As filed with the Securities and Exchange Commission on November 30, 1998
File Nos. 2-67052 and 811-3023
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 68
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 70
FORUM FUNDS
(Formerly "Forum Funds, Inc.")
Two Portland Square
Portland, Maine 04101
(207) 879-1900
Leslie K. Klenk, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
Copies to:
Anthony C.J. Nuland, Esq.
Seward & Kissel
1200 G Street, N.W.
Washington, D.C. 20005
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to Rule 485, paragraph (b
[X] on December 30, 1998 pursuant to Rule 485, paragraph (b)
[ ] 60 days after filing pursuant to Rule 485, paragraph (a)(1)
[ ] on ______ pursuant to Rule 485, paragraph (a)(1)
[ ] 75 days after filing pursuant to Rule 485, paragraph (a)(2)
[ ] on ______ pursuant to Rule 485, paragraph (a)(2)
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities being registered: Investor Shares, Institutional Shares and
Institutional Service 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 series being registered is
structured as a master-feeder fund and thus this amendment is also executed by
Core Trust (Delaware).
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(Prospectus offering Investor 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)
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PART A
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Form N-1A Item No. Location in Prospectus
- ------------------ ----------------------
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Prospectus Summary; Investment Objectives and
Policies; Other Information - The Trust and Its Shares
Item 5. Management of the Fund Prospectus Summary; Management
Item 5A. Management's Discussion of Fund Performance Not Applicable
Item 6. Capital Stock and Other Securities Investment Objectives and Policies; Distributions
and Tax Matters; Other Information - The Trust
and Its Shares
Item 7. Purchase of Securities Being Offered Purchases and Redemptions of Shares; Other
Information - Determination of Net Asset Value;
Management
Item 8. Redemption or Repurchase Purchases and Redemptions of Shares
Item 9. Pending Legal Proceedings Not Applicable
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(Prospectus offering 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)
PART A
Form N-1A Item No. Location in Prospectus
- ------------------ ----------------------
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Prospectus Summary; Investment Objectives and
Policies; Other Information - The Trust and Its Shares
Item 5. Management of the Fund Prospectus Summary; Management
Item 5A. Management's Discussion of Fund Performance Not Applicable
Item 6. Capital Stock and Other Securities Investment Objectives and Policies; Distributions
and Tax Matters; Other Information - The Trust
and Its Shares
Item 7. Purchase of Securities Being Offered Purchases and Redemptions of Shares; Other
Information - Determination of Net Asset Value;
Management
Item 8. Redemption or Repurchase Purchases and Redemptions of Shares
Item 9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(Prospectus offering Institutional Service 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)
<TABLE>
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PART A
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Form N-1A Item No. Location in Prospectus
- ------------------ ----------------------
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Prospectus Summary; Investment Objectives and
Policies; Other Information - The Trust and Its Shares
Item 5. Management of the Fund Prospectus Summary; Management
Item 5A. Management's Discussion of Fund Performance Not Applicable
Item 6. Capital Stock and Other Securities Investment Objectives and Policies; Distributions
and Tax Matters; Other Information - The Trust
and Its Shares
Item 7. Purchase of Securities Being Offered Purchases and Redemptions of Shares; Other
Information - Determination of Net Asset Value;
Management
Item 8. Redemption or Repurchase Purchases and Redemptions of Shares
Item 9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
(All other Prospectuses)
PART A
Not Applicable to this Filing
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
(SAI offering Investor Shares, Institutional Shares and Institutional Service
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)
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PART B
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Form N-1A Item No. Location in Statement of Additional Information
- ------------------ -----------------------------------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and History Management; Other Information
Item 13. Investment Objectives and Other Policies Investment Policies; Investment Limitations
Item 14. Management of the Fund Management
Item 15. Control Persons and Principal Holders of Other Information
Securities
Item 16. Investment Advisory and Other Services Management; Other Information - Custodian,
Counsel, Auditors
Item 17. Brokerage Allocation and Other Practices Portfolio Transactions
Item 18. Capital Stock and Other Securities Determination of Net Asset Value
Item 19. Purchase, Redemption and Pricing of Determination of Net Asset Value; Additional
Securities Being Offered Purchase and Redemption Information
Item 20. Tax Status Taxation
Item 21. Underwriters Management
Item 22. Calculation of Performance Data Performance Data
Item 23. Financial Statements Not Applicable
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
(All other SAIs)
PART B
Not Applicable to this Filing
<PAGE>
FORUM FUNDS
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
PROSPECTUS
January __, 1999
- --------------------------------------------------------------------------------
THIS PROSPECTUS OFFERS INVESTOR 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 January __, 1999 (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>
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TABLE OF CONTENTS
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1. Prospectus Summary.............................. 5. Purchases and Redemptions of Shares.............
2. Financial Highlights............................ 6. Distributions and Tax Matters...................
3. Investment Objectives and Policies.............. 7. Other Information...............................
4. Management......................................
</TABLE>
ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. AN INVESTMENT IN
THE FUNDS IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT ENDORSED OR GUARANTEED BY
ANY BANK OR ANY AFFILIATE OF A BANK.
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 Fund Services, LLC ("FFS")
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 FFS, 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 8:00 a.m. and 6:00 p.m., Eastern time, except on the following
holidays (or the days on which they are observed): 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 ("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
"Purchases and Redemptions of Shares."
Shares of one or more of the Funds may not be currently offered for sale in your
state.
EXCHANGES. Shareholders of a Fund may exchange Investor Shares without charge
for Investor Shares of the other Funds and for the shares of other certain
mutual funds not offered by this Prospectus. See "Purchases and Redemptions of
Shares - Exchanges."
2
<PAGE>
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, all securities, including U.S.
Government Securities, involve 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. For a further description of the
various expenses incurred in the operation of the Funds and the Portfolios, see
"Management."
EXPENSES OF INVESTING IN THE FUNDS
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) 0.04% 0.05% 0.04% 0.04% 0.08%
Other Expenses(3)
(after expense reimbursements) 0.69% 0.70% 0.67% 0.60% 0.65%
------- ----- ----- ----- -----
Total Operating Expenses 0.73% 0.75% 0.71% 0.64% 0.73%
</TABLE>
(1) The amount of fees and expenses for each Fund except Daily Assets Government
Portfolio is based on 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. Daily Assets Government Fund had no outstanding Investors Shares
as of August 31, 1998 and the amount of fees and expenses is based on estimated
annualized expenses for the Fund's fiscal year ending August 31, 1999.
(2) Management Fees include all investment advisory fees incurred by the Funds
and the Portfolios; as long as its assets are invested in a Portfolio, a
Portfolio pays no investment advisory fees directly.
(3) Absent reimbursements by FIA and its affiliates (estimated reimbursements
for Daily Assets Government Fund), Other Expenses and Total Fund Operating
Expenses would be: 727.09% and 727.12%, respectively, for Daily Assets Treasury
Obligations Portfolio; 112.42% and 112.47%, respectively, for Daily Assets
Government Fund; 766.13% and 766.17%, respectively, for Daily Assets Government
Obligations Fund; 671.07% and 671.11%, respectively, for Daily Assets Cash Fund;
and 749.10% and 749.18%, 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:
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One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
Daily Assets Treasury Obligations Fund $7 $22 $40 $90
Daily Assets Government Fund $8 $24 $42 $93
Daily Assets Government Obligations Fund $7 $23 $39 $88
Daily Assets Cash Fund $7 $21 $36 $80
Daily Assets Municipal Fund $7 $23 $40 $90
</TABLE>
3
<PAGE>
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.
4
<PAGE>
2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Investor Share of the Funds offering Investor Shares for the period indicated.
Prior to the offering of Investor Shares, Daily Assets Government Fund and Daily
Assets Cash Fund had commenced operations; selected data for a single
outstanding Institutional Service Share of the Funds since their inception also
is shown. Portfolio Information for each of the years or periods ended August 31
were audited by KPMG Peat Marwick LLP, independent auditors, whose report data
October 6, 1998 expressed an unqualified opinion on this information.
Information for Daily Assets Government Fund and Daily Assets Cash Fund for each
of the years or periods prior to August 31, 1997 was audited by other
independent auditors. The Funds' financial statements and independent auditors'
report are included in the Funds' annual report which is incorporated by
reference into the SAI and may be obtained without charge.
As of August 31, 1998, Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio had net assets of
$264,844,947; $46,762,986; $717,124,347, $607,340,844, and $20,834,474
respectively.
<TABLE>
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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 Total
----- ------ ------ Share -------- ------ Return
----- ------
DAILY ASSETS TREASURY OBLIGATIONS FUND
INVESTOR SHARES
Period ended August 31, 1998(2) $1.00 0.02 (0.02) $1.00 0.73%(3) 5.06%(3) 0.89%
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Period ended August 31, 1998(2) $1.00 0.05 (0.05) $1.00 0.46%(3) 4.39%(3) 5.04%
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(3) 4.76%(3) 2.01%
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70% 4.80%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01% 5.18%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82% 2.83%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.32%(3) 2.92%(3) 3.13%(3)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INVESTOR SHARES
Period ended August 31, 1998(2) $1.00 0.02 (0.02) $1.00 0.71%(3) 5.06%(3) 0.90%
DAILY ASSETS CASH FUND
INVESTOR SHARES
Period ended August 31, 1998(2) $1.00 0.02 (0.02) $1.00 0.78%(3) 5.25%(3) 5.91%
INSTITUTIONAL SERVICE SHARES
Year ended August 31, 1998 (2) $1.00 0.05 (0.05) $1.00 0.46%(3) 5.22%(3) 5.34%
October 1, 1996 to August 31, 1997 1.00 0.05 (0.05) 1.00 0.52%(3) 5.06%(3)% 4.70%
DAILY ASSETS MUNICIPAL FUND
INVESTOR SHARES
Period ended August 31, 1998 (2) $1.00 0.01 (0.01) $1.00 0.73%(2) 2.53%(2) 0.06%
</TABLE>
<TABLE>
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Ratio of
Net Assets Gross
End of Expenses
Period to Average
(000s Net Assets(1)
Omitted) ------------
--------
$ 10 727.12%(3)
$ 9,485 0.91%((3)
44,116 0.95%(3)
43,975 0.99%
43,103 1.06%
36,329 1.10%
26,505 1.17%
4,687 2.43%(3)
$ 766.17%(3)
10
$ 709.02%(3)
10
$ 5,235 0.90%(3)
12,076 1.22%(3)
$ 10 749.18%(2)
</TABLE>
5
<PAGE>
(1) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding any waivers and expense reimbursements for the Fund and its
respective Portfolio.
(2) The Trust commenced the offering of the Investor Share class of Daily
Assets Treasury Obligations Fund, Daily Assets Government Obligations Fund,
Daily Assets Cash Fund, and Daily Assets Municipal Fund on August 6, 1998.
(3) Annualized.
6
<PAGE>
3. INVESTMENT OBJECTIVES AND POLICIES
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
the following discusses the investment policies of the Portfolios (and the
responsibilities of the 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 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. 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. There can be
no assurance that any Fund or Portfolio will achieve its investment objective.
or maintain a stable net asset value.
INVESTMENT POLICIES
Each Portfolio invests only in high quality, U.S. dollar-denominated 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, A Division of The McGraw Hill Companies, and Moody's
Investors Service, Inc., is contained in the SAI.
Each Portfolio invests only in instruments that have a remaining maturity of 397
days or less (as calculated under Rule 2a-7 of the Investment Company Act of
1940, as amended (the "1940 Act")) 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.
Although each Portfolio only invests in high quality money market instruments,
an investment in a Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities and municipal securities, can
change in value when there is a change in interest rates, the issuer's actual or
perceived creditworthiness or the issuer's ability to meet its obligations.
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.
7
<PAGE>
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 "Investment Objectives and Policies - Daily Assets Government Portfolio")
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 Portfolios 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
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<PAGE>
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" without registration under
the Securities Act of 1933 (the "1933 Act"). These "restricted securities" are
restricted as to disposition under the Federal securities laws in that the sale
of these securities may not be made absent registration under the 1933 Act or an
appropriate exemption therefrom.
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. The Portfolio may invest a
substantial portion of its portfolio in municipal securities supported by credit
and liquidity enhancements (i.e. letters of credit not covered by federal
deposit insurance or put or demand features of third party financial
institutions, generally domestic and foreign banks. 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. Such investments will expose the Portfolio to risks pertaining to the
banking industry, including the foreign banking industry such as interest rate
and credit risk.
The Portfolio may purchase variable rate demand notes ("VRDN") which 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). They 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.
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 by a third party financial
institution to grant the security holders an 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. 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 Portfolios at more favorable rates.
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.
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<PAGE>
MUNICIPAL BONDS AND NOTES. Municipal bonds are long term fixed-income
securities. "General obligation" bonds are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
"Revenue" bonds are payable from revenues derived from a particular facility,
class of facilities or the proceeds of a special excise or other tax, but not
from general tax revenues. "Moral obligation" bonds are 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
Portfolio 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, 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 Municipal leases are entered into by state and local
governments and authorities to acquire equipment and facilities such as fire and
sanitation vehicles, telecommunications equipment and other assets. 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 Portfolio's and each Portfolio's investment objective and certain
investment limitations, as described in the SAI, may not be changed without
approval of the holders of a majority of the Portfolio's or Portfolio's, as
applicable, outstanding voting securities (as defined in the 1940 Act) (a
"Portfolioamental policy"). Except as otherwise indicated in this Prospectus or
in the SAI, investment policies of a Portfolio or a Portfolio may be changed by
the applicable board of trustees without shareholder approval (a
"nonPortfolioamental policy"). 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 Portfolios' and
the Portfolios' investment policies is contained in the SAI.
BORROWING. As a Portfolioamental policy, 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. As a
Portfolioamental policy of Government Portfolio and as a nonPortfolioamental
policy for each other Portfolio. borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's total
assets.
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<PAGE>
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 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. 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.
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. Securities
with ultimate maturities of greater than 397 days may be purchased only in
accordance with the provisions of Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features which comply with certain
requirements and certain U.S. Government Securities may be purchased. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.
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<PAGE>
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invest 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. 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 Portfolios and meets periodically
to review the results of the Portfolios, monitor investment activities and
practices and discuss other matters affecting the Portfolios 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 Portfolio. FAdS also serves as
administrator of the Portfolios and provides administrative services for each
Portfolio that are similar to those provided to the Portfolios. 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 Portfolios
and Portfolios pursuant to agreements with the Trust and Core Trust and is paid
a separate fee for these services.
FFS acts as the agent of the Trust in connection with the offering of shares of
the Portfolios. FFS 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
Portfolio's Investor Shares. Under the Plan, FFS receives a fee at an annual
rate of 0.15% of the average daily net assets of each Portfolio attributable to
Investor Shares as compensation for FFS's services as distributor. From this
amount, FFS 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 FFS exceed its Rule 12b-1 fees for any Portfolio, the Portfolio will not be
obligated to pay FSS an additional amount and if FFS's distribution related
expenses are less than its Rule 12b-1 fees, FSS will realize a profit.
FAdS, FFS, 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 FFS provide administration services to registered
investment companies with assets of approximately $38 billion.
INVESTMENT ADVISER
Subject to the general supervision of the Core Trust Board, FIA makes investment
decisions for each Portfolio
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and monitors the Portfolios' investments. FIA, which is located at Two Portland
Square, Portland, Maine 04101, provides investment advisory services to seven
other mutual Portfolios. 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
subadvisers to each Portfolio that they did not manage on a daily basis. On
January 2, 1998, Forum Advisors, Inc. acquired Linden and reorganized into FIA.
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.
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-
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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 determined as of
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 Payment Must be
Received by 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
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.
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<PAGE>
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 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). 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 $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 on the next business
day
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<PAGE>
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 prior to 4:00 p.m., Eastern time. 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 including
affiliates of FSS. These financial institutions 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 financial institutions to promptly forward these requests.
Investors who purchase or redeem shares in this manner will be subject to the
procedures of their financial institution, 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 financial institution 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 financial institutions may enter purchase
orders with payment to follow.
The Trust may confirm purchases and redemptions of a financial institution's
customers directly to the financial institution, which in turn will provide its
customers with such confirmations and periodic statements as may be required by
law or agreed to between the financial institution 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.
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<PAGE>
Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders 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 and, in some cases, must have a signature guarantee. All
certificates submitted for redemption must be endorsed by the shareholder and
have a signature guarantee. See "Purchases and Redemptions - Other Redemption
Matters."
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.
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.
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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
Portfolio. 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 existing account. Shareholders may only exchange into a fund
if that fund's shares may legally be sold in the shareholder's state of
residence.
The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Accordingly, a
shareholder may realize a capital gain or loss with respect to the shares
redeemed. Redemptions and purchases are effected at the respective net asset
values of the two funds as next determined following receipt of proper
instructions and all necessary supporting documents by the fund whose shares are
being exchanged.
If a shareholder exchanges into a fund that imposes a sales charge, that
shareholder is required to pay the difference between that fund's sales charge
and any sales charge the shareholder has previously paid in connection with the
shares being exchanged. For example, if a shareholder paid a 2% sales charge in
connection with the purchase of the shares of a fund and then exchanged those
shares into another fund with a 3% sales charge, that shareholder would pay an
additional 1% sales charge on the exchange. Shares acquired through the
reinvestment of dividends and distributions are deemed to have been acquired
with a sales charge rate equal to that paid on the shares on which the dividend
or distribution was paid. The exchange privilege may be modified materially or
terminated by the Trust at any time upon 60 days' notice to shareholders.
BY MAIL. Exchanges may be accomplished by written instruction to 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
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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 of net investment
income 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 or 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. Distributions of net capital gain (i.e., the excess of
net capital gain from capital assets held for more than one year over net losses
from capital assets held for no more than one year) will be treated in the hands
of the shareholders as long-term capital gain.
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
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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. 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.
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7. OTHER INFORMATION
PERFORMANCE INFORMATION
Investor Shares' performance may be advertised. All performance information is
based on historical results, is not intended to indicate future performance and,
unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of the period. A Fund's compounded
annualized yield assumes the reinvestment of distributions paid by the Fund,
and, therefore will be somewhat higher than the annualized yield for the same
period. A Fund may also quote tax-equivalent yields, which show the taxable
yields a shareholder would have to earn to equal the Fund's tax-free yield,
after taxes. A tax-equivalent yield is calculated by dividing the Fund's
tax-free yield by one minus a stated federal, state or combined federal and
state tax rate. Each class' performance will vary.
The Funds' advertisements may also reference ratings and rankings among similar
funds by independent evaluators such as Morningstar, Lipper Analytical Services,
Inc. or IBC Financial Data, Inc. In addition, the performance of the Funds may
be compared to recognized indices of market performance. The comparative
material found in a Fund's advertisements, sales literature, or reports to
shareholders may contain performance rankings. This material is not to be
considered representative or indicative of future performance.
BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to 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 twenty-two 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
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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 November 1, 1998, Bank of New Hampshire may be deemed to have controlled
Daily Assets Treasury Obligations Fund and Daily Assets Municipal Fund, H.M.
Payson & Co. may be deemed to have controlled Daily Assets Government Fund,
Peoples Heritage Bank may be deemed to have controlled Daily Assets Treasury
Obligations Fund and Daily Assets Government Obligations Fund, and National City
Bank of Evansville may be deemed to have controlled Daily Assets Cash Fund and
Daily Assets Municipal 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 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
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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 FFS
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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FORUM FUNDS
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
PROSPECTUS
January __, 1999
- --------------------------------------------------------------------------------
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 January ___, 1999 (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>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C> <C>
1. Prospectus Summary.............................. 5. Purchases and Redemptions of Shares.............
2. Financial Highlights............................ 6. Distributions and Tax Matters...................
3. Investment Objectives and Policies.............. 7. Other Information...............................
4. Management......................................
</TABLE>
ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. AN INVESTMENT IN
THE FUNDS IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT ENDORSED OR GUARANTEED BY
ANY BANK OR ANY AFFILIATE OF A BANK.
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.
2
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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 Fund Services, LLC ("FFS")
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 8:00 a.m. and 6:00 p.m., Eastern time, except on the
following holidays (or the days on which they are observed): 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. ("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 "Purchases and Redemptions of Shares."
Shares of one or more of the Funds may not be currently offered for sale in your
state.
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 Funds
invest only in money market instruments, all securities,
3
<PAGE>
including U.S. Government Securities, involve 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 Shares will bear directly or
indirectly. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares. For a further description of the
various expenses incurred in the operation of the Funds and the Portfolios, see
"Management."
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) 0.04% 0.05% 0.04% 0.04% 0.05%
Other Expenses(3)
(after expense reimbursements) 0.17% 0.15% 0.16% 0.16% 0.07%
----- ----- ----- ----- -----
Total Operating Expenses 0.21% 0.20% 0.20% 0.20% 0.12%
</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 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 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 reimbursements by FIA and its affiliates, Other Expenses and Total
Fund Operating Expenses would be: 0.43% and 0.47%, respectively, for Daily
Assets Treasury Obligations Fund; 0.64 % and 0.69%, respectively, for Daily
Assets Government Fund; 0.70% and 0.74%, respectively, for Daily Assets
Government Obligations Fund; 0.65% and 0.69%, respectively, for Daily Assets
Cash Fund; and 1.21% and 1.26%, 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:
<TABLE>
<S> <C> <C> <C> <C>
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
Daily Assets Treasury Obligations Fund $2 $7 $11 $26
Daily Assets Government Fund $2 $6 $11 $26
Daily Assets Government Obligations Fund $2 $6 $11 $26
Daily Assets Cash Fund $2 $6 $11 $25
Daily Assets Municipal Fund $1 $4 $7 $16
</TABLE>
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.
4
<PAGE>
2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Institutional Share of the Funds for the period indicated. Prior to the offering
of Institutional Shares, Daily Assets Government Fund and Daily Assets Cash Fund
had commenced operations; selected data for a single outstanding Institutional
Service Share of the Funds since their inception also is shown. Information for
each of the years or periods ended August 31 were audited by KPMG Peat Marwick
LLP, independent auditors, whose report data October 6th, 1998 expressed an
unqualified opinion on this information. Information for Daily Assets Government
Fund for each of the years or periods prior to March 31, 1997 was audited by
other independent auditors.. The financial statements and independent auditors'
report thereon for the fiscal year ended August 31, 1998. are included in the
Funds' annual report and are incorporated by reference into the SAI and may be
obtained from the Trust without charge.
As of August 31, 1998, Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio had net assets of
$264,844,947; $46,762,986; $717,124,357, $607,340,844, and $20,834,474
respectively.
5
<PAGE>
<TABLE>
<S> <C> <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 Total
----- ------ ------ Share -------- ------ Return
DAILY ASSETS TREASURY OBLIGATIONS FUND ----- ------
INSTITUTIONAL SHARES
Period ended August 31, 1998 (2) $1.00 0.03 (0.03) $1.00 0.20%(2) 5.41%(3) 3.34%
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SHARES
Period ended August 31, 1998 (2) $1.00 0.01 (0.01) $1.00 0.20%(3) 5.26%(3) 0.89%
INSTITUTIONAL SERVICE SHARES
Period ended August 31, 1998 $1.00 0.05 (0.05) $1.00 0.46%(3) 4.93%(3) 5.04%
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(3) 4.76%(3) 2.01%
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70% 4.80%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01% 5.18%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82% 2.83%
July 1, 1992 to March 31, 1993
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Period ended August 31, 1998 (2) $1.00 0.03 (0.03) $1.00 0.20%(3) 5.43%(3) 3.24%
DAILY ASSETS CASH FUND
INSTITUTIONAL SHARES
Period ended August 31, 1998 (2) $1.00 0.03 (0.03) $1.00 0.20%(3) 5.46%(3) 2.70%
INSTITUTIONAL SERVICE SHARES
Period ended August 31, 1998 $1.00 0.05 (0.05) $1.00 0.46%(3) 5.22%(3) 5.34%
October 1, 1996 to August 31, 1997 1.00 0.05 (0.05) 1.00 0.52%(3) 5.06%(3)% 4.70%
DAILY ASSETS MUNICIPAL FUND
INSTITUTIONAL SHARES
Period ended August 31, 1998 (2) $1.00 0.01 (0.01) $1.00 0.12%(3) 3.16%(3) 0.59%
</TABLE>
<TABLE>
<S><C> <C>
Ratio of
Net Assets Gross
End of Expenses
Period to Average
(000s Net Assets(1)
Omitted) -------------
--------
$110,561 0.47%(2)
$ 36,095 0.69%(2)
$ 9,485 0.91%(3)
44,116 0.95%(3)
43,975 0.99%
43,103 1.06%
36,329 1.10%
26,505 1.17%
$ 15,352 0.74%(3)
$ 28,396 0.68%(3)
$ 5,235 0.90%(3)
12,076 1.22%(3)
$ 20,773 1.26%(3)
</TABLE>
(1) The ratio of Gross Expenses to Average Net Assets reflects the expense ratio
excluding any fee waivers and expense reimbursements for the Fund and its
respective Portfolio.
(2) The Trust commenced the offering of the Institutional Share Class of Daily
Assets Treasury Obligations Fund, Daily Assets Government Fund, Daily Assets
Government Obligations Fund, Daily Assets Cash Fund, and Daily Assets Municipal
Fund on January 22, 1998, July 1, 1998, January 30, 1998, March 13, 1998, and
June 25, 1998, respectively.
(3) Annualized.
6
<PAGE>
3. INVESTMENT OBJECTIVES AND POLICIES
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
the following discusses the investment policies of the Portfolios (and the
responsibilities of the 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 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. 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. There can be
no assurance that any Fund or Portfolio will achieve its investment objective.
or maintain a stable net asset value.
INVESTMENT POLICIES
Each Portfolio invests only in high quality, U.S. dollar-denominated 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, A Division of The McGraw Hill Companies, and Moody's
Investors Service, Inc., is contained in the SAI.
Each Portfolio invests only in instruments that have a remaining maturity of 397
days or less (as calculated under Rule 2a-7 of the Investment Company Act of
1940, as amended (the "1940 Act")) 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.
Although each Portfolio only invests in high quality money market instruments,
an investment in a Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities and municipal securities, can
change in value when there is a change in interest rates, the issuer's actual or
perceived creditworthiness or the issuer's ability to meet its obligations.
7
<PAGE>
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 "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
8
<PAGE>
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" without registration under
the Securities Act of 1933 (the "1933 Act"). These "restricted securities" are
restricted as to disposition under the Federal securities laws in that the sale
of these securities may not be made absent registration under the 1933 Act or an
appropriate exemption therefrom.
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. The Portfolio may invest a
substantial portion of its portfolio in municipal securities supported by credit
and liquidity enhancements (i.e., letters of credit not covered by federal
deposit insurance or put or demand features of third party financial
institutions, generally domestic and foreign banks. 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. Such investments will expose the Portfolio to risks pertaining to the
banking industry, including the foreign banking industry, such as interest rate
and credit risk.
The Portfolio may purchase variable rate demand notes ("VRDN") which 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). They 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.
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 to grant the security holders an 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. 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.
9
<PAGE>
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.
MUNICIPAL BONDS AND NOTES. Municipal bonds are long term fixed-income
securities. "General obligation" bonds are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
"Revenue" bonds are payable from revenues derived from a particular facility,
class of facilities or, the proceeds of a special excise or other tax, but not
from general tax revenues. "Moral obligation" bonds are 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, 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. Municipal leases are entered into by state and local
governments and authorities to acquire equipment and facilities such as fire and
sanitation vehicles, telecommunications equipment and other assets. 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 herein and in the SAI, 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) (a
"fundamental policy"). Except as otherwise indicated in this Prospectus or in
the SAI, investment policies of a Fund or a Portfolio may be changed by the
applicable board of trustees without shareholder approval (a "nonfundamental
policy"). 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.
10
<PAGE>
BORROWING. As a fundamental investment policy, 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. As a fundamental policy for Government Portfolio and as a nonfundamental
policy for each other Portfolio, borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's total
assets.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain credit risks not associated with direct investment in
securities. Each Portfolio, however, intends to enter into repurchase agreements
only with sellers which 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 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. 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.
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. Securities
with ultimate maturities of greater than 397 days may be purchased only in
accordance with the provisions of Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features which comply with certain
requirements and certain U.S. Government Securities may be purchased. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.
11
<PAGE>
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invest 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. 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.
FFS acts as the agent of the Trust in connection with the offering of shares of
the Funds but receives no compensation for these services. FFS is a registered
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
FAdS, FFS, 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 FFS provided administration services to registered
investment companies with assets of approximately $38 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 seven 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 subadvisers to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into FIA.
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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 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.
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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 determined as of
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 Payment Must be
Received by 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
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 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.
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The Trust employs reasonable procedures to ensure that telephone orders are
genuine (which include recording certain transactions). 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 on the next business day
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 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 prior to 4:00p.m, Eastern time.. 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.
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<PAGE>
THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks or other financial institutions, including
affiliates of FSS. These financial institutions 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 financial institution to promptly forward these requests.
Investors who purchase or redeem shares in this manner will be subject to the
procedures of their financial institution, 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 financial institution 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 financial institutions may enter purchase
orders with payment to follow.
The Trust may confirm purchases and redemptions of a financial institution's
customers directly to the financial institution, which in turn will provide its
customers with such confirmations and periodic statements as may be required by
law or agreed to between the financial institution 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 and in some cases must have a signature guarantee. All certificates
submitted for redemption must be endorsed by the shareholder with signature
guaranteed. See "Purchases and Redemptions of Shares - Other Redemption
Matters."
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.
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<PAGE>
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.
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 existing 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.
17
<PAGE>
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 of net investment
income 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 or 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. Distributions of net capital gain (i.e., the excess of
net gain from capital assets held more than one year over net losses from
capital assets held for no more than one year) will be treated in the hands of
the shareholders as long-term capital gain 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.
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<PAGE>
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 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.
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<PAGE>
7. OTHER INFORMATION
PERFORMANCE INFORMATION
Institutional Shares' performance may be advertised. All performance information
is based on historical results, is not intended to indicate future performance
and, unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of the period. A Fund's compounded
annualized yield assumes the reinvestment of distributions paid by the Fund,
and, therefore will be somewhat higher than the annualized yield for the same
period. A Fund may also quote tax-equivalent yields, which show the taxable
yields a shareholder would have to earn to equal the Fund's tax-free yield,
after taxes. A tax-equivalent yield is calculated by dividing the Fund's
tax-free yield by one minus a stated federal, state or combined federal and
state tax rate. Each class' performance will vary.
The Funds' advertisements may also reference ratings and rankings among similar
funds by independent evaluators such as Morningstar, Lipper Analytical Services,
Inc. or IBC Financial Data, Inc. In addition, the performance of the Funds may
be compared to recognized indices of market performance. The comparative
material found in a Fund's advertisements, sales literature, or reports to
shareholders may contain performance rankings. This material is not to be
considered representative or indicative of future performance.
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<PAGE>
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 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 twenty-two 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 November 1, 1998, Bank of New Hampshire may be deemed to have controlled
Daily Assets Treasury Obligations and Daily Assets Municipal Fund, H.M. Payson &
Co. may be deemed to have controlled Daily Assets Government Fund, Peoples
Heritage Bank may be deemed to have controlled Daily Assets Treasury Obligations
Fund and Daily Assets Government Obligations Fund, and National City Bank of
Evansville may be deemed to have controlled Daily Assets Municipal 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.
21
<PAGE>
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 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
22
<PAGE>
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 FFS at 207-879-1900. If an investor invests
through a financial institution, the investor may also contact the investor's
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.
23
<PAGE>
FORUM FUNDS
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
PROSPECTUS
January __, 1999
- --------------------------------------------------------------------------------
THIS PROSPECTUS OFFERS INSTITUTIONAL SERVICE 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 January __, 1999 (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>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C> <C>
1. Prospectus Summary.............................. 5. Purchases and Redemptions of Shares.............
2. Financial Highlights............................ 6. Distributions and Tax Matters...................
3. Investment Objectives and Policies.............. 7. Other Information...............................
4. Management......................................
</TABLE>
ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. AN INVESTMENT IN
THE FUNDS IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT ENDORSED OR GUARANTEED BY
ANY BANK OR ANY AFFILIATE OF A BANK.
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 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 Fund Services, Inc. ("FFS")
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 8:00 a.m. and 6:00 p.m., Eastern time,
except on the following holidays (or the days on which they are observed): 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 ("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 "Purchases and Redemptions of Shares."
Shares of one or more of the Fund may not be offered for sale in your state.
2
<PAGE>
EXCHANGES. Shareholders of a Fund may exchange Institutional Service Shares
without charge for Institutional Service Shares of the other Funds and for
shares of certain mutual funds not offered by this Prospectus. See "Purchases
and Redemptions of Shares - Exchanges."
DISTRIBUTIONS. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."
INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Funds
invest only in money market instruments, all securities, including U.S.
Government Securities, involve 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. For a further description of
the various expenses incurred in the operation of the Funds and the Portfolios,
see "Management."
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) 0.04% 0.05% 0.04% 0.04% 0.08%
Other Expenses(3)
(after expense reimbursements) 0.42% 0.41% 0.41% 0.42% 0.46%
----- ----- ----- ----- -----
Total Operating Expenses 0.46% 0.46% 0.45% 0.46% 0.54%
</TABLE>
(1) 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 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 reimbursements by FIA and its affiliates, Other Expenses and Total
Fund Operating Expenses would be: 1.50% and 1.54%, respectively, for Daily
Assets Treasury Obligations Fund; 0.87% and 0.92%, respectively, for Daily
Assets Government Fund; 2.09% and 2.13%, respectively, for Daily Assets
Government Obligations Fund; 0.86% and 0.90%, respectively, for Daily Assets
Cash Fund; and 721.67% and 721.75%, 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:
<TABLE>
<S> <C> <C> <C> <C>
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
Daily Assets Treasury Obligations Fund $5 $15 $25 $57
Daily Assets Government Fund $5 $15 $26 $58
Daily Assets Government Obligations Fund $5 $14 $25 $57
Daily Assets Cash Fund $5 $15 $26 $58
Daily Assets Municipal Fund $6 $17 $30 $68
</TABLE>
3
<PAGE>
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.
4
<PAGE>
2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Institutional Service Share of the Funds for the periods indicated. Information
for the periods ended August 31, 1998 and August 31, 1997 was audited by KPMG
Peat Marwick LLP, independent auditors. Information for each of the years or
periods ended August 31 were audited by KPMG Peat Marwick LLP, independent
auditors, whose report dated October 6, 1998 expressed an unqualified opinion on
this information. Information for Daily Assets Government Fund and Daily Assets
Cash Fund for each of the years or periods prior to August 31, 1997 was audited
by other independent auditors. . The Funds' financial statements and independent
auditors' report thereon for the fiscal year ended August 31, 1998 are included
in the Funds' annual report, which is incorporated by reference into the SAI and
may be obtained from the Trust without charge.
As of August 31, 1998, Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio had net assets of
$264,844,947; $46,762,986; $717,124,357, $607,340,844, and $20,834,474
respectively.
5
<PAGE>
<TABLE>
<S> <C> <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 Total
----- ------ ------ Share -------- ------ Return
----- ------
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
Period Ended August 31, 1998(2) $1.00 0.02 (0.02) $1.00 0.45%(3) 5.16%(3) 2.19%
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Year ended August 31, 1998 $1.00 0.05 (0.05) $1.00 0.46% 4.93% 5.04%
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(2) 4.76%(2) 2.01%
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70% 4.80%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01% 5.18%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82% 2.83%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.32%(2) 2.92%(2) 3.13%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
Period ended August 31, 1998(2) $1.00 0.02 (0.02) $1.00 0.45%(3) 5.16%(3) 2.22%
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Year ended August 31, 1998 $1.00 0.05 (0.05) $1.00 0.46% 5.22% 5.34%
October 1, 1996 to August 31, 1997 1.00 0.05 (0.05) 1.00 0.52%(2) 5.06%(2)% 4.70%
DAILY ASSETS MUNICIPAL FUND
INSTITUTIONAL SERVICE SHARES
Period ended August 31, 1998(2)_ $1.00 - - $1.00 0.54%(3) 2.76%(3) 0.20%
</TABLE>
<TABLE>
<S><C> <C>
Ratio of
Net Assets Gross
End of Expenses
Period to Average
(000s Net Assets(1)
Omitted) -------------
--------
$ 4,448 1.53%(3)
$ 9,485 0.91%
44,116 0.95%(2)
43,975 0.99%
43,103 1.06%
36,329 1.10%
26,505 1.17%
4,687 2.43%(2)
$ 2,390 2.13%(3)
$ 5,235 0.90%
12,076 1.22%(2)
$ 10 721.75%(3)
</TABLE>
(1) The ratio of Gross Expenses to Average Net Assets reflects the expense ratio
in the absence of any fee waivers and expense reimbursements for the Fund and
its respective Portfolio.
(2) The Trust commenced the offering of the Institutional Service Share class of
Daily Assets Treasury Obligations Fund, Daily Assets Government Obligations
Fund, and Daily Assets Municipal Fund on August 6, 1998.
(3) Annualized.
6
<PAGE>
3. INVESTMENT OBJECTIVES AND POLICIES
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
the following discusses the investment policies of the Portfolios (and the
responsibilities of the 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 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. 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. There can be
no assurance that any Fund or Portfolio will achieve its investment objective.
There can be no assurance that any Fund or Portfolio will achieve its investment
objective or maintain a stable net asset value.
INVESTMENT POLICIES
Each Portfolio invests only in high quality, U.S. dollar-denominated 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, A Division of The McGraw Hill Companies, and Moody's
Investors Service, Inc., is contained in the SAI.
Each Portfolio invests only in instruments that have a remaining maturity of 397
days or less (as calculated under Rule 2a-7 of the Investment Company Act of
1940, as amended (the "1940 Act")) 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.
Although each Portfolio only invests in high quality money market instruments,
an investment in a Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities and municipal securities, can
change in value when there is a change in interest rates, the issuer's actual or
perceived creditworthiness or the issuer's ability to meet its obligations.
7
<PAGE>
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
Portfolio 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 Portfolio 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 Portfolio 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 "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
8
<PAGE>
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" without registration under
the Securities Act of 1933 (the "1933 Act"). These "restricted securities" are
restricted as to disposition under the Federal securities laws in that the sale
of these securities may not be made absent registration under the 1933 Act or an
appropriate exemption therefrom.
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. The Portfolio may invest a
substantial portion of its portfolio in municipal securities supported by credit
and liquidity enhancements (i.e. letters of credit not covered by federal
deposit insurance or put or demand features of third party financial
institutions, generally domestic and foreign banks. 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. Such investments will expose the Portfolio to risks pertaining to the
banking industry, including the foreign banking industry such as interest rate
and credit risk.
The Portfolio may purchase variable rate demand notes ("VRDN") which 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). They 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.
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 to grant 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. 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.
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<PAGE>
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.
MUNICIPAL BONDS AND NOTES. Municipal bonds are long term fixed-income
securities. "General obligation" bonds are secured by a municipality's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. "Revenue" bonds are usually payable only from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other tax, but not from general tax revenues.
Under a "moral obligation" bond (which is normally issued by special purpose
public authorities), if the issuer is unable to meet its obligations under the
bonds from current revenues, it may draw on a reserve fund that is backed by the
moral commitment (but not the legal obligation) of the state or municipality
that created the issuer. The Portfolio may invest in industrial development
bonds, which in most cases are revenue bonds. The payment of the principal and
interest on these bonds is dependent solely on the ability of an initial or
subsequent user of the facilities financed by the bonds to meet its financial
obligations and the pledge, if any, of real and personal property so financed as
security for such payment. Municipal notes, 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. Municipal leases are entered into by state and local
governments and authorities to acquire equipment and facilities such as fire and
sanitation vehicles, telecommunications equipment and other assets. 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, may not be changes 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)(a "fundamental policy"). Except
as otherwise indicated in this Prospectus or SAI, investment policies of a Fund
or of a Portfolio may be changes by the applicable board of trustees without
shareholder approval (a "nonfundamental policy").. 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. As a fundamental policy, 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. As a
fundamental policy of Government Portfolio and as a nonfundamental policy for
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each other Portfolio, borrowing for purposes other than meeting redemption
requests will not exceed 5% of the value of the Portfolio's total assets.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain credit risks not associated with direct investment in
securities. Each Portfolio, however, intends to enter into repurchase agreements
only with sellers which 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 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. 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.
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. Securities
with ultimate maturities of greater than 397 days may be purchased only in
accordance with the provisions of Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features which comply with certain
requirements and certain U.S. Government Securities may be purchased. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.
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<PAGE>
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invest 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. 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.
FFS acts as the agent of the Trust in connection with the offering of shares of
the Funds but receives no compensation for these services. FFS is a registered
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
FAdS, FFS, 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 FFS provided administration services to registered
investment companies with assets of approximately $38 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 seven 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 subadvisers to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into FIA.
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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 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,
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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 determined as of
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:
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<TABLE>
<S> <C> <C>
Order Must be Payment Must be
Received by 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
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 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). 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.
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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 $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 on the next business day
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 prior to 4:00 p.m., Eastern time. 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, including
affiliates of FSS. These financial institutions 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 financial institution to promptly forward these requests.
Investors who purchase or redeem shares in this manner will be subject to the
procedures of their financial institution, which may include charges,
limitations, investment minimums, cutoff times and restrictions in
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<PAGE>
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 financial institution 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 financial institutions may
enter purchase orders with payment to follow.
The Trust may confirm purchases and redemptions of a financial institution's
customers directly to the financial institution, which in turn will provide its
customers with such confirmations and periodic statements as may be required by
law or agreed to between the financial institution 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 and, in some cases, must have a signature guarantee. All
certificates submitted for redemption must be endorsed by the shareholder and
have a signature guarantee. See "Purchases and Redemptions - Other Redemption
Matters."
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
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<PAGE>
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 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 existing 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.
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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 of net investment
income 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 or 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.. Distributions of net capital gain (i.e., the excess of
net capital gain from capital assets held more than one year over losses from
capital assets held for no more than one year) will be treated in the hands of
the shareholders as long-term capital gain.
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.
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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.
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
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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 financial institution
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 twenty-two 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
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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 November 1, 1998, Bank of New Hampshire may be deemed to have controlled
Daily Assets Treasury Obligations Fund and Daily Assets Municipal Fund, H.M.
Payson & Co. may be deemed to have controlled Daily Assets Government Fund,
Peoples Heritage Bank may be deemed to have controlled Daily Assets Treasury
Obligations Fund and Daily Assets Government Obligations Fund, and National City
Bank of Evansville may be deemed to have controlled Daily Assets Cash Fund and
Daily Assets Municipal 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.
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
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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 FFS
at 207-879-1900. If an investor invests through a financial institution, the
investor may also contact the investor's 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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FORUM FUNDS
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND
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
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
January __, 1999
This Statement of Additional Information supplements the Prospectuses dated
January ___, 1999, 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. Investment Policies
3. Investment Limitations
4. Investment by Financial Institutions
5. Performance Data
6. Management
7. Determination of Net Asset Value
8. Portfolio Transactions
9. Additional Purchase and Redemption Information
10. Taxation
11. Other Information
12. Financial Statements
Appendix A - Description of Securities Ratings
Appendix B - Performance Information
Appendix C - Miscellaneous Tables
Appendix D -Additional Advertising Materials
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 22
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
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 Equity 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
"FFS" means Forum Fund Services, LLC
"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:
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
Each Fund has a fundamental 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).
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.
RATINGS AS INVESTMENT CRITERIA
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's, A Division of
The McGraw Hill Companies ("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
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an event in determining whether the Portfolio should continue to hold the
obligation. Credit ratings attempt to evaluate the safety of principal and
interest payments and do not evaluate the risks of fluctuations in market value.
Also, rating agencies may fail to make timely changes in credit ratings in
response to developments and events, so that an issuer's current financial
condition may be better or worse than the rating indicates.
SMALL BUSINESS ADMINISTRATION SECURITIES.
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 25 years. No Portfolio may purchase an SBA security if, immediately after
the purchase, (i) the Fund would have more than 15% of its net assets invested
in SBA securities, (ii) the total unamortized premium on SBA Securities with a
premium held by the Portfolio divided by the sum of the par amount of all SBA
securities with a premium held by the portfolio would exceed 0.25% of the
Portfolios' net assets or (iii) the total unamortized discount on SBA Securities
with a discount held by the Portfolio divided by the sum of the par amount of
all SBA securities with a discount held by the portfolio would exceed 0.25% of
the Portfolios' net assets. Premium is the amount above par for which a security
is purchased and discount is the amount below par for which a security is
purchased.
MORTGAGE 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 contrast, MBSs provide periodic payments
which consist of interest and, in most cases, principal. In effect, these
payments are a "pass-through" of the periodic payments and optional prepayments
made by the individual borrowers on their mortgage loans, net of any fees paid
to the issuer or guarantor of such securities. Additional payments to holders of
MBSs are caused by prepayments resulting from the sale of the underlying
property or the refinancing or foreclosure of the underlying mortgage loans.
Such prepayments may significantly shorten the effective maturities of MBSs, and
occur more often during periods of declining interest rates.
Although the rate adjustment feature of MBSs may act as a buffer to reduce sharp
changes in the value of MBSs, these securities are still subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rate is reset only periodically, changes
in the interest rate on MBSs may lag behind changes in prevailing market
interest rates. Also, some MBSs (or the underlying mortgages) are subject to
caps or floors that limit the maximum change in interest rate during a specified
period or over the life of the security.
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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. See
"Investments By Financial Institutions - Investments by Shareholders that are
Credit Unions-Treasury Cash Portfolio and Government Cash Portfolio." 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 FIA
may, consistent with the investment objective and policies of a Portfolio,
consider making investments in such new types of securities.
WHEN-ISSUED SECURITIES
Each Portfolio may purchase securities on a when-issued or delayed delivery
basis. In those cases, the purchase price and the interest rate payable on the
securities are fixed on the transaction date and delivery and payment may take
place a month or more after the date of the transaction. At the time a Portfolio
makes the commitment to purchase securities on a when-issued or delayed delivery
basis, the Portfolio will record the transactions as a purchase and thereafter
reflect the value each day of such securities in determining its net asset
value. If a Portfolio chooses to dispose of the right to acquire a when-issued
security prior to its acquisition, it could, as with the disposition of any
other portfolio obligation, incur a gain or loss due to market fluctuation.
Failure of an issuer to deliver the security may result in the Portfolio
incurring a loss or missing an opportunity to make an alternative investment.
When a Portfolio agrees to purchase a security on a when-issued or delayed
delivery basis, its custodian will set aside and maintain in a segregated
account cash, U.S. Government Securities or other liquid assets with a market
value at all times at least equal to the amount of its commitment.
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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 FIA and, with
respect to certain types of restricted securities which may be deemed to be
liquid, has adopted guidelines to be followed by the FIA. FIA 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. FIA 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 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. A Portfolio might suffer a loss to the extent that the
proceeds from the sale of the collateral are less than the repurchase price. In
the event of a counterparty's bankruptcy, a Portfolios might suffer a loss due
to a delay in or prevention from selling the collateral for the Portfolio's
benefit. Failure by the other party to deliver a security purchased by a
Portfolio may result in a missed opportunity to make an alternative investment.
FIA 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.
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,
FIA believes that the Portfolios may be able to take advantage of the higher
yield that is usually paid on long-term securities.
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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 FIA
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 FIA would not have
chosen to sell such securities and which may result in a taxable gain or loss.
MUNICIPAL SECURITIES
Municipal securities are issued by the states, territories and possessions of
the United States, their political subdivisions (such as cities, counties and
towns) and various authorities (such as public housing or redevelopment
authorities), instrumentalities, public corporations and special districts (such
as water, sewer or sanitary districts) of the states, territories and
possessions of the United States or their political subdivisions. In addition,
municipal securities include securities issued by or on behalf of public
authorities to finance various privately operated facilities, such as industrial
development bonds or other private activity bonds that are backed only by the
assets and revenues of the non-governmental user (such as manufacturing
enterprises, hospitals, colleges or other entities).
Municipal securities historically have not been subject to registration with the
SEC, although there have been proposals which would require registration in the
future.
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MUNICIPAL NOTES. Municipal notes, which may be either "general obligation" or
"revenue" securities are intended to fulfill the short-term capital needs of the
issuer and generally have maturities not exceeding one year. They include the
following: tax anticipation notes, revenue anticipation notes, bond anticipation
notes, construction loan notes and tax-exempt commercial paper. Tax anticipation
notes are issued to finance working capital needs of municipalities, and are
payable from various anticipated future seasonal tax revenues, such as income,
sales, use and business taxes. Revenue anticipation notes are issued in
expectation of receipt of other types of revenues, such as federal revenues
available under various federal revenue sharing programs. Bond anticipation
notes are issued to provide interim financing until long-term financing can be
arranged and are typically payable from proceeds of the long-term bonds.
Construction loan notes are sold to provide construction financing. After
successful completion and acceptance, many such projects receive permanent
financing through the Federal Housing Administration under the Federal National
Mortgage Association or the Government National Mortgage Association. Tax-exempt
commercial paper is a short-term obligation with a stated maturity of 365 days
or less. It is issued by agencies of state and local governments to finance
seasonal working capital needs or as short-term financing in anticipation of
longer term financing. Municipal notes also include longer term issues that are
remarketed to investors periodically, usually at one year intervals or less.
MUNICIPAL BONDS. Municipal bonds meet longer term capital needs of a municipal
issuer and generally have maturities of more than one year when issued. General
obligation bonds are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. General obligation bonds are secured by the issuer's pledge of its full
faith and credit and taxing power for the payment of principal and interest. The
taxes that can be levied for the payment of debt service may be limited or
unlimited as to rate or amount. Revenue bonds in recent years have come to
include an increasingly wide variety of types of municipal obligations. As with
other kinds of municipal obligations, the issuers of revenue bonds may consist
of virtually any form of state or local governmental entity. Generally, revenue
bonds are secured by the revenues or net revenues derived from a particular
facility, class of facilities, or, in some cases, from the proceeds of a special
excise or other specific revenue source, but not from general tax revenues.
Revenue bonds are issued to finance a wide variety of capital projects including
electric, gas, water and sewer systems; highways, bridges, and tunnels; port and
airport facilities; colleges and universities; and hospitals. Many of these
bonds are additionally secured by a debt service reserve fund which can be used
to make a limited number of principal and interest payments should the pledged
revenues be insufficient. Various forms of credit enhancement, such as a bank
letter of credit or municipal bond insurance, may also be employed in revenue
bond issues. Revenue bonds issued by housing authorities may be secured in a
number of ways, including partially or fully insured mortgages, rent subsidized
and/or collateralized mortgages, and/or the net revenues from housing or other
public projects. Some authorities provide further security in the form of a
state's ability (without obligation) to make up deficiencies in the debt service
reserve fund. In recent years, revenue bonds have been issued in large volumes
for projects that are privately owned and operated, as discussed below.
Municipal bonds are considered private activity bonds if they are issued to
raise money for privately owned or operated facilities used for such purposes as
production or manufacturing, housing, health care and other nonprofit or
charitable purposes. These bonds are also used to finance public facilities such
as airports, mass transit systems and ports. The payment of the principal and
interest on such bonds is dependent solely on the ability of the facility's
owner or user to meet its financial obligations and the pledge, if any, of real
and personal property as security for such payment.
While at one time the pertinent provisions of the Code permitted private
activity bonds to bear tax-exempt interest in connection with virtually any type
of commercial or industrial project (subject to various restrictions as to
authorized costs, size limitations, state per capita volume restrictions, and
other matters), the types of qualifying projects under the Code have become
increasingly limited, particularly since the enactment of the Tax Reform Act of
1986. Under current provisions of the Code, tax-exempt financing remains
available, under prescribed conditions, for certain privately owned and operated
facilities of organizations described in Section 501(c)(3) of the Code,
multi-family rental housing facilities, airports, docks and wharves, mass
commuting facilities and solid waste disposal projects, among others, and for
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the tax-exempt refinancing of various kinds of other private commercial projects
originally financed with tax-exempt bonds. In future years, the types of
projects qualifying under the Code for tax-exempt financing could become
increasingly limited.
OTHER MUNICIPAL OBLIGATIONS. Other municipal obligations, incurred for a variety
of financing purposes, include municipal leases, which may take the form of a
lease or an installment purchase or conditional sale contract. Municipal leases
are entered into by state and local governments and authorities to acquire a
wide variety of equipment and facilities such as fire and sanitation vehicles,
telecommunications equipment and other capital assets. Municipal leases
frequently have special risks not normally associated with general obligation or
revenue bonds. Leases and installment purchase or conditional sale contracts
(which normally provide for title to the leased asset to pass eventually to the
government issuer) have evolved as a means for governmental issuers to acquire
property and equipment without being required to meet 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.
ALTERNATIVE MINIMUM TAX. Municipal securities are also categorized according to
(i) whether the interest is or is not includable in the calculation of
alternative minimum taxes imposed on individuals and corporations, (ii) whether
the costs of acquiring or carrying the bonds are or are not deductible in part
by banks and other financial institutions, and (iii) other criteria relevant for
Federal income tax purposes. Due to the increasing complexity of the Code and
related requirements governing the issuance of tax-exempt bonds, industry
practice has uniformly required as a condition to the issuance of such bonds,
but particularly for revenue bonds, an opinion of nationally recognized bond
counsel as to the tax-exempt status of interest on the bonds.
PUTS AND STANDBY COMMITMENTS ON MUNICIPAL SECURITIES. Municipal Cash Portfolio
may acquire "puts" with respect to municipal securities. A put gives a Portfolio
the right to sell the municipal security at a specified price at any time on or
before a specified date. A Portfolio may sell, transfer or assign a put only in
conjunction with its sale, transfer or assignment of the underlying security or
securities. The amount payable to a Portfolio upon its exercise of a "put" is
normally: (1) the Portfolio's acquisition cost of the municipal securities
(excluding any accrued interest which the Portfolio paid on their acquisition),
less any amortized market premium or plus any amortized market or original issue
discount during the period the Portfolio owned the securities, plus (2) all
interest accrued on the securities since the last interest payment date during
that period.
Puts may be acquired by the Portfolio to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of a
Portfolio's assets at a rate of return more favorable than that of the
underlying security. Municipal Cash Portfolio expects that it will generally
acquire puts only where the puts are available without the payment of any direct
or indirect consideration. However, if necessary or advisable, the Portfolio may
pay for a put either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to the puts (thus reducing the
yield to maturity otherwise available for the same securities). The Portfolio
intends to enter into puts only with dealers, banks and broker-dealers which, in
the Portfolio's Investment Adviser's opinion, present minimal credit risks.
Puts may, under certain circumstances, also be used to shorten the maturity of
underlying variable rate or floating rate securities for purposes of calculating
the remaining maturity of those securities and the dollar-weighted average
portfolio maturity of a Portfolio's assets.
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.
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The primary purpose of this practice is to permit a 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, a
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. The
Portfolio's policy is to enter into stand-by commitment transactions only with
municipal securities dealers which are determined to present minimal credit
risks.
The acquisition of a stand-by commitment does not affect the valuation or
maturity of the underlying municipal securities which continue to be valued in
accordance with the amortized cost method. Stand-by commitments acquired by the
Portfolio are valued at zero in determining net asset value. When a Portfolio
pays directly or indirectly for a stand-by commitment, its cost is reflected as
unrealized depreciation for the period during which the commitment is held.
Stand-by commitments do not affect the average weighted maturity of the
Portfolio's portfolio of securities.
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
Government Portfolio has adopted the following fundamental investment
limitations which are in addition to those contained in the Prospectus of Daily
Assets Government Fund. 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.
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(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 real estate or any interest therein
(including limited partnership interests), 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). 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 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, but not in an
amount greater than 33 1/3% of the value of the Portfolio's 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) INVESTING FOR CONTROL. Invest for the purpose of exercising control over
any person.
(12) RESTRICTED SECURITIES. Purchase restricted securities.
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) 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) 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.
(c) 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.
(d) 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.
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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
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. No Portfolio may:
(1) DIVERSIFICATION. With respect to 75% 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.
(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.
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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 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) SECURITIES WITH VOTING RIGHTS. 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.
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.
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
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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. There are
various subjective criteria for making this determination and, therefore, it is
not possible to provide any assurance as to how Portfolio shares will be
evaluated by bank examiners.
Before acquiring Fund shares, prospective investors that are banks or bank
holding companies, particularly those that are organized under the laws of any
country other than the United States or of any state, territory or other
political subdivision of the United States, and prospective investors that are
U.S. branches and agencies of foreign banks or Edge Corporations, should consult
all applicable laws, regulations and policies, as well as appropriate regulatory
bodies, to confirm that an investment in Fund shares is permissible and in
compliance with any applicable investment or other limits.
Fund shares held by National banks are generally required to be revalued
periodically and reported at the lower of cost or market value. Such shares may
also be subject to special regulatory reporting, accounting and tax treatment.
In addition, a bank may be required to obtain specific approval from its board
of directors before acquiring Fund shares, and thereafter may be required to
review its investment in a Fund for the purpose of verifying compliance with
applicable Federal banking laws, regulations and policies.
National banks generally must review their holdings of shares of a Fund at least
quarterly to ensure compliance with established bank policies and legal
requirements. Upon request, the Portfolios will make available to the Funds
investors information relating to the size and composition of their portfolio
for the purpose of providing Fund shareholders with this information.
INVESTMENT BY SHAREHOLDERS THAT ARE CREDIT UNIONS - DAILY ASSETS 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, 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
does not meet all of the tests outlined in 12 C.F.R. Section 703.100(e) or (iii)
a residual interest in a CMO or REMIC. The Portfolios also may invest in reverse
repurchase agreements in accordance with 12 C.F.R. 703.100(j) 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 FUND
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
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<PAGE>
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, 1998, see Appendix B.
YIELD INFORMATION
Each Fund may provide current annualized and effective annualized yield
quotations for each class based on its daily dividends. These quotations may
from time to time be used in advertisements, shareholder reports or other
communications to shareholders. All performance information supplied by a Fund
is historical and is not intended to indicate future returns.
In performance advertising the Funds may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC 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, financial institutions through which investors may
purchase and redeem Fund shares 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
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<PAGE>
assumed in yield calculations, the yield quoted for a class may differ from the
rate of distribution the class paid over the same period or the rate of income
reported in the Fund's financial statements.
OTHER PERFORMANCE AND SALES LITERATURE MATTERS
Total returns quoted in sales literature reflect all aspects of a Fund's return,
including the effect of reinvesting dividends and capital gain distributions.
Average annual returns generally are calculated by determining the growth or
decline in value of a hypothetical historical investment in a Fund over a stated
period, and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant over the period. While average annual returns are a convenient means of
comparing investment alternatives, investors should realize that the performance
is not constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Funds.
Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment over such periods
according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end
of the applicable period, of a hypothetical $1,000 payment
made at the beginning of the applicable period.
OTHER ADVERTISING MATTERS
The Funds may advertise other forms of performance. For example, average annual
and cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of investments,
and/or a series of redemptions over any time period. Total returns may be broken
down into their components of income and capital (including capital gains and
changes in share price) in order to illustrate the relationship of 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 Portfolio's) 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.
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<PAGE>
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. His address is Department of Economics, University of
California, Los Angeles, 405 Hilgard Avenue, Los Angeles, California
90024.
James C. Cheng, Trustee (age 56)
President of Technology Marketing Associates (a marketing consulting
company) since September 1991. His address is 27 Temple Street,
Belmont, Massachusetts 02178.
J. Michael Parish, Trustee (age 54)
Partner at the law firm of Reid and Priest, LLP, since 1995. Prior
thereto, he was a partner at Winthrop Stimson Putnam & Roberts from
1989-1995. His address is 40 West 57th Street, New York, New York
10019.
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. Mr. Hong also serves as an
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.
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<PAGE>
Leslie K. Klenk, Secretary (age 34)
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. Ms. Klenk
is also an officer of other investment companies for which the Forum
Financial Group of Companies provides services. Her address is Two
Portland Square, Portland, Maine 04101.
Pamela Stutch, Assistant Secretary (age 31)
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.
Ms. Stutch is also an officer of other investment companies for which
the Forum Financial Group of Companies provides services. Her address
is Two Portland Square, Portland, Maine 04101.
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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)
Managing Director, 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. Mr. Sheehan
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.
Stacey Hong, Treasurer
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.
Pamela J. Wheaton, Assistant Treasurer (age 38)
Senior Manager, Fund Accounting, 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.
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. In addition to the
$1,000 for each Board meeting attended, each Trustee is paid $100 per active
portfolio of the Trust. To the extent a meeting relates to only certain
portfolios of the Trust, Trustees are paid the $100 fee only with
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respect to those portfolios. Trustees are also reimbursed for travel and related
expenses incurred in attending meetings of the Board. No officer of the Trust is
compensated by the Trust.
The following table provides the aggregate compensation paid to each Trustee.
The Trust has not adopted any form of retirement plan covering Trustees or
officers. Information is presented for the fiscal year ended August 31, 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 $2,759 None None $2,759
Mr. Cheng $2,759 None None $2,759
Mr. Parish $2,759 None None $2,759
</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, 1998, there were twenty-one 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 fiscal year ended August 31, 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 $1,264 None None $1,264
Mr. Parish $1,264 None None $1,264
Mr. Cheng $1,264 None None $1,264
</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 ADVISER
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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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
subadvisers 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 did not result
in 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, between Core Trust and Forum
Advisors, Inc., and between Core Trust and FIA, as applicable, with respect to
each Portfolio. This information is provided for the past three years (or
shorter time a 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 securities laws registration fees and related expenses;
and fees payable to an investment adviser under an investment advisory
agreement.
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<PAGE>
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
provides, with respect to the Funds, for an initial term of one year from its
effective date and for its continuance in effect for successive twelve month
period thereafter, provided the agreement is specifically approved at least
annually by the Board or by the shareholders of the Funds, and in either case by
a majority of the Trustees who are not parties to the Trust Administration
Agreement or interested persons of any such party.
The Trust Administration Agreement may be terminated by either party without
penalty on 60 days' written notice and may not be assigned by either party
except upon written consent by the other party. The Trust Administration
Agreement also provides that FAdS shall not be liable for any action or inaction
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 an administration agreement with Core Trust (the "Core
Trust Administration 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 Administration 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 Administration Agreement or interested persons of any such party. Prior to
December 1, 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
action or inaction 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.
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At the request of the Core Trust Board, FAdS provides persons satisfactory to
the Core Trust Board to serve as officers of Core Trust.
DISTRIBUTION
FFS was formed under the laws of the State of Delaware on June 8, 1998 and
serves as distributor of shares of the Funds pursuant to a Distribution
Agreement between FFS 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 FFS 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 FFS's duties or by reason of reckless disregard of its
obligations and duties under the Distribution Agreement. Prior to December 30,
1998, Forum Financial Services, Inc. served as the Trust's distributor.
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
FFSI 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).
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TRANSFER AGENT
FSS acts as transfer agent of the Trust pursuant to a transfer agency and
services agreement with the Trust (the "Transfer Agency Agreement"). The
Transfer Agency Agreement provides, with respect to the Funds, for an initial
term of one year from its effective date and for its continuance in effect for
successive twelve-month periods thereafter, provided that the Transfer Agency
Agreement is specifically approved at least annually by the Board or by a vote
of the shareholders of each Fund, and in either case by a majority of the
Trustees who are not parties to the Transfer Agency Agreement or interested
persons of any such party at a meeting called for the purpose of voting on the
Transfer Agency Agreement.
The Transfer Agency Agreement may be terminated by either party without penalty
on 60 days' written notice and may not be assigned by either party except upon
written consent of the other party. The Transfer Agency Agreement also provides
that FSS shall not be responsible for, and the Trust shall on behalf of each
applicable Fund or Class thereof indemnify and hold FSS harmless from and
against, any and all losses, damages, costs, charges, reasonable counsel fees,
payments, expenses and liability arising out of or attributable to all actions
of FSS or its agents or subcontractors required to be taken pursuant to the
Transfer Agency Agreement, provided that such actions are taken in good faith
and without gross negligence or willful misconduct. Prior to May 19, 1998, Forum
Financial Corp. served as the Trust's transfer agent.
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
offer and redeem Fund shares 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).
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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 December 5, 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.
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.
In offering or redeeming Fund shares, 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
THE TRUST. 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. The Fund
Accounting Agreement shall continue in effect with respect to a Fund until
terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).
This Fund Accounting Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to FAcS or (ii) by FAcS on 60 days'
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written notice to the Trust. The Fund Accounting Agreement may not be assigned
by either party except with the written authorization of the other party. Under
the Fund Accounting Agreement, FAcS shall not be liable for any action or
inaction of Forum relating to any event whatsoever in the absence of bad faith,
willful misfeasance or gross negligence in the performance of FAcS's duties or
obligations under the Fund Accounting Agreement or by reason of FAcS's reckless
disregard of its duties and obligations under the Fund Accounting Agreement.
CORE TRUST. Pursuant to a Portfolio and Unitholder 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 a Portfolio's asset level as well as the amount and type of the
Portfolio'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. This Portfolio and
Unitholder Accounting Agreement shall continue in effect with respect to a
Portfolio until terminated; provided, that continuance is specifically approved
at least annually by the Board. The Portfolio and Unitholder Accounting
Agreement may be terminated with respect to a Portfolio at any time, without the
payment of any penalty (i) by the Board on 60 days' written notice to FAcS or
(ii) by FAcS on 60 days' written notice to the Trust.
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.
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, FFS, 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.
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Each investor in a Portfolio, including the Funds, may add to or reduce its
investment in that Portfolio on each Fund Business Day. 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 Portfolios 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 Portfolios will pay any brokerage
commissions, in the event a Portfolio pays brokerage commissions or other
transaction-related compensation, the payments may be made to broker-dealers who
pay expenses of the Portfolio that it would otherwise be obligated to pay
itself. Any transaction for which a 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.
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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.
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.
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)
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.
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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 the 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 a 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, Imperial Trust Company, 201
North Figueroa Street, Suite 610, Los Angeles, California 90012, acts as the
custodian of each Portfolio's assets. The custodians' responsibilities include
safeguarding and controlling the Portfolios' cash and securities and determining
income payable on and collecting interest on Portfolio investments.
COUNSEL
Legal matters in connection with the issuance of beneficial interest of the
Trust are passed upon by Seward & Kissel, 1200 G Street, N.W., Washington, D.C.
20005.
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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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SHAREHOLDINGS
As of November 1, 1998, the officers and trustees of the Trust as a group owned
less than 1% of the outstanding shares of each Fund.
Table 7 to Appendix C lists the persons who owned of record 5% or more of the
outstanding shares of a class of shares of the Fund.
FUND STRUCTURE
CORE AND GATEWAY. EACH Fund seek to achieve its objective by investing all of
its 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 an
interestholder 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
interest 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 interestholders. 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 interestholders of a Core
Portfolio include, subject to applicable statutory and regulatory requirements:
the election of trustees; approval of an investment advisory contract; certain
amendments of the organizational documents for the Core Portfolio; 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
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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 the Fund's investable assets in another pooled
investment entity having substantially the same investment objective as the
Fund.
12. FINANCIAL STATEMENTS
AUGUST 31, 1998 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
Treasury Obligations, Daily Assets Government Obligations Fund, Daily Assets
Government Fund, Daily Assets Cash Fund, and Daily Assets Municipal Fund for
the fiscal year ended August 31, 1998 and the Independent Auditors' Report
thereon (included in the Annual Report to Shareholders), which are delivered
along with this SAI, are incorporated herein by reference. Also incorporated by
reference into this SAI are the Schedules of Investments, Statements of Assets
and Liabilities, Statements of Operations, Statements of Changes in Net Assets,
and notes thereto, of Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio for the fiscal year
ended August 31, 1998 and the Independent Auditors' Report thereon.
33
<PAGE>
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 IBCA, 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:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
o Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 by Moody's have a strong ability for repayment of senior
short-term debt obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
STANDARD AND POOR'S CORPORATION. S&P's two highest commercial paper ratings are
A and B. Issues assigned an A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety. An A-1 designation
indicates that the degree of safety regarding timely payment is either
overwhelming or very strong. Those issues determined to possess overwhelming
safety characteristics are denoted with a plus (+) sign designation. The
capacity for timely payment on issues with an A-2 designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1. A-3 issues have a satisfactory capacity for timely payment. They are,
however, somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations. Issues rated B
are regarded as having only an adequate capacity for timely payment. However,
such capacity may be damaged by changing conditions or short-term adversities.
FITCH IBCA, 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, 1998, 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 4.92% 5.04% -- --
Institutional Service Shares 5.19% 5.33% -- --
Institutional Shares 5.44% 5.59% -- --
DAILY ASSETS GOVERNMENT FUND
Investor Shares 6.17% 6.36% -- --
Institutional Service Shares 4.99% 5.12% -- --
Institutional Shares 5.24% 5.38% -- --
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
Investor Shares 4.82% 4.93% -- --
Institutional Service Shares 5.11% 5.24% -- --
Institutional Shares 5.36% 5.51% -- --
DAILY ASSETS CASH FUND
Investor Shares 4.91% 5.03% -- --
Institutional Service Shares 5.21% 5.34% -- --
Institutional Shares 5.46% 5.60% -- --
DAILY ASSETS MUNICIPAL FUND
Investor Shares 2.53% 2.57% -- --
Institutional Service Shares 2.82% 2.86% -- --
Institutional Shares 3.06% 3.11% -- --
</TABLE>
As of August 31, 1998, there were no outstanding Investor Shares of Daily Assets
Government Fund.
B-1
<PAGE>
APPENDIX C- MISCELLANEOUS TABLES
<TABLE>
<CAPTION>
TABLE 1 - INVESTMENT ADVISORY FEES ($)
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1998 55,735 0 55,735
Year ended August 31, 1997 0
Year ended August 31, 1996 12,930 0 12,930
GOVERNMENT PORTFOLIO
Year ended August 31, 1998 23,813 0 23,813
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
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1998 238,860 0 238,860
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, 1998 158,716 0 158,716
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, 1998 1,937 0 0
Year ended August 31, 1997 -- -- --
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
TABLE 2 - ADMINISTRATION FEES ($)
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1998 74,964 29,678 45,286
Year ended August 31, 1997 24,287 14,346 9,941
Year ended August 31, 1996 19,198 9,307 9,891
GOVERNMENT PORTFOLIO
Year ended August 31, 1998 28,796 28,796 0
Period ended August 31, 1997 18,128 18,128 0
Year ended March 31, 1997 41,274 41,274 0
Year ended March 31, 1996(1)
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1998 317,754 0 317,754
Year ended August 31, 1997 252,821 0 252,821
Year ended August 31, 1996 230,547 104,558 125,989
CASH PORTFOLIO
Year ended August 31, 1998 212,800 0 212,800
Year ended August 31, 1997 92,652 7,621 85,031
Year ended August 31, 1996 56,125 3,719 52,406
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1998 1,937 1,937 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1998 24,549 24,549 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Year ended August 31, 1998 28,110 2,864 25,246
Period ended August 31, 1997 18,123 0 18,123
Year ended March 31, 1997 41,232 7,453 33,779
Year ended March 31, 1996
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1998 4,115 4,115 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Year ended August 31, 1998 10,505 10,505 0
Year ended August 31, 1997 7,453 7,453 0
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1998 1,934 1,934 0
Year ended August 31, 1997 -- -- --
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
TABLE 3 - INVESTOR SHARES RULE 12B-1 FEES ($)
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1998 -- -- --
DAILY ASSETS GOVERNMENT FUND
Period ended August 31, 1998 -- -- --
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1998 -- -- --
DAILY ASSETS CASH FUND
Period ended August 31, 1998 -- -- --
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1998 -- -- --
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
TABLE 4 - TRANSFER AGENCY FEES ($)
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1998 6,071 6,069 2
Year ended August 31, 1997 -- -- --
Institutional Shares
Year ended August 31, 1998 31,381 31,036 345
Investor Shares
Year ended August 31, 1998 843 843 0
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
Year ended August 31, 1998 68,534 53,276 15,258
Period ended August 31, 1997 50,810 44,054 6,756
Year ended March 31, 1997 116,051 101,485 14,566
Year ended March 31, 1996 110,792 96,881 13,911
Institutional Shares
Year ended August 31, 1998 4,874 4,853 21
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1998 6,869 6,866 3
Year ended August 31, 1997 -- -- --
Institutional Shares
Year ended August 31, 1998 10,816 10,762 54
Investor Shares
Year ended August 31, 1998 843 843 0
DAILY ASSETS CASH FUND
Institutional Service Shares
Year ended August 31, 1998 27,955 15,294 12,661
Period ended August 31, 1997 29,772 17,766 12,006
Institutional Shares
Year ended August 31, 1998 9,362 9,311 51
Investor Shares
Year ended August 31, 1998 843 843 0
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
Year ended August 31, 1998 842 842 0
Year ended August 31, 1997 -- -- --
Institutional Shares
Year ended August 31, 1998 4,150 4,126 24
Investor Shares
Year ended August 31, 1998 843 843 0
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
TABLE 5 - SHAREHOLDER SERVICE FEES ($)
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1998 2,600 2,600 0
Investor Shares
Period ended August 31, 1998 0 0 0
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
Period ended August 31, 1998 78,274 78,274 0
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1998 2,018 2,018 0
Investor Shares
Period ended August 31, 1998 0 0 0
DAILY ASSETS CASH FUND
Institutional Service Shares
Year ended August 31, 1998 22,439 22,439 0
Investor Shares
Period ended August 31, 1998 0 0 0
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
Year ended August 31, 1998 0 0 0
Investor Shares
Period ended August 31, 1998 0 0 0
As of August 31, 1998, there was no effective Shareholder Plan with respect to
Institutional Shares of any Fund.
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
TABLE 6 - FUND ACCOUNTING FEES ($)
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1998 48,000 0 48,000
Year ended August 31, 1997 24,279 0 24,279
Year ended August 31, 1996 28,518 19,955 8,563
GOVERNMENT PORTFOLIO
Year ended August 31, 1998 48,000 37,946 10,054
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, 1998 48,000 0 48,000
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, 1998 48,000 0 48,000
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, 1998 8,800 8,800 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1998 13,323 13,323 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Year ended August 31, 1998 14,000 4,000 10,000
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, 1998 14,064 14,064 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Year ended August 31, 1998 18,999 12,999 6,000
Year ended August 31, 1997
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1998 4,198 4,198 0
Year ended August 31, 1997 -- -- --
</TABLE>
C-6
<PAGE>
TABLE 7 - 5% SHAREHOLDERS
As of November 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 99.00 0.01
Two Portland Square, Portland, ME 04101
Institutional Shares
Babb & Co., C/O Bank of New Hampshire 55.45 53.19
P.O. Box 477, Concord, NH 03302
Allagash & Co.
c/o Bank of New Hampshire 43.10 41.35
P.O. Box 477, Concord, NH 03302-0477
Institutional Service Shares
Allagash & Co., C/O Bank of New Hampshire 43.10 41.35
P.O. Box 477, Concord, NH 03302
DAILY ASSETS GOVERNMENT FUND
Investor Shares
BankBoston IRA Cust. 16.26 0.20
FBO William Edward McMahon
35 Lookout View Road, Fairport, NY 14450
Donad A. Levi and Eileen Delasandro 16.02 0.19
FBO Quadra Capital Partners LP
401K Plan and Trust
270 Congress St., Boston, MA 02210
BankBoston IRA Cust. 12.92 0.16
FBO Nancy Hsiung
5 Ingraham Rd., Wellesley, MA 02181
BankBoston IRA RO Cust. 7.90 0.09
FBO Roger G. Harris
Suite #1241
779 E. Merritt Island Cswy., Merritt Island, FL 32952-3516
Bank of Boston IRA Cust. 5.84 0.07
FBO Frederica Stevenson
P.O. Box 277
Southborough, MA 01772
Stephen John Williams 5.74 0.07
1062 E. Princeton Ave., Salt Lake City, UT 84105
BankBoston IRA RO Cust. 5.09 0.05
FBO Deborah Delasandro
3 Lattice Place, Greenville, SC 29615
Institutional Shares
H.M. Payson & Co. Custody Account 51.89 42.24
P.O. Box 31, Portland, ME 04112
H.M. Payson & Co. Trust Account 47.35 38.55
P.O. Box 31, Portland, ME 04112
Institutional Service Shares
Bank of Boston FBO Merne E. Young 11.36 1.97
18751 San Rufino, Irvine, CA 92612
Casa Colina Centers for Rehabilitation 10.94 1.90
2850 N Garey Ave, PO Box 6001, Pomona, CA 91769
Lansdowne Parking Associates LP C/O Meredith Mgt. 7.89 1.37
One Bridge Street #300, Newton, MA 02458
Retirement Planning Strategies 6.01 1.05
Scudder Growth and Income Fund, NY
C-7
<PAGE>
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Investor Shares
Forum Administrative Services, LLC 99.00 0.03
Two Portland Square, Portland, ME 04101
Institutional Shares
Allagash & Co., C/O Bank of New Hampshire 81.77 71.02
P.O. Box 477, Concord, NH 03302
Babb & Co., C/O Bank of New Hampshire 17.25 14.99
P.O. Box 477, Concord, NH 03302
Institutional Service Shares
Cutler Equity Income Fund 22.88 3.00
C/O Forum Financial Services
Two Portland Square, Portland, ME 04101
Sound Shore Fund 22.88 2.00
C/O Forum Financial Services
Two Portland Square, Portland, ME 04101
CRM Small Cap Value Fund 21.91 2.87
C/O Forum Financial Services
Two Portland Square, Portland, ME 04101
Cutler Approved List Equity Fund 22.88 3.00
C/O Forum Financial Services
Two Portland Square, Portland, ME 04101
DAILY ASSETS CASH FUND
Investor Shares
Forum Administrative Services, LLC 98.99 0.02
Two Portland Square, Portland, ME 04101
Institutional Shares
FirstTrust Co. 32.41 27.37
National City Bank Trust Dept.
227 Main St., Evansville, IN 47708
Allagash & Co., C/O Bank of New Hampshire 27.59 25.29
P.O. Box 477, Concord, NH 03302
H M Payson & Co Custody Acct 21.63 18.27
FBO Customer Funds Under Mgmt
P.O. Box 31, Portland, ME 04112
H M Payson & Co Trust Account 13.02 10.76
FBO Customer Funds Under Mgmt
P.O. Box 31, Portland, ME 04112
C-8
<PAGE>
Institutional Service Shares
CRM Small Cap Value Fund 18.99 2.95
C/O Forum Financial Services, Inc
Two Portland Square, Portland, ME 04101
Sound Shore Fund 18.82 2.92
C/O Forum Financial Services, Inc
Two Portland Square, Portland, ME 04101
Cutler Equity Income Fund 18.82 2.92
C/O Forum Financial Services, Inc.
Two Portland Square, Portland, ME 04101
Cutler Approved List Equity Fund 18.82 2.92
C/O Forum Financial Services, Inc.
Two Portland Square, Portland, ME 04101
Allagash & Co C/O Bank of New Hampshire 10.64 1.65
PO Box 477, Concord, NH 03302
Daily Assets Municipal Fund
Investor Shares
Forum Financial Group 99.00 0.04
Two Portland Square, Portland, ME 04101
Institutional Shares
Babb & Co C/O Bank of New Hampshire 45.99 45.96
PO Box 477, Concord, NH 03302
National City Bank Trust Dept. 31.43 31.40
227 Main St., Evansville, IN 47708
Inglewood, CA 90301
Allagash & Co C/O Bank of New Hampshire 21.61 21.80
PO Box 477, Concord, NH 03302
Institutional Service Shares
Forum Financial Group 99.95 0.03
Two Portland Square, Portland, ME 04101
</TABLE>
C-9
<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 149 funds with
more than $38 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
$1.9 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 $388 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: $38 billion
*Client Assets Processed by Fund Accounting: $49 billion
*Client Funds under Administration and Distribution: 149 mutual funds with 226
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 -200, Poland - 71, Bermuda - 4
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: $1.05 Billion
*Custody Income Assets: $388 Million
*Client Base: 85% individuals; 15% institutional
*Owned by 13 shareholders; 12 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, 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 149
mutual funds for 12 different fund managers, with more than $38 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 275 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 4 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 June 30, 1998.
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 $1.05 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 $1.9 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 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.
D-5
<PAGE>
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
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements
Prospectus: Financial Highlights.
Statement of Additional Information: Not Applicable
(b) Exhibits
(1) Trust Instrument of Registrant dated August 29, 1995
(see Note 1).
(2) By-Laws of Registrant (see Note 2).
(3) None.
(4) See the following Sections in the Trust Instrument
filed as Exhibit(1): Sections 2.04 and 2.06.
(5) (a) Investment Advisory Agreement between
Registrant and H.M. Payson & Co. relating to
Payson Value Fund and Payson Balanced
Fund dated December 18, 1995 (see Note 3).
(b) Investment Advisory Agreement between
Registrant and Quadra Capital Partners, L.P.
relating to Quadra Growth Fund dated as of
December 20, 1996 (see Note 4).
(c) Investment Subadvisory Agreement between
Quadra Capital Partners, L.P. and Carl
Domino Associates, L.P. relating to Quadra
Value Equity Fund dated as of October 18,
1996 (see Note 4).
(d) Investment Advisory Agreement between
Registrant and Austin Investment Management,
Inc. relating to Austin Global Equity Fund
dated as of June 14, 1996 (see Note 3).
(e) Investment Advisory Agreement between
Registrant and Oak Hall Capital Advisors,
Inc. relating to Oak Hall Small Cap
Contrarian Fund dated as of June 14, 1996
(see Note 3).
(f) Investment Advisory Agreement between
Registrant and Forum Investment Advisors,
LLC relating to Investors Bond Fund,
TaxSaver Bond Fund, Investors High Grade
Bond Fund, Maine Municipal Bond Fund, New
Hampshire Bond Fund and Investors Growth
Fund dated as of January 2, 1998 (see Note
5).
(g) Investment Subadvisory Agreement between
Quadra Capital Partners, L.P. and Smith
Asset Management Group, L.P. relating to
Quadra Growth Fund dated as of November 1,
1997 (see Note 6).
(h) Investment Advisory Agreement between
Registrant and Polaris Capital Management,
Inc. (see Note 7).
<PAGE>
(i) Investment Advisory Agreement between
Registrant and H.M. Payson & Co. relating to
Investors Equity Fund dated as of December
5, 1997 (see Note 8).
(j) Investment Subadvisory Agreement between
H.M. Payson & Co. and Peoples Heritage Bank
relating to Investors Equity Fund (see Note
9).
(k) Investment Advisory Agreement between
Registrant and Forum Investment Advisors,
LLC relating to Small Company Opportunities
Fund dated as of March 30, 1998 (see Note
8).
(6) (a) Selected Dealer Agreement between Forum
Financial Services, Inc. and securities
brokers (see Note 3).
(b) Bank Affiliated Selected Dealer Agreement
between Forum Financial Services, Inc. and
bank affiliates (see Note 3).
(c) Distribution Agreement between Registrant
and Forum Financial Services, Inc. relating
to Quadra Growth Fund, Investors Bond Fund,
TaxSaver Bond Fund, Investors High Grade
Bond Fund, Maine Municipal Bond Fund, New
Hampshire Bond Fund, Equity Index Fund
Small Company Opportunities Fund,
International Equity Fund, Emerging Markets
Fund, Investors Equity Fund,
Investors Growth Fund, Payson
Balanced Fund, Payson Value Fund, Oak Hall
Small Cap Contrarian Fund, Austin Global
Equity Fund, Polaris Global Value Fund and
Investor Shares, Institutional Shares and
Institutional Service Shares of Daily Assets
Government Fund, Daily Assets Treasury
Obligations Fund, Daily Assets Government
Obligations Fund, Daily Assets Cash Fund and
Daily Assets Municipal Fund dated as of June
19, 1997 (see Note 3).
(d) Form of Distribution Agreement, undated,
between Registrant and Forum Fund Services,
LLC relating to Quadra Growth Fund,
Investors Bond Fund, TaxSaver Bond Fund,
Investors High Grade Bond Fund, Maine
Municipal Bond Fund, New Hampshire Bond
Fund, Equity Index Fund, Small Company
Opportunities Fund, International Equity
Fund, Emerging Markets Fund, Investors
Equity Fund, Investors Growth Fund, Payson
Balanced Fund, Payson Value Fund, Oak Hall
Small Cap Contrarian Fund, Austin Global
Equity Fund, Polaris Global Value Fund and
Investor Shares, Institutional Shares and
Institutional Service Shares of Daily Assets
Government Fund, Daily Assets Treasury
Obligations Fund, Daily Assets Government
Obligations Fund, Daily Assets Cash Fund and
Daily Assets Municipal Fund (filed
herewith).
(7) None.
(8) (a) Transfer Agency and Services Agreement
between Registrant and Forum Shareholder
Services, LLC relating to
Quadra Growth Fund, Investors
Bond Fund, TaxSaver Bond Fund, Investors
High Grade Bond Fund, Maine Municipal
Bond Fund, New Hampshire Bond Fund,
Equity Index Fund, Small Company
Opportunities Fund, International Equity
Fund, Emerging Markets Fund, Investors
Equity Fund, Investors Growth Fund, Payson
Balanced Fund, Payson Value Fund, Oak Hall
Small Cap Contrarian Fund, Austin Global
Equity Fund, Polaris Global Value Fund and
Investor Shares, Institutional Shares
and Institutional Service Shares of Daily
Assets Government Fund, Daily Assets
Treasury Obligations Fund, Daily Assets
Government Obligations Fund, Daily Assets
Cash Fund and Daily Assets Municipal Fund
dated May 19, 1998 (see Note 3).
<PAGE>
(b) Custodian Agreement between Registrant and
BankBoston N.A., relating to,
Quadra Growth Fund, Investors
Bond Fund, TaxSaver Bond Fund, Investors
High Grade Bond Fund, Maine Municipal Bond
Fund, New Hampshire Bond Fund, Equity Index
Fund, Small Company Opportunities Fund,
International Equity Fund, Emerging Markets
Fund, Investors Equity Fund, Investors
Growth Fund, Payson Balanced Fund, Payson
Value Fund, Oak Hall Small Cap Contrarian
Fund, Austin Global Equity Fund, Polaris
Global Value Fund and Investor Shares,
Institutional Shares and Institutional
Service Shares of Daily Assets Government
Fund, Daily Assets Treasury Obligations
Fund, Daily Assets Government Obligations
Fund, Daily Assets Cash Fund and Daily
Assets Municipal Fund dated as of May 19,
1998 (see Note 9).
(9) (a) Administration Agreement between Registrant
and Forum Administrative Services, LLC
relating to
Quadra Growth Fund, Investors Bond Fund,
TaxSaver Bond Fund, Investors High Grade
Bond Fund, Maine Municipal Bond Fund,
New Hampshire Bond Fund, Equity Index Fund,
Small Company Opportunities Fund,
International Equity Fund, Emerging Markets
Fund, Investors Equity Fund, Investors
Growth Fund, Payson Balanced Fund, Payson
Value Fund, Oak Hall Small Cap
Contrarian Fund, Austin Global Equity Fund,
Polaris Global Value Fund and Investor
Shares, Institutional Shares and
Institutional Service Shares of Daily Assets
Government Fund, Daily Assets Treasury
Obligations Fund, Daily Assets
Government Obligations Fund, Daily Assets
Cash Fund and Daily Assets Municipal Fund
dated as of June 19, 1997 and amended
as of December 5, 1997 (see Note 3).
(b) Shareholder Service Plan of Registrant
relating to Quadra Growth Fund dated June
19, 1997, amended September 22, 1997 and
Form of Shareholder Service Agreement
relating to Quadra Funds (see Note 10).
(c) Shareholder Service Plan of Registrant dated
September 22, 1997 and Form of Shareholder
Service Agreement dated December 5, 1997
relating to the Daily Assets Treasury Fund,
Daily Assets Cash Fund, Daily Assets
Government Fund, Daily Assets Municipal Fund
and Daily Assets Treasury Obligations Fund
(see Note 11).
(d) Shareholder Service Plan of Registrant dated
March 18, 1998 and Form of Shareholder
Service Agreement relating to Polaris
Global Value Fund (see Note 8).
(e) Shareholder Service Plan of Registrant dated
December 5, 1997 and Form of Shareholder
Service Agreement relating to Oak Hall Small
Cap Contrarian Fund (see Note 8).
(10) Opinion of Seward & Kissel dated January 5, 1996 (see
Note 12).
(11) None.
<PAGE>
(12) None.
(13) Investment Representation letter of Reich & Tang,
Inc. as original purchaser of shares of Registrant
(see Note 3).
(14) Form of Disclosure Statement and Custodial Account
Agreement applicable to individual retirement
accounts (see Note 3).
(15) Form of Rule 12b-1 Plan adopted by Registrant
(see Note 3).
(16) Schedule of Sample Performance Calculations (see
Note 14) relating to:
<TABLE>
<S><C> <C>
Investors High Grade Bond Fund Payson Balanced Fund
Investors Bond Fund Austin Global Equity Fund
TaxSaver Bond Fund Oak Hall Small Cap Contrarian Fund
Maine Municipal Bond Fund Quadra Value Equity Fund
New Hampshire Bond Fund Quadra Growth Fund
Daily Assets Treasury Obligations Fund Equity Index Fund
Daily Assets Government Fund Investors Equity Fund
Daily Assets Government Obligations Fund Investors Growth Fund
Daily Assets Cash Fund Small Company Opportunities Fund
Daily Assets Municipal Fund International Equity Fund
Payson Value Fund Emerging Markets Fund
</TABLE>
(17) Financial Data Schedules (see Note 13).
(18) 18f-3 plan adopted by Registrant (see Note 3).
Other Exhibits:
Power of Attorney for James C. Cheng (see Note 1).
Power of Attorney for Costas Azariadis (see Note 1).
Power of Attorney for J. Michael Parish (see Note 1).
Power of Attorney for John Y. Keffer (see Note 8).
---------------
Note (1) Exhibit incorporated by reference as filed in PEA No. 34 via
EDGAR on May 9, 1996, accession number 0000912057-96-008780.
(2) Exhibit incorporated by reference as filed in PEA No. 43 via
EDGAR on July 31, 1997, accession number 0000912057-97-025707.
(3) Exhibit incorporated by reference as filed in PEA No. 62 via
EDGAR on May 26, 1998, accession number 0001004402-98-000307.
(4) Exhibit incorporated by reference as filed in PEA No. 41 via
EDGAR on December 31, 1996, accession number
0000912057-96-030646.
(5) Exhibit incorporated by reference as filed in PEA 56 via EDGAR
on December 31, 1997, accession number 0001004402-97-000281.
(6) Exhibit incorporated by reference as filed in PEA No. 48 via
EDGAR on October 31, 1997, accession number
0001004402-97-000152.
<PAGE>
(7) Exhibit incorporated by reference as filed in PEA No. 62 via
EDGAR on June 8, 1998, accession number 0001004402-98-000339.
(8) Exhibit incorporated by reference as filed in PEA No. 65 via
EDGAR on September 30, 1998, accession number
0001004402-98-000530.
(9) Exhibit incorporated by reference as filed in PEA No. 64 via
EDGAR on July 31, 1998, accession number 0001004402-98-000421.
(10) Exhibit incorporated by reference as filed in PEA No. 49 via
EDGAR on November 5, 1997, accession number
0001004402-97-000163.
(11) Exhibit incorporated by reference as filed in PEA No. 50 via
EDGAR on November 12, 1997, accession number
0001004402-97-000189.
(12) Exhibit incorporated by reference as filed in PEA No. 33 via
EDGAR on January 5, 1996, accession number
0000912057-96-000216.
(13) Exhibit incorporated by reference as filed in PEA No. 67 via
EDGAR on November 12, 1998, accession number
0001004402-98-000589.
(14) Exhibit incorporated by reference as filed in PEA No. 61 via
EDGAR on May 8, 1998, accession number 0001004402-98-000295.
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<S> <C>
--------------------------------------------------------------------------- --------------------------------
Title of Class Number of Recordholders
as of November 1, 1998
--------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------- --------------------------------
Investors High Grade Bond Fund 3
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Investors Bond Fund 59
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TaxSaver Bond Fund 37
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Maine Municipal Bond Fund 393
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New Hampshire Bond Fund 71
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Daily Assets Treasury Obligations Fund
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Institutional Service 4
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Institutional 5
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Investor 2
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Daily Assets Government Fund
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Institutional Service 135
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Institutional 4
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Investor 23
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Daily Assets Government Obligations Fund
--------------------------------------------------------------------------- --------------------------------
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Institutional Service 12
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Institutional 5
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Investor 2
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Daily Assets Cash Fund
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Institutional Service 23
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Institutional 7
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Investor 2
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Daily Assets Municipal Fund
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Institutional Service 2
--------------------------------------------------------------------------- --------------------------------
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Institutional 5
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Investor 2
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Payson Value Fund 370
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Payson Balanced Fund 388
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Austin Global Equity Fund 14
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Oak Hall Small Cap Contrarian Fund 155
--------------------------------------------------------------------------- --------------------------------
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Quadra Value Equity Fund 17
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Quadra Growth Fund 1
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--------------------------------------------------------------------------- --------------------------------
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Polaris Global Value Fund 185
--------------------------------------------------------------------------- --------------------------------
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Equity Index Fund 7
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Investors Equity Fund 7
--------------------------------------------------------------------------- --------------------------------
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Investors Growth Fund 4
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Small Company Opportunities Fund 2
--------------------------------------------------------------------------- --------------------------------
--------------------------------------------------------------------------- --------------------------------
International Equity Fund 2
--------------------------------------------------------------------------- --------------------------------
<PAGE>
--------------------------------------------------------------------------- --------------------------------
Emerging Markets Fund 2
--------------------------------------------------------------------------- --------------------------------
</TABLE>
ITEM 27. INDEMNIFICATION
In accordance with Section 3803 of the Delaware Business Trust Act,
Section 5.2 of Registrant's Trust Instrument provides as follows:
"5.2. INDEMNIFICATION.
"(a) Subject to the exceptions and limitations contained in Section
(b) below:
"(i) Every Person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of being or having
been a Trustee or officer and against amounts paid or incurred by him
in the settlement thereof;
"(ii) The words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
"(b) No indemnification shall be provided hereunder to a Covered
Person:
"(i) Who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Holders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of the
Covered Person's office or (B) not to have acted in good faith in the
reasonable belief that Covered Person's action was in the best interest
of the Trust; or
"(ii) In the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the Trustee's or officer's office,
"(A) By the court or other body approving the
settlement;
"(B) By at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or
"(C) By written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a full
trial-type inquiry);
provided, however, that any Holder may, by appropriate legal
proceedings, challenge any such determination by the Trustees or by independent
counsel.
"(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be a Covered Person and shall inure to the benefit of
the heirs, executors and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which
Trust personnel, other than Covered Persons, and other persons may be
entitled by contract or otherwise under law.
<PAGE>
"(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in paragraph (a) of this Section 5.2 may be paid by the Trust
or Series from time to time prior to final disposition thereof upon
receipt of an undertaking by or on behalf of such Covered Person that
such amount will be paid over by him to the Trust or Series if it is
ultimately determined that he is not entitled to indemnification under
this Section 5.2; provided, however, that either (a) such Covered
Person shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance
payments or (c) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined,
based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to
believe that such Covered Person will be found entitled to
indemnification under this Section 5.2.
"(e) Conditional advancing of indemnification monies under this Section
5.2 for actions based upon the 1940 Act may be made only on the
following conditions: (i) the advances must be limited to amounts used,
or to be used, for the preparation or presentation of a defense to the
action, including costs connected with the preparation of a settlement;
(ii) advances may be made only upon receipt of a written promise by, or
on behalf of, the recipient to repay that amount of the advance which
exceeds that amount which it is ultimately determined that he is
entitled to receive from the Trust by reason of indemnification; and
(iii) (a) such promise must be secured by a surety bond, other suitable
insurance or an equivalent form of security which assures that any
repayments may be obtained by the Trust without delay or litigation,
which bond, insurance or other form of security must be provided by the
recipient of the advance, or (b) a majority of a quorum of the Trust's
disinterested, non-party Trustees, or an independent legal counsel in a
written opinion, shall determine, based upon a review of readily
available facts, that the recipient of the advance ultimately will be
found entitled to indemnification.
"(f) In case any Holder or former Holder of any Series shall be held to
be personally liable solely by reason of the Holder or former Holder
being or having been a Holder of that Series and not because of the
Holder or former Holder acts or omissions or for some other reason, the
Holder or former Holder (or the Holder or former Holder's heirs,
executors, administrators or other legal representatives, or, in the
case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all
loss and expense arising from such liability. The Trust, on behalf of
the affected Series, shall, upon request by the Holder, assume the
defense of any claim made against the Holder for any act or obligation
of the Series and satisfy any judgment thereon from the assets of the
Series."
Paragraph 4 of each Investment Advisory Agreement provides in substance
as follows:
"4. We shall expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we
agree as an inducement to your undertaking these services that you
shall not be liable hereunder for any mistake of judgment or in any
event whatsoever, except for lack of good faith, provided that nothing
herein shall be deemed to protect, or purport to protect, you against
any liability to us or and to our security holders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder."
Section 8 of the Distribution Agreement provides:
(a) The Trust will indemnify, defend and hold the Distributor, its
employees, agents, directors and officers and any person who controls
the Distributor within the meaning of section 15 of the Securities Act
or section 20 of the 1934 Act ("Distributor Indemnitees") free and
harmless from and against any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable
counsel fees and other expenses of every nature and character
(including the cost of investigating or defending such claims, demands,
actions, suits or liabilities and any reasonable counsel fees incurred
in connection therewith) which any Distributor Indemnitee may incur,
under the Securities Act, or under common law or otherwise, arising out
<PAGE>
of or based upon any alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectuses or arising
out of or based upon any alleged omission to state a material fact
required to be stated in any one thereof or necessary to make the
statements in any one thereof not misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished in writing to the Trust in connection with the preparation of
the Registration Statement or exhibits to the Registration Statement by
or on behalf of the Distributor ("Distributor Claims").
After receipt of the Distributor's notice of termination under Section
13(e), the Trust shall indemnify and hold each Distributor Indemnitee
free and harmless from and against any Distributor Claim; provided,
that the term Distributor Claim for purposes of this sentence shall
mean any Distributor Claim related to the matters for which the
Distributor has requested amendment to the Registration Statement and
for which the Trust has not filed a Required Amendment, regardless of
with respect to such matters whether any statement in or omission from
the Registration Statement was made in reliance upon, or in conformity
with, information furnished to the Trust by or on behalf of the
Distributor.
(b) The Trust may assume the defense of any suit brought to enforce any
Distributor Claim and may retain counsel of good standing chosen by the
Trust and approved by the Distributor, which approval shall not be
withheld unreasonably. The Trust shall advise the Distributor that it
will assume the defense of the suit and retain counsel within ten (10)
days of receipt of the notice of the claim. If the Trust assumes the
defense of any such suit and retains counsel, the defendants shall bear
the fees and expenses of any additional counsel that they retain. If
the Trust does not assume the defense of any such suit, or if
Distributor does not approve of counsel chosen by the Trust or has been
advised that it may have available defenses or claims that are not
available to or conflict with those available to the Trust, the Trust
will reimburse any Distributor Indemnitee named as defendant in such
suit for the reasonable fees and expenses of any counsel that person
retains. A Distributor Indemnitee shall not settle or confess any claim
without the prior written consent of the Trust, which consent shall not
be unreasonably withheld or delayed.
(c) The Distributor will indemnify, defend and hold the Trust and its
several officers and trustees (collectively, the "Trust Indemnitees"),
free and harmless from and against any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character (including the cost of investigating or defending such
claims, demands, actions, suits or liabilities and any reasonable
counsel fees incurred in connection therewith), but only to the extent
that such claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other
expenses result from, arise out of or are based upon:
(i) any alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or any alleged omission of a
material fact required to be stated or necessary to make the statements
therein not misleading, if such statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Trust in writing in connection with the preparation of the Registration
Statement or Prospectus by or on behalf of the Distributor; or
(ii) any act of, or omission by, Distributor or its sales
representatives that does not conform to the standard of care set forth
in Section 7 of this Agreement ("Trust Claims").
(d) The Distributor may assume the defense of any suit brought to
enforce any Trust Claim and may retain counsel of good standing chosen
by the Distributor and approved by the Trust, which approval shall not
be withheld unreasonably. The Distributor shall advise the Trust that
it will assume the defense of the suit and retain counsel within ten
(10) days of receipt of the notice of the claim. If the Distributor
assumes the defense of any such suit and retains counsel, the
defendants shall bear the fees and expenses of any additional counsel
that they retain. If the Distributor does not assume the defense of any
such suit, or if Trust does not approve of counsel chosen by the
Distributor or has been advised that it may have available defenses or
claims that are not available to or conflict with those available to
the Distributor, the Distributor will reimburse any Trust Indemnitee
named as defendant in such suit for the reasonable fees and expenses of
<PAGE>
any counsel that person retains. A Trust Indemnitee shall not settle or
confess any claim without the prior written consent of the Distributor,
which consent shall not be unreasonably withheld or delayed.
(e) The Trust's and the Distributor's obligations to provide
indemnification under this Section is conditioned upon the Trust or the
Distributor receiving notice of any action brought against a
Distributor Indemnitee or Trust Indemnitee, respectively, by the person
against whom such action is brought within twenty (20) days after the
summons or other first legal process is served. Such notice shall refer
to the person or persons against whom the action is brought. The
failure to provide such notice shall not relieve the party entitled to
such notice of any liability that it may have to any Distributor
Indemnitee or Trust Indemnitee except to the extent that the ability of
the party entitled to such notice to defend such action has been
materially adversely affected by the failure to provide notice.
(f) The provisions of this Section and the parties' representations and
warranties in this Agreement shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
Distributor Indemnitee or Trust Indemnitee and shall survive the sale
and redemption of any Shares made pursuant to subscriptions obtained by
the Distributor. The indemnification provisions of this Section will
inure exclusively to the benefit of each person that may be a
Distributor Indemnitee or Trust Indemnitee at any time and their
respective successors and assigns (it being intended that such persons
be deemed to be third party beneficiaries under this Agreement).
(g) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware
arising out of or in any way connected with the issuance or sale of
Shares.
(h) Nothing contained herein shall require the Trust to take any action
contrary to any provision of its Organic Documents or any applicable
statute or regulation or shall require the Distributor to take any
action contrary to any provision of its Articles of Incorporation or
Bylaws or any applicable statute or regulation; provided, however, that
neither the Trust nor the Distributor may amend their Organic Documents
or Articles of Incorporation and Bylaws, respectively, in any manner
that would result in a violation of a representation or warranty made
in this Agreement.
(i) Nothing contained in this section shall be construed to protect the
Distributor against any liability to the Trust or its security holders
to which the Distributor would otherwise be subject by reason of its
failure to satisfy the standard of care set forth in Section 7 of this
Agreement.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Forum Investment Advisors, LLC
The description of Forum Investment Advisors, LLC
(investment adviser to each of Daily Assets Treasury
Obligations Fund, Daily Assets Government Fund, Daily Assets
Government Obligations Fund, Daily Assets Cash Fund, Daily
Assets Municipal Fund, Investors High Grade Bond Fund,
Investors Bond Fund, TaxSaver Bond Fund, Maine Municipal
Bond Fund, New Hampshire Bond Fund, Small Company
Opportunities Fund, and Investors Growth Fund) in the
Prospectuses and Statements of Additional Information,
constituting certain of Parts A and B, respectively, of this
Registration Statement, are incorporated by reference
herein.
The following are the members of Forum Investment Advisors,
LLC, Two Portland Square, Portland, Maine 04101, including
their business connections, which are of a substantial nature.
Forum Holdings Corp. I., Member.
Forum Trust, LLC., Member.
<PAGE>
Both Forum Holdings Corp. I. and Forum Trust are controlled
indirectly by John Y. Keffer, Chairman and President of the
Registrant. Mr. Keffer is President of Forum Trust and Forum
Financial Group, LLC. Mr. Keffer is also a director and/or
officer of various registered investment companies for which the
various Forum Financial Group's operating subsidiaries provide
services.
The following are the officers of Forum Investment Advisors, LLC,
including their business connections that are of a substantial
nature. Each officer may serve as an officer of various
registered investment companies for which the Forum Financial
Group provides services.
<PAGE>
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Sara M. Morris Treasurer Forum Investment Advisors, LLC.
--------------------------------- --------------------------------
Chief Financial Officer Forum Financial Group, LLC.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Officer Other Forum affiliated
companies
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
David I. Goldstein Secretary Forum Investment Advisors, LLC.
--------------------------------- --------------------------------
General Counsel Forum Financial Group, LLC.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Officer Other Forum affiliated
companies
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Leslie C. Berthy Managing Director Forum Investment Advisors, LLC.
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(b) H.M. Payson & Co.
The description of H.M. Payson & Co. in the Prospectuses and
Statements of Additional Information, with respect to the
Payson Value Fund, Payson Balanced Fund and Investors Equity
Fund, constituting certain of Parts A and B, respectively, of
this Registration Statement, are incorporated by reference
herein.
The following are the directors and principal executive
officers of H.M. Payson & Co., including their business
connections, which are of a substantial nature. The address
of H.M. Payson & Co. is One Portland Square, Portland, Maine
04101.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Adrian L. Asherman Managing Director H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
John C. Downing Managing Director, Treasurer H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
William A. Macleod Managing Director H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Thomas M. Pierce Managing Director H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Peter E. Robbins Managing Director H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
John H. Walker Managing Director, President H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Teresa M. Esposito Managing Director H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
John C. Knox Managing Director H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Harold J Dixon Managing Director H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Laura McDill Managing Director H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Michael R. Currie Managing Director H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
William O. Hall, III Managing Director H.M. Payson & Co.
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(c) Austin Investment Management, Inc.
The description of Austin Investment Management, Inc. in the
Prospectus and Statement of Additional Information with
respect to the Austin Global Equity Fund, constituting certain
of Parts A and B, respectively, of this Registration
Statement, are incorporated by reference herein.
The following is the director and principal executive officer
of Austin Investment Management, Inc. 375 Park Avenue, New
York, New York 10152, including his business connections,
which are of a substantial nature.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Peter Vlachos Director, President, Treasurer, Austin Investment Management
Secretary Inc.
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(d) Oak Hall Capital Advisors, LLP
The description of Oak Hall Capital Advisors, LLP in the
Prospectus and Statement of Additional Information with
respect to Oak Hall Small Cap Contrarian Fund, constituting
part of Parts A and B, respectively, of this Registration
Statement are incorporated by reference herein.
The following are the directors and principal executive
officers of, Oak Hall Capital Advisors, Inc. 122 East 42nd
Street, New York, New York 10168, including their business
connections which are of a substantial nature.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Alexander G. Anagnos Director, Portfolio Manager Oak Hall Capital Advisors, LLP
--------------------------------- --------------------------------
Consultant American Services Corporation
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Financial Advisor WR Family Associates
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Lewis G. Cole Director Oak Hall Capital Advisors, LLP
--------------------------------- --------------------------------
Partner The Law Firm of Strook, Strook
& Lavan
--------------------------------- --------------------------------- --------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
John J. Hock Executive Vice President Oak Hall Capital Advisors, LLP
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Charles D. Klein Portfolio Manager Oak Hall Capital Advisors, LLP
--------------------------------- --------------------------------
Director American Services Corporation
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Financial Advisor WR Family Associates
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
David P. Steinmann Executive Vice President Oak Hall Capital Advisors, LLP
--------------------------------- --------------------------------
Secretary, Treasurer American Securities Corporation
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Administrator WR Family Associates
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(e) Carl Domino Associates, L.P.
The description of Carl Domino Associates, L.P. in the
Prospectus and Statement of Additional Information with
respect to the Quadra Value Equity Fund, constituting certain
of Parts A and B, respectively, of this Registration
Statement, are incorporated by reference herein.
The following are the directors and principal executive
officers of, Carl Domino Associates, L.P., 580 Village Blvd.,
West Palm Beach, FL 33409 including their business
connections, which are of a substantial nature.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Carl J. Domino Managing Partner, Portfolio Carl Domino Associates, L.P.
Manager
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Paul Scoville, Jr. Senior Portfolio Manager Carl Domino Associates, L.P.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Ann Fritts Syring Senior Portfolio Manager Carl Domino Associates, L.P.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
John Wagstaff-Callahan Senior Portfolio Manager Carl Domino Associates, L.P.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Trustee formerly of Batterymarch
Financial Management
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Stephen Krider Kent, Jr. Senior Portfolio Manager Carl Domino Associates, L.P.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Senior Portfolio Manager formerly of Gamble, Jones
Holbrook & Brent
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(f) Smith Asset Management Group, L.P.
The description of Smith Asset Management Group, L.P. in the
Prospectus and Statement of Additional Information with
respect to the Quadra Growth Fund, constituting certain of
Parts A and B, respectively, of this Registration Statement,
are incorporated by reference herein.
<PAGE>
The following are the directors and principal executive
officers of Smith Asset Management Group, L.P., including
their business connections, which are of a substantial nature.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Stephen S. Smith Chief Executive Officer Smith Asset Management Group
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Partner Discovery Management
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Stephen J. Summers Partner Smith Asset Management Group
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Chief Executive Officer Discovery Management
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Sarah C. Castleman Partner/Portfolio Manager Smith Asset Management Group
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Partner/Portfolio Manager Discovery Management
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
John D. Brim Vice President/Portfolio Manager Smith Asset Management Group
--------------------------------
--------------------------------- --------------------------------
Vice President/Portfolio Manager Discovery Management
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(g) Norwest Investment Management, Inc.
The description of Norwest Investment Management, Inc. ("NIM")
in the Prospectus and Statement of Additional Information for
Equity Index Fund, constituting certain of Parts A and B,
respectively, of this Registration Statement, are incorporated
by reference herein.
The following are the directors and principal executive
officers of NIM, including their business connections, which
are of a substantial nature. The address of Norwest
Corporation, the parent of Norwest Bank Minnesota, N.A.
("Norwest Bank"), which is the parent of NIM, is Norwest
Center, Sixth Street and Marquette Avenue, Minneapolis, MN
55479. Unless otherwise indicated below, the principal
business address of any company with which the directors and
principal executive officers are connected is also Sixth
Street and Marquette Avenue, Minneapolis, MN 55479.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
P. Jay Kiedrowski Chairman, Chief Executive Norwest Investment Management,
Officer, President Inc.
--------------------------------- --------------------------------
Executive Vice President, Norwest Bank Minnesota, N.A.
Employee
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Director Crestone Capital Management,
Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Chairman Galliard Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
James W. Paulsen Senior Vice President, Chief Norwest Investment Management,
Invest Officer Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Stephen P. Gianoli Senior Vice President, Chief Norwest Investment Management,
Executive Officer Inc.
--------------------------------- --------------------------------
<PAGE>
--------------------------------- --------------------------------
Director Crestone Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
David S. Lunt Vice President, Senior Norwest Investment Management,
Portfolio Manager Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Richard C. Villars Vice President, Senior Norwest Investment Management,
Portfolio Manager Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Lee K. Chase Senior Vice President Norwest Investment Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Andrew Owen Vice President Norwest Investment Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Eileen A. Kuhry Investment Compliance Specialist Norwest Investment Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(h) Schroder Capital Management International Inc.
The description of Schroder Capital Management International
Inc. ("SCMI") in the Prospectus and Statement of Additional
Information relating to International Equity Fund and Emerging
Markets Fund, constituting certain of Parts A and B,
respectively, of this Registration Statement, are incorporated
by reference herein.
The following are the directors and principal officers of
SCMI, including their business connections of a substantial
nature. The address of each company listed, unless otherwise
noted, is 787 Seventh Avenue, 34th Floor, New York, New York
10019. Schroder Capital Management International Limited
("Schroder Ltd.") is a United Kingdom affiliate of SCMI, which
provides investment management services to international
clients, located principally in the United States.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
David M. Salisbury Chairman, Director SCMI
--------------------------------- --------------------------------
Chief Executive, Director Schroder Ltd.*
--------------------------------- --------------------------------
Director Schroders plc.*
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Trustee and Officer Schroder Series Trust II
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Richard R. Foulkes Deputy Chairman, Director SCMI
--------------------------------- --------------------------------
Deputy Chairman Schroder Ltd.*
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
John A. Troiano Chief Executive, Director SCMI
---------------------------------
--------------------------------
Chief Executive, Director Schroder Ltd.*
--------------------------------- --------------------------------
--------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
--------------------------------- --------------------------------- --------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Sharon L. Haugh Executive Vice President, SCMI
Director
--------------------------------
--------------------------------- --------------------------------
Director, Chairman Schroder Fund Advisors Inc
--------------------------------- --------------------------------
Director Schroder Ltd.*
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Chairman, Director Schroder Capital Management
Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Trustee Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Gavin D. L. Ralston Senior Vice President, Managing SCMI
Director
--------------------------------- --------------------------------
Director Schroder Ltd.*
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Mark J. Smith Senior Vice President, Director SCMI
--------------------------------- --------------------------------
Senior Vice President, Director Schroder Ltd.*
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Director Schroder Fund Advisors Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Trustee and Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Robert G. Davy Senior Vice President, Director SCMI
--------------------------------- --------------------------------
Director Schroder Ltd.*
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Jane P. Lucas Senior Vice President, Director SCMI
--------------------------------- --------------------------------
Director Schroder Fund Advisors Inc.
--------------------------------- --------------------------------
Director Schroder Capital Management
Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Officer Certain open end management
investment companies for which
SCMI and/or its affiliates
provide investment services
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
David R. Robertson Group Vice President SCMI
--------------------------------- --------------------------------
Senior Vice President Schroder Fund Advisors Inc.
--------------------------------
---------------------------------
Director of Institutional Oppenheimer Funds, Inc.
Business resigned 2/98
--------------------------------- --------------------------------- --------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
---------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
---------------------------------- --------------------------------- --------------------------------
---------------------------------- --------------------------------- --------------------------------
Michael M. Perelstein Senior Vice President, Director SCMI
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Senior Vice President, Director Schroders Ltd.*
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Managing Director MacKay Shields Financial
Corporation
resigned 11/96
---------------------------------- --------------------------------- --------------------------------
---------------------------------- --------------------------------- --------------------------------
Louise Croset First Vice President, Director SCMI
--------------------------------- --------------------------------
First Vice President Schroder Ltd.*
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Trustee and Officer Schroder Series Trust II
---------------------------------- --------------------------------- --------------------------------
---------------------------------- --------------------------------- --------------------------------
Ellen B. Sullivan Group Vice President, Director SCMI
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Director Schroder Capital Management
Inc.
---------------------------------- --------------------------------- --------------------------------
---------------------------------- --------------------------------- --------------------------------
Catherine A. Mazza Group Vice President SCMI
--------------------------------- --------------------------------
President, Director Schroder Fund Advisors Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Director Schroder Capital Management
Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Officer Certain open-end management
investment companies for
which SCMI and/or its
affiliates provide investment
services.
---------------------------------- --------------------------------- --------------------------------
---------------------------------- --------------------------------- --------------------------------
Heather F. Crighton First Vice President, Director SCMI
--------------------------------- --------------------------------
--------------------------------- --------------------------------
First Vice President, Director Schroder Ltd.*
---------------------------------- --------------------------------- --------------------------------
--------------------------------- ---------------------------------- --------------------------------
Ira Unschuld Group Vice President SCMI
---------------------------------- --------------------------------
Officer Certain open-end management
investment companies for
which SCMI and/or its
affiliates provide investment
services.
--------------------------------- ---------------------------------- --------------------------------
--------------------------------- ---------------------------------- --------------------------------
Paul M. Morris Senior Vice President SCMI
---------------------------------- --------------------------------
---------------------------------- --------------------------------
Director Schroder Capital Management
Inc.
---------------------------------- --------------------------------
---------------------------------- --------------------------------
Principal, Senior Portfolio Weiss, Peck & Greer LLC
Manager resigned 12/96
--------------------------------- ---------------------------------- --------------------------------
--------------------------------- ---------------------------------- --------------------------------
Susan B. Kenneally First Vice President, Director SCMI
---------------------------------- --------------------------------
---------------------------------- --------------------------------
First Vice President, Director Schroder Ltd.*
--------------------------------- ---------------------------------- --------------------------------
--------------------------------- ---------------------------------- --------------------------------
Jennifer A. Bonathan First Vice President, Director SCMI
---------------------------------- --------------------------------
---------------------------------- --------------------------------
First Vice President, Director Schroder Ltd.*
--------------------------------- ---------------------------------- --------------------------------
</TABLE>
*Schroder Ltd. and Schroders plc. are located at 31 Gresham St., London
EC2V 7QA, United Kingdom.
<PAGE>
(i) Polaris Capital Management, Inc.
The description of Polaris Capital Management, Inc.
("Polaris") under the caption "Management - Investment Adviser
and Portfolio Manager." in the Prospectus for Polaris Global
Value Fund and "Management - Investment Adviser and Portfolio
Manager" in the Statement of Additional Information relating
to that fund, constituting certain of Parts A and B,
respectively, of the Registration Statement, are incorporated
by reference herein.
The following are the directors and principal officers of
Polaris, including their business connections of a substantial
nature. The address of the company is 125 Summer Street,
Boston, Massachusetts 02110.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Bernard R. Horn, Jr. President, Portfolio Manager Polaris Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(j) Quadra Capital Partners, L.P.
The description of Quadra Capital Partners, L.P. ("Quadra")
under the caption "Management - The Adviser" in the
Prospectus for Quadra Growth Fund and "Management -
Advisers" in the Statement of Additional Information
relating to the funds, constituting certain of Parts A and
B, respectively, of the Registration Statement, are
incorporated by reference herein.
The following are the principals of Quadra, including their
business connections of a substantial nature. The address of
the company is 270 Congress Street, Boston, MA 02210.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Eileen Delasandro Chief Executive Officer Quadra Capital Partners, Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Donald Levi Chief Operating Officer Quadra Capital Partners, Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Howard Stevenson Chairman Quadra Capital Partners, Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Sarofim-Rock Professor Harvard Business School
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Philip Hamilton Director of Strategic Planning, Quadra Capital Partners, Inc.
Compliance Officer
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(k) Peoples Heritage Bank
The description of Peoples Heritage Bank ("Peoples") in the
Prospectus and Statement of Additional Information, with
respect to the Investors Equity Fund, constituting certain of
Parts A and B, respectively, of this Registration Statement,
are incorporated by reference herein.
The following are the officers of Peoples Trust and Investment
Group, including their business connections, which are of a
substantial nature, who provide investment advisory related
services. Unless otherwise indicated below, the principal
business address of Peoples with which these are connected is
One Portland Square, Portland, Maine 04101.
<PAGE>
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Gary L. Robinson Senior Vice President Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Dorothy M. Wentworth Vice President Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Stephen L. Eddy Vice President Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Dana R. Mitiguy Chief Investment Officer Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Larry D. Pelletier Vice President Peoples
217 Main Street
Lewiston, Maine 04240
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Carolyn B. May Vice President Peoples
217 Main Street
Lewiston, Maine 04240
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Kevin K. Brown Vice President Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Donald W. Smith Vice President Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
John W. Gibbons Vice President Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Joseph M. Pratt Vice President Peoples
74 Hammond Street
Bangor, Maine 04401
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Lucy L. Tucker Vice President Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Nancy W. Bard Assistant Vice President Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Douglas P. Adams Trust Officer Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Melanie L. Bishop Trust Officer Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Jeffrey Oldfield Vice President Peoples
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Janet E. Milley Assistant Vice President Peoples
74 Hammond Street
Bangor, Maine 04401
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(l) Crestone Capital Management, Inc.
The description of Crestone Capital Management, Inc.
("Crestone") in the Prospectus and in the Statement of
Additional Information relating to the Small Company Stock
Fund, constituting certain of Parts A and B, respectively, of
the Registration Statement, is incorporated by reference
herein.
<PAGE>
The following are the directors and principal executive
officers of Crestone, including their business connections,
which are of a substantial nature. The address of Crestone is
7720 East Belleview Avenue, Suite 220, Englewood Colorado
80111-2614 and, unless otherwise indicated below, that address
is the principal business address of any company with which
the directors and principal executive officers are connected.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name (Address if Different) Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Kirk McCown President, Director Crestone Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
P. Jay Kiedrowski Director Crestone Capital Management,
Inc.
--------------------------------- --------------------------------
Sixth and Marquette Ave. Chairman, Chief Executive Norwest Investment Management,
Minneapolis, MN 55479 Officer, President Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Executive Vice President, Norwest Bank Minnesota, N.A.
Employee
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Chairman Galliard Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Stephen P. Gianoli Director Crestone Capital Management,
Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Sixth and Marquette Ave. Senior Vice President, Chief Norwest Investment Management,
Minneapolis, MN 55479 Executive Officer Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Susan Koonsman Director Crestone Capital Management,
Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
1740 Broadway President Norwest Investments & Trust
Denver, CO 80274
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(m) Peregrine Capital Management, Inc.
The description of Peregrine Capital Management, Inc.
("Peregrine") in the Prospectus and in the Statement of
Additional Information relating to Small Company Value
Portfolio, constituting certain of Parts A and B,
respectively, of the Registration Statement, is incorporated
by reference herein.
The following are the directors and principal executive
officers of Peregrine, including their business connections,
which are of a substantial nature. The address of Peregrine is
LaSalle Plaza, 800 LaSalle Avenue, Suite 1850, Minneapolis,
Minnesota 55402 and, unless otherwise indicated below, that
address is the principal business address of any company with
which the directors and principal executive officers are
connected.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name (Address if Different) Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
James R. Campbell Director Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Sixth and Marquette Ave. President, Chief Executive Norwest Bank
Minneapolis, MN 55479-0116 Officer, Director
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Patricia D. Burns Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name (Address if Different) Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Tasso H. Coin Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
John S. Dale Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Julie M. Gerend Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
William D. Giese Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Daniel J. Hagen Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Ronald G. Hoffman Senior Vice President, Secretary Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Frank T. Matthews Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Jeannine McCormick Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Barbara K. McFadden Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Robert B. Mersky Chairman, President, Chief Peregrine Capital Management,
Executive Inc.
Officer
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Gary E. Nussbaum Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
James P. Ross Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Vice President Norwest Bank (prior to
November, 1996)
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Jonathan L. Scharlau Assistant Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Jay H. Strohmaier Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Senior Vice President/Managed Voyageur Asset Management
Accounts (prior to September, 1996)
--------------------------------- --------------------------------- --------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name (Address if Different) Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Paul E. von Kuster Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Janelle M. Walter Assistant Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Paul R. Wurm Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
J. Daniel Vendermark Vice President Peregrine Capital Management,
Sixth and Marquette Avenue Inc.
Minneapolis, MN 55479-1013
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Albert J. Edwards Senior Vice President Peregrine Capital Management,
Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Vice President/Marketing U.S. Trust Company of
California (prior to June 9,
1997)
--------------------------------- --------------------------------- --------------------------------
</TABLE>
(n) Galliard Capital Management, Inc.
The description of Galliard Capital Management, Inc.
("Galliard") in the Prospectus and constituting certain of
Parts A and B, respectively, of the Registration Statement,
is incorporated by reference herein.
The following are the directors and principal executive
officers of Galliard, including their business connections,
which are of a substantial nature. The address of Galliard is
LaSalle Plaza, Suite 2060, 800 LaSalle Avenue, Minneapolis,
Minnesota 55479 and, unless otherwise indicated below, that
address is the principal business address of any company with
which the directors and principal executive officers are
connected.
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name (Address if Different) Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
P. Jay Kiedrowski Chairman Galliard Capital Management,
Inc.
--------------------------------- --------------------------------
Sixth and Marquette Ave., Chairman, Chief Executive Norwest Investment Management,
Minneapolis, MN 55479 Officer, President Inc.
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Executive Vice President, Norwest Bank Minnesota, N.A.
Employee
--------------------------------- --------------------------------
--------------------------------- --------------------------------
Director Crestone Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Richard Merriam Principal, Senior Portfolio Galliard Capital Management,
Manager Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
John Caswell Principal, Senior Portfolio Galliard Capital Management,
Manager Inc.
--------------------------------- --------------------------------- --------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
--------------------------------- --------------------------------- --------------------------------
Name Title Business Connection
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Karl Tourville Principal, Senior Portfolio Galliard Capital Management,
Manager Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Laura Gideon Senior Vice President of Galliard Capital Management,
Marketing Inc.
--------------------------------- --------------------------------- --------------------------------
--------------------------------- --------------------------------- --------------------------------
Leela Scattum Vice President of Operations Galliard Capital Management,
Inc.
--------------------------------- --------------------------------- --------------------------------
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Forum Financial Services, Inc., Registrant's underwriter,
serves as underwriter for the following investment companies
registered under the Investment Company Act of 1940, as
amended:
The CRM Funds,The Cutler Trust, Forum Funds, Memorial Funds,
Monarch Funds, Norwest Advantage Funds, Norwest Select Funds,
and Sound Shore Fund, Inc.
(b) The following directors and officers of Forum Financial
Services, Inc. hold the following positions with Registrant.
Their business address is Two Portland Square, Portland, Maine
04101.
<TABLE>
<S> <C> <C>
---------------------------- ------------------------------- -----------------------------
Name Position with Underwriter Position with Registrant
---------------------------- ------------------------------- -----------------------------
---------------------------- ------------------------------- -----------------------------
John Y. Keffer President Chairman, President
---------------------------- ------------------------------- -----------------------------
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder are maintained at the offices of Forum
Administrative Services, LLC and Forum Shareholder Services, LLC, Two
Portland Square, Portland, Maine 04101. The records required to be
maintained under Rule 31a-1(b)(1) with respect to journals of receipts
and deliveries of securities and receipts and disbursements of cash are
maintained at the offices of the Registrant's custodian, BankBoston,
100 Federal Street, Boston, Massachusetts 02106. The records required
to be maintained under Rule 31a-1(b)(5), (6) and (9) are maintained at
the offices of the Registrant's adviser or subadviser, as listed in
Item 28 hereof.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders relating to the portfolio or class thereof to which the
prospectus relates upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this registration statement
under rule 485(b) under the Securities Act of 1933, as amended, and has duly
caused this post-effective amendment number 68 to Registrant's registration
statement to be signed on its behalf by the undersigned, duly authorized, in the
City of Portland, State of Maine on the 30th day of November, 1998.
FORUM FUNDS
By: /s/ John Y. Keffer
----------------------------
John Y. Keffer, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons on the
30th day of November, 1998.
(a) Principal Executive Officer
/s/ John Y. Keffer
-----------------------------
John Y. Keffer
President and Chairman
(b) Principal Financial and Accounting Officer
/s/ Stacey Hong
-----------------------------
Stacey Hong
Treasurer
(c) A majority of the Trustees
/s/ John Y. Keffer
-----------------------------
John Y. Keffer
Trustee
James C. Cheng, Trustee
J. Michael Parish, Trustee
Costas Azariadis, Trustee
*By: /s/ John Y. Keffer
-----------------------------------
John Y. Keffer
Attorney in Fact*
* Pursuant to powers of attorney filed as Other Exhibits to
this Registration Statement.
<PAGE>
SIGNATURES
On behalf of Core Trust (Delaware), being duly authorized, I have duly caused
this amendment to the Registration Statement of Forum Funds to be signed in the
City of Portland, State of Maine on the 30th day of November, 1998.
CORE TRUST (DELAWARE)
By: /s/ John Y. Keffer
-------------------------
John Y. Keffer
President
This amendment to the Registration Statement of Forum Funds has been signed
below by the following persons in the capacities indicated on the 30th day of
November, 1998.
(a) Principal Executive Officer
/s/ John Y. Keffer
--------------------------------
John Y. Keffer
Chairman and President
(b) Principal Financial and Accounting Officer
/s/ Stacey Hong
--------------------------------
Stacey Hong
Treasurer
(c) A Majority of the Trustees
/s/ John Y. Keffer
--------------------------------
John Y. Keffer
Chairman
J. Michael Parish, Trustee
James C. Cheng, Trustee
Costas Azariadis, Trustee
*By: /s/ John Y. Keffer
----------------------------
John Y. Keffer
Attorney in Fact*
Pursuant to powers of attorney filed as Other Exhibits to this
Registration Statement.
<PAGE>
INDEX TO EXHIBITS
(6)(d) Form of Distribution Agreement between Registrant and Forum Fund
Services, LLC.
EXHIBIT (6)(D)
FORUM FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made as of the _____________________, by and between Forum
Funds, a Delaware business trust, with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and Forum
Fund Services, LLC, a Delaware limited liability company with its principal
office and place of business at Two Portland Square, Portland, Maine 04101
("Distributor").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company and
may issue its shares of beneficial interest, no par value ("Shares") in separate
series and classes; and
WHEREAS, the Distributor is registered under the Securities Exchange
Act of 1934, as amended ("1934 Act"), as a broker-dealer and is engaged in the
business of selling shares of registered investment companies either directly to
purchasers or through other financial intermediaries;
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement being herein
referred to as a "Fund," and collectively as the "Funds") and the Trust may in
the future offer shares of various classes of each Fund as listed in Appendix A
hereto (each such class together with all other classes subsequently established
by the Trust in a Fund being herein referred to as a "Class," and collectively
as the "Classes"); and
WHEREAS, the Trust desires that the Distributor offer, as principal
underwriter, the Shares of each Fund and Class thereof to the public and the
Distributor is willing to provide those services on the terms and conditions set
forth in this Agreement in order to promote the growth of the Funds and
facilitate the distribution of the Shares;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Distributor do hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints the Distributor, and the Distributor
hereby agrees, to act as distributor of the Shares for the period and on the
terms set forth in this Agreement.
(b) In connection therewith, the Trust has delivered to the Distributor
copies of (i) the Trust's Trust Instrument and Bylaws (collectively, as amended
from time to time, "Organic Documents"), (ii) the Trust's Registration Statement
and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended
("Securities Act"), or the 1940 Act ("Registration Statement"), (iii) the
current prospectuses and statements of additional information of each Fund and
<PAGE>
Class thereof (collectively, as currently in effect and as amended or
supplemented, the "Prospectus"), (iv) each current plan of distribution or
similar document adopted by the Trust under Rule 12b-1 under the 1940 Act
("Plan") and each current shareholder service plan or similar document adopted
by the Trust ("Service Plan"); and (iv) all procedures adopted by the Trust with
respect to the Funds (e.g., repurchase agreement procedures), and shall promptly
furnish the Distributor with all amendments of or supplements to the foregoing.
The Trust shall deliver to Forum a certified copy of the resolution of the Board
of Trustees of the Trust (the "Board") appointing Forum and authorizing the
execution and delivery of this Agreement.
SECTION 2. EXCLUSIVE NATURE OF DUTIES
The Distributor shall be the exclusive representative of the Trust to
act distributor of the Funds except that the rights given under this Agreement
to the Distributor shall not apply to: (i) Shares issued in connection with the
merger, consolidation or reorganization of any other investment company or
series or class thereof with a Fund or Class thereof; (ii) a Fund's acquisition
by purchase or otherwise of all or substantially all of the assets or stock of
any other investment company or series or class thereof; (iii) the reinvestment
in Shares by a Fund's shareholders of dividends or other distributions; or (iv)
any other offering by the Trust of securities to its shareholders (collectively
"exempt transactions").
SECTION 3. OFFERING OF SHARES
(a) The Distributor shall have the right to buy from the Trust the
Shares needed to fill unconditional orders for unsold Shares of the Funds as
shall then be effectively registered under the Securities Act placed with the
Distributor by investors or selected dealers or selected agents (each as defined
in Section 11 hereof) acting as agent for their customers or on their own
behalf. Alternatively, the Distributor may act as the Trust's agent, to offer,
and to solicit offers to subscribe to, unsold Shares of the Funds as shall then
be effectively registered under the Securities Act. The Distributor will
promptly forward all orders and subscriptions to the Trust. The price that the
Distributor shall pay for Shares purchased from the Trust shall be the net asset
value per Share, determined as set forth in Section 3(c) hereof, used in
determining the public offering price on which the orders are based. Shares
purchased by the Distributor are to be resold by the Distributor to investors at
the public offering price, as set forth in Section 3(b) hereof, or to selected
dealers or selected agents acting as agent for their customers that have entered
into agreements with the Distributor pursuant to Section 11 hereof or acting on
their own behalf. The Trust reserves the right to sell Shares directly to
investors through subscriptions received by the Trust, but no such direct sales
shall affect the sales charges due to the Distributor hereunder.
(b) The public offering price of the Shares of a Fund, i.e., the price
per Share at which the Distributor or selected dealers or selected agents may
sell Shares to the public or to those persons eligible to invest in Shares as
described in the applicable Prospectus, shall be the public offering price
determined in accordance with the then currently effective Prospectus of the
Fund or Class thereof under the Securities Act relating to such Shares. The
public offering price shall not exceed the net asset value at which the
Distributor, when acting as principal, is to purchase such Shares, plus, in the
<PAGE>
case of Shares for which an initial sales charge is assessed, an initial charge
equal to a specified percentage or percentages of the public offering price of
the Shares as set forth in the current Prospectus relating to the Shares. In the
case of Shares for which an initial sales charge may be assessed, Shares may be
sold to certain classes of persons at reduced sales charges or without any sales
charge as from time to time set forth in the current Prospectus relating to the
Shares. The Trust will advise the Distributor of the net asset value per Share
at each time as the net asset value per Share shall have been determined by the
Trust and at such other times as the Distributor may reasonably request.
(c) The net asset value per Share of each Fund or Class thereof shall
be determined by the Trust, or its designated agent, in accordance with and at
the times indicated in the applicable Prospectus on each Fund business day in
accordance with the method set forth in the Prospectus and guidelines
established by the Trust's Board of Trustees (the "Board").
(d) The Trust reserves the right to suspend the offering of Shares of a
Fund or of any Class thereof at any time in the absolute discretion of the
Board, and upon notice of such suspension the Distributor shall cease to offer
Shares of the Funds or Classes thereof specified in the notice.
(e) The Trust, or any agent of the Trust designated in writing to the
Distributor by the Trust, shall be promptly advised by the Distributor of all
purchase orders for Shares received by the Distributor and all subscriptions for
Shares obtained by the Distributor as agent shall be directed to the Trust for
acceptance and shall not be binding until accepted by the Trust. Any order or
subscription may be rejected by the Trust; provided, however, that the Trust
will not arbitrarily or without reasonable cause refuse to accept or confirm
orders or subscriptions for the purchase of Shares. The Trust or its designated
agent will confirm orders and subscriptions upon their receipt, will make
appropriate book entries and, upon receipt by the Trust or its designated agent
of payment thereof, will issue such Shares in certificated or uncertificated
form pursuant to the instructions of the Distributor. The Distributor agrees to
cause such payment and such instructions to be delivered promptly to the Trust
or its designated agent.
SECTION 4. REPURCHASE OR REDEMPTION OF SHARES BY THE TRUST
(a) Any of the outstanding Shares of a Fund or Class thereof may be
tendered for redemption at any time, and the Trust agrees to redeem or
repurchase the Shares so tendered in accordance with its obligations as set
forth in the Organic Documents and the Prospectus relating to the Shares. The
price to be paid to redeem or repurchase the Shares of a Fund of Class thereof
shall be equal to the net asset value calculated in accordance with the
provisions of Section 3(b) hereof less, in the case of Shares for which a
deferred sales charge is assessed, a deferred sales charge equal to a specified
percentage or percentages of the net asset value of those Shares as from time to
time set forth in the Prospectus relating to those Shares or their cost,
whichever is less. Shares of a Fund or Class thereof for which a deferred sales
charge may be assessed and that have been outstanding for a specified period of
time may be redeemed without payment of a deferred sales charge as from time to
time set forth in the Prospectus relating to those Shares.
<PAGE>
(b) The Trust or its designated agent shall pay (i) the total amount of
the redemption price consisting of the redemption price less any applicable
deferred sales charge to the redeeming shareholder or its agent and (ii) except
as may be otherwise required by the Rules of Fair Practice (the "Rules") of the
National Association of Securities Dealers Regulation, Inc. (the "NASD") and any
interpretations thereof, any applicable deferred sales charges to the
Distributor in accordance with the Distributor's instructions on or before the
fifth business day (or such other earlier business day as is customary in the
investment company industry) subsequent to the Trust or its agent having
received the notice of redemption in proper form.
(c) Redemption of Shares or payment therefor may be suspended at times
when the New York Stock Exchange is closed for any reason other than its
customary weekend or holiday closings, when trading thereon is restricted, when
an emergency exists as a result of which disposal by the Trust of securities
owned by a Fund is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of a Fund's net assets,
or during any other period when the SEC so requires or permits.
SECTION 5. DUTIES AND REPRESENTATIONS OF THE DISTRIBUTOR
(a) The Distributor shall use reasonable efforts to sell Shares of the
Funds upon the terms and conditions contained herein and in the then current
Prospectus. The Distributor shall devote reasonable time and effort to effect
sales of Shares but shall not be obligated to sell any specific number of
Shares. The services of the Distributor to the Trust hereunder are not to be
deemed exclusive, and nothing herein contained shall prevent the Distributor
from entering into like arrangements with other investment companies so long as
the performance of its obligations hereunder is not impaired thereby.
(b) In selling Shares of the Funds, the Distributor shall use its best
efforts in all material respects duly to conform with the requirements of all
federal and state laws relating to the sale of the Shares. None of the
Distributor, any selected dealer, any selected agent or any other person is
authorized by the Trust to give any information or to make any representations
other than as is contained in a Fund's Prospectus or any advertising materials
or sales literature specifically approved in writing by the Trust or its agents.
(c) The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers or selected agents, the
collection of amounts payable by investors and selected dealers or selected
agents on such sales, and the cancellation of unsettled transactions, as may be
necessary to comply with the requirements of the NASD.
(d) The Distributor represents and warrants to the Trust that:
(i) It is a limited liability company duly organized and existing and
in good standing under the laws of the State of Delaware and it is duly
qualified to carry on its business in the State of Maine;
<PAGE>
(ii) It is empowered under applicable laws and by its Operating
Agreement to enter into and perform this Agreement;
(iii) All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
(iv) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;
(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Distributor, enforceable
against the Distributor in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and
secured parties;
(vi) It is registered under the 1934 Act with the SEC as a
broker-dealer, it is a member in good standing of the NASD, it will
abide by the rules and regulations of the NASD, and it will notify the
Trust if its membership in the NASD is terminated or suspended; and
(vii) The performance by the Distributor of its obligations hereunder
does not and will not contravene any provision of its Operating Agreement.
(e) Notwithstanding anything in this Agreement, including the
Appendices, to the contrary, the Distributor makes no warranty or representation
as to the number of selected dealers or selected agents with which it has
entered into agreements in accordance with Section 11 hereof, as to the
availability of any Shares to be sold through any selected dealer, selected
agent or other intermediary or as to any other matter not specifically set forth
herein.
SECTION 6. DUTIES AND REPRESENTATIONS OF THE TRUST
(a) The Trust shall furnish to the Distributor copies of all financial
statements and other documents to be delivered to shareholders or investors at
least two Fund business days prior to such delivery and shall furnish the
Distributor copies of all other financial statements, documents and other papers
or information which the Distributor may reasonably request for use in
connection with the distribution of Shares. The Trust shall make available to
the Distributor the number of copies of the Funds' Prospectuses as the
Distributor shall reasonably request.
(b) The Trust shall take, from time to time, subject to the approval of
the Board and any required approval of the shareholders of the Trust, all action
necessary to fix the number of authorized Shares (if such number is not limited)
and to register the Shares under the Securities Act, to the end that there will
be available for sale the number of Shares as reasonably may be expected to be
sold pursuant to this Agreement.
(c) The Trust shall execute any and all documents, furnish to the
Distributor any and all information, otherwise use its best efforts to take all
actions that may be reasonably necessary and cooperate with the Distributor in
<PAGE>
taking any action as may be necessary to register or qualify Shares for sale
under the securities laws of the various states of the United States and other
jurisdictions ("States") as the Distributor shall designate (subject to approval
by the Trust); provided that the Distributor shall not be required to register
as a broker-dealer or file a consent to service of process in any State and
neither the Trust nor any Fund or Class thereof shall be required to qualify as
a foreign corporation, trust or association in any State. Any registration or
qualification may be withheld, terminated or withdrawn by the Trust at any time
in its discretion. The Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the Trust
in connection with such registration or qualification.
(d) The Trust represents and warrants to the Distributor that:
(i) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware;
(ii) It is empowered under applicable laws and by its Organic Documents
to enter into and perform this Agreement;
(iii) All proceedings required by the Organic Documents have been taken
to authorize it to enter into and perform its duties under this
Agreement;
(iv) It is an open-end management investment company registered with
the SEC under the 1940 Act;
(v) All Shares, when issued, shall be validly issued, fully paid and
non-assessable;
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Trust, enforceable against
the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties;
(vii) The performance by the Distributor of its obligations hereunder
does not and will not contravene any provision of its Articles of
Incorporation.
(viii) The Registration statement is currently effective and will
remain effective with respect to all Shares of the Funds and Classes
thereof being offered for sale;
(ix) The Registration Statement and Prospectuses have been or will be,
as the case may be, carefully prepared in conformity with the
requirements of the Securities Act and the rules and regulations
thereunder;
(x) The Registration Statement and Prospectuses contain or will contain
all statements required to be stated therein in accordance with the
Securities Act and the rules and regulations thereunder; all statements
of fact contained or to be contained in the Registration Statement or
Prospectuses are or will be true and correct at the time indicated or
<PAGE>
on the effective date as the case may be; and neither the Registration
Statement nor any Prospectus, when they shall become effective or be
authorized for use, will include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser
of Shares;
(xi) It will from time to time file such amendment or amendments to the
Registration Statement and Prospectuses as, in the light of
then-current and then-prospective developments, shall, in the opinion
of its counsel, be necessary in order to have the Registration
Statement and Prospectuses at all times contain all material facts
required to be stated therein or necessary to make any statements
therein not misleading to a purchaser of Shares ("Required
Amendments");
(xii) It shall not file any amendment to the Registration Statement or
Prospectuses without giving the Distributor reasonable advance notice
thereof; provided, however, that nothing contained in this Agreement
shall in any way limit the Trust's right to file at any time such
amendments to the Registration Statement or Prospectuses, of whatever
character, as the Trust may deem advisable, such right being in all
respects absolute and unconditional; and
(xiii) Any amendment to the Registration Statement or Prospectuses
hereafter filed will, when it becomes effective, contain all statements
required to be stated therein in accordance with the 1940 Act and the
rules and regulations thereunder; all statements of fact contained in
the Registration Statement or Prospectuses will, when be true and
correct at the time indicated or on the effective date as the case may
be; and no such amendment, when it becomes effective, will include an
untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of the Shares.
SECTION 7. STANDARD OF CARE
(a) The Distributor shall use its best judgment and reasonable efforts
in rendering services to the Trust under this Agreement but shall be under no
duty to take any action except as specifically set forth herein or as may be
specifically agreed to by the Distributor in writing. The Distributor shall not
be liable to the Trust or any of the Trust's shareholders for any error of
judgment or mistake of law, for any loss arising out of any investment, or for
any action or inaction of the Distributor in the absence of bad faith, willful
misfeasance or gross negligence in the performance of the Distributor's duties
or obligations under this Agreement or by reason or the Distributor's reckless
disregard of its duties and obligations under this Agreement
(b) The Distributor shall not be liable for any action taken or failure
to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to th
Trust or counsel to the Distributor;
<PAGE>
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction (the Distributor
shall have no duty or obligation to make any inquiry or effort of
certification of such oral instruction);
(iii) any written instruction or certified copy of any resolution of
the Board, and the Distributor may rely upon the genuineness of any
such document or copy thereof reasonably believed in good faith by the
Distributor to have been validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
the Distributor to be genuine and to have been signed or presented by
the Trust or other proper party or parties;
and the Distributor shall not be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which the Distributor reasonably believes in
good faith to be genuine.
(c) The Distributor shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control including, without limitation, acts of civil or military authority,
national emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent the
Distributor's obligations hereunder are to oversee or monitor the activities of
third parties, the Distributor shall not be liable for any failure or delay in
the performance of the Distributor's duties caused, directly or indirectly, by
the failure or delay of such third parties in performing their respective duties
or cooperating reasonably and in a timely manner with the Distributor.
SECTION 8. INDEMNIFICATION
(a) The Trust will indemnify, defend and hold the Distributor, its
employees, agents, directors and officers and any person who controls the
Distributor within the meaning of section 15 of the Securities Act or section 20
of the 1934 Act ("Distributor Indemnitees") free and harmless from and against
any and all claims, demands, actions, suits, judgments, liabilities, losses,
damages, costs, charges, reasonable counsel fees and other expenses of every
nature and character (including the cost of investigating or defending such
claims, demands, actions, suits or liabilities and any reasonable counsel fees
incurred in connection therewith) which any Distributor Indemnitee may incur,
under the Securities Act, or under common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectuses or arising out of or based upon any
alleged omission to state a material fact required to be stated in any one
thereof or necessary to make the statements in any one thereof not misleading,
<PAGE>
unless such statement or omission was made in reliance upon, and in conformity
with, information furnished in writing to the Trust in connection with the
preparation of the Registration Statement or exhibits to the Registration
Statement by or on behalf of the Distributor ("Distributor Claims").
After receipt of the Distributor's notice of termination under Section
13(e), the Trust shall indemnify and hold each Distributor Indemnitee free and
harmless from and against any Distributor Claim; provided, that the term
Distributor Claim for purposes of this sentence shall mean any Distributor Claim
related to the matters for which the Distributor has requested amendment to the
Registration Statement and for which the Trust has not filed a Required
Amendment, regardless of with respect to such matters whether any statement in
or omission from the Registration Statement was made in reliance upon, or in
conformity with, information furnished to the Trust by or on behalf of the
Distributor.
(b) The Trust may assume the defense of any suit brought to enforce any
Distributor Claim and may retain counsel of good standing chosen by the Trust
and approved by the Distributor, which approval shall not be withheld
unreasonably. The Trust shall advise the Distributor that it will assume the
defense of the suit and retain counsel within ten (10) days of receipt of the
notice of the claim. If the Trust assumes the defense of any such suit and
retains counsel, the defendants shall bear the fees and expenses of any
additional counsel that they retain. If the Trust does not assume the defense of
any such suit, or if Distributor does not approve of counsel chosen by the Trust
or has been advised that it may have available defenses or claims that are not
available to or conflict with those available to the Trust, the Trust will
reimburse any Distributor Indemnitee named as defendant in such suit for the
reasonable fees and expenses of any counsel that person retains. A Distributor
Indemnitee shall not settle or confess any claim without the prior written
consent of the Trust, which consent shall not be unreasonably withheld or
delayed.
(c) The Distributor will indemnify, defend and hold the Trust and its
several officers and trustees (collectively, the "Trust Indemnitees"), free and
harmless from and against any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other expenses of every nature and character (including the cost of
investigating or defending such claims, demands, actions, suits or liabilities
and any reasonable counsel fees incurred in connection therewith), but only to
the extent that such claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses
result from, arise out of or are based upon:
(i) any alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or any alleged omission of a
material fact required to be stated or necessary to make the statements
therein not misleading, if such statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Trust in writing in connection with the preparation of the Registration
Statement or Prospectus by or on behalf of the Distributor; or
(ii) any act of, or omission by, Distributor or its sales
representatives that does not conform to the standard of care set forth
in Section 7 of this Agreement ("Trust Claims").
(d) The Distributor may assume the defense of any suit brought to
enforce any Trust Claim and may retain counsel of good standing chosen by the
Distributor and approved by the Trust, which approval shall not be withheld
unreasonably. The Distributor shall advise the Trust that it will assume the
defense of the suit and retain counsel within ten (10) days of receipt of the
notice of the claim. If the Distributor assumes the defense of any such suit and
retains counsel, the defendants shall bear the fees and expenses of any
additional counsel that they retain. If the Distributor does not assume the
defense of any such suit, or if Trust does not approve of counsel chosen by the
Distributor or has been advised that it may have available defenses or claims
that are not available to or conflict with those available to the Distributor,
the Distributor will reimburse any Trust Indemnitee named as defendant in such
suit for the reasonable fees and expenses of any counsel that person retains. A
Trust Indemnitee shall not settle or confess any claim without the prior written
consent of the Distributor, which consent shall not be unreasonably withheld or
delayed.
(e) The Trust's and the Distributor's obligations to provide
indemnification under this Section is conditioned upon the Trust or the
Distributor receiving notice of any action brought against a Distributor
Indemnitee or Trust Indemnitee, respectively, by the person against whom such
action is brought within twenty (20) days after the summons or other first legal
process is served. Such notice shall refer to the person or persons against whom
the action is brought. The failure to provide such notice shall not relieve the
party entitled to such notice of any liability that it may have to any
Distributor Indemnitee or Trust Indemnitee except to the extent that the ability
of the party entitled to such notice to defend such action has been materially
adversely affected by the failure to provide notice.
(f) The provisions of this Section and the parties' representations and
warranties in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Distributor
Indemnitee or Trust Indemnitee and shall survive the sale and redemption of any
Shares made pursuant to subscriptions obtained by the Distributor. The
indemnification provisions of this Section will inure exclusively to the benefit
of each person that may be a Distributor Indemnitee or Trust Indemnitee at any
time and their respective successors and assigns (it being intended that such
persons be deemed to be third party beneficiaries under this Agreement).
(g) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware arising
out of or in any way connected with the issuance or sale of Shares.
(h) Nothing contained herein shall require the Trust to take any action
contrary to any provision of its Organic Documents or any applicable statute or
regulation or shall require the Distributor to take any action contrary to any
provision of its Operating Agreement or any applicable statute or regulation;
provided, however, that neither the Trust nor the Distributor may amend their
<PAGE>
Organic Documents or Operating Agreement and Bylaws, respectively, in any manner
that would result in a violation of a representation or warranty made in this
Agreement.
(i) Nothing contained in this section shall be construed to protect the
Distributor against any liability to the Trust or its security holders to which
the Distributor would otherwise be subject by reason of its failure to satisfy
the standard of care set forth in Section 7 of this Agreement.
SECTION 9. NOTIFICATION BY THE TRUST
The Trust shall advise the Distributor immediately: (i) of any request
by the SEC for amendments to the Trust's Registration Statement or Prospectus or
for additional information; (ii) in the event of the issuance by the SEC of any
stop order suspending the effectiveness of the Trust's Registration Statement or
any Prospectus or the initiation of any proceedings for that purpose; (iii) of
the happening of any material event which makes untrue any statement made in the
Trust's then current Registration Statement or Prospectus or which requires the
making of a change in either thereof in order to make the statements therein not
misleading; and (iv) of all action of the SEC with respect to any amendments to
the Trust's Registration Statement or Prospectus which may from time to time be
filed with the Commission under the 1940 Act or the Securities Act.
SECTION 10. COMPENSATION; EXPENSES
(a) In consideration of the Distributor's services in connection with
the distribution of Shares of each Fund and Class thereof, the Distributor shall
receive: (i) any applicable sales charge assessed upon investors in connection
with the purchase of Shares; (ii) from the Trust, any applicable contingent
deferred sales charge ("CDSC") assessed upon investors in connection with the
redemption of Shares; (iii) from the Trust, the distribution service fees with
respect to the Shares of those Classes as designated in Appendix A for which a
Plan is effective (the "Distribution Fee"); and (iv) from the Trust, the
shareholder service fees with respect to the Shares of those Classes as
designated in Appendix A for which a Service Plan is effective (the "Shareholder
Service Fee"). The Distribution Fee and Shareholder Service Fee shall be accrued
daily by each applicable Fund or Class thereof and shall be paid monthly as
promptly as possible after the last day of each calendar month but in any event
on or before the fifth (5th) Fund business day after month-end, at the rate or
in the amounts set forth in Appendix A and, as applicable, the Plan(s). The
Trust grants and transfers to the Distributor a general lien and security
interest in any and all securities and other assets of a Fund now or hereafter
maintained in an account at the Fund's custodian on behalf of the Fund to secure
any Distribution Fees and Shareholder Service Fees owed the Distributor by the
Trust under this Agreement.
(b) The Trust shall cause its transfer agent (the "Transfer Agent") to
withhold, from redemption proceeds payable to holders of Shares of the Funds and
the Classes thereof, all CDSCs properly payable by the shareholders in
accordance with the terms of the applicable Prospectus and shall cause the
Transfer Agent to pay such amounts over to the Distributor as promptly as
possible after the settlement date for each redemption of Shares.
<PAGE>
(c) Except as specified in Sections 8 and 10(a), the Distributor shall
be entitled to no compensation or reimbursement of expenses for the services
provided by the Distributor pursuant to this Agreement.
(d) The Trust shall be responsible and assumes the obligation for
payment of all the expenses of the Funds, including fees and disbursements of
its counsel and auditors, in connection with the preparation and filing of the
Registration Statement and Prospectuses (including but not limited to the
expense of setting in type the Registration Statement and Prospectuses and
printing sufficient quantities for internal compliance, regulatory purposes and
for distribution to current shareholders).
(e) The Trust shall bear the cost and expenses (i) of the registration
of the Shares for sale under the Securities Act; (ii) of the registration or
qualification of the Shares for sale under the securities laws of the various
States; (iii) if necessary or advisable in connection therewith, of qualifying
the Trust, the Funds or the Classes thereof (but not the Distributor) as an
issuer or as a broker or dealer, in such States as shall be selected by the
Trust and the Distributor pursuant to Section 6(c) hereof; and (iv) payable to
each State for continuing registration or qualification therein until the Trust
decides to discontinue registration or qualification pursuant to Section 6(c)
hereof. The Distributor shall pay all expenses relating to the Distributor's
broker-dealer qualification.
SECTION 11. SELECTED DEALER AND SELECTED AGENT AGREEMENTS
The Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") and
selected agent agreements with depository institutions and other financial
intermediaries of its choice ("selected agents") for the sale of Shares and to
fix therein the portion of the sales charge, if any, that may be allocated to
the selected dealers or selected agents; provided, that the Trust shall approve
the forms of agreements with selected dealers or selected agents and shall
review the compensation set forth therein. Shares of each Fund or Class thereof
shall be resold by selected dealers or selected agents only at the public
offering price(s) set forth in the Prospectus relating to the Shares. Within the
United States, the Distributor shall offer and sell Shares of the Funds only to
such selected dealers as are members in good standing of the NASD.
<PAGE>
SECTION 12. CONFIDENTIALITY
The Distributor agrees to treat all records and other information
related to the Trust as proprietary information of the Trust and, on behalf of
itself and its employees, to keep confidential all such information, except that
the Distributor may:
(i) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(ii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(iii) release such other information as approved in writing by the
Trust, which approval shall not be unreasonably withheld;
provided, however, that the Distributor may release any information regarding
the Trust without the consent of the Trust if the Distributor reasonably
believes that it may be exposed to civil or criminal legal proceedings for
failure to comply, when requested to release any information by duly constituted
authorities or when so requested by the Trust.
SECTION 13. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund on the
later of (i) the date first above written or (ii) the date on which the Trust's
Registration Statement relating to Shares of a Fund becomes effective. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund for
a period of one year from its effectiveness and thereafter shall continue in
effect with respect to a Fund until terminated; provided, that continuance is
specifically approved at least annually (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund and (ii) by a vote of
a majority of Trustees of the Trust (I) who are not parties to this Agreement or
interested persons of any such party (other than as Trustees of the Trust) and
(II) with respect to each class of a Fund for which there is an effective Plan,
who do not have any direct or indirect financial interest in any such Plan
applicable to the class or in any agreements related to the Plan, cast in person
at a meeting called for the purpose of voting on such approval.
(c) This Agreement may be terminated at any time with respect to a
Fund, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund or, with respect to
each class of a Fund for which there is an effective Plan, a majority of
Trustees of the Trust who do not have any direct or indirect financial interest
in any such Plan or in any agreements related to the Plan, on 60 days' written
notice to the Distributor or (ii) by the Distributor on 60 days' written notice
to the Trust.
<PAGE>
(d) This Agreement shall automatically terminate upon its assignment
and upon the termination of the Distributor's membership in the NASD.
(e) If the Trust shall not file a Required Amendment within fifteen
days following receipt of a written request from the Distributor to do so, the
Distributor may, at its option, terminate this Agreement immediately.
(f) The obligations of Sections 5(d), 6(d), 8, 9 and 10 shall survive
any termination of this Agreement.
SECTION 14. NOTICES
Any notice required or permitted to be given hereunder by either party
to the other shall be deemed sufficiently given if personally delivered or sent
by telegram, facsimile or registered, certified or overnight mail, postage
prepaid, addressed by the party giving such notice to the other party at the
last address furnished by the other party to the party giving such notice, and
unless and until changed pursuant to the foregoing provisions hereof each such
notice shall be addressed to the Trust or the Distributor, as the case may be,
at their respective principal places of business.
SECTION 15. ACTIVITIES OF THE DISTRIBUTOR
Except to the extent necessary to perform the Distributor's obligations
hereunder, nothing herein shall be deemed to limit or restrict the Distributor's
right, or the right of any of the Distributor's employees, agents, officers or
directors who may also be a trustee, officer or employee of the Trust, or
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
SECTION 16. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Distributor agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Distributor's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the shareholders of
the Funds.
SECTION 17. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
<PAGE>
(b) No provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of New York.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund are separate and distinct
from the assets and liabilities of each other Fund and that no Fund shall be
liable or shall be charged for any debt, obligation or liability of any other
Fund, whether arising under this Agreement or otherwise.
(i) No affiliated person, employee, agent, officer or director of the
Distributor shall be liable at law or in equity for the Distributor's
obligations under this Agreement.
(j) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof.
(k) The terms "vote of a majority of the outstanding voting
securities," "interested person," "affiliated person" and "assignment" shall
have the meanings ascribed thereto in the 1940 Act.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
FORUM FUNDS
By:________________________
Mark D. Kaplan
Vice President
FORUM FUND SERVICES, LLC
By:________________________
John Y. Keffer
President
NOTE: THIS AGREEMENT NOT TO BE USED
FOR CDSC FUNDING (B SHARE) FINANCING
<PAGE>
FORUM FUNDS
DISTRIBUTION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF __________________
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
Investors Bond Fund
TaxSaver Bond Fund
High Grade Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Oak Hall Small Cap Contrarian Fund
Austin Global Equity Fund
Polaris Global Value Fund
Investors Growth Fund
Quadra Growth Fund
Payson Balanced Fund
Payson Value Fund
Investors Equity Fund
Equity Index Fund
Small Company Opportunities Fund
International Equity Fund
Emerging Markets Fund
