. The Portfolios may not lend portfolio securities in
an amount greater than 33 1/3% of the value of their total assets.
In connection with entering into repurchase agreements and securities loans, the
Portfolios require continual maintenance by Core Trust's custodian of the market
value of the underlying collateral in amounts equal to, or in excess of, the
repurchase price plus the transaction costs (including loss of interest) that
the Portfolios could expect to incur upon liquidation of the collateral if the
counterparty defaults. The Portfolios' use of securities lending entails certain
risks not associated with direct investments in securities. For instance, in the
event that bankruptcy or similar proceedings were commenced against a
counterparty in these transactions or a counterparty defaulted on its
obligations, a Portfolio might suffer a loss. Failure by the other party to
deliver a security purchased by a Portfolio may result in a missed opportunity
to make an alternative investment. FAI monitors the creditworthiness of
counterparties to these transactions under the Core Trust Board's general
supervision and pursuant to specific Core Trust Board adopted procedures
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<PAGE>
and intend to enter into these transactions only when they believe the
counterparties present minimal credit risks and the income to be earned from the
transaction justifies the attendant risks.
VARIABLE AND FLOATING RATE SECURITIES
The yield of variable and floating rate securities varies in relation to changes
in specific money market rates, such as the Prime Rate. A "variable" interest
rate adjusts at predetermined intervals (for example, daily, weekly or monthly),
while a "floating" interest rate adjusts whenever a specified benchmark rate
(such as the bank prime lending rate) changes. These changes are reflected in
adjustments to the yields of the variable and floating rate securities, and
different securities may have different adjustment rates. Accordingly, as
interest rates increase or decrease, the capital appreciation or depreciation
may be less on these obligations than for fixed rate obligations. To the extent
that the Portfolios invest in long-term variable or floating rate securities,
FAI believes that the Portfolios may be able to take advantage of the higher
yield that is usually paid on long-term securities.
Cash Portfolio also may purchase variable and floating rate master notes of
corporations, which are unsecured obligations redeemable upon notice that permit
investment of fluctuating amounts at varying rates of interest pursuant to
direct arrangement with the issuer of the instrument. These obligations include
master demand notes that permit investment of fluctuating amounts at varying
rates of interest pursuant to direct arrangement with the issuer of the
instrument. The issuer of these obligations often has the right, after a given
period, to prepay their outstanding principal amount of the obligations upon a
specified number of days' notice. These obligations generally are not traded,
nor generally is there an established secondary market for these obligations. To
the extent a demand note does not have a seven day or shorter demand feature and
there is no readily available market for the obligation, it is treated as an
illiquid security.
INVESTMENT COMPANY SECURITIES
In connection with managing their cash position, the Portfolios may invest in
the securities of other investment companies that are money market funds within
the limits proscribed by the 1940 Act. Under normal circumstances, each
Portfolio may invest up to 15% of its assets in money market funds. The
Portfolio only invests in money market funds when it has excess cash and FAI
believes that the investment is in the best interest of the Portfolio. In
addition to the Portfolio's expenses (including the various fees), as a
shareholder in another investment company, the Portfolio bears its pro rata
portion of the other investment company's expenses (including fees). Those
expenses are not part of the Portfolio's (or Fund's) expense ratio, but rather
are reflected in the yield of the investment in the money market fund.
ZERO-COUPON SECURITIES
Government Portfolio may invest in zero-coupon securities such as Treasury bills
and separately traded principal and interest components of Treasury Securities
issued or guaranteed under the U.S. Treasury's Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program. These securities are
sold at original issue discount and pay no interest to holders prior to
maturity. Because of this, zero-coupon securities may be subject to greater
fluctuation of market value than the other securities in which the Portfolios
may invest. All zero-coupon securities in which the Portfolio invests will have
a maturity of less than 13 months.
The Portfolio (and thus the Fund) must include a portion of the original issue
discount of zero-coupon securities, if any, as income even though these
securities do not pay any interest until maturity. Because the Fund distributes
all of its net investment income, the Fund may have to sell portfolio securities
to distribute imputed income, which may occur at a time when FAI would not have
chosen to sell such securities and which may result in a taxable gain or loss.
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<PAGE>
3. INVESTMENT LIMITATIONS
Fundamental investment limitations of a Fund or of a Portfolio cannot be changed
without the affirmative vote of the lesser of (i) more than 50% of the
outstanding interests of the respective Fund or Portfolio or (ii) 67% of the
shares of the Fund or Portfolio present or represented at a shareholders or
interestholders meeting at which the holders of more than 50% of the outstanding
interests of the Fund or Portfolio are present or represented.
Except as required by the 1940 Act, if a percentage restriction on investment or
utilization of assets is adhered to at the time an investment is made, a later
change in percentage resulting from a change in the market values of a
Portfolio's assets, the change in status of a security or purchases and
redemptions of shares will not be considered a violation of the limitation.
Each Fund has adopted the same fundamental and nonfundamental investment
limitations as its corresponding Portfolio. In addition, the Portfolios and the
Funds have adopted a fundamental policy which provides that, notwithstanding any
other investment policy or restriction (whether fundamental), the Portfolio or
Fund, as applicable, may invest all of its assets in the securities of a single
pooled investment fund having substantially the same investment objectives,
policies and restrictions as the Fund or Portfolio, as applicable.
GOVERNMENT PORTFOLIO - FUNDAMENTAL POLICIES
Government Portfolio has adopted the following fundamental investment
limitations which are in addition to those contained in the Prospectus of Daily
Assets Government Fund and which may not be changed without shareholder
approval. The Portfolio may not:
(1) DIVERSIFICATION. With respect to 75% of its assets, purchase
securities, other than U.S. Government Securities, of any one issuer if
more than 5% of the value of the Portfolio's total assets would at the
time of purchase be invested in any one issuer.
(2) CONCENTRATION. Purchase securities, other than U.S. Government
Securities, if more than 25% of the value of the Portfolio's total
assets would be invested in securities of issuers conducting their
principal business activity in the same industry, provided that
consumer finance companies and industrial finance companies are
considered to be separate industries and that there is no limit on the
purchase of the securities of domestic commercial banks.
(3) UNDERWRITING. Act as an underwriter of securities of other issuers,
except to the extent that, in connection with the disposition of
portfolio securities, the Portfolio may be deemed to be an underwriter
for purposes of the Securities Act of 1933.
(4) REAL ESTATE. Purchase or sell (i) real estate or any interest therein,
except that the Portfolio may invest in debt obligations secured by
real estate or interests therein or issued by companies that invest in
real estate or interests therein and (ii) real property (including
limited partnership interests, but excluding readily marketable
interests in real estate investment trusts or readily marketable
securities of companies which invest in real estate.)
(5) COMMODITIES. Purchase or sell physical commodities or contracts
relating to physical commodities, provided that currencies and
currency-related contracts will not be deemed to be physical
commodities.
(6) BORROWING. Borrow money, except for temporary or emergency purposes
(including the meeting of redemption requests). Total borrowings may
not exceed 33 1/3% of the Portfolio's total assets and borrowing for
purposes other than meeting redemptions may not exceed 5% of the value
of
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each the Portfolio's total assets. Outstanding borrowings in excess
of 5% of the value of the Portfolio's total assets must be repaid
before any subsequent investments are made by the Portfolio.
(7) SENIOR SECURITIES. Issue senior securities except pursuant to Section
18 of the 1940 Act and except that the Portfolio may borrow money
subject to investment limitations specified in the Portfolio's
Prospectus.
(8) LENDING. Make loans, except that the Portfolio may (i) purchase debt
securities which are otherwise permissible investments, (ii) enter into
repurchase agreements and (iii) lend portfolio securities. The
Portfolio may not lend portfolio securities in an amount greater than
33 1/3% of the value of its total assets.
(9) PLEDGING. Pledge, mortgage or hypothecate its assets, except to secure
permitted indebtedness. Collateralized loans of securities are not
deemed to be pledges or hypothecations for this purpose.
(10) OPTIONS. Write put and call options.
(11) INVEST FOR CONTROL. Invest for the purpose of exercising control over
any person.
(12) RESTRICTED SECURITIES. Purchase restricted securities.
GOVERNMENT PORTFOLIO - NONFUNDAMENTAL POLICIES
Government Portfolio has adopted the following nonfundamental investment
limitations that may be changed by the Core Trust Board without shareholder
approval. The Portfolio may not:
(a) SECURITIES WITH VOTING RIGHTS. Purchase securities having voting
rights, except the Portfolio may invest in securities of other
investment companies to the extent permitted by the 1940 Act.
(b) MARGIN; SHORT SALES. Purchase securities on margin, or make short sales
of securities, except for the use of short-term credit necessary for
the clearance of purchases and sales of portfolio securities.
(c) LIQUIDITY. Acquire securities or invest in repurchase agreements with
respect to any securities if, as a result, more than 10% of the
Portfolio's net assets (taken at current value) would be invested in
repurchase agreements not entitling the holder to payment of principal
within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.
TREASURY CASH PORTFOLIO, GOVERNMENT CASH PORTFOLIO, CASH PORTFOLIO
AND MUNICIPAL CASH PORTFOLIO -- FUNDAMENTAL POLICIES
Treasury Cash Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal
Cash Portfolio have adopted the following fundamental investment limitations
which are in addition to those contained in the Prospectuses offering Daily
Assets Treasury Obligations Fund, Daily Assets Government Obligations Fund,
Daily Assets Cash Fund and Daily Assets Municipal Fund and which may not be
changed without shareholder approval. No Portfolio may:
(1) DIVERSIFICATION. With respect to 75% of its assets, purchase a security
other than a U.S. Government Security (or, in the case of Municipal
cash Portfolio, other than a security of an investment company) if, as
a result, more than 5% of the Portfolio's total assets would be
invested in the securities of a single issuer.
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(2) CONCENTRATION. Purchase securities if, immediately after the purchase,
more than 25% of the value of the Portfolio's total assets would be
invested in the securities of issuers having their principal business
activities in the same industry; provided, however, that there is no
limit on investments in U.S. Government Securities.
(3) UNDERWRITING. Underwrite securities of other issuers, except to the
extent that the Portfolio may be considered to be acting as an
underwriter in connection with the disposition of portfolio securities.
(4) REAL ESTATE. Purchase or sell real estate or any interest therein,
except that the Portfolio may invest in debt obligations secured by
real estate or interests therein or issued by companies that invest in
real estate or interests therein.
(5) COMMODITIES. Purchase or sell physical commodities or contracts
relating to physical commodities, provided that currencies and
currency-related contracts will not be deemed to be physical
commodities.
(6) BORROWING. Borrow money, except for temporary or emergency purposes
(including the meeting of redemption requests) and except for entering
into reverse repurchase agreements, provided that borrowings do not
exceed 33 1/3% of the value of the Portfolio's total assets.
(7) SENIOR SECURITIES. Issue senior securities except as appropriate to
evidence indebtedness that the Portfolio is permitted to incur, and
provided that the Portfolio may issue shares of additional series or
classes that the Trustees may establish.
(8) LENDING. Make loans except for loans of portfolio securities, through
the use of repurchase agreements, and through the purchase of debt
securities that are otherwise permitted investments.
(9) THRIFT INVESTOR LIMITATIONS. With respect to Government Cash Portfolio,
purchase or hold any security that (i) a Federally chartered savings
association may not invest in, sell, redeem, hold or otherwise deal
pursuant to law or regulation, without limit as to percentage of the
association's assets and (ii) pursuant to 12 C.F.R. Section 566.1 would
cause shares of the Portfolio not to be deemed to be short term liquid
assets when owned by Federally chartered savings associations.
For purposes of limitation (2): (i) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (ii)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.
TREASURY CASH PORTFOLIO, GOVERNMENT CASH PORTFOLIO, CASH PORTFOLIO
AND MUNICIPAL CASH PORTFOLIO - NONFUNDAMENTAL POLICIES
Treasury Cash Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal
Cash Portfolio - have adopted the following nonfundamental investment
limitations that may be changed by the Core Trust Board without shareholder
approval. Each Portfolio may not:
(a) DIVERSIFICATION. With respect to 100% of its assets, purchase a
security other than a U.S. Government Security if, as a result, more
than 5% of the Portfolio's total assets would be invested in the
securities of a single issuer, unless the investment is permitted by
Rule 2a-7 under the 1940 Act.
(b) BORROWING. Purchase securities for investment while any borrowing
equaling 5% or more of the Portfolio's total assets is outstanding; and
if at any time the Portfolio's borrowings exceed the
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Portfolio's investment limitations due to a decline in net assets,
such borrowings will be promptly (within three days) reduced to the
extent necessary to comply with the limitations. Borrowing for
purposes other than meeting redemption requests will not exceed 5% of
the value of the Portfolio's total assets.
(c) Purchase securities that have voting rights, except the Portfolio may
invest in securities of other investment companies to the extent
permitted by the 1940 Act.
(d) MARGIN; SHORT SALES. Purchase securities on margin, or make short sales
of securities, except for the use of short-term credit necessary for
the clearance of purchases and sales of portfolio securities.
(e) LIQUIDITY. Acquire securities or invest in repurchase agreements with
respect to any securities if, as a result, more than 10% of the
Portfolio's net assets (taken at current value) would be invested in
repurchase agreements not entitling the holder to payment of principal
within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.
4. INVESTMENTS BY FINANCIAL INSTITUTIONS
INVESTMENT BY SHAREHOLDERS THAT ARE BANKS - DAILY ASSETS GOVERNMENT OBLIGATIONS
FUND
Government Cash Portfolio invests only in instruments which, if held directly by
a bank or bank holding company organized under the laws of the United States or
any state thereof, would be assigned to a risk-weight category of no more than
20% under the current risk based capital guidelines adopted by the Federal bank
regulators (the "Guidelines"). In the event that the Guidelines are revised, the
Portfolio's portfolio will be modified accordingly, including by disposing of
portfolio securities or other instruments that no longer qualify under the
Guidelines. In addition, the Portfolio does not intend to hold in its portfolio
any securities or instruments that would be subject to restriction as to amount
held by a National bank under Title 12, Section 24 (Seventh) of the United
States Code. If the Portfolio's portfolio includes any instruments that would be
subject to a restriction as to amount held by a National bank, investment in the
Portfolio may be limited.
The Guidelines provide that shares of an investment fund are generally assigned
to the risk-weight category applicable to the highest risk-weighted security or
instrument that the fund is permitted to hold. Accordingly, Portfolio shares
should qualify for a 20% risk weighting under the Guidelines. The Guidelines
also provide that, in the case of an investment fund whose shares should qualify
for a risk weighting below 100% due to limitations on the assets which it is
permitted to hold, bank examiners may review the treatment of the shares to
ensure that they have been assigned an appropriate risk-weight. In this
connection, the Guidelines provide that, regardless of the composition of an
investment fund's assets, shares of a fund may be assigned to the 100%
risk-weight category if it is determined that the fund engages in activities
that appear to be speculative in nature or has any other characteristics that
are inconsistent with a lower risk weighting. FIA has no reason to believe that
such a determination would be made with respect to the Portfolio. Their are
various subjective criteria for making this determination and, therefore, it is
not possible to provide any assurance as to how Portfolio shares will be
evaluated by bank examiners.
Before acquiring Fund shares, prospective investors that are banks or bank
holding companies, particularly those that are organized under the laws of any
country other than the United States or of any state, territory or other
political subdivision of the United States, and prospective investors that are
U.S. branches and agencies of foreign banks or Edge Corporations, should consult
all applicable laws, regulations and policies, as well as appropriate regulatory
bodies, to confirm that an investment in Fund Shares is permissible and in
compliance with any applicable investment or other limits.
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Fund shares held by National banks are generally required to be revalued
periodically and reported at the lower of cost or market value. Such shares may
also be subject to special regulatory reporting, accounting and tax treatment.
In addition, a bank may be required to obtain specific approval from its board
of directors before acquiring Fund shares, and thereafter may be required to
review its investment in a Fund for the purpose of verifying compliance with
applicable Federal banking laws, regulations and policies.
National banks generally must review their holdings of shares of a Fund at least
quarterly to ensure compliance with established bank policies and legal
requirements. Upon request, the Portfolios will make available to the Funds
investors information relating to the size and composition of their portfolio
for the purpose of providing Fund shareholders with this information.
INVESTMENT BY SHAREHOLDERS THAT ARE CREDIT UNIONS - DAILY ASSETS TREASURY
OBLIGATIONS FUND AND DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Treasury Cash Portfolio and Government Cash Portfolio limit their investments to
investments that are legally permissible for Federally chartered credit unions
under applicable provisions of the Federal Credit Union Act (including 12 U.S.C.
Section 1757(7), (8) and (15)) and the applicable rules and regulations of the
National Credit Union Administration (including 12 C.F.R. Part 703, Investment
and Deposit Activities), as such statutes and rules and regulations may be
amended. The Portfolios limit their investments to U.S. Government Securities
(including Treasury STRIPS) and repurchase agreements fully collateralized by
U.S. Government Securities. Certain U.S. Government Securities owned by a
Portfolio may be mortgage or asset backed, but, except to reduce interest rate
risk, no such security will be (i) a stripped mortgage backed security ("SMBS"),
(ii) a collateralized mortgage obligation ("CMO") or real estate mortgage
investment conduit ("REMIC") that meets any of the tests outlined in 12 C.F.R.
Section 703.5(g) or (iii) a residual interest in a CMO or REMIC. In order to
reduce interest rate risk, the Portfolios may purchase a SMBS, CMO, REMIC or
residual interest in a CMO or REMIC but only in accordance with 12 C.F.R.
Section 703.5(i). Treasury Cash Portfolio and Government Cash Portfolio have no
current intention to make any such investment. The Portfolios also may invest in
reverse repurchase agreements in accordance with 12 C.F.R. 703.4(e) to the
extent otherwise permitted herein and in the Prospectus.
INVESTMENTS BY SHAREHOLDERS THAT ARE SAVINGS ASSOCIATIONS - DAILY ASSETS
TREASURY OBLIGATIONS FUND AND DAILY ASSETS GOVERNMENT OBLIGATIONS PORTFOLIO
Treasury Cash Portfolio and Government Cash Portfolio limit their investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage under applicable provisions of the
Home Owners' Loan Act (including 12 U.S.C. Section 1464) and the applicable
rules and regulations of the Office of Thrift Supervision, as such statutes and
rules and regulations may be amended. In addition, the Portfolios limit their
investments to investments that are permissible for an open-end investment
company to hold and would permit shares of the investment company to qualify as
liquid assets under 12 C.F.R. Section 566.1(g) and as short-term liquid assets
under 12 C.F.R. Section 566.1(h). These policies may be amended only by approval
of a Portfolio's interestholders or Fund's shareholders, as applicable.
5. PERFORMANCE DATA
For a listing of certain performance data as of August 31, 1997, see Appendix B.
YIELD INFORMATION
Each Fund may provide current annualized and effective annualized yield
quotations for each class based on its daily dividends. These quotations may
from time to time be used in advertisements, shareholder reports or other
communications to shareholders. All performance information supplied by a Fund
is historical and is not intended to indicate future returns.
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<PAGE>
In performance advertising the Funds may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC Financial Data, Inc. or CDA/Wiesenberger
or other companies which track the investment performance of investment
companies ("Fund Tracking Companies"). The Funds may also compare any of their
performance information with the performance of recognized stock, bond and other
indices. The Funds may also refer in such materials to mutual fund performance
rankings and other data published by Fund Tracking Companies. Performance
advertising may also refer to discussions of a Fund and comparative mutual fund
data and ratings reported in independent periodicals, such as newspapers and
financial magazines.
Any current yield quotation of a class of a Fund which is used in such a manner
as to be subject to the provisions of Rule 482(d) under the Securities Act of
1933, as amended, shall consist of an annualized historical yield, carried at
least to the nearest hundredth of one percent, based on a specific
seven-calendar-day period and shall be calculated by dividing the net change
during the seven-day period in the value of an account having a balance of one
share at the beginning of the period by the value of the account at the
beginning of the period, and multiplying the quotient by 365/7. For this
purpose, the net change in account value would reflect the value of additional
shares purchased with dividends declared on the original share and dividends
declared on both the original share and any such additional shares, but would
not reflect any realized gains or losses from the sale of securities or any
unrealized appreciation or depreciation on portfolio securities. In addition,
any effective annualized yield quotation used by a Fund shall be calculated by
compounding the current yield quotation for such period by adding 1 to the
product, raising the sum to a power equal to 365/7, and subtracting 1 from the
result.
Although published yield information is useful to investors in reviewing a
class' performance, investors should be aware that each Fund's yield fluctuates
from day to day and that the class' yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Fund's shares. Also, Participating Organizations (as that term is used in
the Prospectus) may charge their customers direct fees in connection with an
investment in a Fund, which will have the effect of reducing the class' net
yield to those shareholders. The yields of a class are not fixed or guaranteed,
and an investment in the Fund is not insured or guaranteed. Accordingly, yield
information may not necessarily be used to compare shares of the Fund with
investment alternatives which, like money market instruments or bank accounts,
may provide a fixed rate of interest. Also, it may not be appropriate directly
to compare a Fund's yield information to similar information of investment
alternatives which are insured or guaranteed.
Income calculated for the purpose of determining a class' yield differs from
income as determined for other accounting purposes. Because of the different
accounting methods used, and because of the compounding assumed in yield
calculations, the yield quoted for a class may differ from the rate of
distribution the class paid over the same period or the rate of income reported
in the Fund's financial statements.
OTHER PERFORMANCE AND SALES LITERATURE MATTERS
Total returns quoted in sales literature reflect all aspects of a Fund's return,
including the effect of reinvesting dividends and capital gain distributions.
Average annual returns generally are calculated by determining the growth or
decline in value of a hypothetical historical investment in a Fund over a stated
period, and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant over the period. While average annual returns are a convenient means of
comparing investment alternatives, investors should realize that the performance
is not constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Funds.
Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment over such periods
according to the following formula:
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P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of
the applicable period, of a hypothetical $1,000 payment made
at the beginning of the applicable period.
OTHER ADVERTISING MATTERS
The Funds may advertise other forms of performance. For example, average annual
and cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of investments,
and/or a series of redemptions over any time period. Total returns may be broken
down into their components of income and capital (including capital gains and
changes in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Any performance information may be
presented numerically or in a table, graph or similar illustration.
A Fund may also include various information in its advertisements. Information
included in the Fund's advertisements may include, but is not limited to: (i)
the Fund's (or the Fund's corresponding Portfolios) portfolio holdings and
portfolio allocation as of certain dates, such as portfolio diversification by
instrument type, by instrument or by maturity, (ii) descriptions of the
portfolio managers of the Fund or the Fund's corresponding Portfolio and the
portfolio management staff of FIA or summaries of the views of the portfolio
managers with respect to the financial markets, (iii) the results of a
hypothetical investment in a Fund over a given number of years, including the
amount that the investment would be at the end of the period, (iv) the effects
of earning Federally and, if applicable, state tax-exempt income from the Fund
or investing in a tax-deferred account, such as an individual retirement account
and (v) the net asset value, net assets or number of shareholders of a Fund as
of one or more dates.
In connection with its advertisements a Fund may provide "shareholders' letters"
which serve to provide shareholders or investors an introduction into the
Fund's, the Portfolio's, the Trust's, the Core Trust's or any of the Trust's or
the Core Trust's service providers' policies or business practices.
Appendix D contains further information on matters that may be advertised.
6. MANAGEMENT
TRUSTEES AND OFFICERS OF THE TRUST
The trustees and officers of the Trust and their principal occupations during
the past five years are set forth below. Each Trustee who is an "interested
person" (as defined by the 1940 Act) of the Trust is indicated by an asterisk.
John Y. Keffer,* Chairman and President (age 55)
President, Forum Financial Group, LLC (mutual fund services company
holding company). Mr. Keffer is also a director and/or officer of
various registered investment companies for which the various Forum
Financial Group of Companies provides services. His address is Two
Portland Square, Portland, Maine 04101.
Costas Azariadis, Trustee (age 55)
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
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<PAGE>
Department of Economics, University of California, Los Angeles, 405
Hilgard Avenue, Los Angeles, California 90024.
James C. Cheng, Trustee (age 55)
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 54)
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 (age 42)
Director, Investments, Forum Financial Group, LLC with which he has
been associated 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.
Stacey Hong, Treasurer (age 32)
Director, Fund Accounting, Forum Financial Group, LLC, with which he
has been associated since April 1992. Prior thereto, Mr. Hong was as
Senior Accountant with Ernst and Young. His address is Two Portland
Square, Portland, Maine 04101.
Max Berueffy, Secretary (age 46)
Senior Counsel, Forum Financial Group, LLC, 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 also
serves as an officer of other registered investment companies for
which the Forum Financial Group of Companies provides services. His
address is Two Portland Square, Portland, Maine 04101.
Leslie K. Klenk, Assistant Secretary (age 33)
Assistant Counsel, Forum Financial Group, LLC, with which she has been
associated since April 1998. Prior thereto, Ms. Klenk was Vice
President and Associate General Counsel at Smith Barney Inc. . Her
address is Two Portland Square, Portland, Maine 04101.
Pamela Stutch, Assistant Secretary (age 30)
Fund Administrator, Forum Financial Group, LLC, with which she has
been associated since May 1998. Prior thereto, Ms. Stutch attended
Temple University School of Law and graduated in 1997. Ms. Stutch was
as a legal intern for the Maine Department of the Attorney General.
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<PAGE>
TRUSTEES AND OFFICERS OF CORE TRUST
The Trustees and officers of Core Trust and their principal occupations during
the past five years are set forth below. Each of the Trustees of the Trust is
also a Trustee of Core Trust and several officers of the Trust serve as officers
of Core Trust . Each Trustee who is an "interested person" (as defined by the
1940 Act) of Core Trust is indicated by an asterisk. Accordingly, for background
information pertaining to the Trustees and these officers, see "Trustees and
Officers of the Trust" above.
John Y. Keffer,* Chairman and President.
Costas Azariadis, Trustee.
James C. Cheng, Trustee.
J. Michael Parish, Trustee.
Thomas G. Sheehan, Vice President (age 44)
Director, Relationship Management, Forum Financial Group, LLC, with
which he has been associated since October, 1993. Prior thereto, Mr.
Sheehan was a Special Counsel in the Division of Investment Management
of the U.S. Securities and Exchange Commission in Washington, D.C. His
address is Two Portland Square, Portland, Maine 04101.
Stacey Hong, Treasurer
Pamela J. Wheaton, Assistant Treasurer (age 38)
Manager, Tax and Compliance, Forum Financial Group, LLC, with which
she has been associated since 1989. Ms. Wheaton is also an officer of
other registered investment companies for which the Forum Financial
Group of Companies provides services. Her address is Two Portland
Square, Portland, Maine 04101.
David I. Goldstein, Vice President and Secretary (age 37)
General Counsel, Forum Financial Group, LLC, with which he has been
associated since 1991. Mr. Goldstein also serves as an officer of
other registered investment companies for which the Forum Financial
Group of Companies provides services. His address is Two Portland
Square, Portland, Maine 04101.
Max Berueffy, Vice President and Assistant Secretary
Leslie K. Klenk, Assistant Secretary.
Pam Stutch, Assistant Secretary
TRUSTEE COMPENSATION
THE TRUST. Each Trustee of the Trust (other than John Y. Keffer, who is an
interested person of the Trust) is paid $1,000 for each Board meeting attended
(whether in person or by electronic communication) and $1,000 for each committee
meeting attended on a date when a Board meeting is not held. As of March 31,
1997, in addition to the $1,000 for each Board meeting attended, each Trustee is
paid $100 per active portfolio of the Trust. To the extent a meeting relates to
only certain portfolios of the Trust, Trustees are
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<PAGE>
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 six months ended February 28, 1998.
<TABLE>
<S> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Keffer None None None None
Mr. Azariadis $5,219 None None $5,219
Mr. Cheng $5,219 None None $5,219
Mr. Parish $5,219 None None $5,219
</TABLE>
CORE TRUST. Each of the Trustees of the Trust is also a Trustee of Core Trust.
Each Trustee of Core Trust is paid $1,000 for each meeting of the Core Trust
Board attended (whether in person or by electronic communication) plus $100 for
each active portfolio of Core Trust and is paid $1000 for each committee meeting
attended on a date when the Core Trust Board meeting is not held. As of August
31, 1997, there were fifteen active portfolios of Core Trust (including certain
of the Portfolios). Trustees are also reimbursed for travel and related expenses
incurred in attending meetings of the Core Trust Board. No officer of Core Trust
is compensated or reimbursed for expenses by Core Trust. Since commencement of
the Trust's operations, Mr. Keffer has not accepted any fees for his services as
Trustee.
The following table provides the aggregate compensation paid to each trustee of
Core Trust for the six months ended February 28, 1998. Core Trust has not
adopted any form of retirement plan covering trustees or officers of Core Trust.
<TABLE>
<S> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Keffer None None None None
Mr. Azariadis $1,044 None None $1,044
Mr. Parish $1,044 None None $1,044
Mr. Cheng $1,044 None None $1,044
</TABLE>
Each Trustee of Core Trust (other than John Y. Keffer, who is an interested
person of Core Trust) is paid $1,000 for each Core Trust Board meeting attended
(whether in person or by electronic communication) plus $100 per active
portfolio of Core Trust and is paid $1,000 for each committee meeting attended
on a date when a Core Trust Board meeting is not held. To the extent a meeting
relates to only certain portfolios of Core Trust, trustees are paid the $100 fee
only with respect to those portfolios. Core Trust trustees are also reimbursed
for travel and related expenses incurred in attending meetings of the Core Trust
Board
INVESTMENT ADVISERS
FIA furnishes to the Portfolios at its own expense all services, facilities and
personnel necessary in connection with managing the Portfolios' investments and
effecting portfolio transactions for the Portfolios, pursuant to an investment
advisory agreement between FIA and Core Trust (an "Advisory Agreement"). The
Advisory Agreement provides, with respect to each Portfolio, for an initial term
of one year from its effective date and for its continuance in effect for
successive twelve-month periods thereafter, provided the Advisory Agreement is
specifically approved at least annually by the Core Trust Board or by vote of
the interestholders of the Portfolios, and in either case by a majority of the
Trustees who are not parties to the Advisory Agreement or interested persons of
any such party.
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<PAGE>
Prior to January 2, 1998, Linden Asset Management, Inc. ("Linden") served as
investment adviser to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio, and Forum Advisors, Inc. served as investment adviser to
Government Portfolio. Linden and Forum Advisors, Inc. also acted as investment
subadvisors to each Portfolio that they did not manage on a daily basis. On
January 2, 1998, Forum Advisors, Inc. acquired Linden and reorganized into a new
company named Forum Investment Advisors, LLC. These transactions have not
effected any change in advisory staff, portfolio managers, or advisory fees, or
any other material change.
Table 1 in Appendix C shows the dollar amount of fees paid under the investment
advisory agreements between Core Trust and Linden and between Core Trust and
Forum Advisors, Inc., as applicable, with respect to each Portfolio or, prior to
Daily Assets Government Fund investing in Government Portfolio, the dollar
amount of fees paid under the Investment Advisory Agreement between the Trust
and Forum Advisors, Inc. with respect to the Fund. This information is provided
for the past three years (or shorter time a Fund or Portfolio has been
operational).
The Advisory Agreement is terminable without penalty by Core Trust with respect
to the Portfolio on 60 days' written notice when authorized either by vote of
the Portfolio's interestholders or by a vote of a majority of the Core Trust
Board, or by FIA on not more than 60 days' nor less than 30 days' written
notice, and will automatically terminate in the event of its assignment. The
Advisory Agreement also provides that, with respect to a Portfolio, FIA shall
not be liable for any error of judgment or mistake of law or for any act or
omission in the performance of its duties to the Portfolio, except for willful
misfeasance, bad faith or gross negligence in the performance of FIA's duties or
by reason of reckless disregard of its obligations and duties under the Advisory
Agreement. The Advisory Agreement provides that FIA may render services to
others.
For its services, FIA receives an advisory fee at an annual rate of 0.05% of
Government Portfolio's and Municipal Cash Portfolio's average daily net assets
For services provided to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio, FIA receives an advisory fee based upon the total average daily
net assets of those Portfolios ("Total Portfolio Assets"). FIA's fee is
calculated at an annual rate on a cumulative basis as follows: 0.06% of the
first $200 million of Total Portfolio Assets, 0.04% of the next $300 million of
Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets.
Prior to January 15, 1996, Forum Advisors, Inc. acted as Daily Assets Government
Fund's investment adviser under an investment advisory agreement with Forum
Funds, Inc. Under that investment advisory agreement, Forum Advisors, Inc.
received a fee at an annual rate of 0.20% of the average daily net assets of the
Fund.
In addition to receiving an advisory fee from a Portfolio it advises, FIA may
also act and be compensated as investment manager for its clients with respect
to assets which are invested in the Portfolio. In some instances, FIA may elect
to credit against any investment management fee received from a client who is
also a shareholder in the Portfolio an amount equal to all or a portion of the
fees received by FIA or any affiliate of FIA from the Portfolio with respect to
the client's assets invested in the Portfolio.
The Trust has confirmed its obligation to pay all of its expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the custodian, transfer agent
and dividend disbursing agent; telecommunications expenses; auditing, legal and
compliance expenses; costs of forming the trust and maintaining corporate
existence; costs of preparing and printing the Trust's prospectuses, statements
of additional information, account application forms and shareholder reports and
delivering them to existing and prospective shareholders; costs of maintaining
books of original entry for portfolio and fund accounting and other required
books and accounts and of calculating the net asset value of shares of the
Funds; costs of reproduction, stationery and supplies; compensation of Trustees,
officers and employees of the Trust and costs of other personnel performing
services for the Trust; costs of corporate meetings; SEC registration fees and
related expenses; state
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<PAGE>
securities laws registration fees and related expenses; and fees payable to an
investment adviser under an investment advisory agreement.
Anthony R. Fischer, Jr., is primarily responsible for the day-to-day management
of the Portfolios. Mr. Fischer was the sole stockholder, director and officer of
Linden from 1992 until its acquisition by FIA. He has been primarily responsible
for the day-to-day management of Treasury Cash Portfolio, Government Cash
Portfolio and Cash Portfolio since their inception. Mr. Fischer has over
twenty-five years experience in the money market industry. From 1984 through
1989, Mr. Fischer served as Senior Vice President and Treasurer of United
California Savings Bank, Santa Ana, California, and prior thereto, as a Manager
for five years at PaineWebber Jackson & Curtis, New York, New York.
ADMINISTRATION
Table 2 in Appendix C shows the dollar amount of fees paid for administrative
services by the Funds and the Portfolios. This information is provided for the
past three years (or shorter time a Fund or Portfolio has been operational).
THE TRUST. Pursuant to an administration agreement (the "Trust Administration
Agreement"), FAdS supervises the overall management of the Trust (which
includes, among other responsibilities, negotiation of contracts and fees with,
and monitoring of performance and billing of, the transfer agent and custodian
and arranging for maintenance of books and records of the Trust) and provides
the Trust with general office facilities. The Trust Administration Agreement may
be terminated by either party without penalty on 60 days' written notice and may
not be assigned except upon written consent by both parties. The Trust
Administration Agreement also provides that FAdS 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 FAdS's duties or by reason of
reckless disregard of its obligations and duties under the Trust Administration
Agreement. Prior to June 19, 1997, FFSI provided administration services to the
Trust.
FAdS provides persons satisfactory to the Board to serve as officers of the
Trust. Those officers, as well as certain other employees and Trustees of the
Trust, may be Trustees, officers or employees of (and persons providing services
to the Trust may include) FAdS, FFSI, their affiliates or affiliates of FIA.
CORE TRUST. Pursuant to a management agreement with Core Trust (the "Core Trust
Management Agreement"), FAdS supervises the overall management of Core Trust
(which includes, among other responsibilities, negotiation of contracts and fees
with, and monitoring of performance and billing of, the custodian and arranging
for maintenance of books and records of Core Trust) and provides Core Trust with
general office facilities. The Core Trust Management Agreement provides, with
respect to the Portfolios, for an initial term of one year from its effective
date and for its continuance in effect for successive twelve-month periods
thereafter, provided the agreement is specifically approved at least annually by
the Core Trust Board or by the interestholders of the Portfolios, and in either
case by a majority of the Trustees who are not parties to the Core Trust
Management Agreement or interested persons of any such party. Prior to November
15, 1997, FFSI provided administration services to Core Trust.
The Core Trust Management Agreement terminates automatically if it is assigned
and may be terminated without penalty with respect to the Portfolio by vote of a
Portfolio's shareholders or by either party on 60 days' written notice. The Core
Trust Management Agreement also provides that FAdS shall not be liable for any
error of judgment or mistake of law or for any act or omission in the
administration or management of Core Trust, except for willful misfeasance, bad
faith or gross negligence in the performance of Forum's duties or by reason of
reckless disregard of its obligations and duties under the Core Trust Management
Agreement.
At the request of the Core Trust Board, FAdS provides persons satisfactory to
the Core Trust Board to serve as officers of Core Trust.
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<PAGE>
DISTRIBUTION
FFSI was incorporated under the laws of the State of Delaware on February 7,
1986 and serves as distributor of shares of the Funds pursuant to a Distribution
Agreement between FFSI and the Trust (the "Distribution Agreement"). The
Distribution Agreement provides, with respect to each Fund, for an initial term
of one year from its effective date and for its continuance in effect for
successive twelve-month periods thereafter, provided the Distribution Agreement
is specifically approved at least annually by the Board or by the shareholders
of the Fund, and in either case by a majority of the Trustees who are not
parties to the Distribution Agreement or interested persons of any such party.
The Distribution Agreement terminates automatically if it is assigned and may be
terminated without penalty with respect to each Fund by vote of the Fund's
shareholders or by either party on 60 days' written notice. The Distribution
Agreement also provides that FFSI shall not be liable for any error of judgment
or mistake of law or for any act or omission in the performance of services to
the Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of FFSI's duties or by reason of reckless disregard of its
obligations and duties under the Distribution Agreement.
With respect to any class that has adopted a distribution plan, the Distribution
Agreement is also terminable upon similar notice by a majority of the Trustees
who (i) are not interested persons of the Trust and (ii) have no direct or
indirect financial interest in the operation of that distribution plan or in the
Distribution Agreement ("Qualified Trustees").
FFSI acts as sole placement agent for interests in the Portfolios and receives
no compensation for those services from the portfolios.
INVESTOR CLASS DISTRIBUTION PLAN. In accordance with Rule 12b-1 under the 1940
Act, with respect to the Investor Class of each Fund, the Trust adopted a
distribution plan (the "Investor Class Plan") which provides for the payment to
Forum of a Rule 12b-1 fee at the annual rate of 0.15% of the average daily net
assets of the Investor class of each Fund as compensation for Forum's services
as distributor.
The Investor Class Plan provides that all written agreements relating to that
plan must be approved by the Board, including a majority of the Qualified
Trustees. In addition, the Investor Class Plan (as well as the Distribution
Agreement) requires the Trust and Forum to prepare and submit to the Board, at
least quarterly, and the Board will review, written reports setting forth all
amounts expended under the Investor Class Plan and identifying the activities
for which those expenditures were made.
The Investor Class Plan provides that it will remain in effect for one year from
the date of its adoption and thereafter shall continue in effect provided it is
approved at least annually by the shareholders or by the Board, including a
majority of the Qualified Trustees. The Investor Class Plan further provides
that it may not be amended to increase materially the costs which may be borne
by the Trust for distribution pursuant to the Investor Class Plan without
shareholder approval and that other material amendments of the Investor Class
Plan must be approved by the Qualified Trustees. The Investor Class Plan may be
terminated at any time by the Board, by a majority of the Qualified Trustees, or
by a Fund's Investor class shareholders.
Table 3 in Appendix C shows the dollar amount of fees payable under the Investor
Class Plan with respect to each Fund. This information is provided for the past
three years (or shorter time a Fund has been operational).
TRANSFER AGENT
FSS acts as transfer agent of the Trust pursuant to a transfer agency agreement
with the Trust (the "Transfer Agency Agreement"). The Transfer Agency Agreement
provides, with respect to the Funds, for an initial term of one year from its
effective date and for its continuance in effect for successive twelve-
20
<PAGE>
month periods thereafter, provided that the Transfer Agency Agreement is
specifically approved at least annually by the Board or by a vote of the
shareholders of each Fund, and in either case by a majority of the Trustees who
are not parties to the Transfer Agency Agreement or interested persons of any
such party at a meeting called for the purpose of voting on the Transfer Agency
Agreement.
Among the responsibilities of FSS as transfer agent for the Trust are: (1)
answering customer inquiries regarding account status and history, the manner in
which purchases and redemptions of shares of each Fund may be effected and
certain other matters pertaining to each Fund; (2) assisting shareholders in
initiating and changing account designations and addresses; (3) providing
necessary personnel and facilities to establish and maintain shareholder
accounts and records, assisting in processing purchase and redemption
transactions and receiving wired funds; (4) transmitting and receiving funds in
connection with customer orders to purchase or redeem shares; (5) verifying
shareholder signatures in connection with changes in the registration of
shareholder accounts; (6) furnishing periodic statements and confirmations of
purchases and redemptions; (7) arranging for the transmission of proxy
statements, annual reports, prospectuses and other communications from the Trust
to its shareholders; (8) arranging for the receipt, tabulation and transmission
to the Trust of proxies executed by shareholders with respect to meetings of
shareholders of the Trust; and (9) providing such other related services as the
Trust or a shareholder may reasonably request.
FSS or any sub-transfer agent or processing agent may also act and receive
compensation as custodian, investment manager, nominee, agent or fiduciary for
its customers or clients who are shareholders of a Fund with respect to assets
invested in that Fund. FSS or any sub-transfer agent or other processing agent
may elect to credit against the fees payable to it by its clients or customers
all or a portion of any fee received from the Trust or from the Transfer Agent
with respect to assets of those customers or clients invested in the Portfolio.
FSS, FAdS or sub-transfer agents or processing agents retained by the FSS 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 FSS
or FAdS.
For its services under the Transfer Agency Agreement, FSS receives an annual fee
from each Fund of (i) 0.05% of each Fund's average daily net assets attributable
to institutional Shares,0.10% of each Fund's average daily net assets
attributable to institutional service shares and 0.25% of each Fund's average
daily net assets attributable to Investor Shares (computed and paid monthly in
arrears by the Fund), (ii) $12,000 per year (computed and paid monthly in
arrears by the Fund) and (iii) Annual Shareholder Account Fees of $18 per
shareholder account in Institutional Shares, Institutional Service Shares and
Investor Shares (computed as of the last business day of the prior month).
Table 4 in Appendix C shows the dollar amount of fees paid for transfer agency
services by the Funds. This information is provided for the past three years (or
shorter time a Fund has been operational).
SHAREHOLDER SERVICE PLAN AND AGREEMENTS
The Trust has adopted a shareholder service plan ("Shareholder Service Plan")
with respect to the Institutional Service class and the Investor class of each
Fund which provides that FAdS may obtain the services of financial institutions
to act as shareholder servicing agents for their customers invested in those
classes. The Shareholder Service Plan was effective on November 15, 1997 for the
Institutional Service class of those Funds then operating.
The Shareholder Service Plan provides that all written agreements relating to
that plan must be approved by the Board, including a majority of the Qualified
Trustees. In addition, the Shareholder Service Plan (as well as the various
shareholder service agreements) requires the Trust and FAdS to prepare and
submit to the Board, at least quarterly, and the Board will review written
reports setting forth all amounts expended under the plan and identifying the
activities for which those expenditures were made.
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The Shareholder Service Plan provides that it will remain in effect for one year
from the date of its adoption and thereafter shall continue in effect provided
it is approved at least annually by the shareholders or by the Board. The
Shareholder Service Plan further provides material amendments of the plan must
be approved by the Qualified Trustees. The Shareholder Service Plan may be
terminated at any time by the Board or by a majority of the Qualified Trustees.
The Trust may enter into shareholder servicing agreements with various
Shareholder Servicing Agents pursuant to which those agents, as agent for their
customers, may agree among other things to: (i) answer shareholder inquiries
regarding the manner in which purchases, exchanges and redemptions of shares of
the Trust may be effected and other matters pertaining to the Trust's services;
(ii) provide necessary personnel and facilities to establish and maintain
shareholder accounts and records; (iii) assist shareholders in arranging for
processing purchase, exchange and redemption transactions; (iv) arrange for the
wiring of funds; (v) guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
(vi) integrate periodic statements with other shareholder transactions; and
(vii) provide such other related services as the shareholder may request.
As Participating Organizations, some Shareholder Servicing Agents also may
impose certain conditions on their customers, subject to the terms of the
Trust's Prospectus, in addition to or different from those imposed by the Trust,
such as requiring a minimum initial investment or by charging their customers a
direct fee for their services. Some Shareholder Servicing Agents may also act
and receive compensation for acting as custodian, investment manager, nominee,
agent or fiduciary for its customers or clients who are shareholders of the
Funds with respect to assets invested in the Funds. These Shareholder Servicing
Agents may elect to credit against the fees payable to it by its clients or
customers all or a portion of any fee received from the Trust with respect to
assets of those customers or clients invested in the Funds.
Table 5 in Appendix C shows the dollar amount of fees paid under the Shareholder
Service Plan with respect to Institutional Service Shares and Investor Shares of
each Fund services by the Funds. This information is provided for the past three
years (or shorter time a Fund has been operational).
FUND ACCOUNTING
Pursuant to a Fund Accounting Agreement, FAcS provides the Funds with accounting
services, including the calculation of the Fund's net asset value. For these
services, FAcS receives an annual fee of$36,000 per Fund plus surcharges
depending on the amount and type of each Fund's portfolio transactions and
positions. Pursuant to a Fund Accounting Agreement with Core Trust, FAcS also
provides portfolio accounting services to each Portfolio, including the
calculation of each Portfolio's net asset value. For these services, FAcS
receives an annual fee of $48,000 per Portfolio plus surcharges depending upon
the amount and type of thePortfolio's portfolio transactions and positions. The
annual fee for each of the Treasury Cash Portfolio, Government Cash Portfolio
and Cash Portfolio with up to five unitholders (excluding FAcS and its
affiliates) is the lesser of 0.05% of the average daily net assets of the
Portfolio or $48,000.
FAcS is required to use its best judgment and efforts in rendering fund
accounting services and is not liable to Core Trust for any action or inaction
in the absence of bad faith, willful misconduct or gross negligence. FAcS is not
responsible or liable for any failure or delay in performance of its fund
accounting obligations arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control and Core Trust has agreed to
indemnify and hold harmless FAcS, its employees, agents, officers and directors
against and from any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising out of or in any way related to FAcS's
actions taken or failures to act with respect to a Portfolio or based, if
applicable, upon information, instructions or requests with respect to a
Portfolio given or made to FAcS by an officer of the Trust duly authorized. This
indemnification does not apply to FAcS actions taken or failures to act in cases
of FAcS's own bad faith, willful misconduct or gross negligence.
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Table 6 in Appendix C shows the dollar amount of fees paid for accounting
services by the Funds and the Portfolios. This information is provided for the
past three years (or shorter time a Fund or Portfolio has been operational).
FORUM FINANCIAL GROUP
FIA, FFSI, FSS and FAcS are members of the Forum Financial Group of Companies.
Each of these companies are affiliated through the common control by John Y.
Keffer.
7. DETERMINATION OF NET ASSET VALUE
The Funds do not determine net asset value on the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas. Purchases and redemptions are effected at the time of the next
determination of net asset value following the receipt of any purchase or
redemption order.
Pursuant to the rules of the SEC, both the Board and the Core Trust Board have
established procedures to stabilize each Fund's and each Portfolio's, as
applicable, net asset value at $1.00 per share. These procedures include a
review of the extent of any deviation of net asset value per share as a result
of fluctuating interest rates, based on available market rates, from each Fund's
and Portfolio's, as applicable, $1.00 amortized cost price per share. Should
that deviation exceed 1/2 of 1%, the Board and the Core Trust Board,
respectively, will consider whether any action should be initiated to eliminate
or reduce material dilution or other unfair results to shareholders. Such action
may include redemption of shares in kind, selling portfolio securities prior to
maturity, reducing or withholding dividends and utilizing a net asset value per
share as determined by using available market quotations.
In determining the approximate market value of portfolio investments, the
Portfolios may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried at their face value.
Each investor in a Portfolio, including the Funds, may add to or reduce its
investment in that Portfolio on each business day of the Portfolios (which
corresponds to Fund Business Days). The Portfolios maintain the same Business
Days as do the Funds. As of the close of regular trading on any Fund Business
Day, the value of a Fund's beneficial interest in a Portfolio is determined by
multiplying the net asset value of the Portfolio by the percentage, effective
for that day, which represents the Fund's share of the aggregate beneficial
interests in the Portfolio. Any additions or reductions, which are to be
effected as of the close of the Fund Business Day, are then effected. The Fund's
percentage of the aggregate beneficial interests in the Portfolio are then
recomputed as the percentage equal to the fraction (i) the numerator of which is
the value of the Fund's investment in the Portfolio as of the close of the Fund
Business Day plus or minus, as the case may be, the amount of net additions to
or reductions from the Fund's investment in the Portfolio effected as of that
time, and (ii) the denominator of which is the aggregate net asset value of the
Portfolio as of the close of the Fund Business Day plus or minus, as the case
may be, the amount of net additions to or reductions from the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
determined is then applied to determine the value of the Fund's interest in the
Portfolio as of the close of the next Fund Business Day.
8. PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities for the Portfolio usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. Although Core
Trust does not anticipate that the Portfolio will pay any amounts of commission,
in the event the Portfolio pays
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brokerage commissions or other transaction-related compensation, the payments
may be made to broker-dealers who pay expenses of the Portfolio that it would
otherwise be obligated to pay itself. Any transaction for which the Portfolio
pays transaction-related compensation will be effected at the best price and
execution available, taking into account the amount of any payments made on
behalf of the Portfolio by the broker-dealer effecting the transaction.
Purchases from underwriters of portfolio securities include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
serving as market makers include the spread between the bid and asked prices.
Since each Fund's and Portfolio's inception, no brokerage fees were paid by any
Fund (during those periods of the Funds invested directly in securities), nor
any Portfolio.
Allocations of transactions to dealers and the frequency of transactions are
determined for each Portfolio by FIA in its best judgment and in a manner deemed
to be in the best interest of shareholders of that Portfolio rather than by any
formula. The primary consideration is prompt execution of orders in an effective
manner and at the most favorable price available to the Portfolio.
Investment decisions for the Portfolios will be made independently from those
for any other account or investment company that is or may in the future become
managed by FIA or its respective affiliates. If, however, a Portfolio and other
investment companies or accounts managed by FIA is contemporaneously engaged in
the purchase or sale of the same security, the transactions may be averaged as
to price and allocated equitably to each account. In some cases, this policy
might adversely affect the price paid or received by a Portfolio or the size of
the position obtainable for the Portfolio. In addition, when purchases or sales
of the same security for a Portfolio and for other investment companies managed
by FIA occur contemporaneously, the purchase or sale orders may be aggregated in
order to obtain any price advantages available to large denomination purchases
or sales.
No portfolio transactions are executed with FIA or any of its affiliates.
9. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Funds are sold on a continuous basis by the distributor without
any sales charge.
In addition to the situations described in the Prospectus, the Trust may redeem
shares involuntarily to reimburse a Fund for any loss sustained by reason of the
failure of a shareholder to make full payment for shares purchased by the
shareholder or to collect any charge relating to transactions effected for the
benefit of a shareholder which is applicable to a Fund's shares as provided in
the Prospectus from time to time.
The Trust has filed a formal election with the SEC pursuant to which the Funds
will only effect a redemption in portfolio securities in kind if a shareholder
is redeeming more than $250,000 or 1% of the Fund's total net assets, whichever
is less, during any 90-day period.
The Funds may wire proceeds of redemptions to shareholders that have elected
wire redemption privileges only if the wired amount is greater than $5,000. In
addition, the Funds will only wire redemption proceeds to financial institutions
located in the United States.
By use of the telephone redemption or exchange privilege, the shareholder
authorizes FSS 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 FSS to be genuine. The records of FSS of such instructions are
binding.
FSS 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 FSS will be reinvested and
the checks will be canceled.
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EXCHANGE PRIVILEGE
The exchange privilege permits shareholders of the Funds to exchange their
shares for shares of any Participating Fund, which includes (i) the same class
of the other Funds and (ii) any other mutual fund for which Forum or its
affiliates act as investment adviser, manager or distributor and which
participates in the Trust's exchange privilege program. The following table
summarizes the current exchange opportunities associated with class of each
shares of the Funds.
<TABLE>
<S> <C>
Class of Shares Exchange Opportunities
--------------- ----------------------
Investor Shares Other Funds (Investor Shares)
Other series of the Trust
Sound Shore Fund, Inc.
The CRM Funds (Investor Shares)
The Cutler Trust
Memorial Funds (Trust Shares)
Institutional Shares Other Funds (Institutional Shares)
Institutional Service Shares Other Funds (Institutional Service Shares)
The CRM Funds (Institutional Shares)
Memorial Funds (Institutional Shares)
</TABLE>
Exchange transactions are made on the basis of relative net asset values per
share at the time of the exchange transaction plus any applicable sales charge
of the Participating Fund whose shares are acquired. Exchanges are accomplished
by (i) a redemption of the shares of the Fund exchanged at the next
determination of that Fund's net asset value after the exchange order in proper
form (including any necessary supporting documents required by the Fund whose
shares are being exchanged) is accepted by the Transfer Agent and (ii) a
purchase of the shares of the fund acquired at the next determination of that
fund's net asset value after (or occurring simultaneously with) the time of
redemption.
Shares of any Participating Fund may be exchanged without a sales charge for
shares of any Participating Fund that are offered without a sales charge. If the
Participating Fund whose shares are purchased in the exchange transaction
imposes a higher sales charge the shareholder will be required to pay the sales
charge on the purchased shares. Shareholders are entitled to any reduced sales
charges of the Participating Fund into which they are exchanging to the extent
those reduced sales charges would be applicable to that shareholder's purchase
of shares.
The Funds do not charge for the exchange privilege and there is currently no
limit on the number of exchanges a shareholder may make, but each Fund reserves
the right to limit excessive exchanges by any shareholder. A pattern of frequent
exchanges may be deemed by the Transfer Agent to be contrary to the best
interests of the Fund's other shareholders and, at the discretion of the
Transfer Agent, may be limited by that Fund's refusal to accept additional
exchanges from the investor.
The terms of the exchange privilege are subject to change, and the privilege may
be terminated by any Participating Fund or the Trust. However the privilege will
not be terminated, and no material change that restricts the availability of the
privilege to shareholders will be implemented, without 60 days' advance notice
to shareholders. No notice need be given of an amendment whose only material
effect is to reduce amount of sales charge required to be paid on the exchange
and no notice need be given if redemptions of shares of a Fund are suspended or
a Fund temporarily delays or ceases the sale of its shares.
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INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The Funds (other than Daily Assets Municipal Fund) offer an individual
retirement plan (the "IRA") for individuals who wish to use shares of a Fund as
a medium for funding individual retirement savings. Under the IRA, distributions
of net investment income and capital gain will be automatically reinvested in
the IRA established for the investor. The Funds' custodian furnishes custodial
services to the IRAs for a service fee. Shareholders wishing to invest in a Fund
through an IRA should contact the Transfer Agent for further information.
10. TAXATION
Qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended, does not involve governmental supervision of management or
investment practices or policies. The information set forth in the Prospectuses
and the following discussion relate solely to Federal income taxes on
distributions and other distributions by the Funds and assumes that the Funds
each qualify for treatment as a regulated investment company. Investors should
consult their own counsel for further details and for the application of
Federal, state and local tax laws to the investor's particular situation.
In order to continue to qualify for treatment as a regulated investment company
under the Internal Revenue Code, a Fund must distribute to its shareholders for
each taxable year at least 90% of its net investment income and must meet
several additional requirements. Among these requirements are the following: (1)
the Fund must derive at least 90% of its gross income each taxable year from
distributions, interest, payments with respect to securities loans, gains from
the sale or other disposition of securities and certain other income; (2)
subject to certain exceptions, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, securities of investment companies, U.S. Government
Securities and other securities, with these other securities limited, in respect
of any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets; and (3) subject to certain exceptions, at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than securities of investment
companies and U.S. Government Securities) of any one issuer.
The Funds expect to derive substantially all of their gross income (exclusive of
capital gain) from sources other than dividends. Accordingly, it is expected
that none of the Funds' dividends or distributions will qualify for the
dividends-received deduction for corporations.
Distributions declared by the Fund in October, November, or December of any year
and payable to shareholders of record on a date in such a month will be deemed
to have been paid by the Fund and received by the shareholders on December 31 of
the year declared if paid by the Fund during the following January.
11. OTHER INFORMATION
CUSTODIAN
Pursuant to a Custodian Agreement with Core Trust, BankBoston N.A., 100 Federal
Street, Boston, Massachusetts 02106, acts as the custodian of Government
Portfolio's assets. Pursuant to a Custodian Agreement with Core Trust, Imperial
Trust Company, 201 North Figueroa Street, Suite 610, Los Angeles, California
90012, acts as the custodian of each other Portfolio's assets. The custodians'
responsibilities include safeguarding and controlling the Portfolios cash and
securities and determining income payable on and collecting interest on
Portfolio investments.
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COUNSEL
Legal matters in connection with the issuance of beneficial interest of the
Trust are passed upon by Seward & Kissel, 1200 G Street, N.W., Washington, D.C.
20005.
AUDITORS
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110, independent
auditors, acts as auditors for the Funds and as auditors for the Portfolios.
THE TRUST AND ITS SHARES
The Trust is a business trust organized under Delaware law. Delaware law
provides that shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
securities regulators of some states, however, have indicated that they and the
courts in their state may decline to apply Delaware law on this point.
The Trust Instrument contains an express disclaimer of shareholder liability for
the debts, liabilities, obligations, and expenses of the Trust and requires that
a disclaimer be given in each contract entered into or executed by the Trust or
the Trustees. The Trust Instrument provides for indemnification out of each
series' property of any shareholder or former shareholder held personally liable
for the obligations of the series. The Trust Instrument also provides that each
series shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the series and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which Delaware law does not
apply, no contractual limitation of liability was in effect and the portfolio is
unable to meet its obligations. FAdS believes that, in view of the above, there
is no risk of personal liability to shareholders.
The Trust Instrument further provides that the Trustees shall not be liable to
any person other than the Trust or its shareholders; moreover, the Trustees
shall not be liable for any conduct whatsoever, provided that a Trustee is not
protected against any liability to which he would otherwise by subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The Board is required to call a meeting of shareholders for the purpose of
voting upon the removal of any trustee when so requested in writing by the
shareholders of record holding at least 10% of the Trust's outstanding shares.
Each series' capital consists of shares of beneficial interest. Shares are fully
paid and nonassessable, except as set forth above with respect to Trustee and
shareholder liability. Shareholders representing 10% or more of the Trust or a
series may, as set forth in the Trust Instrument, call meetings of the Trust or
series for any purpose related to the Trust or series, as the case may be,
including, in the case of a meeting of the entire Trust, the purpose of voting
on removal of one or more Trustees. The Trust or any series may be terminated
upon the sale of its assets to, or merger with, another open-end management
investment company or series thereof, or upon liquidation and distribution of
its assets. Generally such terminations must be approved by the vote of the
holders of a majority of the outstanding shares of the Trust or the series;
however, the Trustees may, without prior shareholder approval, change the form
of organization of the Trust by merger, consolidation or incorporation. If not
so terminated or reorganized, the Trust and its series will continue
indefinitely. Under the Trust Instrument, the Trustees may, without shareholder
vote, cause the Trust to merge or consolidate into one or more trusts,
partnerships or corporations or cause the Trust to merge or consolidate into one
or more trusts, partnerships or corporations or cause the Trust to be
incorporated under Delaware law, so long as the surviving entity is an open-end
management investment company that will succeed to or assume the Trust's
registration statement.
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FUND STRUCTURE
CORE AND GATEWAY. The Funds seek to achieve their objective by investing all of
their investable assets in a separate portfolio of a registered, open-end
management investment company with substantially the same investment objective
and policies as the Fund. This "Core and Gateway" fund structure is an
arrangement whereby one or more investment companies or other collective
investment vehicles that share investment objectives -- but offer their shares
through distinct distribution channels -- pool their assets by investing in a
single investment company having substantially the same investment objective and
policies (a "Core Portfolio"). This means that the only investment securities
that will be held by a Fund will be the Fund's interest in the Core Portfolio.
This structure permits other collective investment vehicles to invest
collectively in a Core Portfolio, allowing for greater economies of scale in
managing operations of the single Core Portfolio. The Board retains the right to
withdraw a Fund's investments from a Core Portfolio at any time; the Fund would
then resume investing directly in individual securities of other issuers or
could re-invest all of its assets in another Core Portfolio.
FUND SHAREHOLDERS' VOTING RIGHTS. A Core Portfolio normally will not hold
meetings of its investors except as required under the 1940 Act. As a
shareholder in a Core Portfolio, a Fund is entitled to vote in proportion to its
relative interest in the Core Portfolio. On any issue, a Fund will vote its
shares in a Core Portfolio in proportion to the votes cast by its shareholders.
If there are other investors in a Core Portfolio, there can be no assurance that
any issue that receives a majority of the votes cast by the Fund's shareholders
will receive a majority of votes cast by all Core Portfolio shareholders.
Generally, a Fund will hold a meeting of its shareholders to obtain instructions
on how to vote its interest in a Core Portfolio when the Core Portfolio is
conducting a meeting of its shareholders. However, subject to applicable
statutory and regulatory requirements, a Fund will not seek instructions from
its shareholders with respect to (i) any proposal relating to a Core Portfolio
that, if made with respect to the Fund, would not require the vote of Fund
shareholders, or (ii) any proposal relating to the Core Portfolio that is
identical to a proposal previously approved by the Fund's shareholders.
In addition to a vote to remove a trustee or change a fundamental policy,
examples of matters that will require approval of shareholders of a Core
Portfolio include, subject to applicable statutory and regulatory requirements:
the election of trustees; approval of an investment advisory contract; the
dissolution of a Core Portfolio; certain amendments of the organizational
documents for the Core Portfolio; a merger, consolidation or sale of
substantially all of a Core Portfolio's assets; or any additional matters
required or authorized by the charter or trust instrument and by-laws of a Core
Portfolio or any registration statement of a Core Portfolio, or as the directors
or trustees of the Core Portfolio may consider desirable. The board of trustees
of a Core Portfolio will typically reserve the power to change nonfundamental
policies without prior shareholder approval.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Core
Portfolio may be affected by the actions of other large investors in the Core
Portfolio, if any. For example, if the Core Portfolio had a large investor other
than the Fund that redeemed its interest in the Core Portfolio, the Core
Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from the Core Portfolio at any time,
if the Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if other investors in
the Core Portfolio, by a vote of shareholders, changed the investment objective
or policies of the Core Portfolio in a manner not acceptable to the Board. A
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Core Portfolio. That distribution could
result in a less diversified portfolio of investments for the Fund and could
affect adversely the liquidity of the Fund's portfolio. If the Fund decided to
convert those securities to cash, it normally would incur transaction costs. If
a Fund withdrew its investment from the Core Portfolio, the Board would consider
what action might be taken, including the management of the Fund's assets in
accordance with its investment objective and policies by FIA or the investment
of all of
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the Fund's investable assets in another pooled investment entity having
substantially the same investment objective as the Fund.
12. FINANCIAL STATEMENTS
AUGUST 31, 1997 ANNUAL REPORT
The Statements of Assets and Liabilities, Statements of Operations, Statements
of Changes in Net Assets, Financial Highlights and Notes Thereto of Daily Assets
Government Fund (formerly known as Daily Assets Treasury Fund) and Daily Assets
Cash Fund for the fiscal year ended August 31, 1997 and the Independent
Auditors' Report thereon (included in the Annual Report to Shareholders), which
are delivered along with this SAI, are incorporated herein by reference. Also
incorporated by reference into this SAI are the Schedules of Investments,
Statements of Assets and Liabilities, Statements of Operations, Statements of
Changes in Net Assets, and notes thereto, of Government Portfolio (formerly
known as Treasury Portfolio) and Cash Portfolio for the fiscal year ended August
31, 1997 and the Independent Auditors' Report thereon.
FEBRUARY 28, 1998 SEMI-ANNUAL REPORT
The Statements of Assets and Liabilities, Statements of Operations, Statements
of Changes in Net Assets, Financial Highlights and Notes Thereto of Daily Assets
Government Fund (formerly known as Daily Assets Treasury Fund), Daily Assets
Treasury Obligations Fund, Daily Assets Government Obligations Fund (formerly
known as Daily Assets Government Fund) and Daily Assets Cash Fund for the
semi-annual period ended February 28, 1998 (included in the Semi-Annual Report
to Shareholders), which are delivered along with this SAI, are incorporated
herein by reference. Also incorporated by reference into this SAI are the
Schedules of Investments, Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, and notes thereto, of
Government Portfolio (formerly known as Treasury Portfolio) and Cash Portfolio
for the semi-annual period ended February 28, 1998.
DAILY ASSETS MUNICIPAL FUND
As Daily Assets Municipal Fund and Municipal Cash Portfolio had not as of
February 28, 1998 commenced operations, no financial statements will be
available until after August 31, 1998.
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APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
CORPORATE BONDS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S"). Bonds which are rated Aaa are
judged by Moody's to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Note: Those bonds in the Aa and A groups which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa1 and A1.
STANDARD AND POOR'S CORPORATION ("S&P"). Bonds rated AAA have the highest rating
assigned by S&P. Capacity to pay interest and repay principal is extremely
strong.
Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.
Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt rated in higher rated
categories.
Note: The ratings for AA and A may be modified by the addition of a plus (+) or
minus (-) sign to show the relative standing within the rating category.
FITCH INVESTORS SERVICE, INC. ("FITCH"). AAA Bonds are considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events.
AA Bonds are considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, shorter-term debt of these issuers is generally rate F-1+.
A Bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA categories.
A-1
<PAGE>
COMMERCIAL PAPER
MOODY'S INVESTORS SERVICE, INC. Moody's two highest ratings for short-term debt,
including commercial paper, are Prime-1 and Prime-2. Both are judged investment
grade, to indicate the relative repayment ability of rated issuers.
Issuers rated Prime-1 have a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics:
* Leading market positions in well-established industries.]
* High rates of return on funds employed.
* Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
* Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
* Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers rated Prime-2 by Moody's have a strong ability for repayment of senior
short-term debt obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
STANDARD AND POOR'S CORPORATION. S&P's two highest commercial paper ratings are
A and B. Issues assigned an A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety. An A-1 designation
indicates that the degree of safety regarding timely payment is either
overwhelming or very strong. Those issues determined to possess overwhelming
safety characteristics are denoted with a plus (+) sign designation. The
capacity for timely payment on issues with an A-2 designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1. A-3 issues have a satisfactory capacity for timely payment. They are,
however, somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations. Issues rated B
are regarded as having only an adequate capacity for timely payment. However,
such capacity may be damaged by changing conditions or short-term adversities.
FITCH INVESTORS SERVICE, INC. Fitch's short-term ratings apply to debt
obligations that are payable on demand or have original maturities of generally
up to three years, including commercial paper, certificates of deposit,
medium-term notes, and municipal and investment notes.
F-1+. Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
F-2. Issues assigned this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1 ratings.
A-2
<PAGE>
APPENDIX B - PERFORMANCE INFORMATION
For the seven day period ended August 31, 1997, the annualized yields of each of
the classes of the Funds that were then operating were as follows:
<TABLE>
<S> <C> <C> <C> <C>
TAX EQUIVALENT TAX EQUIVALENT
CURRENT YIELD EFFECTIVE YIELD CURRENT YIELD EFFECTIVE YIELD
DAILY ASSETS TREASURY
OBLIGATIONS FUND
Investor Shares -- -- -- --
Institutional Service Shares -- -- -- --
Institutional Shares -- -- -- --
DAILY ASSETS GOVERNMENT FUND
Investor Shares -- -- -- --
Institutional Service Shares 4.76% 4.87% -- --
Institutional Shares -- -- -- --
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
Investor Shares -- -- -- --
Institutional Service Shares -- -- -- --
Institutional Shares -- -- -- --
DAILY ASSETS CASH FUND
Investor Shares -- -- -- --
Institutional Service Shares 5.19% 5.33% -- --
Institutional Shares -- -- -- --
DAILY ASSETS MUNICIPAL FUND
Investor Shares -- -- -- --
Institutional Service Shares -- -- -- --
Institutional Shares -- -- -- --
</TABLE>
As of August 31, 1997, there were no outstanding Institutional Shares, Investor
Shares or Institutional Service Shares of each Fund other than Daily Assets
Government Fund and Daily Assets Cash Fund.
B-1
<PAGE>
APPENDIX C- MISCELLANEOUS TABLES
TABLE 1 - INVESTMENT ADVISORY FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1997 0
Year ended August 31, 1996 12,930 0 12,930
GOVERNMENT PORTFOLIO
Period ended August 31, 1997 9,064 0 9,064
Year ended March 31, 1997 20,637 0 20,637
Year ended March 31, 1996 69,466 0 69,466
Year ended March 31, 1995 59,382 53,382 6,000
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1997 196,857 0 196,857
Year ended August 31, 1996 156,552 0 156,552
CASH PORTFOLIO
Year ended August 31, 1997 72,872 0 72,872
Year ended August 31, 1996 38,083 0 38,083
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1997 -- -- --
</TABLE>
C-1
<PAGE>
TABLE 2 - ADMINISTRATION FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1997 24,287 14,346 9,941
Year ended August 31, 1996 19,198 9,307 9,891
GOVERNMENT PORTFOLIO
Period ended August 31, 1997 18,128 18,128 0
Year ended March 31, 1997 41,274 41,274 0
Year ended March 31, 1996(1)
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1997 252,821 0 252,821
Year ended August 31, 1996 230,547 104,558 125,989
CASH PORTFOLIO
Year ended August 31, 1997 92,652 7,621 85,031
Year ended August 31, 1996 56,125 3,719 52,406
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1997 -- -- --
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Period ended August 31, 1997 18,123 0 18,123
Year ended March 31, 1997 41,232 7,453 33,779
Year ended March 31, 1996
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Year ended August 31, 1997 7,453 7,453 0
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1997 -- -- --
</TABLE>
C-2
<PAGE>
TABLE 3 - INVESTOR SHARES RULE 12B-1 FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Period ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Period ended August 31, 1997 -- -- --
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1997 -- -- --
</TABLE>
For the fiscal year ended August 31, 1997, no Investor Shares were outstanding
and, accordingly, no fees were payable under the Investor Class Plan.
C-3
<PAGE>
TABLE 4 - TRANSFER AGENCY FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
Period ended August 31, 1997 50,810 44,054 6,756
Year ended March 31, 1997 116,051 101,485 14,566
Year ended March 31, 1996 110,792 96,881 13,911
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Institutional Service Shares
Period ended August 31, 1997 29,772 17,766 12,006
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
</TABLE>
As of August 31, 1997, there were no outstanding Institutional Shares, Investor
Shares or Institutional Service Shares of each Fund other than Daily Assets
Government Fund and Daily Assets Cash Fund.
C-4
<PAGE>
TABLE 5 - SHAREHOLDER SERVICE FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
Period ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
</TABLE>
As of August 31, 1997, there were no outstanding Investor Shares and no
effective Shareholder Plan with respect to Institutional Service Shares of any
Fund.
C-5
<PAGE>
TABLE 6 - FUND ACCOUNTING FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1997 24,279 0 24,279
Year ended August 31, 1996 28,518 19,955 8,563
GOVERNMENT PORTFOLIO
Period ended August 31, 1997 20,000 0 20,000
Year ended March 31, 1997 48,000 0 48,000
Year ended March 31, 1996(1)
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1997 48,000 0 48,000
Year ended August 31, 1996 42,000 0 42,000
CASH PORTFOLIO
Year ended August 31, 1997 48,000 0 48,000
Year ended August 31, 1996 42,000 14,957 27,043
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1997 -- -- --
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Period ended August 31, 1997 5,000 0 5,000
Year ended March 31, 1997 12,000 0 12,000
Year ended March 31, 1996
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Year ended August 31, 1997
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1997 -- -- --
</TABLE>
C-6
<PAGE>
TABLE 7 - 5% SHAREHOLDERS
As of May 1, 1998, the officers and Trustees of the Trust as a group owned less
than 1% of the outstanding shares of each Fund. Also as of that date, the
following table lists the persons who owned of record 5% or more of the
outstanding shares of a class of shares, as well as their percentage holding of
all shares of the Fund
<TABLE>
<S> <C> <C>
PERCENTAGE OF SHARES PERCENTAGE OF SHARES
OF CLASS OWNED OF FUND OWNED
DAILY ASSETS TREASURY OBLIGATIONS FUND
Investor Shares
Forum Administrative Services, LLC 100.00 0.00
Two Portland Square, Portland, ME 04101
Institutional Shares
Babb & Co., C/O Bank of New Hampshire 99.90 96.97
P.O. Box 477, Concord, NH 03302
Institutional Service Shares
Allagash & Co., C/O Bank of New Hampshire 100.00 2.93
P.O. Box 477, Concord, NH 03302
DAILY ASSETS GOVERNMENT FUND
Institutional Shares
Forum Financing 100.00 0.00
Two Portland Square, Portland, ME 04101
Institutional Service Shares
H.M. Payson & Co. Custody Account 54.07 54.07
P.O. Box 31, Portland, ME 04112
H.M. Payson & Co. Custody Account 25.71 25.71
P.O. Box 31, Portland, ME 04112
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Investor Shares
Forum Administrative Services, LLC 100.00 0.00
Two Portland Square, Portland, ME 04101
Institutional Shares
Allagash & Co., C/O Bank of New Hampshire 61.79 61.77
P.O. Box 477, Concord, NH 03302
Babb & Co., C/O Bank of New Hampshire 38.21 38.20
P.O. Box 477, Concord, NH 03302
Institutional Service Shares
Mike Stone, C/O Peoples Heritage Bank 99.85 0.03
P.O. Box 9540, Portland, ME04112
DAILY ASSETS CASH FUND
Investor Shares
Forum Administrative Services, LLC 100.00 0.00
Two Portland Square, Portland, ME 04101
Institutional Shares 100.00 34.66
Allagash & Co., C/O Bank of New Hampshire
P.O. Box 477, Concord, NH 03302
Institutional Service Shares
H.M. Payson & Co. Custody Account 58.43 38.17
P.O. Box 31, Portland, ME 04112
H.M. Payson & Co. Trust Account 37.29 24.36
P.O. Box 31, Portland, ME 04112
</TABLE>
C-7
<PAGE>
APPENDIX D- ADDITIONAL ADVERTISING MATERIALS
TEXT OF PEOPLES HERITAGE NEWS RELEASE
Peoples Heritage Financial Group, Inc. (NASDAQ:PHBK) announced today that it has
formed an alliance with a major mutual fund provider and an investment advisory
firm to expand its mutual fund offerings. The alliance with Forum Financial
Group and H.M. Payson & Company will result in 18 funds, including the unique
Maine Municipal Bond Fund and New Hampshire Bond Fund, being offered through the
branches of Peoples' affiliate banks in Maine, New Hampshire and northern
Massachusetts and the Company's trust and investment subsidiaries
'There is no secret to where financial services are moving, under one roof,"
said William J. Ryan, Chairman, President and Chief Executive Officer of Peoples
Heritage. "One only has to watch the virtually daily announcements of
consolidations in the financial sector to understand that customers are
demanding and receiving 'one-stop' financial services.
"We think we are adding the additional competitive advantage of funds that are
managed and administered close to
home."
Eighteen Forum funds will be offered including two Payson funds. The tax-free
Maine and New Hampshire state bond funds are the only two such funds available
and usually invest 80% of total assets in municipal securities. Other funds
being provided by the alliance include money market, fixed income and equity
funds.
Forum Financial, based in Portland, Maine since 1987, administers 146 funds with
more than $36 billion in assets. Forum manages mutual funds for independent
investment advisors such as Payson and for banks. Forum Investment Advisors, LLC
an affiliate, is the largest Maine-based investment advisor with approximately
$1.7 billion in fund assets under management.
"We are providing a great product set to the customers served by Peoples' nearly
200 branches in northern New England," said John Y. Keffer, Forum Financial
president, "The key today is to link a wide variety of investment options with
convergent, easy access for customers. I believe this alliance does just that."
H.M. Payson & Co., founded in 1854, is one of the nation's oldest investment
firms with nearly $1 billion in assets under management and $300 million in
non-managed custodial accounts. The Payson value Fund and Payson Balanced Fund
are among the 18 offerings.
"I believe we have all the ingredients of a tremendous alliance," said John
Walker, Payson president and managing director. "We have the region's premier
community banking company, a community-based investment advisor, and a local
mutual fund company that operates nationally and specializes in working with
banks. We are poised to provide solid investment performance and service."
Peoples Heritage Financial Group is a $10 billion multi-state bank and financial
services holding company headquartered in Portland, Maine. Its Maine banking
affiliate, Peoples Heritage Bank, has the state's leading deposit market share.
Its New Hampshire banking affiliate, Bank of New Hampshire, has the state's
leading deposit market share. Family Bank, the Company's Massachusetts banking
subsidiary, has the state's tenth largest deposit market share and the leading
market share in many of the northern Massachusetts communities it serves.
Peoples affiliate banks also operate subsidiaries in leasing, trust and
investment services and insurance.
D-1
<PAGE>
FORUM FINANCIAL GROUP:
Headquarters: Two Portland Square, Portland, Maine 04101
President: John Y. Keffer
Offices: Portland, Seattle, Warsaw, Bermuda
*Established in 1986 to administer mutual funds for independent investment
advisors and banks
*Among the nation's largest third-party fund administrators
*Uses proprietary in-house systems and custom programming capabilities
*ADMINISTRATION AND DISTRIBUTION SERVICES: Regulatory, compliance,
expense accounting, budgeting for
all funds
*FUND ACCOUNTING SERVICES: Portfolio valuation, accounting, dividend
declaration, and tax advice
*SHAREHOLDER SERVICES: Preparation of statements, distribution
support, inquiries and processing of trades
*CLIENT ASSETS UNDER ADMINISTRATION AND DISTRIBUTION: $36.9 billion
*CLIENT ASSETS PROCESSED BY FUND ACCOUNTING: $47.6 billion
*CLIENT FUNDS UNDER ADMINISTRATION AND DISTRIBUTION: 146 mutual funds with 219
share classes
*INTERNATIONAL VENTURES:
Joint venture with Bank Handlowy in Warsaw, Poland, using Forum's
proprietary transfer agency and distribution systems Off-shore
investment fund administration, using Bermuda as Forum's center of
operations
*FORUM EMPLOYEES: United States -198, Poland - 61, Bermuda - 3
FORUM CONTACTS:
Mark Kaplan, Managing Director and Portfolio Manager, Forum Investment
Advisors, LLC,
(207) 879-1900 X 6123
Tony Santaniello, Director of Marketing, (207) 879-1900 X 6175
D-2
<PAGE>
H.M. PAYSON & CO.:
Headquarters: One Portland Square, Portland, Maine
President and Managing Director: John Walker
Quality investment services and conservative wealth management since 1854
*Assets under Management: $1 Billion
*Custody Income Assets: $300 Million
*Client Base: 85% individuals; 15% institutional
*Owned by 11 shareholders; 11 managing directors
*Payson Balanced Fund and Payson Value Fund (administrative and shareholder
services provided by Forum Financial Group)
*Employees: 45
H.M. PAYSON & CO. CONTACT:
Joel Harris, Portfolio/Marketing Coordinator, (207) 772-3761
D-3
<PAGE>
TEXT OF FORUM BROCHURE
In connection with its advertisements, a Fund may provide a description of the
Fund's investment adviser and its affiliates, which are service providers to the
Fund. Text which is currently in use is set forth below.
"FORUM FINANCIAL GROUP OF COMPANIES
Forum Financial Group of Companies represent more than a decade of diversified
experience with every aspect of mutual funds. The Forum Family of Funds has
benefited from the informed, sharply focused perspective on mutual funds that
experience makes possible.
The Forum Family of Funds has been created and managed by affiliated companies
of Portland-based Forum Financial Group, among the nation's largest mutual fund
administrators providing clients with a full line of services for every type of
mutual fund.
The Forum Family of Funds is designed to give investment representatives and
investors a broad choice of carefully structured and diversified portfolios,
portfolios that can satisfy a wide variety of immediate as well as long-term
investment goals.
Forum Financial Group has developed its "brand name" family of mutual funds and
has made them available to the investment public and to institutions on both the
national and regional levels.
For more than a decade Forum has had direct experience with mutual funds from a
different perspective, a perspective made possible by Forum's position as a
leading designer and full-service administrator and manager of mutual funds of
all types.
Today Forum Financial Group administers and provides services for over 120
mutual funds for 17 different fund managers, with more than $30 billion in
client assets. Forum has its headquarters in Portland, Maine, and has offices in
Seattle, Bermuda, and Warsaw, Poland. In a joint venture with Bank Handlowy, the
largest and oldest commercial bank in Poland, Forum operates the only
independent transfer agent and mutual fund accounting business in Poland. Forum
directs an off-shore and hedge fund administration business through its Bermuda
office. It employs more than 230 professionals worldwide.
From the beginning, Forum developed a plan of action that was effective with
both start- up funds, and funds that needed restructuring and improved services
in order to live up to their potential. The success of its innovative approach
is evident in Forum's growth rate over the years, a growth rate that has
consistently outstripped that of the mutual fund industry as a whole, as well as
that of the fund service outsource industry.
Forum has worked with both domestic and international mutual fund sponsors,
designing unique mutual fund structures, positioning new funds within the
sponsors' own corporate planning and targeted markets.
Forum's staff of experienced lawyers, many of whom have been associated with the
Securities and Exchange Commission, have been available to work with fund
sponsors to customize fund components and to evaluate the potential of various
fund structures.
Forum has introduced fund sponsors to its unique proprietary Core and Gateway(R)
partnership, helping them to take advantage of this full-service master/feeder
structure.
Fund sponsors understand that even the most efficiently and creatively designed
fund can disappoint shareholders if it is inadequately serviced. That is the
reason why fund sponsors have relied on Forum to meet all of a fund's complex
compliance, regulatory, and filing needs.
D-4
<PAGE>
Forum's full service commitment includes providing state-of- the-art accounting
support (Forum has 8 CPAs on staff, as well as senior accountants who have been
associated with Big 6 accounting firms). Forum's proprietary accounting system
is continually upgraded and can provide custom-built modules to satisfy a fund's
specific requirements. This service is joined with transfer agency and
shareholder service groups that draw their strength both from the high caliber
of the people staffing each unit and from Forum's advanced technology support
system.
More than a decade of experience with mutual funds has given Forum practical
hands-on experience and knowledge of how mutual funds function "from the inside
out."
Forum has put that experience to work by creating the Forum Family of Funds, a
family where each member is designed and positioned for your best investment
advantage, and where each fund is serviced with the utmost attention to the
delivery of timely, accurate, and comprehensive shareholder information.
INVESTMENT ADVISERS
Forum Investment Advisors, LLC offers the services of portfolio managers with
the highest qualifications--because without such direction, a comprehensive and
goal-oriented investment program and ongoing investment strategy are not
possible. Serving as portfolio managers for the Forum Family of Funds are
individuals with decades of experience with some of the country's major
financial institutions.
Individual funds in the Forum Family of Funds invest in portfolios that have as
their investment adviser nationally recognized institutions, including Schroder
Capital Management International, Inc., a major figure in worldwide mutual funds
that, with its affiliates, managed over $175 billion as of September 30, 1997.
Forum Funds are also managed by the portfolio managers of H.M. Payson & Co.,
founded in Portland, Maine in 1854 and one of the oldest investment firms in the
country. Payson has approximately $1 billion in assets under management, with
clients that include pension plans, endowment funds, and institutional and
individual accounts.
FORUM INVESTMENT ADVISORS, LLC
Forum Investment Advisors, LLC is the largest Maine based investment adviser
with approximately $1.4 billion in assets under management. The portfolio
managers have decades of combined experience in a cross section of the country's
financial markets. The managers have specific, day-to-day experience in the
asset class portfolios they manage, bringing critical focus to meeting each
fund's explicit investment objectives. The portfolio managers have been involved
in investing the assets of large insurance companies, banks, pension plans,
individuals, and of course mutual funds. Forum Investment Advisors, LLC has a
staff of analysts and investment administrators to meet the demands of serving
shareholders in our funds.
FORUM FAMILY OF FUNDS
It has been said that mutual fund investment offerings--of which there are
nearly 10,000, with assets spread across stock, bond, and money market funds
worth more than $4 trillion--come in a rainbow of varieties. A better
description would be a "spectrum" of varieties, the spectrum graded from green
through amber and on to red. In simpler terms, from low risk investments,
through moderate to high risk. The lower the risk, the lower the possible reward
- -- the higher the risk, the higher the potential reward.
The Forum Family of Funds provides conservative investment opportunities that
reduce the risk of loss of capital, using underlying money market investments
U.S. Government securities (although the shares of the Forum Funds are neither
insured nor guaranteed by the U.S. Government or its agencies), thus
D-5
<PAGE>
cushioning the investment against market volatility. These funds offer regular
income, ready access to your money, and flexibility to buy or sell at any time.
In the less conservative but still not aggressive category are funds in the
Forum Family that seek to provide steady income and, in certain cases, tax-free
earnings. Such investments provide important diversification to an investment
portfolio.
Growth funds in the Forum Family more aggressively pursue a high return at the
risk of market volatility. These funds include domestic and international stock
mutual funds."
D-6