As filed with the Securities and Exchange Commission on May 26, 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. 62
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 64
FORUM FUNDS
(Formerly "Forum Funds, Inc.")
Two Portland Square
Portland, Maine 04101
(207) 879-1900
Leslie 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:
[X] immediately upon filing pursuant to Rule 485, paragraph (b)
[ ] on [ ] pursuant to Rule 485, paragraph (b)
[ ] 60 days after filing pursuant to Rule 485, paragraph (a)(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: Institutional Shares, Institutional
Service Shares and 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 of Registrant, which are
structured as master-feeder funds. This amendment is also executed by Core Trust
(Delaware).
<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)
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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
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>
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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)
PART A
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FORM N-1A ITEM NO. LOCATION IN PROSPECTUS
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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
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 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)
PART A
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FORM N-1A ITEM NO. LOCATION IN PROSPECTUS
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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
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))
(SAI offering Institutional Shares, Institutional Service Shares and 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)
PART B
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FORM N-1A ITEM NO. LOCATION IN STATEMENT OF ADDITIONAL INFORMATION
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Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and History Management; Other Information
Item 13. Investment Objectives and 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>
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PROSPECTUS
May 27, 1998
FORUM FUNDS
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
(formerly Daily Assets Treasury Fund)
Daily Assets Government Obligations Fund
(formerly Daily Assets Government Fund)
Daily Assets Cash Fund
Daily Assets Municipal Fund
(formerly Daily Assets Tax-Exempt Fund)
- --------------------------------------------------------------------------------
This Prospectus offers Institutional Shares of Daily Assets Treasury Obligations
Fund, Daily Assets Government Fund, Daily Assets Government Obligations Fund,
Daily Assets Cash Fund and Daily Assets Municipal Fund (each a "Fund"). Each
Fund is a diversified no-load, money market portfolio of Forum Funds (the
"Trust"), a registered open-end, management investment company. Each Fund seeks
to provide its shareholders with high current income (which, in the case of
Daily Assets Municipal Fund, is exempt from federal income taxes) to the extent
consistent with the preservation of capital and the maintenance of liquidity.
EACH FUND SEEKS TO ACHIEVE ITS OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE
ASSETS IN A SEPARATE PORTFOLIO OF AN OPEN-END, MANAGEMENT INVESTMENT COMPANY
WITH AN IDENTICAL INVESTMENT OBJECTIVE. SEE "OTHER INFORMATION - FUND
STRUCTURE." THROUGH THE PORTFOLIO IN WHICH IT INVESTS:
DAILY ASSETS TREASURY OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Treasury and in repurchase
agreements backed by these obligations.
DAILY ASSETS GOVERNMENT FUND invests substantially all of its assets
in obligations of the U.S. Government, its agencies and
instrumentalities with a view toward providing income that is
generally considered exempt from state and local income taxes.
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Government, its agencies and
instrumentalities and in repurchase agreements backed by these
obligations.
DAILY ASSETS CASH FUND invests in a broad spectrum of high-quality
money market instruments.
DAILY ASSETS MUNICIPAL FUND invests primarily in high-quality
obligations of the states, territories and possessions of the U.S. and
of their subdivisions, authorities and corporations ("municipal
securities") with a view toward providing income that is exempt from
federal income taxes.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated May 27, 1998 (the "SAI"), which contains more
detailed information about the Trust and the Funds and is available together
with other related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). The SAI, which is incorporated into this Prospectus by
reference, also is available without charge by contacting the Funds' transfer
agent, Forum Shareholder Services, LLC, at P.O. Box 446, Portland, Maine 04112,
(207) 879-0001 or (800) 94FORUM.
Investors should read this Prospectus and retain it for future reference.
FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.
THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
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1. Prospectus Summary..............................3 5. Purchases and Redemptions of Shares.............13
2. Financial Highlights............................5 6. Distributions and Tax Matters...................17
3. Investment Objectives and Policies..............7 7. Other Information...............................18
4. Management......................................11
</TABLE>
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 Financial Services, Inc.
("FFSI") is the distributor of the Funds' shares. Forum Investment Advisors, LLC
("FIA") is the investment adviser of each Portfolio and provides professional
management of the Portfolios' investments. The Funds' transfer agent, dividend
disbursing agent and shareholder servicing agent is Forum Shareholder Services,
LLC (the "FSS"). See "Management" for a description of the services provided and
fees charged to the Funds.
PURCHASES AND REDEMPTIONS. The minimum initial investment in Institutional
Shares is $1,000,000. Institutional Shares may be purchased and redeemed Monday
through Friday, between 9:00 a.m. and 6:00 p.m., Eastern time, except on Federal
holidays and days that the Federal Reserve Bank of San Francisco (Boston in the
case of Daily Assets Government Fund) is closed ("Fund Business Days"). To be
eligible to receive that day's income, purchase orders must be received by FSS
in good order no later than 2:00 p.m., Eastern time (noon in the case of Daily
Assets Government Fund and Daily Assets Municipal Fund). Shareholders may have
redemption proceeds over $5,000 transferred by bank wire to a designated bank
account. To be able to receive redemption proceeds by wire on the day of the
redemption, redemption orders must be received by FSS in good order no later
than 2:00 p.m., Eastern time (noon in the case of Daily Assets Government Fund
and Daily Assets Municipal Fund). All times may be changed without notice by
Fund management due to market activities. See "Purchase and Redemption of
Shares."
EXCHANGES. Shareholders of a Fund may exchange Institutional Shares without
charge for Institutional Shares of the other Funds. See "Purchases and
Redemptions of Shares - Exchanges."
DISTRIBUTIONS. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."
INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Portfolios
invest only in money market instruments, an investment in any Fund involves
certain risks, depending on the types of investments made and the types of
investment techniques employed. Investment in any security, including U.S.
Government Securities, involves some level of investment risk. An investment in
a Fund is not insured by the 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
3
<PAGE>
Shares will bear directly or indirectly. There are no transaction expenses
associated with purchases, redemptions or exchanges of Fund shares.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(1)
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Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Government Government Cash Municipal
Obligations Fund Fund Obligations Fund Fund Fund
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Management Fees(2) 0.14% 0.15% 0.14% 0.14% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.06% 0.05% 0.06% 0.06% 0.05%
----- ----- ----- ----- -----
Total Operating Expenses 0.20% 0.20% 0.20% 0.20% 0.20%
</TABLE>
(1) For a further description of the various expenses incurred in the operation
of the Funds and the Portfolios, see "Management." The amount of fees and
expenses for each Fund is based on estimated annualized expenses for the Funds'
fiscal year ending August 31, 1998. Each Fund's expenses include the Fund's pro
rata portion of all expenses of its corresponding Portfolio, which are borne
indirectly by Fund shareholders. (2) Management Fees include all administration
fees and investment advisory fees incurred by the Funds and the Portfolios; as
long as its assets are invested in a Portfolio, a Fund pays no investment
advisory fees directly. (3) Absent estimated reimbursements by FIA and its
affiliates, Other Expenses and Total Fund Operating Expenses would be: 0.15% and
0.29%, respectively, for Daily Assets Treasury Obligations Fund; 0.17 % and
0.32%, respectively, for Daily Assets Government Fund; 0.17% and 0.31%,
respectively, for Daily Assets Government Obligations Fund; 0.19% and 0.33%,
respectively, for Daily Assets Cash Fund; 0.19% and 0.34%, respectively, for
Daily Assets Municipal Fund. Expense reimbursements are voluntary and may be
reduced or eliminated at any time.
EXAMPLE
Following is a hypothetical example that indicates the dollar amount of expenses
that an investor in Institutional Shares would pay assuming (1) the investment
of all of the Fund's assets in the Portfolio, (2) a $1,000 investment in the
Fund, (3) a 5% annual return, (4) the reinvestment of all distributions and (5)
redemption at the end of each period:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Each Fund $2 $6 $11 $26
The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Funds' projected returns; rather, it is required by government
regulation. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS
THAN INDICATED.
4
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2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Institutional Share of the Funds that offered Institutional Shares prior to
February 28, 1998. The following information also represents selected data for a
single outstanding Institutional Service Share of Daily Assets Government Fund
and Daily Assets Cash Fund. That class was the first offered by the these two
Funds and, accordingly, represent data since each of those Fund's inception.
Information for the period ended August 31, 1997, was audited by KPMG Peat
Marwick LLP, independent auditors. Information for prior periods was audited by
other independent auditors and information for the period ended February 28,
1998 is unaudited. The financial statements and independent auditors' report
thereon for the fiscal year ended August 31, 1997 and the financial statements
for the semi-annual period ended February 28, 1998 are incorporated by reference
into the SAI and may be obtained from the Trust without charge. As of May 20,
1998, Daily Assets Municipal Fund had not commenced operations.
As of February 28, 1998, Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio and Cash Portfolio had net assets of $168,183,226;
$46,711,943; $603,202,130 and $391,807,519, respectively.
5
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RATIO TO AVERAGE NET
ASSETS
Beginning Distributions
Net Asset Net From Net Ending Net Net
Value Per Investment Investment Asset Net Investment
Share Income Income Value Per Expenses Income
Share
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DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, $1.00 0.01 (0.01) $1.00 0.20%(2) 2.13%(2)
1998 (unaudited)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.02 (0.02) $1.00 0.47%(2) 4.86%(2)
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(2) 4.76%(2)
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.32%(2) 2.92%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.01 (0.01) $1.00 0.20%(2) 1.76%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.03 (0.03) $1.00 0.47%(2) 5.23%(2)
October 1, 1996 to August 31, 1997 1.00 0.05 (0.05) 1.00 0.52%(2) 5.06%(2)%
</TABLE>
<TABLE>
Ratio of
Net Assets Gross
End of Expenses
Period to Average
Total (000s Net Assets
Return Omitted) (1)
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DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)0.55% 60,926 0.35%(2)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)2.43% 46,519 0.78%(2)
April 1, 1997 to August 31, 1997 2.01% 44,116 0.95%(2)
Year Ended March 31, 1997 4.80% 43,975 0.99%
Year Ended March 31, 1996 5.18% 43,103 1.06%
Year Ended March 31, 1995 4.45% 36,329 1.10%
Year Ended March 31, 1994 2.83% 26,505 1.17%
July 1, 1992 to March 31, 1993 3.13%(2) 4,687 2.43%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)0.46% 4,952 1.33%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)2.62% 13,034 0.89%(2)
October 1, 1996 to August 31, 1997 4.70% 12,076 1.22%(2)
</TABLE>
(1) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects the
expense ratio in the absence of any waivers and reimbursements for the Fund and
its respective Portfolio.
(2) Annualized.
6
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3. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of each Fund except Daily Assets Municipal Fund is to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of Daily
Assets Municipal Fund is to provide high current income which is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity.
THERE CAN BE NO ASSURANCE THAT ANY FUND OR PORTFOLIO WILL ACHIEVE ITS INVESTMENT
OBJECTIVE OR MAINTAIN A STABLE NET ASSET VALUE.
Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio, which has the same
investment objective and substantially similar investment policies. Therefore,
although the following discusses the investment policies of the Portfolios (and
the responsibilities of Core Trust's board of trustees (the "Core Trust
Board")), it applies equally to the Funds (and the Trust's board of trustees
(the "Board")).
INVESTMENT POLICIES
Each Portfolio invests only in high quality, short-term money market instruments
that are determined by FIA, pursuant to procedures adopted by the Core Trust
Board, to be eligible for purchase and to present minimal credit risks. High
quality instruments include those that (1) are rated (or, if unrated, are issued
by an issuer with comparable outstanding short-term debt that is rated) in the
highest rating category by two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO has issued a rating, by that
NRSRO or (2) are otherwise unrated and determined by FIA to be of comparable
quality. A description of the rating categories of certain NRSROs, such as
Standard & Poor's and Moody's Investors Service, Inc., is contained in the SAI.
Each Portfolio invests only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated under Rule 2a-7) and
maintains a dollar-weighted average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, each Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. As used herein, "U.S. Government
Securities" means obligations issued or guaranteed as to principal and interest
by the United States government, its agencies or instrumentalities and "Treasury
Securities" means U.S. Treasury bills and notes and other U.S. Government
Securities which are guaranteed as to principal and interest by the U.S.
Treasury.
In the case of municipal securities, when the assets and revenues of an issuer
are separate from those of the government creating the issuer and a security is
backed only by the assets and revenues of the issuer, the issuer and not the
creating government is deemed to be the sole issuer of the security. Similarly,
in the case of a security issued by or on behalf of public authorities to
finance various privately operated facilities that is backed only by the assets
and revenues of the non-governmental user, the non-governmental user will be
deemed to be the sole issuer of the security.
Yields on money market securities are dependent on a variety of factors,
including the general conditions of the money markets and the fixed income
markets in general, the size of a particular offering, the maturity of the
obligation and the rating of the issue. A Fund's yield will tend to fluctuate
inversely with prevailing market interest rates. For instance, in periods of
falling market interest rates, yields will tend to be somewhat higher. Although
each Portfolio only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities and municipal securities, can
change in value when there is a change in interest rates, the issuer's actual or
perceived creditworthiness or the issuer's ability to meet its obligations. The
achievement of a Fund's investment objective is dependent in part on the
continuing ability of the issuers of the securities in which the Portfolio
invests to meet their obligations for the payment of principal and interest when
due.
DAILY ASSETS TREASURY OBLIGATIONS FUND
Treasury Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.
7
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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 deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations
of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" that are restricted as to
disposition under the Federal securities laws ("restricted securities"). Any
sale of these securities may not be made absent registration under the
Securities Act of 1933 or the availability of an appropriate exemption
therefrom. Some of these restricted securities, however, are eligible for resale
to institutional investors, and accordingly, a liquid
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<PAGE>
market may exist for them. Pursuant to guidelines adopted by the Core Trust
Board, the investment adviser will determine whether each such investment is
liquid.
DAILY ASSETS MUNICIPAL FUND
Municipal Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in municipal securities. The Portfolio attempts
to maintain 100% of its assets invested in federally tax-exempt municipal
securities; during periods of normal market conditions the Portfolio will have
at least 80% of its net assets invested in federally tax-exempt instruments the
income from which may be subject to the federal alternative minimum tax ("AMT").
The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.
THE SHORT-TERM MUNICIPAL SECURITIES MARKET. It is anticipated that a substantial
amount of the municipal securities held by the Portfolio will be supported by
credit and liquidity enhancements, such as letters of credit (which are not
covered by federal deposit insurance) or put or demand features of third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Portfolio will be dependent in part upon the
credit quality of the banks supporting the Portfolio's investments. This will
result in exposure to risks pertaining to the banking industry, including the
foreign banking industry. These risks include a sustained increase in interest
rates, which can adversely affect the availability and cost of a bank's lending
activities; exposure to credit losses during times of economic decline;
concentration of loan portfolios in certain industries; regulatory developments;
and competition among financial institutions. Brokerage firms and insurance
companies also provide certain liquidity and credit support. The Portfolio's
policy is to purchase municipal securities with third party credit or liquidity
support only after FIA has considered the creditworthiness of the financial
institution providing the support and believes that the security presents
minimal credit risk.
The Portfolio may purchase long term municipal securities with various maturity
shortening provisions. For instance, variable rate demand notes ("VRDN") are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer) which may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
VRDNs may be issued directly by the municipal issuer or created by a bank,
broker-dealer or other financial institution by selling a previously issued
long-term bond with a demand feature attached. Similarly, tender option bonds
(also referred to as certificates of participation) are municipal securities
with relatively long original maturities and fixed rates of interest that are
coupled with an agreement of a third party financial institution under which the
third party grants the security holders the option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. As consideration for
providing the option, the financial institution receives a fee equal to the
difference between the underlying municipal security's fixed rate and the rate,
as determined by a remarketing or similar agent, that would cause the
securities, coupled with the tender option, to trade at par on the date of the
interest rate determination. These bonds effectively provide the holder with a
demand obligation that bears interest at the prevailing short-term municipal
securities interest rate.
The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the Portfolio the right to sell the municipal security at a specified
price at any time before a specified date. The Portfolio will acquire puts only
to enhance liquidity, shorten the maturity of the related municipal security or
permit the Portfolio to invest its funds at more favorable rates. Generally, the
Portfolio will buy a municipal security that is accompanied by a put only if the
put is available at no extra cost. In some cases, however, the Portfolio may pay
an extra amount to acquire a put, either in connection with the purchase of the
related municipal security or separately from the purchase of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as
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<PAGE>
practicable in municipal securities while preserving the necessary flexibility
and liquidity to meet unanticipated redemptions. In this regard, the Portfolio
acquires stand-by commitments solely to facilitate portfolio liquidity and does
not exercise its rights thereunder for trading purposes. Stand-by commitments
involve certain expenses and risks, including the inability of the issuer of the
commitment to pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
MUNICIPAL BONDS. Municipal bonds are long term fixed-income securities. "General
obligation" bonds are secured by a municipality's pledge of its full faith,
credit and taxing power for the payment of principal and interest. "Revenue"
bonds are usually payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other tax, but not from general tax revenues. Under a "moral
obligation" bond (which is normally issued by special purpose public
authorities), if the issuer is unable to meet its obligations under the bonds
from current revenues, it may draw on a reserve fund that is backed by the moral
commitment (but not the legal obligation) of the state or municipality that
created the issuer. The Portfolio may invest in industrial development bonds,
which in most cases are revenue bonds. The payment of the principal and interest
on these bonds is dependent solely on the ability of an initial or subsequent
user of the facilities financed by the bonds to meet its financial obligations
and the pledge, if any, of real and personal property so financed as security
for such payment.
MUNICIPAL NOTES AND LEASES. Municipal notes, which may be either "general
obligation" or "revenue" securities, are short-term fixed income securities
intended to fulfill short-term capital needs of a municipality. Municipal
leases, which may take various forms, are issued by municipalities to acquire a
wide variety of equipment and facilities. Municipal leases frequently have
special risks not normally associated with other municipal securities. Municipal
leases (which normally provide for title to the leased assets to pass eventually
to the government issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
PARTICIPATION INTERESTS. The Portfolio may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.
TAXABLE INVESTMENTS. The Portfolio may invest up to 20% of the value of its net
assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, are fundamental and therefore may not be
changed without approval of the holders of a majority of the Fund's or
Portfolio's, as applicable, outstanding voting securities (as defined in the
1940 Act). Except as otherwise indicated herein or in the SAI, investment
policies of a Fund or a Portfolio may be changed by the applicable board of
trustees without shareholder approval. Each Portfolio is permitted to hold cash
in any amount pending investment in securities and may invest in other
investment companies that intend to comply with Rule 2a-7 and have substantially
similar investment objectives and policies. A further description of the Funds'
and the Portfolios' investment policies is contained in the SAI.
BORROWING. Each Portfolio may borrow money for temporary or emergency purposes
(including the meeting of redemption requests), but not in excess of 33 1/3% of
the value of the Portfolio's total assets. Borrowing for purposes other than
meeting redemption requests will not exceed 5% of the value of the Portfolio's
total assets.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price
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reflects a market rate of interest that is not related to the coupon rate or
maturity of the purchased security. The Portfolios' custodian holds the
underlying collateral, which is maintained at not less than 100% of the
repurchase price. Repurchase agreements involve certain credit risks not
associated with direct investment in securities. Each Portfolio, however,
intends to enter into repurchase agreements only with sellers which FIA believes
present minimal credit risks in accordance with guidelines established by the
Core Trust Board. In the event that a seller defaulted on its repurchase
obligation, however, a Portfolio might suffer a loss.
LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including repurchase agreements
not entitling the Portfolio to payment of principal within seven days. There may
not be an active secondary market for securities held by a Portfolio. The value
of securities that have a limited market tend to fluctuate more than those that
have an active market. FIA monitors the liquidity of each Portfolio's
investments, but there can be no guarantee that an active secondary market will
exist.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. In order to assure itself of
being able to obtain securities at prices which FIA believes might not be
available at a future time, FIA may purchase securities on a when-issued or
delayed delivery basis. When these transactions are negotiated, the price or
yield is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Securities so purchased are subject
to market price fluctuation and no interest on the securities accrues to a
Portfolio until delivery and payment take place. Accordingly, the value of the
securities on the delivery date may be more or less than the purchase price.
Commitments for when-issued or delayed delivery transactions will be entered
into only when a Portfolio has the intention of actually acquiring the
securities, but the Portfolio may sell the securities before the settlement date
if deemed advisable. Failure by the other party to deliver a security purchased
by a Portfolio may result in a loss or missed opportunity to make an alternative
investment. As a result of entering into forward commitments, the Funds are
exposed to greater potential fluctuations in the value of their assets and net
asset values per share.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which each Portfolio
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Those
securities with ultimate maturities of greater than 397 days may be purchased
only in accordance with the provisions of Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features which comply with certain
requirements and certain U.S. Government Securities may be purchased. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invests only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. These Portfolios do not intend to hold in their portfolio any
securities or instruments that would be subject to restriction as to amount held
by a national bank under Title 12, Section 24 (Seventh) of the United States
Code. In addition, these Portfolios limit their investments to those permissible
for Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act and the applicable rules and regulations of the National Credit
Union Administration. Government Cash Portfolio limits its investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage and to investments that permit Fund
shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction the Core Trust Board. The
Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The
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Core Trust Board performs similar functions for the Portfolios and Core Trust.
The SAI contains general background information about the trustees and officers
of the Trust and Core Trust.
ADMINISTRATION AND DISTRIBUTION
Subject to the supervision of the Board, FAdS supervises the overall management
of the Trust, including overseeing the Trust's receipt of services, advising the
Trust and the Trustees on matters concerning the Trust and its affairs, and
providing the Trust with general office facilities and certain persons to serve
as officers. For these services and facilities, FAdS receives a fee at an annual
rate of 0.05% of the daily net assets of each Fund. FAdS also serves as
administrator of the Portfolios and provides administrative services for each
Portfolio that are similar to those provided to the Funds. For its
administrative services to the Portfolios, FAdS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("FAcS") performs portfolio accounting services for the Funds and
Portfolios pursuant to agreements with the Trust and Core Trust and is paid a
separate fee for these services.
FFSI acts as the agent of the Trust in connection with the offering of shares of
the Funds but receives no compensation for these services. FFSI is a registered
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
FAdS, FFSI, FIA, FAcS and FSS are members of the Forum Financial Group of
Companies and together provide a full range of services to the investment
company and financial services industry. As of the date of this Prospectus, each
of these companies was controlled by John Y. Keffer, President and Chairman of
the Trust, and FAdS and FFSI provided administration services to registered
investment companies with assets of approximately $30 billion.
INVESTMENT ADVISER
Subject to the general supervision of the Core Trust Board, FIA makes investment
decisions for each Portfolio and monitors the Portfolios' investments. FIA,
which is located at Two Portland Square, Portland, Maine 04101, provides
investment advisory services to six other mutual funds. Prior to January 2,
1998, Linden Asset Management, Inc. ("Linden") served as investment adviser to
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio and
provided professional management of those Portfolios' investments, and Forum
Advisors, Inc. served as investment adviser to Government Portfolio and provided
professional management of that Portfolio's investments. Linden and Forum
Advisors, Inc. also acted as investment subadvisors to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into a new company named Forum Investment
Advisors, LLC.
Anthony R. Fischer, Jr. is primarily responsible for the day-to-day management
of the Portfolios. Mr. Fischer was the sole stockholder and President of Linden
Asset Management, Inc. from 1992 until January 2, 1998. He has been primarily
responsible for the day-to-day management of Treasury Cash Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio since their
inception. Mr. Fischer has over twenty-five years experience in the money market
industry and during that time has managed money market investment portfolios for
various banks and investment firms.
For its services, FIA receives an advisory fee at an annual rate of 0.05% of
Government Portfolio's and Municipal Cash Portfolio's average daily net assets
For services provided to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio, FIA receives an advisory fee based upon the total average daily
net assets of those Portfolios ("Total Portfolio Assets"). FIA's fee is
calculated at an annual rate on a cumulative basis as follows: 0.06% of the
first $200 million of Total Portfolio Assets, 0.04% of the next $300 million of
Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. A
Fund's expenses include the Fund's pro rata portion of the advisory fee paid by
the corresponding Portfolio.
SHAREHOLDER SERVICING
Shareholder inquiries and communications concerning the Funds may be directed to
FSS at the address and telephone numbers on the first page of this Prospectus.
FSS maintains an account for each shareholder of the Funds (unless such accounts
are maintained by sub-transfer agents or processing agents) and performs other
transfer agency and related functions. FSS is authorized to subcontract any or
all of its functions to one or more qualified sub-transfer agents or processing
agents, which may be its affiliates, who agree to comply with the terms of FSS's
agreement with the Trust. FSS may pay those agents for their services, but no
such payment will increase FSS's compensation from the Trust. For its services,
FSS is paid a transfer
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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.
PURCHASES. Fund shares are sold at a price equal to their net asset value
next-determined after receipt of an order in proper form, on each Fund Business
Day. Fund shares are issued immediately after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by FSS. Each Fund's net asset value is calculated at 4:00
p.m., Eastern time.
Fund shares become entitled to receive distributions on the day the purchase
order is accepted if the order and payment are received by FSS as follows:
<TABLE>
ORDER MUST BE RECEIVED BY PAYMENT MUST BE RECEIVED BY
<S> <C> <C>
Daily Assets Government Fund and
Daily Assets Municipal Fund 12:00 p.m., Eastern time 4:00 p.m., Eastern time
All other Funds 2:00 p.m., Eastern time 4:00 p.m., Eastern time
</TABLE>
If a purchase order is transmitted to FSS (or the wire is received) after the
times listed above, the investor will not receive a distribution on that day. On
days that the New York Stock Exchange or Federal Reserve Bank of San Francisco
(Boston in the case of Daily Assets Government Fund) closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which FSS must receive completed wire
purchase orders and the cut-off times set forth above.
Each Fund reserves the right to reject any subscription for the purchase of Fund
shares. Stock certificates are issued only to shareholders of record upon their
written request and no certificates are issued for fractional shares.
REDEMPTIONS. Fund shares may be redeemed without charge at their net asset value
on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following receipt by FSS of the
redemption order in proper form (and any supporting documentation which FSS may
require). Shares redeemed are not entitled to receive distributions declared on
or after the day on
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which the redemption becomes effective.
For wire redemption orders received after 12:00 p.m., Eastern time, in the case
of Daily Assets Government Fund and Daily Assets Municipal Fund, and after 2:00
p.m., Eastern time, in the case of each other Fund, FSS will wire proceeds the
next Fund Business Day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco (Boston in the case of Daily Assets Government
Fund) closes early or the Public Securities Association recommends that the
government securities markets close early, the Trust may advance the time by
which FSS must receive completed wire redemption orders.
Normally, redemption proceeds are paid immediately, but in no event later than
seven days, following acceptance of a redemption order. Proceeds of redemption
requests (and exchanges), however, will not be paid unless any check used to
purchase the shares has been cleared by the shareholder's bank, which may take
up to 15 calendar days. This delay may be avoided by investing through wire
transfers. Unless otherwise indicated, redemption proceeds normally are paid by
check mailed to the shareholder's record address. The right of redemption may
not be suspended nor the payment dates postponed for more than seven days after
the tender of the shares to the Fund except when the New York Stock Exchange is
closed (or when trading thereon is restricted) for any reason other than its
customary weekend or holiday closings or under any emergency or other
circumstance as determined by the SEC.
Proceeds of redemptions normally are paid in cash. However, payments may be made
wholly or partially in portfolio securities if the Board determines that payment
in cash would be detrimental to the best interests of the Fund.
The Trust employs reasonable procedures to ensure that telephone orders are
genuine (which include recording certain transactions and the use of shareholder
security codes). If the Trust did not employ such procedures, it could be liable
for any losses due to unauthorized or fraudulent telephone instructions.
Shareholders should verify the accuracy of telephone instructions immediately
upon receipt of confirmation statements. During times of drastic economic or
market changes, telephone redemption and exchange privileges may be difficult to
implement. In the event that a shareholder is unable to reach FSS by telephone,
requests may be mailed or hand-delivered to FSS.
Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon not less than 60 days' written notice, all shares in
any Fund account with an aggregate net asset value of less than $5,000.
PURCHASE AND REDEMPTION PROCEDURES
Investors may open an account by completing the application at the back of this
Prospectus or by contacting FSS at the address on the first page of this
Prospectus. To request shareholder services not referenced on the account
application and to change information regarding a shareholder's account (such as
addresses), investors should request an Optional Services Form from FSS.
INITIAL PURCHASE OF SHARES
There is a $1,000,000 minimum for initial investments in each Fund.
BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to FSS. Checks are accepted at full value subject
to collection. Payment by a check drawn on any member of the Federal Reserve
System can normally be converted into Federal Funds within two business days
after receipt of the check. Checks drawn on some non-member banks may take
longer.
For individual or Uniform Gift to Minors Act accounts, the check or money order
used to purchase shares of a Fund must be made payable to "Forum Funds" or to
one or more owners of that account and endorsed to Forum Funds. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts, the check
used to purchase shares of a Fund must be made payable on its face to "Forum
Funds." No other method of payment by check will be accepted. All purchases must
be paid in U.S. dollars; checks must be drawn on U.S. banks. Payment by
Traveler's Checks is prohibited.
BY BANK WIRE. To make an initial investment in a Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Trust
at 800-94FORUM (800-943-6786) or (207) 879-0001 to obtain an account number. The
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<PAGE>
investor should then instruct a bank to wire the investor's money immediately
to:
BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Shareholder Services, LLC
Account #: 541-54171
Re: [Name of Fund] - Institutional Shares
Account #: .........
Account Name: .........
The investor should then promptly complete and mail the account application. Any
investor planning to wire funds should instruct a bank early in the day so the
wire transfer can be accomplished the same day. There may be a charge imposed by
the bank for transmitting payment by wire, and there also may be a charge for
the use of Federal Funds.
THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks or other financial institutions ("Processing
Organizations"), including affiliates of FSS. Processing Organizations may
charge their customers a fee for their services and are responsible for promptly
transmitting purchase, redemption and other requests to a Fund. The Trust is not
responsible for the failure of any Processing Organization to promptly forward
these requests.
Investors who purchase or redeem shares in this manner will be subject to the
procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Investors who purchase Fund shares
through a Processing Organization may or may not be the shareholder of record
and, subject to their institution's and the Fund's procedures, may have Fund
shares transferred into their name. Certain Processing Organizations may enter
purchase orders with payment to follow.
The Trust may confirm purchases and redemptions of a Processing Organization's
customers directly to the Processing Organization, which in turn will provide
its customers with such confirmations and periodic statements as may be required
by law or agreed to between the Processing Organization and its customers.
SUBSEQUENT PURCHASES OF SHARES
Subsequent purchases may be made by mailing a check, by sending a bank wire or
through a financial institution as indicated above. Shareholders using the wire
system for purchase should first telephone the Trust at 800-94FORUM
(800-943-6786) or (207) 879-0001 to notify it of the wire transfer. All payments
should clearly indicate the shareholder's name and account number.
Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to FSS.
REDEMPTION OF SHARES
Shareholders who wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several days after a shareholder's application is received.
Shares for which certificates have been issued may not be redeemed by telephone.
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
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<PAGE>
with signature guaranteed and all certificates submitted for redemption must be
endorsed by the shareholder with signature guaranteed.
BY TELEPHONE. A shareholder who has elected telephone redemption privileges may
make a telephone redemption request by calling FSS at 800-94FORUM (800-943-6786)
or (207) 879-0001 and providing the shareholder's account number, the exact name
in which the shareholder's shares are registered and the shareholder's social
security or taxpayer identification number. In response to the telephone
redemption instruction, the Fund will mail a check to the shareholder's record
address or, if the shareholder has elected wire redemption privileges, wire the
proceeds.
BY BANK WIRE. For redemptions of more than $5,000, a shareholder who has elected
wire redemption privileges may request the Fund to transmit the redemption
proceeds by Federal Funds wire to a bank account designated on the shareholder's
account application. To request bank wire redemptions by telephone, the
shareholder also must have elected the telephone redemption privilege.
Redemption proceeds are transmitted by wire on the day the redemption request in
proper form is received by FSS .
OTHER REDEMPTION MATTERS. To protect shareholders and the Funds against fraud,
signatures on certain requests must have a signature guarantee. Requests must be
made in writing and include a signature guarantee for any of the following
transactions: (1) any endorsement on a stock certificate; (2) written
instruction to redeem Shares whose value exceeds $50,000; (3) instructions to
change a shareholder's record name; (4) redemption in an account in which the
account address or account registration has changed within the last 30 days; (5)
the proceeds are not being sent to the address of record, preauthorized bank
account, or preauthorized brokerage firm account; (6) proceeds are to be paid to
someone other than the registered owners or to an account with a different
registration; (7) change of automatic investment or redemption, dividend
election, telephone redemption or exchange option election or any other option
election in connection with the shareholder's account.
Signature guarantees may be provided by any eligible institution acceptable to
FSS, including a bank, a broker, a dealer, a national securities exchange, a
credit union, or a savings association that is authorized to guarantee
signatures. Whenever a signature guarantee is required, the signature of each
person required to sign for the account must be guaranteed. A notarized
signature is not sufficient.
FSS will deem a shareholder's account "lost" if correspondence to the
shareholder's address of record is returned as undeliverable, unless FSS
determines the shareholder's new address. When an account is deemed lost all
distributions on the account will be reinvested in additional shares of the
Fund. In addition, the amount of any outstanding (unpaid for six months or more)
checks for distributions that have been returned to FSS will be reinvested and
the checks will be canceled.
EXCHANGES
Shareholders may exchange their shares for Institutional Shares of any other
Fund. Exchanges are subject to the fees charged by, and the restrictions listed
in the prospectus for, the fund into which a shareholder is exchanging,
including minimum investment requirements. The Funds do not charge for
exchanges, and there is currently no limit on the number of exchanges a
shareholder may make, but each Fund reserves the right to limit excessive
exchanges by any shareholder. See "Additional Purchase and Redemption
Information" in the SAI.
Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the new account. Shareholders may only exchange into a fund if
that fund's shares may legally be sold in the shareholder's state of residence.
The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Accordingly, a
shareholder may realize a capital gain or loss with respect to the shares
redeemed. Redemptions and purchases are effected at the respective net asset
values of the two funds as next determined following receipt of proper
instructions and all necessary supporting documents by the fund whose shares are
being exchanged. The exchange privilege may be modified materially or terminated
by the Trust at any time upon 60 days' notice to shareholders.
BY MAIL. Exchanges may be accomplished by written instruction to FSS accompanied
by any stock certificate that may have
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<PAGE>
been issued to the shareholder. All written requests for exchanges must be
signed by the shareholder (a signature guarantee is not required) and all
certificates submitted for exchange must be endorsed by the shareholder with
signature guaranteed.
BY TELEPHONE. Exchanges may be accomplished by telephone by any shareholder who
has elected telephone exchange privileges by calling FSS at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number.
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Each
type of net capital gain realized by a Fund, if any, will be distributed
annually. Shareholders may choose to have all distributions reinvested in
additional shares of the Fund or received in cash. In addition, shareholders may
have all distributions of net capital gain reinvested in additional shares of
the Fund and distributions of net investment income paid in cash. All
distributions are treated in the same manner for Federal income tax purposes
whether received in cash or reinvested in shares of the Fund.
All distributions will be reinvested at the Fund's net asset value as of the
payment date of the dividend. All distributions are reinvested unless another
option is selected. All distributions not reinvested will be paid to the
shareholder in cash and may be paid more than seven days following the date on
which distribution would otherwise be reinvested.
TAXES
TAX STATUS OF THE FUNDS. Each Fund intends to qualify or continue to qualify to
be taxed as a "regulated investment company" under the Internal Revenue Code of
1986, as amended. Accordingly, no Fund will be liable for Federal income taxes
on the net investment income and capital gain distributed to its shareholders.
Because each Fund intends to distribute all of its net investment income and net
capital gain each year, the Funds should also avoid Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Two different tax rates apply to net capital gain --
that is, the excess of net gain from capital assets held for more than one year
over net losses from capital assets held for not more than one year. One rate
(generally 28%) applies to net gain on capital assets held for more than one
year but not more than 18 months and a second rate (generally 20%) applies to
the balance of such net capital gains. Distributions of net capital gain will be
taxable to shareholders as such, regardless of how long a shareholder has held
shares in the Fund.
THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
DAILY ASSETS MUNICIPAL FUND. Distributions paid by Daily Assets Municipal Fund
out of federally tax-exempt interest income earned by the Fund ("exempt-interest
dividends") generally will not be subject to federal income tax in the hands of
the Fund's shareholders. Substantially all of the distributions paid by the Fund
are anticipated to be exempt-interest dividends. Persons who are "substantial
users" or "related persons" thereof of facilities financed by private activity
securities held by the Fund, however, may be subject to federal income tax on
their pro rata share of the interest income from those securities and should
consult their tax advisers before purchasing Shares. Exempt-interest dividends
are included in the "adjusted current earnings" of corporations for purposes of
the federal alternative minimum tax ("AMT").
Interest on indebtedness incurred by shareholders to purchase or carry shares of
the Fund generally is not deductible for federal income tax purposes. Under
rules for determining when borrowed funds are used for purchasing or carrying
particular assets, shares of the Fund may be considered to have been purchased
or carried with borrowed funds even though those funds are not directly linked
to the shares.
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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.
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
18
<PAGE>
annualized percentage rate based on the Fund's share price at the end of the
period. A Fund's compounded annualized yield assumes the reinvestment of
distributions paid by the Fund, and, therefore will be somewhat higher than the
annualized yield for the same period. A Fund may also quote tax-equivalent
yields, which show the taxable yields a shareholder would have to earn to equal
the Fund's tax-free yield, after taxes. A tax-equivalent yield is calculated by
dividing the Fund's tax-free yield by one minus a stated federal, state or
combined federal and state tax rate. Each class' performance will vary.
The Funds' advertisements may also reference ratings and rankings among similar
funds by independent evaluators such as Morningstar, Lipper Analytical Services,
Inc. or IBC Financial Data, Inc. In addition, the performance of the Funds may
be compared to recognized indices of market performance. The comparative
material found in a Fund's advertisements, sales literature, or reports to
shareholders may contain performance rankings. This material is not to be
considered representative or indicative of future performance.
BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a Processing
Organization or perform sub-transfer agent or similar services for the Trust and
its shareholders. If a bank or bank affiliate were prohibited from performing
all or a part of the foregoing services, its shareholder customers would be
permitted to remain shareholders of the Trust and alternative means for
continuing to service them would be sought.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 4:00 p.m.,
Eastern time, on each Fund Business Day by dividing the value of the Fund's net
assets (the value of its interest in the Portfolio and other assets less its
liabilities) by the number of shares outstanding at the time the determination
is made. In order to more easily maintain a stable net asset value per share,
each Portfolio's portfolio securities are valued at their amortized cost
(acquisition cost adjusted for amortization of premium or accretion of discount)
in accordance with Rule 2a-7. The Portfolios will only value their portfolio
securities using this method if the Core Trust Board believes that it fairly
reflects the market-based net asset value per share. The Portfolios' other
assets, if any, are valued at fair value by or under the direction of the Core
Trust Board.
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end, management investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc., which was incorporated in 1980. The
Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create classes of
shares within each series. There are currently sixteen series of the Trust.
Each share of each fund of the Trust and each class of shares has equal
distribution, liquidation and voting rights, and fractional shares have those
rights proportionately, except that expenses related to the distribution of the
shares of each class (and certain other expenses such as transfer agency and
administration expenses) are borne solely by those shares and each class votes
separately with respect to the provisions of any Rule 12b-1 plan which pertain
to the class and other matters for which separate class voting is appropriate
under applicable law. Generally, shares will be voted in the aggregate without
reference to a particular fund or class, except if the matter affects only one
fund or class or voting by fund or class is required by law, in which case
shares will be voted separately by fund or class, as appropriate. Delaware law
does not require the Trust to hold annual meetings of shareholders, and it is
anticipated that shareholder meetings will be held only when specifically
required by Federal or state law. Shareholders (and Trustees) have available
certain procedures for the removal of Trustees. There are no conversion or
preemptive rights in connection with shares of the Trust. All shares when issued
in accordance with the terms of the offering will be fully paid and
nonassessable. Shares are redeemable at net asset value, at the option of the
shareholders. A shareholder in a fund is entitled to the shareholder's pro rata
share of all distributions arising from that fund's assets and, upon redeeming
shares, will receive the portion of the fund's net assets represented by the
redeemed shares.
As of May 1, 1998, Babb & Co. may be deemed to have controlled Daily Assets
Treasury Obligations Fund and Daily Assets Government Obligations Fund, H.M.
Payson & Co. may be deemed to have controlled Daily Assets Government Fund and
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f
Daily Assets Cash Fund and Allagash & Co. may be deemed to have controlled Daily
Assets Government Obligations Fund and Daily Assets Cash Fund, through
investment in the Funds by their customers. From time to time, these
shareholders or other shareholders may own a large percentage of the Shares of a
Fund and accordingly, may be able to greatly affect (if not determine) the
outcome of a shareholder vote.
FUND STRUCTURE
OTHER CLASSES OF SHARES. In addition to Institutional Shares, each Fund may
create and issue shares of other classes of securities. Each Fund currently has
two other classes of shares authorized, Institutional Service Shares and
Investor Shares. Institutional Services Shares are offered solely through banks,
trust companies and certain other financial institutions, and their affiliates
and correspondents, for investment of their funds or funds for which they act in
a fiduciary, agency or custodial capacity. Investor Shares are offered to the
general public, have a $10,000 minimum investment and bear shareholder service
and distribution fees. Institutional Service Shares and Investor Shares incur
more expenses than Institutional Shares. See, "Additional Information" below.
Except for certain differences, each share of each class represents an
undivided, proportionate interest in a Fund. Each share of each Fund is entitled
to participate equally in distributions and the proceeds of any liquidation of
that Fund except that, due to the differing expenses borne by the various
classes, the amount of distributions will differ among the classes.
CORE TRUST STRUCTURE. Each Fund invests all of its assets in its corresponding
Portfolio of Core Trust, a business trust organized under the laws of the State
of Delaware in September 1994 and registered under the 1940 Act as an open-end,
management investment company. Accordingly, a Portfolio directly acquires its
own securities and its corresponding Fund acquires an indirect interest in those
securities. The assets of each Portfolio belong only to, and the liabilities of
the Portfolio are borne solely by, the Portfolio and no other portfolio of Core
Trust. Upon liquidation of a Portfolio, investors in the Portfolio would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.
THE PORTFOLIOS. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, Daily
Assets Government Fund and Daily Assets Municipal Fund are the only investors
(other than FAdS or its affiliates) that have invested in Government Portfolio
and Municipal Cash Portfolio, respectively. Each of the other Portfolios has
another investor besides the Funds (and FAdS and its affiliates). All investors
in a Portfolio invest on the same terms and conditions as the Funds and will pay
a proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio is entitled to vote in proportion to the relative value of its
interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. There can be no assurance that
any issue that receives a majority of the votes cast by a Fund's shareholders
will receive a majority of votes cast by all investors in the Portfolio.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Portfolio
may be affected by the actions of other large investors in the Portfolio, if
any. If a large investor other than a Fund redeemed its interest in a Portfolio,
the Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A 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
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Funds or concerning any other investment companies that invest in a Portfolio,
investors may contact FFSI at 207-879-1900. If an investor invests through a
financial institution, the investor may also contact their financial institution
to obtain information about the other classes or any other investment company
investing in a Portfolio.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
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PROSPECTUS
May 27, 1998
FORUM FUNDS
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
(formerly Daily Assets Treasury Fund)
Daily Assets Government Obligations Fund
(formerly Daily Assets Government Fund)
Daily Assets Cash Fund
Daily Assets Municipal Fund
(formerly Daily Assets Tax-Exempt Fund)
- --------------------------------------------------------------------------------
This Prospectus offers Institutional Service Shares of Daily Assets Treasury
Fund, Daily Assets Treasury Obligations Fund, Daily Assets Government Fund,
Daily Assets Cash Fund and Daily Assets Municipal Fund (each a "Fund"). Each
Fund is a diversified no-load, money market portfolio of Forum Funds (the
"Trust"), a registered, open-end, management investment company. Each Fund seeks
to provide its shareholders with high current income (which, in the case of
Daily Assets Municipal Fund, is exempt from federal income taxes) to the extent
consistent with the preservation of capital and the maintenance of liquidity.
EACH FUND SEEKS TO ACHIEVE ITS OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE
ASSETS IN A SEPARATE PORTFOLIO OF AN OPEN-END, MANAGEMENT INVESTMENT COMPANY
WITH AN IDENTICAL INVESTMENT OBJECTIVE. SEE "OTHER INFORMATION - FUND
STRUCTURE." THROUGH THE PORTFOLIO IN WHICH IT INVESTS:
DAILY ASSETS TREASURY OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Treasury and in repurchase
agreements backed by these obligations.
DAILY ASSETS GOVERNMENT FUND invests substantially all of its assets
in obligations of the U.S. Government, its agencies and
instrumentalities with a view toward providing income that is
generally considered exempt from state and local income taxes.
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Government, its agencies and
instrumentalities and in repurchase agreements backed by these
obligations.
DAILY ASSETS CASH FUND invests in a broad spectrum of high-quality
money market instruments.
DAILY ASSETS MUNICIPAL FUND invests primarily in high-quality
obligations of the states, territories and possessions of the U.S. and
of their subdivisions, authorities and corporations ("municipal
securities") with a view toward providing income that is exempt from
federal income taxes.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated May 27, 1998 (the "SAI"), which contains more
detailed information about the Trust and the Funds and is available together
with other related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). The SAI, which is incorporated into this Prospectus by
reference, also is available without charge by contacting the Funds' transfer
agent, Forum Shareholder Services, LLC, at P.O. Box 446, Portland, Maine 04112,
(207) 879-0001 or (800) 94FORUM.
Investors should read this
Prospectus and retain it for future reference.
FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.
THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C> <C>
1. Prospectus Summary..............................3 5. Purchases and Redemptions of Shares.............13
2. Financial Highlights............................4 6. Distributions and Tax Matters...................17
3. Investment Objectives and Policies..............7 7. Other Information...............................18
4. Management.....................................11
</TABLE>
2
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1. PROSPECTUS SUMMARY
HIGHLIGHTS OF THE FUNDS
This prospectus offers shares of the Institutional Service class ("Institutional
Service Shares") of each of the Funds. Institutional Services Shares are offered
solely through banks, trust companies and certain other financial institutions,
and their affiliates and correspondents, for investment of their funds or funds
for which they act in a fiduciary, agency or custodial capacity. The Funds
operate in accordance with the provisions of Rule 2a-7 under the Investment
Company Act of 1940 (the "1940 Act"). Each Fund invests all of its investable
assets in a separate portfolio (each a "Portfolio") of Core Trust (Delaware), an
open-end, management investment company ("Core Trust") as follows:
Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Portfolio
Daily Assets Government Obligations Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Municipal Fund Municipal Cash Portfolio
Accordingly, the investment experience of each Fund will correspond directly
with the investment experience of its corresponding Portfolio. See "Other
Information Fund Structure." Each Fund currently offers three separate classes
of shares: Institutional Shares, Institutional Service Shares and Investor
Shares. Institutional Service Shares are sold through this Prospectus.
Institutional Shares and Investor Shares are each offered by a separate
prospectus. See "Other Information -- Fund Structure -- Other Classes of
Shares."
MANAGEMENT. Forum Administrative Services, LLC ("FAdS") supervises the overall
management of the Funds and the Portfolios and Forum Financial Services, Inc.
("FFSI") is the distributor of the Funds' shares. Forum Investment Advisors, LLC
("FIA") is the investment adviser of each Portfolio and provides professional
management of the Portfolios' investments. The Funds' transfer agent, dividend
disbursing agent and shareholder servicing agent is Forum Shareholder Services,
LLC (the "FSS"). See "Management" for a description of the services provided and
fees charged to the Funds.
SHAREHOLDER SERVICING. The Trust has adopted a Shareholder Service Plan
relating to Institutional Service Shares under which FAdS is compensated for
various shareholder servicing activities. See "Management - Shareholder
Servicing" and "- Administration and Distribution."
PURCHASES AND REDEMPTIONS. The minimum initial investment in Institutional
Service Shares is $100,000. Institutional Service Shares may be purchased and
redeemed Monday through Friday, between 9:00 a.m. and 6:00 p.m., Eastern time,
except on Federal holidays and days that the Federal Reserve Bank of San
Francisco (Boston in the case of Daily Assets Government Fund) is closed ("Fund
Business Days"). To be eligible to receive that day's income, purchase orders
must be received by FSS in good order no later than 2:00 p.m., Eastern time
(noon in the case of Daily Assets Government Fund and Daily Assets Municipal
Fund). Shareholders may have redemption proceeds over $5,000 transferred by bank
wire to a designated bank account. To be able to receive redemption proceeds by
wire on the day of the redemption, redemption orders must be received by FSS in
good order no later than 2:00 p.m., Eastern time (noon in the case of Daily
Assets Government Fund and Daily Assets Municipal Fund). All times may be
changed without notice by Fund management due to market activities. See
"Purchase and Redemption of Shares."
EXCHANGES. Shareholders of a Fund may exchange Institutional Service Shares
without charge for Institutional Service Shares of the other Funds. See
"Purchases and Redemptions of Shares - Exchanges."
DISTRIBUTIONS. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."
INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Portfolios
invest only in money market instruments, an investment in any Fund involves
certain risks, depending on the types of investments made and the types of
investment techniques employed. Investment in any security,
3
<PAGE>
including U.S. Government Securities, involves some level of investment risk. An
investment in a Fund is not insured by the FDIC, nor is it insured or guaranteed
against loss of principal.
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Institutional Service Shares will bear
directly or indirectly. There are no transaction expenses associated with
purchases, redemptions or exchanges of Fund shares.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
<S> <C> <C> <C> <C> <C>
Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Government Government Cash Municipal
Obligations Fund Fund Obligations Fund Fund Fund
Management Fees(2) 0.14% 0.15% 0.14% 0.14% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.31% 0.30% 0.31% 0.31% 0.30%
----- ----- ----- ----- -----
Total Operating Expenses 0.45% 0.45% 0.45% 0.45% 0.45%
</TABLE>
(1) For a further description of the various expenses incurred in the operation
of the Funds and the Portfolios, see "Management." The amount of fees and
expenses for Daily Assets Government Fund and Daily Assets Cash Fund is based on
the Fund's expenses for its last fiscal year ended August 31, 1997 restated to
reflect current fees; the amount of expenses for each other Fund is based on
estimated annualized expenses for those Funds' fiscal year ending August 31,
1998. Each Fund's expenses include the Fund's pro rata portion of all expenses
of its corresponding Portfolio, which are borne indirectly by Fund shareholders.
(2) Management Fees include all administration fees and investment advisory fees
incurred by the Funds and the Portfolios; as long as its assets are invested in
a Portfolio, a Fund pays no investment advisory fees directly. (3) Absent
estimated reimbursements by FIA and its affiliates, Other Expenses and Total
Fund Operating Expenses would be: 0.36% and 0.50%, respectively, for Daily
Assets Treasury Obligations Fund; 0.40% and 0.55%, respectively, for Daily
Assets Government Fund; 0.40% and 0.54%, respectively, for Daily Assets
Government Obligations Fund; 0.43% and 0.57%, respectively, for Daily Assets
Cash Fund; 0.43% and 0.58%, respectively, for Daily Assets Municipal Fund.
Expense reimbursements are voluntary and may be reduced or eliminated at any
time.
EXAMPLE
Following is a hypothetical example that indicates the dollar amount of expenses
that an investor in Institutional Service Shares would pay assuming (1) the
investment of all of the Fund's assets in the Portfolio, (2) a $1,000 investment
in the Fund, (3) a 5% annual return, (4) the reinvestment of all distributions
and (5) redemption at the end of each period:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Each Fund $5 $14 $25 $57
The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Funds' projected returns; rather, it is required by government
regulation. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS
THAN INDICATED.
2. FINANCIAL HIGHLIGHTS
The following information represents selected data for a single outstanding
Institutional Service Share of the Funds that offered Institutional Service
Shares prior to February 28, 1998. The following information also represents
selected data for a single outstanding Institutional Share of Daily Assets
Government Obligations Fund and Daily Assets Government Cash Fund. That class
was the first offered by the these two Funds and, accordingly, represent data
since each of those Fund's inception. Information for the period ended August
31, 1997, was audited by KPMG Peat Marwick LLP, independent auditors.
Information for prior periods was audited by other independent
4
<PAGE>
auditors and information for the period ended February 28, 1998 is unaudited.
The financial statements and independent auditors' report thereon for the fiscal
year ended August 31, 1997 and the financial statements for the semi-annual
period ended February 28, 1998 are incorporated by reference into the SAI and
may be obtained from the Trust without charge. As of May 20, 1998, Daily Assets
Municipal Fund had not commenced operations.
As of February 28, 1998, Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio and Cash Portfolio had net assets of $168,183,226;
$46,711,943; $603,202,130 and $391,807,519, respectively.
5
<PAGE>
<TABLE>
RATIO TO AVERAGE NET
ASSETS
Beginning Distributions
Net Asset Net From Net Ending Net Net
Value Per Investment Investment Asset Net Investment
Share Income Income Value Per Expenses Income
Share
<S> <C> <C> <C> <C> <C> <C>
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.01 (0.01) $1.00 0.20%(2) 2.13%(2)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.02 (0.02) $1.00 0.47%(2) 4.86%(2)
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(2) 4.76%(2)
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.32%(2) 2.92%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998 (unaudited)$1.00 0.01 (0.01) $1.00 0.20%(2) 1.76%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998 $1.00 0.03 (0.03) $1.00 0.47%(2) 5.23%(2)
October 1, 1996 to August 31, 1997 (unaudited) 1.00 0.05 (0.05) 1.00 0.52%(2) 5.06%(2)%
</TABLE>
<TABLE>
Ratio of
Net Assets Gross
End of Expenses
Period to Average
Total (000s Net Assets
Return Omitted) (1)
<S> <C> <C> <C>
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) 0.55% 60,926 0.35%(2)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) 2.43% 46,519 0.78%(2)
April 1, 1997 to August 31, 1997 2.01% 44,116 0.95%(2)
Year Ended March 31, 1997 4.80% 43,975 0.99%
Year Ended March 31, 1996 5.18% 43,103 1.06%
Year Ended March 31, 1995 4.45% 36,329 1.10%
Year Ended March 31, 1994 2.83% 26,505 1.17%
July 1, 1992 to March 31, 1993 3.13%(2) 4,687 2.43%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) 0.46% 4,952 1.33%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) 2.62% 13,034 0.89%(2)
October 1, 1996 to August 31, 1997 4.70% 12,076 1.22%(2)
</TABLE>
(1) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects the
expense ratio in the absence of any waivers and reimbursements for the Fund and
its respective Portfolio.
(2) Annualized.
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3. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of each Fund except Daily Assets Municipal Fund is to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of Daily
Assets Municipal Fund is to provide high current income which is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity.
THERE CAN BE NO ASSURANCE THAT ANY FUND OR PORTFOLIO WILL ACHIEVE ITS INVESTMENT
OBJECTIVE OR MAINTAIN A STABLE NET ASSET VALUE.
Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio, which has the same
investment objective and substantially similar investment policies. Therefore,
although the following discusses the investment policies of the Portfolios (and
the responsibilities of Core Trust's board of trustees (the "Core Trust
Board")), it applies equally to the Funds (and the Trust's board of trustees
(the "Board")).
INVESTMENT POLICIES
Each Portfolio invests only in high quality, short-term money market instruments
that are determined by FIA, pursuant to procedures adopted by the Core Trust
Board, to be eligible for purchase and to present minimal credit risks. High
quality instruments include those that (1) are rated (or, if unrated, are issued
by an issuer with comparable outstanding short-term debt that is rated) in the
highest rating category by two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO has issued a rating, by that
NRSRO or (2) are otherwise unrated and determined by FIA to be of comparable
quality. A description of the rating categories of certain NRSROs, such as
Standard & Poor's and Moody's Investors Service, Inc., is contained in the SAI.
Each Portfolio invests only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated under Rule 2a-7) and
maintains a dollar-weighted average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, each Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. As used herein, "U.S. Government
Securities" means obligations issued or guaranteed as to principal and interest
by the United States government, its agencies or instrumentalities and "Treasury
Securities" means U.S. Treasury bills and notes and other U.S. Government
Securities which are guaranteed as to principal and interest by the U.S.
Treasury.
In the case of municipal securities, when the assets and revenues of an issuer
are separate from those of the government creating the issuer and a security is
backed only by the assets and revenues of the issuer, the issuer and not the
creating government is deemed to be the sole issuer of the security. Similarly,
in the case of a security issued by or on behalf of public authorities to
finance various privately operated facilities that is backed only by the assets
and revenues of the non-governmental user, the non-governmental user will be
deemed to be the sole issuer of the security.
Yields on money market securities are dependent on a variety of factors,
including the general conditions of the money markets and the fixed income
markets in general, the size of a particular offering, the maturity of the
obligation and the rating of the issue. A Fund's yield will tend to fluctuate
inversely with prevailing market interest rates. For instance, in periods of
falling market interest rates, yields will tend to be somewhat higher. Although
each Portfolio only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities and municipal securities, can
change in value when there is a change in interest rates, the issuer's actual or
perceived creditworthiness or the issuer's ability to meet its obligations. The
achievement of a Fund's investment objective is dependent in part on the
continuing ability of the issuers of the securities in which the Portfolio
invests to meet their obligations for the payment of principal and interest when
due.
DAILY ASSETS TREASURY OBLIGATIONS FUND
Treasury Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.
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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 deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations
of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" that are restricted as to
disposition under the Federal securities laws ("restricted securities"). Any
sale of these securities may not be made absent registration under the
Securities Act of 1933 or the availability of an appropriate exemption
therefrom. Some of these restricted securities, however, are eligible for resale
to institutional investors, and accordingly, a liquid
8
<PAGE>
market may exist for them. Pursuant to guidelines adopted by the Core Trust
Board, the investment adviser will determine whether each such investment is
liquid.
DAILY ASSETS MUNICIPAL FUND
Municipal Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in municipal securities. The Portfolio attempts
to maintain 100% of its assets invested in federally tax-exempt municipal
securities; during periods of normal market conditions the Portfolio will have
at least 80% of its net assets invested in federally tax-exempt instruments the
income from which may be subject to the federal alternative minimum tax ("AMT").
The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.
THE SHORT-TERM MUNICIPAL SECURITIES MARKET. It is anticipated that a substantial
amount of the municipal securities held by the Portfolio will be supported by
credit and liquidity enhancements, such as letters of credit (which are not
covered by federal deposit insurance) or put or demand features of third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Portfolio will be dependent in part upon the
credit quality of the banks supporting the Portfolio's investments. This will
result in exposure to risks pertaining to the banking industry, including the
foreign banking industry. These risks include a sustained increase in interest
rates, which can adversely affect the availability and cost of a bank's lending
activities; exposure to credit losses during times of economic decline;
concentration of loan portfolios in certain industries; regulatory developments;
and competition among financial institutions. Brokerage firms and insurance
companies also provide certain liquidity and credit support. The Portfolio's
policy is to purchase municipal securities with third party credit or liquidity
support only after FIA has considered the creditworthiness of the financial
institution providing the support and believes that the security presents
minimal credit risk.
The Portfolio may purchase long term municipal securities with various maturity
shortening provisions. For instance, variable rate demand notes ("VRDN") are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer) which may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
VRDNs may be issued directly by the municipal issuer or created by a bank,
broker-dealer or other financial institution by selling a previously issued
long-term bond with a demand feature attached. Similarly, tender option bonds
(also referred to as certificates of participation) are municipal securities
with relatively long original maturities and fixed rates of interest that are
coupled with an agreement of a third party financial institution under which the
third party grants the security holders the option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. As consideration for
providing the option, the financial institution receives a fee equal to the
difference between the underlying municipal security's fixed rate and the rate,
as determined by a remarketing or similar agent, that would cause the
securities, coupled with the tender option, to trade at par on the date of the
interest rate determination. These bonds effectively provide the holder with a
demand obligation that bears interest at the prevailing short-term municipal
securities interest rate.
The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the Portfolio the right to sell the municipal security at a specified
price at any time before a specified date. The Portfolio will acquire puts only
to enhance liquidity, shorten the maturity of the related municipal security or
permit the Portfolio to invest its funds at more favorable rates. Generally, the
Portfolio will buy a municipal security that is accompanied by a put only if the
put is available at no extra cost. In some cases, however, the Portfolio may pay
an extra amount to acquire a put, either in connection with the purchase of the
related municipal security or separately from the purchase of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
9
<PAGE>
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
MUNICIPAL BONDS. Municipal bonds are long term fixed-income securities. "General
obligation" bonds are secured by a municipality's pledge of its full faith,
credit and taxing power for the payment of principal and interest. "Revenue"
bonds are usually payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other tax, but not from general tax revenues. Under a "moral
obligation" bond (which is normally issued by special purpose public
authorities), if the issuer is unable to meet its obligations under the bonds
from current revenues, it may draw on a reserve fund that is backed by the moral
commitment (but not the legal obligation) of the state or municipality that
created the issuer. The Portfolio may invest in industrial development bonds,
which in most cases are revenue bonds. The payment of the principal and interest
on these bonds is dependent solely on the ability of an initial or subsequent
user of the facilities financed by the bonds to meet its financial obligations
and the pledge, if any, of real and personal property so financed as security
for such payment.
MUNICIPAL NOTES AND LEASES. Municipal notes, which may be either "general
obligation" or "revenue" securities, are short-term fixed income securities
intended to fulfill short-term capital needs of a municipality. Municipal
leases, which may take various forms, are issued by municipalities to acquire a
wide variety of equipment and facilities. Municipal leases frequently have
special risks not normally associated with other municipal securities. Municipal
leases (which normally provide for title to the leased assets to pass eventually
to the government issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
PARTICIPATION INTERESTS. The Portfolio may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.
TAXABLE INVESTMENTS. The Portfolio may invest up to 20% of the value of its net
assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, are fundamental and therefore may not be
changed without approval of the holders of a majority of the Fund's or
Portfolio's, as applicable, outstanding voting securities (as defined in the
1940 Act). Except as otherwise indicated herein or in the SAI, investment
policies of a Fund or a Portfolio may be changed by the applicable board of
trustees without shareholder approval. Each Portfolio is permitted to hold cash
in any amount pending investment in securities and may invest in other
investment companies that intend to comply with Rule 2a-7 and have substantially
similar investment objectives and policies. A further description of the Funds'
and the Portfolios' investment policies is contained in the SAI.
BORROWING. Each Portfolio may borrow money for temporary or emergency purposes
(including the meeting of redemption requests), but not in excess of 33 1/3% of
the value of the Portfolio's total assets. Borrowing for purposes other than
meeting redemption requests will not exceed 5% of the value of the Portfolio's
total assets.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price
10
<PAGE>
reflects a market rate of interest that is not related to the coupon rate or
maturity of the purchased security. The Portfolios' custodian holds the
underlying collateral, which is maintained at not less than 100% of the
repurchase price. Repurchase agreements involve certain credit risks not
associated with direct investment in securities. Each Portfolio, however,
intends to enter into repurchase agreements only with sellers whichFIA believes
present minimal credit risks in accordance with guidelines established by the
Core Trust Board. In the event that a seller defaulted on its repurchase
obligation, however, a Portfolio might suffer a loss.
LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including repurchase agreements
not entitling the Portfolio to payment of principal within seven days. There may
not be an active secondary market for securities held by a Portfolio. The value
of securities that have a limited market tend to fluctuate more than those that
have an active market. FIA monitors the liquidity of each Portfolio's
investments, but there can be no guarantee that an active secondary market will
exist.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. In order to assure itself of
being able to obtain securities at prices which FIA believes might not be
available at a future time, FIA may purchase securities on a when-issued or
delayed delivery basis. When these transactions are negotiated, the price or
yield is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Securities so purchased are subject
to market price fluctuation and no interest on the securities accrues to a
Portfolio until delivery and payment take place. Accordingly, the value of the
securities on the delivery date may be more or less than the purchase price.
Commitments for when-issued or delayed delivery transactions will be entered
into only when a Portfolio has the intention of actually acquiring the
securities, but the Portfolio may sell the securities before the settlement date
if deemed advisable. Failure by the other party to deliver a security purchased
by a Portfolio may result in a loss or missed opportunity to make an alternative
investment. As a result of entering into forward commitments, the Funds are
exposed to greater potential fluctuations in the value of their assets and net
asset values per share.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which each Portfolio
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Those
securities with ultimate maturities of greater than 397 days may be purchased
only in accordance with the provisions of Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features which comply with certain
requirements and certain U.S. Government Securities may be purchased. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invests only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. These Portfolios do not intend to hold in their portfolio any
securities or instruments that would be subject to restriction as to amount held
by a national bank under Title 12, Section 24 (Seventh) of the United States
Code. In addition, these Portfolios limit their investments to those permissible
for Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act and the applicable rules and regulations of the National Credit
Union Administration. Government Cash Portfolio limits its investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage and to investments that permit Fund
shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction the Core Trust Board. The
Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The
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F Core Trust Board
performs similar functions for the Portfolios and Core Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust.
ADMINISTRATION AND DISTRIBUTION
Subject to the supervision of the Board, FAdS supervises the overall management
of the Trust, including overseeing the Trust's receipt of services, advising the
Trust and the Trustees on matters concerning the Trust and its affairs, and
providing the Trust with general office facilities and certain persons to serve
as officers. For these services and facilities, FAdS receives a fee at an annual
rate of 0.05% of the daily net assets of each Fund. FAdS also serves as
administrator of the Portfolios and provides administrative services for each
Portfolio that are similar to those provided to the Funds. For its
administrative services to the Portfolios, FAdS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("FAcS") performs portfolio accounting services for the Funds and
Portfolios pursuant to agreements with the Trust and Core Trust and is paid a
separate fee for these services.
FFSI acts as the agent of the Trust in connection with the offering of shares of
the Funds but receives no compensation for these services. FFSI is a registered
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
FAdS, FFSI, FIA, FAcS and FSS are members of the Forum Financial Group of
companies and together provide a full range of services to the investment
company and financial services industry. As of the date of this Prospectus, each
of these companies was controlled by John Y. Keffer, President and Chairman of
the Trust, and FAdS and FFSI provided administration services to registered
investment companies with assets of approximately $30 billion.
INVESTMENT ADVISER
Subject to the general supervision of the Core Trust Board, FIA makes investment
decisions for each Portfolio and monitors the Portfolios' investments. FIA,
which is located at Two Portland Square, Portland, Maine 04101, provides
investment advisory services to six other mutual funds. Prior to January 2,
1998, Linden Asset Management, Inc. ("Linden") served as investment adviser to
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio and
provided professional management of those Portfolios' investments, and Forum
Advisors, Inc. served as investment adviser to Government Portfolio and provided
professional management of that Portfolio's investments. Linden and Forum
Advisors, Inc. also acted as investment subadvisors to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into a new company named Forum Investment
Advisors, LLC.
Anthony R. Fischer, Jr. is primarily responsible for the day-to-day management
of the Portfolios. Mr. Fischer was the sole stockholder and President of Linden
Asset Management, Inc. from 1992 until January 2, 1998. He has been primarily
responsible for the day-to-day management of Treasury Cash Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio since their
inception. Mr. Fischer has over twenty-five years experience in the money market
industry and during that time has managed money market investment portfolios for
various banks and investment firms.
For its services, FIA receives an advisory fee at an annual rate of 0.05% of
Government Portfolio's and Municipal Cash Portfolio's average daily net assets
For services provided to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio, FIA receives an advisory fee based upon the total average daily
net assets of those Portfolios ("Total Portfolio Assets"). FIA's fee is
calculated at an annual rate on a cumulative basis as follows: 0.06% of the
first $200 million of Total Portfolio Assets, 0.04% of the next $300 million of
Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. A
Fund's expenses include the Fund's pro rata portion of the advisory fee paid by
the corresponding Portfolio.
SHAREHOLDER SERVICING
TRANSFER AND DIVIDEND DISBURSING AGENT. Shareholder inquiries and communications
concerning the Funds may be directed to FSS at the address and telephone numbers
on the first page of this Prospectus. FSS maintains an account for each
shareholder of the Funds (unless such accounts are maintained by sub-transfer
agents or processing agents) and performs other transfer agency and related
functions. FSS is authorized to subcontract any or all of its functions to one
or more qualified sub-transfer agents or processing agents, which may be its
affiliates, who agree to comply with the terms of FSS's agreement with the
Trust. FSS may pay those agents for their services, but no such payment will
increase FSS's
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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, and may reimburse a Fund for
certain expenses. Any such waivers or reimbursements would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.
Each Fund's expenses include the service fees described in this Prospectus, the
fees and expenses of the Board, applicable insurance and bonding expenses and
state and SEC registration fees. Each Fund bears its pro rata portion of the
expenses of the Portfolio in which it invests along with all other investors in
the Portfolio.
5. PURCHASES AND REDEMPTIONS OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through FSS, which accepts orders
for purchases and redemptions from shareholders of record and new investors.
Shareholders of record will receive from the Trust periodic statements listing
all account activity during the statement period. The Trust reserves the right
in the future to modify, limit or terminate any shareholder privilege, upon
appropriate notice to shareholders, and may charge a fee for certain shareholder
services, although no such fees are currently contemplated.
PURCHASES. Fund shares are sold at a price equal to their net asset value
next-determined after receipt of an order in proper form, on each Fund Business
Day. Fund shares are issued immediately after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by FSS. Each Fund's net asset value is calculated at 4:00
p.m., Eastern time.
Fund shares become entitled to receive distributions on the day the purchase
order is accepted if the order and payment are received by FSS as follows:
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<TABLE>
<S> <C> <C>
ORDER MUST BE RECEIVED BY PAYMENT MUST BE RECEIVED BY
Daily Assets Government Fund and
Daily Assets Municipal Fund 12:00 p.m., Eastern time 4:00 p.m., Eastern time
All other Funds 2:00 p.m., Eastern time 4:00 p.m., Eastern time
</TABLE>
If a purchase order is transmitted to FSS (or the wire is received) after the
times listed above, the investor will not receive a distribution on that day. On
days that the New York Stock Exchange or Federal Reserve Bank of San Francisco
(Boston in the case of Daily Assets Government Fund) closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which FSS must receive completed wire
purchase orders and the cut-off times set forth above.
Each Fund reserves the right to reject any subscription for the purchase of Fund
shares. Stock certificates are issued only to shareholders of record upon their
written request and no certificates are issued for fractional shares.
REDEMPTIONS. Fund shares may be redeemed without charge at their net asset value
on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following receipt by FSS of the
redemption order in proper form (and any supporting documentation which FSS may
require). Shares redeemed are not entitled to receive distributions declared on
or after the day on which the redemption becomes effective.
For wire redemption orders received after 12:00 p.m., Eastern time, in the case
of Daily Assets Government Fund and Daily Assets Municipal Fund, and after 2:00
p.m., Eastern time, in the case of each other Fund, FSS will wire proceeds the
next Fund Business Day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco (Boston in the case of Daily Assets Government
Fund) closes early or the Public Securities Association recommends that the
government securities markets close early, the Trust may advance the time by
which FSS must receive completed wire redemption orders.
Normally, redemption proceeds are paid immediately, but in no event later than
seven days, following acceptance of a redemption order. Proceeds of redemption
requests (and exchanges), however, will not be paid unless any check used to
purchase the shares has been cleared by the shareholder's bank, which may take
up to 15 calendar days. This delay may be avoided by investing through wire
transfers. Unless otherwise indicated, redemption proceeds normally are paid by
check mailed to the shareholder's record address. The right of redemption may
not be suspended nor the payment dates postponed for more than seven days after
the tender of the shares to the Fund except when the New York Stock Exchange is
closed (or when trading thereon is restricted) for any reason other than its
customary weekend or holiday closings or under any emergency or other
circumstance as determined by the SEC.
Proceeds of redemptions normally are paid in cash. However, payments may be made
wholly or partially in portfolio securities if the Board determines that payment
in cash would be detrimental to the best interests of the Fund.
The Trust employs reasonable procedures to ensure that telephone orders are
genuine (which include recording certain transactions and the use of shareholder
security codes). If the Trust did not employ such procedures, it could be liable
for any losses due to unauthorized or fraudulent telephone instructions.
Shareholders should verify the accuracy of telephone instructions immediately
upon receipt of confirmation statements. During times of drastic economic or
market changes, 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
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FSS.
INITIAL PURCHASE OF SHARES
There is a $100,000 minimum for total initial investments through of by any
financial institution in each Fund.
BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to FSS. Checks are accepted at full value subject
to collection. Payment by a check drawn on any member of the Federal Reserve
System can normally be converted into Federal Funds within two business days
after receipt of the check. Checks drawn on some non-member banks may take
longer.
For individual or Uniform Gift to Minors Act accounts, the check or money order
used to purchase shares of a Fund must be made payable to "Forum Funds" or to
one or more owners of that account and endorsed to Forum Funds. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts, the check
used to purchase shares of a Fund must be made payable on its face to "Forum
Funds." No other method of payment by check will be accepted. All purchases must
be paid in U.S. dollars; checks must be drawn on U.S. banks. Payment by
Traveler's Checks is prohibited.
BY BANK WIRE. To make an initial investment in a Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Trust
at 800-94FORUM (800-943-6786) or (207) 879-0001 to obtain an account number. The
investor should then instruct a bank to wire the investor's money immediately
to:
BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Shareholder Services, LLC
Account #: 541-54171
Re: [Name of Fund] - Institutional Service Shares
Account #: .........
Account Name: .........
The investor should then promptly complete and mail the account application. Any
investor planning to wire funds should instruct a bank early in the day so the
wire transfer can be accomplished the same day. There may be a charge imposed by
the bank for transmitting payment by wire, and there also may be a charge for
the use of Federal Funds.
THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks or other financial institutions ("Processing
Organizations"), including affiliates of FSS. Processing Organizations may
charge their customers a fee for their services and are responsible for promptly
transmitting purchase, redemption and other requests to a Fund. The Trust is not
responsible for the failure of any Processing Organization to promptly forward
these requests.
Investors who purchase or redeem shares in this manner will be subject to the
procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Investors who purchase Fund shares
through a Processing Organization may or may not be the shareholder of record
and, subject to their institution's and the Fund's procedures, may have Fund
shares transferred into their name. Certain Processing Organizations may enter
purchase orders with payment to follow.
The Trust may confirm purchases and redemptions of a Processing Organization's
customers directly to the Processing Organization, which in turn will provide
its customers with such confirmations and periodic statements as may be required
by law or agreed to between the Processing Organization and its customers.
SUBSEQUENT PURCHASES OF SHARES
Subsequent purchases may be made by mailing a check, by sending a bank wire or
through a financial institution as indicated
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<PAGE>
above. Shareholders using the wire system for purchase should first telephone
the Trust at 800-94FORUM (800-943-6786) or (207) 879-0001 to notify it of the
wire transfer. All payments should clearly indicate the shareholder's name and
account number.
Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to FSS.
REDEMPTION OF SHARES
Shareholders who wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several days after a shareholder's application is received.
Shares for which certificates have been issued may not be redeemed by telephone.
BY MAIL. Shareholders may make a redemption in any amount by sending a written
request to FSS accompanied by any stock certificate that may have been issued to
the shareholder. All written requests for redemption must be signed by the
shareholder with signature guaranteed and all certificates submitted for
redemption must be endorsed by the shareholder with signature guaranteed.
BY TELEPHONE. A shareholder who has elected telephone redemption privileges may
make a telephone redemption request by calling FSS at 800-94FORUM (800-943-6786)
or (207) 879-0001 and providing the shareholder's account number, the exact name
in which the shareholder's shares are registered and the shareholder's social
security or taxpayer identification number. In response to the telephone
redemption instruction, the Fund will mail a check to the shareholder's record
address or, if the shareholder has elected wire redemption privileges, wire the
proceeds.
BY BANK WIRE. For redemptions of more than $5,000, a shareholder who has elected
wire redemption privileges may request the Fund to transmit the redemption
proceeds by Federal Funds wire to a bank account designated on the shareholder's
account application. To request bank wire redemptions by telephone, the
shareholder also must have elected the telephone redemption privilege.
Redemption proceeds are transmitted by wire on the day the redemption request in
proper form is received by FSS .
OTHER REDEMPTION MATTERS. To protect shareholders and the Funds against fraud,
signatures on certain requests must have a signature guarantee. Requests must be
made in writing and include a signature guarantee for any of the following
transactions: (1) any endorsement on a stock certificate; (2) written
instruction to redeem Shares whose value exceeds $50,000; (3) instructions to
change a shareholder's record name; (4) redemption in an account in which the
account 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.
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<PAGE>
EXCHANGES
Shareholders may exchange their shares for Institutional Service Shares of any
other Fund or for shares of any other mutual fund administered by FAdS that
participates with the Funds in the exchange program. Exchanges are subject to
the fees charged by, and the restrictions listed in the prospectus for, the fund
into which a shareholder is exchanging, including minimum investment
requirements. The Funds do not charge for exchanges, and there is currently no
limit on the number of exchanges a shareholder may make, but each Fund reserves
the right to limit excessive exchanges by any shareholder. See "Additional
Purchase and Redemption Information" in the SAI.
Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the new account. Shareholders may only exchange into a Fund if
that Fund's shares may legally be sold in the shareholder's state of residence.
The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Accordingly, a
shareholder may realize a capital gain or loss with respect to the shares
redeemed. Redemptions and purchases are effected at the respective net asset
values of the two Funds as next determined following receipt of proper
instructions and all necessary supporting documents by the Fund whose shares are
being exchanged. The exchange privilege may be modified materially or terminated
by the Trust at any time upon 60 days' notice to shareholders.
BY MAIL. Exchanges may be accomplished by written instruction to FSS accompanied
by any stock certificate that may have been issued to the shareholder. All
written requests for exchanges must be signed by the shareholder (a signature
guarantee is not required) and all certificates submitted for exchange must be
endorsed by the shareholder with signature guaranteed.
BY TELEPHONE. Exchanges may be accomplished by telephone by any shareholder who
has elected telephone exchange privileges by calling FSS at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number.
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Each
type of net capital gain realized by a Fund, if any, will be distributed
annually. Shareholders may choose to have all distributions reinvested in
additional shares of the Fund or received in cash. In addition, shareholders may
have all distributions of net capital gain reinvested in additional shares of
the Fund and distributions of net investment income paid in cash. All
distributions are treated in the same manner for Federal income tax purposes
whether received in cash or reinvested in shares of the Fund.
All distributions will be reinvested at the Fund's net asset value as of the
payment date of the dividend. All distributions are reinvested unless another
option is selected. All distributions not reinvested will be paid to the
shareholder in cash and may be paid more than seven days following the date on
which distribution would otherwise be reinvested.
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<PAGE>
TAXES
TAX STATUS OF THE FUNDS. Each Fund intends to qualify or continue to qualify to
be taxed as a "regulated investment company" under the Internal Revenue Code of
1986, as amended. Accordingly, no Fund will be liable for Federal income taxes
on the net investment income and capital gain distributed to its shareholders.
Because each Fund intends to distribute all of its net investment income and net
capital gain each year, the Funds should also avoid Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Two different tax rates apply to net capital gain --
that is, the excess of net gain from capital assets held for more than one year
over net losses from capital assets held for not more than one year. One rate
(generally 28%) applies to net gain on capital assets held for more than one
year but not more than 18 months and a second rate (generally 20%) applies to
the balance of such net capital gains. Distributions of net capital gain will be
taxable to shareholders as such, regardless of how long a shareholder has held
shares in the Fund.
THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
DAILY ASSETS MUNICIPAL FUND. Distributions paid by Daily Assets Municipal Fund
out of federally tax-exempt interest income earned by the Fund ("exempt-interest
dividends") generally will not be subject to federal income tax in the hands of
the Fund's shareholders. Substantially all of the distributions paid by the Fund
are anticipated to be exempt-interest dividends. Persons who are "substantial
users" or "related persons" thereof of facilities financed by private activity
securities held by the Fund, however, may be subject to federal income tax on
their pro rata share of the interest income from those securities and should
consult their tax advisers before purchasing shares. Exempt-interest dividends
are included in the "adjusted current earnings" of corporations for purposes of
the federal alternative minimum tax ("AMT").
Interest on indebtedness incurred by shareholders to purchase or carry shares of
the Fund generally is not deductible for federal income tax purposes. Under
rules for determining when borrowed funds are used for purchasing or carrying
particular assets, shares of the Fund may be considered to have been purchased
or carried with borrowed funds even though those funds are not directly linked
to the shares.
The income from the Portfolio's investments may be subject to the AMT. Interest
on certain municipal securities issued to finance "private activities" ("private
activity securities") is a "tax preference item" for purposes of the AMT
applicable to certain individuals and corporations even though such interest
will continue to be fully tax-exempt for regular federal income tax purposes.
The Portfolio may purchase private activity securities, the interest on which
may constitute a "tax preference item" for purposes of the AMT.
STATE AND LOCAL TAXES. Daily Assets Government Fund's investment policies are
structured to provide shareholders, to the extent permissible by Federal and
state law, with income that is exempt or excluded from income taxation at the
state and local level. Many states (by statute, judicial decision or
administrative action) do not tax dividends from a regulated investment company
that are attributable to interest on obligations of the U.S. Treasury and
certain U.S. Government agencies and instrumentalities if the interest on those
obligations would not be taxable to a shareholder that held the obligation
directly. As a result, substantially all distributions paid by the Fund to
shareholders residing in certain states will be exempt or excluded from state
income taxes. A portion of the distributions paid by the other Funds to
shareholders may be exempt or excluded from state income taxes, but these Funds
are not managed to provide any specific amount of state tax-free income to
shareholders.
The exemption for federal income tax purposes of distributions derived from
interest on municipal securities does not necessarily result in an exemption
under the income or other tax laws of any state or local taxing authority.
Shareholders of Daily Assets Municipal Fund may be exempt from state and local
taxes on distributions of tax-exempt interest income derived from obligations of
the state and/or municipalities of the state in which they reside but may be
subject to tax on income derived from the municipal securities of other
jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in a
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<PAGE>
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 number of shares
entitled to receive distributions, and expresses the result as an annualized
percentage rate based on the Fund's share price at the end of the period. A
Fund's compounded annualized yield assumes the reinvestment of distributions
paid by the Fund, and, therefore will be somewhat higher than the annualized
yield for the same period. A Fund may also quote tax-equivalent yields, which
show the taxable yields a shareholder would have to earn to equal the Fund's
tax-free yield, after taxes. A tax-equivalent yield is calculated by dividing
the Fund's tax-free yield by one minus a stated federal, state or combined
federal and state tax rate. Each class' performance will vary.
The Funds' advertisements may also reference ratings and rankings among similar
funds by independent evaluators such as Morningstar, Lipper Analytical Services,
Inc. or IBC Financial Data, Inc. In addition, the performance of the Funds may
be compared to recognized indices of market performance. The comparative
material found in a Fund's advertisements, sales literature, or reports to
shareholders may contain performance rankings. This material is not to be
considered representative or indicative of future performance.
BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a Processing
Organization or perform sub-transfer agent or similar services for the Trust and
its shareholders. If a bank or bank affiliate were prohibited from performing
all or a part of the foregoing services, its shareholder customers would be
permitted to remain shareholders of the Trust and alternative means for
continuing to service them would be sought.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 4:00 p.m.,
Eastern time, on each Fund Business Day by
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dividing the value of the Fund's net assets (the value of its interest in the
Portfolio and other assets less its liabilities) by the number of shares
outstanding at the time the determination is made. In order to more easily
maintain a stable net asset value per share, each Portfolio's portfolio
securities are valued at their amortized cost (acquisition cost adjusted for
amortization of premium or accretion of discount) in accordance with Rule 2a-7.
The Portfolios will only value their portfolio securities using this method if
the Core Trust Board believes that it fairly reflects the market-based net asset
value per share. The Portfolios' other assets, if any, are valued at fair value
by or under the direction of the Core Trust Board.
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end, management investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc., which was incorporated in 1980. The
Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create classes of
shares within each series. There are currently sixteen series of the Trust.
Each share of each fund of the Trust and each class of shares has equal
distribution, liquidation and voting rights, and fractional shares have those
rights proportionately, except that expenses related to the distribution of the
shares of each class (and certain other expenses such as transfer agency and
administration expenses) are borne solely by those shares and each class votes
separately with respect to the provisions of any Rule 12b-1 plan which pertain
to the class and other matters for which separate class voting is appropriate
under applicable law. Generally, shares will be voted in the aggregate without
reference to a particular fund or class, except if the matter affects only one
fund or class or voting by fund or class is required by law, in which case
shares will be voted separately by fund or class, as appropriate. Delaware law
does not require the Trust to hold annual meetings of shareholders, and it is
anticipated that shareholder meetings will be held only when specifically
required by Federal or state law. Shareholders (and Trustees) have available
certain procedures for the removal of Trustees. There are no conversion or
preemptive rights in connection with shares of the Trust. All shares when issued
in accordance with the terms of the offering will be fully paid and
nonassessable. Shares are redeemable at net asset value, at the option of the
shareholders. A shareholder in a fund is entitled to the shareholder's pro rata
share of all distributions arising from that fund's assets and, upon redeeming
shares, will receive the portion of the fund's net assets represented by the
redeemed shares.
As of May 1, 1998, Babb & Co. may be deemed to have controlled Daily Assets
Treasury Obligations Fund and Daily Assets Government Obligations Fund, H.M.
Payson & Co. may be deemed to have controlled Daily Assets Government Fund and
Daily Assets Cash Fund and Allagash & Co. may be deemed to have controlled Daily
Assets Government Obligations Fund and Daily Assets Cash Fund, through
investment in the Funds by their customers. From time to time, these
shareholders or other shareholders may own a large percentage of Shares of a
Fund and accordingly, may be able to greatly affect (if not determine) the
outcome of a shareholder vote.
FUND STRUCTURE
OTHER CLASSES OF SHARES. In addition to Institutional Service Shares, each Fund
may create and issue shares of other classes of securities. Each Fund currently
has two other classes of shares authorized, Institutional Shares and Investor
Shares. Institutional Shares have an investment minimum of $1,000,000. Investor
Shares are offered to the general public, have a $10,000 minimum investment and
bear shareholder service and distribution fees. Institutional Shares incur less
expenses and Investor Shares incur more expenses than Institutional Service
Shares. See, "Additional Information" below. Except for certain differences,
each share of each class represents an undivided, proportionate interest in a
Fund. Each share of each Fund is entitled to participate equally in
distributions and the proceeds of any liquidation of that Fund except that, due
to the differing expenses borne by the various classes, the amount of
distributions will differ among the classes.
CORE TRUST STRUCTURE. Each Fund invests all of its assets in its corresponding
Portfolio of Core Trust, a business trust organized under the laws of the State
of Delaware in September 1994 and registered under the 1940 Act as an open-end,
management investment company. Accordingly, a Portfolio directly acquires its
own securities and its corresponding Fund acquires an indirect interest in those
securities. The assets of each Portfolio belong only to, and the liabilities of
the Portfolio are borne solely by, the Portfolio and no other portfolio of Core
Trust. Upon liquidation of a Portfolio, investors in the Portfolio would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.
20
<PAGE>
THE PORTFOLIOS. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, Daily
Assets Government Fund and Daily Assets Municipal Fund are the only investors
(other than FAdS or its affiliates) that have invested in Government Portfolio
and Municipal Cash Portfolio, respectively. Each of the other Portfolios has
another investor besides the Funds (and FAdS and its affiliates). All investors
in a Portfolio invest on the same terms and conditions as the Funds and will pay
a proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio is entitled to vote in proportion to the relative value of its
interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. There can be no assurance that
any issue that receives a majority of the votes cast by a Fund's shareholders
will receive a majority of votes cast by all investors in the Portfolio.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Portfolio
may be affected by the actions of other large investors in the Portfolio, if
any. If a large investor other than a Fund redeemed its interest in a Portfolio,
the Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from a Portfolio at any time, if the
Board determines that it is in the best interests of the Fund and its
shareholders to do so. The Fund might withdraw, for example, if other investors
in the Portfolio, by a vote of shareholders, changed the investment objective or
policies of the Portfolio in a manner not acceptable to the Board or not
permissible by the Fund. A withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. If
the Fund decided to convert those securities to cash, it usually would incur
transaction costs. If the Fund withdrew its investment from the Portfolio, the
Board would consider what action might be taken, including the management of the
Fund's assets in accordance with its investment objective and policies by the
investment adviser to the Portfolio or the investment of all of the Fund's
investable assets in another pooled investment entity having substantially the
same investment objective as the Fund. The inability of the Fund to find a
suitable replacement investment, in the event the Board decided not to permit
the Portfolio's investment adviser to manage the Fund's assets, could have a
significant impact on shareholders of the Fund.
ADDITIONAL INFORMATION. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact
FFSI at 207-879-1900. If an investor invests through a financial institution,
the investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
21
<PAGE>
PROSPECTUS
May 27, 1998
FORUM FUNDS
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
(formerly Daily Assets Treasury Fund)
Daily Assets Government Obligations Fund
(formerly Daily Assets Government Fund)
Daily Assets Cash Fund
Daily Assets Municipal Fund
(formerly Daily Assets Tax-Exempt Fund)
- --------------------------------------------------------------------------------
This Prospectus offers Investor Shares of Daily Assets Treasury Fund, Daily
Assets Treasury Obligations Fund, Daily Assets Government Fund, Daily Assets
Cash Fund and Daily Assets Municipal Fund (each a "Fund"). Each Fund is a
diversified no-load, money market portfolio of Forum Funds (the "Trust"), a
registered, open-end, management investment company. Each Fund seeks to provide
its shareholders with high current income (which, in the case of Daily Assets
Municipal Fund, is exempt from federal income taxes) to the extent consistent
with the preservation of capital and the maintenance of liquidity.
EACH FUND SEEKS TO ACHIEVE ITS OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE
ASSETS IN A SEPARATE PORTFOLIO OF AN OPEN-END, MANAGEMENT INVESTMENT COMPANY
WITH AN IDENTICAL INVESTMENT OBJECTIVE. SEE "OTHER INFORMATION - FUND
STRUCTURE." THROUGH THE PORTFOLIO IN WHICH IT INVESTS:
DAILY ASSETS TREASURY OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Treasury and in repurchase
agreements backed by these obligations.
DAILY ASSETS GOVERNMENT FUND invests substantially all of its assets
in obligations of the U.S. Government, its agencies and
instrumentalities with a view toward providing income that is
generally considered exempt from state and local income taxes.
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Government, its agencies and
instrumentalities and in repurchase agreements backed by these
obligations.
DAILY ASSETS CASH FUND invests in a broad spectrum of high-quality
money market instruments.
DAILY ASSETS MUNICIPAL FUND invests primarily in high-quality
obligations of the states, territories and possessions of the U.S. and
of their subdivisions, authorities and corporations ("municipal
securities") with a view toward providing income that is exempt from
federal income taxes.
This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated May 27, 1998 (the "SAI"), which contains more
detailed information about the Trust and the Funds and is available together
with other related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). The SAI, which is incorporated into this Prospectus by
reference, also is available without charge by contacting the Funds' transfer
agent, Forum Shareholder Services, LLC., at P.O. Box 446, Portland, Maine 04112,
(207) 879-0001 or (800) 94FORUM.
Investors should read this
Prospectus and retain it for future reference.
FUND SHARES ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE FEDERAL RESERVE SYSTEM OR ANY
OTHER FEDERAL AGENCY.
THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C> <C>
1. Prospectus Summary..............................3 5. Purchases and Redemptions of Shares.............12
2. Financial Highlights............................5 6. Distributions and Tax Matters...................16
3. Investment Objectives and Policies..............5 7. Other Information...............................18
4. Management......................................10
</TABLE>
2
<PAGE>
1. PROSPECTUS SUMMARY
HIGHLIGHTS OF THE FUNDS
This prospectus offers shares of the Investor class ("Investor Shares") of each
of the Funds. The Funds operate in accordance with the provisions of Rule 2a-7
under the Investment Company Act of 1940 (the "1940 Act"). Each Fund invests all
of its investable assets in a separate portfolio (each a "Portfolio") of Core
Trust (Delaware), an open-end, management investment company ("Core Trust") as
follows:
Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Portfolio
Daily Assets Government Obligations Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Municipal Fund Municipal Cash Portfolio
Accordingly, the investment experience of each Fund will correspond directly
with the investment experience of its corresponding Portfolio. See "Other
Information Fund Structure." Each Fund currently offers three separate classes
of shares: Institutional Shares, Institutional Service Shares and Investor
Shares. Investor Shares are sold through this Prospectus. Institutional Shares
and Institutional Service Shares are each offered by a separate prospectus. See
"Other Information --Fund Structure -- Other Classes of Shares."
MANAGEMENT. Forum Administrative Services, LLC ("FAdS") supervises the overall
management of the Funds and the Portfolios and Forum Financial Services, Inc.
("FFSI") is the distributor of the Funds' shares. Forum Investment Advisors, LLC
("FIA") is the investment adviser of each Portfolio and provides professional
management of the Portfolios' investments. The Funds' transfer agent, dividend
disbursing agent and shareholder servicing agent is Forum Shareholder Services,
LLC (the "FSS"). See "Management" for a description of the services provided and
fees charged to the Funds.
SHAREHOLDER SERVICING AND DISTRIBUTION. The Trust has adopted a Shareholder
Service Plan and a Plan of Distribution relating to Investor Shares under which
FAdS and FFSI, respectively, are compensated for various shareholder servicing
and distribution related activities. See "Management - Shareholder Servicing"
and "Administration and Distribution."
PURCHASES AND REDEMPTIONS. The minimum initial investment in Investor Shares is
$10,000 ($2,000 for IRAs, $2,500 for exchanges). The minimum subsequent
investment is $500. Investor Shares may be purchased and redeemed Monday through
Friday, between 9:00 a.m. and 6:00 p.m., Eastern time, except on Federal
holidays and days that the Federal Reserve Bank of San Francisco (Boston in the
case of Daily Assets Government Fund) is closed ("Fund Business Days"). To be
eligible to receive that day's income, purchase orders must be received by FSS
in good order no later than 2:00 p.m., Eastern time (noon in the case of Daily
Assets Government Fund and Daily Assets Municipal Fund). Shareholders may have
redemption proceeds over $5,000 transferred by bank wire to a designated bank
account. To be able to receive redemption proceeds by wire on the day of the
redemption, redemption orders must be received by FSS in good order no later
than 2:00 p.m., Eastern time (noon in the case of Daily Assets Government Fund
and Daily Assets Municipal Fund). All times may be changed without notice by
Fund management due to market activities. See "Purchase and Redemption of
Shares."
EXCHANGES. Shareholders of a Fund may exchange Investor Shares without charge
for Investor Shares of the other Funds and for the shares of certain other
mutual funds not offered by this Prospectus. See "Purchases and Redemptions of
Shares - Exchanges."
DISTRIBUTIONS. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."
3
<PAGE>
INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Portfolios
invest only in money market instruments, an investment in any Fund involves
certain risks, depending on the types of investments made and the types of
investment techniques employed. Investment in any security, including U.S.
Government Securities, involves some level of investment risk. An investment in
a Fund is not insured by the FDIC, nor is it insured or guaranteed against loss
of principal.
EXPENSES OF INVESTING IN THE FUNDS
The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Investor Shares will bear directly or
indirectly. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares.
EXPENSES OF INVESTING IN THE FUNDS
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Government Government Cash Municipal
Obligations Fund Fund Obligations Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Management Fees(2) 0.14% 0.15% 0.14% 0.14% 0.15%
Rule 12b-1 Fees 0.15% 0.15% 0.15% 0.15% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.46% 0.45% 0.46% 0.46% 0.45%
----- ----- ----- ----- -----
Total Operating Expenses 0.75% 0.75% 0.75% 0.75% 0.75%
</TABLE>
(1) For a further description of the various expenses incurred in the operation
of the Funds and the Portfolios, see "Management." The amount of fees and
expenses for each Fund is based on estimated annualized expenses for the Funds'
fiscal year ending August 31, 1998. Each Fund's expenses include the Fund's pro
rata portion of all expenses of its corresponding Portfolio, which are borne
indirectly by Fund shareholders. (2) Management Fees include all administration
fees and investment advisory fees incurred by the Funds and the Portfolios; as
long as its assets are invested in a Portfolio, a Fund pays no investment
advisory fees directly. (3) Absent estimated reimbursements by FIA and its
affiliates, Other Expenses and Total Fund Operating Expenses would be: 0.70% and
0.99%, respectively, for Daily Assets Treasury Obligations Fund; 0.75% and
1.05%, respectively, for Daily Assets Government Fund; 0.75% and 1.04%,
respectively, for Daily Assets Government Obligations Fund; 0.80% and 1.09%,
respectively, for Daily Assets Cash Fund; 0.80% and 1.10%, respectively, for
Daily Assets Municipal Fund. Expense reimbursements are voluntary and may be
reduced or eliminated at any time.
EXAMPLE
Following is a hypothetical example that indicates the dollar amount of expenses
that an investor in Investor Shares would pay assuming (1) the investment of all
of the Fund's assets in the Portfolio, (2) a $1,000 investment in the Fund, (3)
a 5% annual return, (4) the reinvestment of all distributions and (5) redemption
at the end of each period:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Each Fund $8 $24 $42 $93
The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Funds' projected returns; rather, it is required by government
regulation. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS
THAN INDICATED.
4
<PAGE>
2. FINANCIAL HIGHLIGHTS
As of February 28, 1998, Investor Shares were not offered. The following
information represents selected data for a single outstanding Institutional
Service Share of Daily Assets Government Fund and Daily Assets Cash Fund and for
a single outstanding Institutional Share of Daily Assets Treasury Obligations
Fund and Daily Assets Government Obligations Fund. Those classes were the first
offered by the respective Funds and, accordingly, represent data since each
Fund's inception. Information for the period ended August 31, 1997, was audited
by KPMG Peat Marwick LLP, independent auditors. Information for prior periods
was audited by other independent auditors and information for the period ended
February 28, 1998 is unaudited. The financial statements and independent
auditors' report thereon for the fiscal year ended August 31, 1997 and the
financial statements for the semi-annual period ended February 28, 1998 are
incorporated by reference into the SAI and may be obtained from the Trust
without charge. As of May 20, 1998, Daily Assets Municipal Fund had not
commenced operations.
As of February 28, 1998, Treasury Cash Portfolio, Government Portfolio,
Government Cash Portfolio and Cash Portfolio had net assets of $168,183,226;
$46,711,943; $603,202,130 and $391,807,519, respectively.
<TABLE>
RATIO TO AVERAGE NET
ASSETS
Beginning Distributions
Net Asset Net From Net Ending Net Net
Value Per Investment Investment Asset Net Investment
Share Income Income Value Per Expenses Income
Share
<S> <C> <C> <C> <C> <C> <C>
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.01 (0.01) $1.00 0.20%(2) 2.13%(2)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.02 (0.02) $1.00 0.47%(2) 4.86%(2)
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(2) 4.76%(2)
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.32%(2) 2.92%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.01 (0.01) $1.00 0.20%(2) 1.76%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) $1.00 0.03 (0.03) $1.00 0.47%(2) 5.23%(2)
October 1, 1996 to August 31, 1997 1.00 0.05 (0.05) 1.00 0.52%(2) 5.06%(2)%
</TABLE>
<TABLE>
Ratio of
Net Assets Gross
End of Expenses
Period to Average
Total (000s Net Assets
Return Omitted) (1)
<S> <C> <C> <C>
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)0.55% 60,926 0.35%(2)
DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)2.43% 46,519 0.78%(2)
April 1, 1997 to August 31, 1997 2.01% 44,116 0.95%(2)
Year Ended March 31, 1997 4.80% 43,975 0.99%
Year Ended March 31, 1996 5.18% 43,103 1.06%
Year Ended March 31, 1995 4.45% 36,329 1.10%
Year Ended March 31, 1994 2.83% 26,505 1.17%
July 1, 1992 to March 31, 1993 3.13%(2) 4,687 2.43%(2)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Sept. 1, 1997 to February 28, 1998(unaudited) 0.46% 4,952 1.33%(2)
DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Sept. 1, 1997 to February 28, 1998(unaudited)2.62% 13,034 0.89%(2)
October 1, 1996 to August 31, 1997 4.70% 12,076 1.22%(2)
</TABLE>
(1) During each period, various fees and expenses were waived and reimbursed,
respectively. The ratio of Gross Expenses to Average Net Assets reflects the
expense ratio in the absence of any waivers and reimbursements for the Fund and
its respective Portfolio.
(2) Annualized.
3. INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of each Fund except Daily Assets Municipal Fund is to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of Daily
Assets Municipal Fund is to provide high current income which is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity.
5
<PAGE>
THERE CAN BE NO ASSURANCE THAT ANY FUND OR PORTFOLIO WILL ACHIEVE ITS INVESTMENT
OBJECTIVE OR MAINTAIN A STABLE NET ASSET VALUE.
Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio, which has the same
investment objective and substantially similar investment policies. Therefore,
although the following discusses the investment policies of the Portfolios (and
the responsibilities of Core Trust's board of trustees (the "Core Trust
Board")), it applies equally to the Funds (and the Trust's board of trustees
(the "Board")).
INVESTMENT POLICIES
Each Portfolio invests only in high quality, short-term money market instruments
that are determined by FIA, pursuant to procedures adopted by the Core Trust
Board, to be eligible for purchase and to present minimal credit risks. High
quality instruments include those that (1) are rated (or, if unrated, are issued
by an issuer with comparable outstanding short-term debt that is rated) in the
highest rating category by two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO has issued a rating, by that
NRSRO or (2) are otherwise unrated and determined by FIA to be of comparable
quality. A description of the rating categories of certain NRSROs, such as
Standard & Poor's and Moody's Investors Service, Inc., is contained in the SAI.
Each Portfolio invests only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated under Rule 2a-7) and
maintains a dollar-weighted average portfolio maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities, each Portfolio will not invest more than 5% of its total
assets in the securities of any one issuer. As used herein, "U.S. Government
Securities" means obligations issued or guaranteed as to principal and interest
by the United States government, its agencies or instrumentalities and "Treasury
Securities" means U.S. Treasury bills and notes and other U.S. Government
Securities which are guaranteed as to principal and interest by the U.S.
Treasury.
In the case of municipal securities, when the assets and revenues of an issuer
are separate from those of the government creating the issuer and a security is
backed only by the assets and revenues of the issuer, the issuer and not the
creating government is deemed to be the sole issuer of the security. Similarly,
in the case of a security issued by or on behalf of public authorities to
finance various privately operated facilities that is backed only by the assets
and revenues of the non-governmental user, the non-governmental user will be
deemed to be the sole issuer of the security.
Yields on money market securities are dependent on a variety of factors,
including the general conditions of the money markets and the fixed income
markets in general, the size of a particular offering, the maturity of the
obligation and the rating of the issue. A Fund's yield will tend to fluctuate
inversely with prevailing market interest rates. For instance, in periods of
falling market interest rates, yields will tend to be somewhat higher. Although
each Portfolio only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities and municipal securities, can
change in value when there is a change in interest rates, the issuer's actual or
perceived creditworthiness or the issuer's ability to meet its obligations. The
achievement of a Fund's investment objective is dependent in part on the
continuing ability of the issuers of the securities in which the Portfolio
invests to meet their obligations for the payment of principal and interest when
due.
DAILY ASSETS TREASURY OBLIGATIONS FUND
Treasury Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.
DAILY ASSETS GOVERNMENT FUND
Government Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities. The Portfolio
invests with a view toward providing income that is generally considered exempt
from state and local income taxes.
Among the U.S. Government Securities in which the Portfolio may invest are U.S.
Treasury Securities and obligations of the Farm Credit System, Farm Credit
System Financial Assistance Corporation, Federal Financing Bank, Federal Home
Loan Banks,
6
<PAGE>
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 deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations
of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.
Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" that are restricted as to
disposition under the Federal securities laws ("restricted securities"). Any
sale of these securities may not be made absent registration under the
Securities Act of 1933 or the availability of an appropriate exemption
therefrom. Some of these restricted securities, however, are eligible for resale
to institutional investors, and accordingly, a liquid market may exist for them.
Pursuant to guidelines adopted by the Core Trust Board, the investment adviser
will determine whether each such investment is liquid.
DAILY ASSETS MUNICIPAL FUND
Municipal Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in municipal securities. The Portfolio attempts
to maintain 100% of its assets invested in federally tax-exempt municipal
securities; during periods of normal market conditions the Portfolio will have
at least 80% of its net assets invested in federally tax-exempt instruments the
income from which may be subject to the federal alternative minimum tax ("AMT").
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The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.
THE SHORT-TERM MUNICIPAL SECURITIES MARKET. It is anticipated that a substantial
amount of the municipal securities held by the Portfolio will be supported by
credit and liquidity enhancements, such as letters of credit (which are not
covered by federal deposit insurance) or put or demand features of third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Portfolio will be dependent in part upon the
credit quality of the banks supporting the Portfolio's investments. This will
result in exposure to risks pertaining to the banking industry, including the
foreign banking industry. These risks include a sustained increase in interest
rates, which can adversely affect the availability and cost of a bank's lending
activities; exposure to credit losses during times of economic decline;
concentration of loan portfolios in certain industries; regulatory developments;
and competition among financial institutions. Brokerage firms and insurance
companies also provide certain liquidity and credit support. The Portfolio's
policy is to purchase municipal securities with third party credit or liquidity
support only after FIA has considered the creditworthiness of the financial
institution providing the support and believes that the security presents
minimal credit risk.
The Portfolio may purchase long term municipal securities with various maturity
shortening provisions. For instance, variable rate demand notes ("VRDN") are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer) which may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
VRDNs may be issued directly by the municipal issuer or created by a bank,
broker-dealer or other financial institution by selling a previously issued
long-term bond with a demand feature attached. Similarly, tender option bonds
(also referred to as certificates of participation) are municipal securities
with relatively long original maturities and fixed rates of interest that are
coupled with an agreement of a third party financial institution under which the
third party grants the security holders the option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. As consideration for
providing the option, the financial institution receives a fee equal to the
difference between the underlying municipal security's fixed rate and the rate,
as determined by a remarketing or similar agent, that would cause the
securities, coupled with the tender option, to trade at par on the date of the
interest rate determination. These bonds effectively provide the holder with a
demand obligation that bears interest at the prevailing short-term municipal
securities interest rate.
The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the Portfolio the right to sell the municipal security at a specified
price at any time before a specified date. The Portfolio will acquire puts only
to enhance liquidity, shorten the maturity of the related municipal security or
permit the Portfolio to invest its funds at more favorable rates. Generally, the
Portfolio will buy a municipal security that is accompanied by a put only if the
put is available at no extra cost. In some cases, however, the Portfolio may pay
an extra amount to acquire a put, either in connection with the purchase of the
related municipal security or separately from the purchase of the security.
The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, the Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment.
MUNICIPAL BONDS. Municipal bonds are long term fixed-income securities. "General
obligation" bonds are secured by a municipality's pledge of its full faith,
credit and taxing power for the payment of principal and interest. "Revenue"
bonds are usually payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the
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<PAGE>
proceeds of a special excise or other tax, but not from general tax revenues.
Under a "moral obligation" bond (which is normally issued by special purpose
public authorities), if the issuer is unable to meet its obligations under the
bonds from current revenues, it may draw on a reserve fund that is backed by the
moral commitment (but not the legal obligation) of the state or municipality
that created the issuer. The Portfolio may invest in industrial development
bonds, which in most cases are revenue bonds. The payment of the principal and
interest on these bonds is dependent solely on the ability of an initial or
subsequent user of the facilities financed by the bonds to meet its financial
obligations and the pledge, if any, of real and personal property so financed as
security for such payment.
MUNICIPAL NOTES AND LEASES. Municipal notes, which may be either "general
obligation" or "revenue" securities, are short-term fixed income securities
intended to fulfill short-term capital needs of a municipality. Municipal
leases, which may take various forms, are issued by municipalities to acquire a
wide variety of equipment and facilities. Municipal leases frequently have
special risks not normally associated with other municipal securities. Municipal
leases (which normally provide for title to the leased assets to pass eventually
to the government issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
PARTICIPATION INTERESTS. The Portfolio may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.
TAXABLE INVESTMENTS. The Portfolio may invest up to 20% of the value of its net
assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.
ADDITIONAL INVESTMENT POLICIES
Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, are fundamental and therefore may not be
changed without approval of the holders of a majority of the Fund's or
Portfolio's, as applicable, outstanding voting securities (as defined in the
1940 Act). Except as otherwise indicated herein or in the SAI, investment
policies of a Fund or a Portfolio may be changed by the applicable board of
trustees without shareholder approval. Each Portfolio is permitted to hold cash
in any amount pending investment in securities and may invest in other
investment companies that intend to comply with Rule 2a-7 and have substantially
similar investment objectives and policies. A further description of the Funds'
and the Portfolios' investment policies is contained in the SAI.
BORROWING. Each Portfolio may borrow money for temporary or emergency purposes
(including the meeting of redemption requests), but not in excess of 33 1/3% of
the value of the Portfolio's total assets. Borrowing for purposes other than
meeting redemption requests will not exceed 5% of the value of the Portfolio's
total assets.
REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain credit risks not associated with direct investment in
securities. Each Portfolio, however, intends to enter into repurchase agreements
only with sellers which 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
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active secondary market for securities held by a Portfolio. The value of
securities that have a limited market tend to fluctuate more than those that
have an active market. FIA monitors the liquidity of each Portfolio's
investments, but there can be no guarantee that an active secondary market will
exist.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. In order to assure itself of
being able to obtain securities at prices which FIA believes might not be
available at a future time, FIA may purchase securities on a when-issued or
delayed delivery basis. When these transactions are negotiated, the price or
yield is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Securities so purchased are subject
to market price fluctuation and no interest on the securities accrues to a
Portfolio until delivery and payment take place. Accordingly, the value of the
securities on the delivery date may be more or less than the purchase price.
Commitments for when-issued or delayed delivery transactions will be entered
into only when a Portfolio has the intention of actually acquiring the
securities, but the Portfolio may sell the securities before the settlement date
if deemed advisable. Failure by the other party to deliver a security purchased
by a Portfolio may result in a loss or missed opportunity to make an alternative
investment. As a result of entering into forward commitments, the Funds are
exposed to greater potential fluctuations in the value of their assets and net
asset values per share.
VARIABLE AND FLOATING RATE SECURITIES. The securities in which each Portfolio
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Those
securities with ultimate maturities of greater than 397 days may be purchased
only in accordance with the provisions of Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features which comply with certain
requirements and certain U.S. Government Securities may be purchased. Similar to
fixed rate debt instruments, variable and floating rate instruments are subject
to changes in value based on changes in market interest rates or changes in the
issuer's creditworthiness.
No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.
FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invests only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. These Portfolios do not intend to hold in their portfolio any
securities or instruments that would be subject to restriction as to amount held
by a national bank under Title 12, Section 24 (Seventh) of the United States
Code. In addition, these Portfolios limit their investments to those permissible
for Federally chartered credit unions under applicable provisions of the Federal
Credit Union Act and the applicable rules and regulations of the National Credit
Union Administration. Government Cash Portfolio limits its investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage and to investments that permit Fund
shares to qualify as liquid assets and as short-term liquid assets.
4. MANAGEMENT
The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction the Core Trust Board. The
Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The Core Trust Board
performs similar functions for the Portfolios and Core Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust.
ADMINISTRATION AND DISTRIBUTION
Subject to the supervision of the Board, FAdS supervises the overall management
of the Trust, including overseeing the Trust's receipt of services, advising the
Trust and the Trustees on matters concerning the Trust and its affairs, and
providing the Trust with general office facilities and certain persons to serve
as officers. For these services and facilities, FAdS receives a fee at an annual
rate of 0.05% of the daily net assets of each Fund. FAdS also serves as
administrator of the Portfolios and
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provides administrative services for each Portfolio that are similar to those
provided to the Funds. For its administrative services to the Portfolios, FAdS
receives a fee at an annual rate of 0.05% of the average daily net assets of
each Portfolio. Forum Accounting Services, LLC ("FAcS") performs portfolio
accounting services for the Funds and Portfolios pursuant to agreements with the
Trust and Core Trust and is paid a separate fee for these services.
FFSI acts as the agent of the Trust in connection with the offering of shares of
the Funds. FFSI is a registered broker-dealer and is a member of the National
Association of Securities Dealers, Inc. In order to facilitate the distribution
of Investor Shares, the Trust has adopted a plan of distribution (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund's Investor
Shares. Under the Plan, FFSIreceives a fee at an annual rate of 0.15% of the
average daily net assets of each Fund attributable to Investor Shares as
compensation for FFSIs services as distributor. From this amount, FFSI may make
payments to various financial institutions, including broker-dealers, banks and
trust companies as compensation for services or reimbursement of expenses in
connection with the distribution of shares or the provision of various
shareholder services. If the distribution related expenses of FFSI exceed its
Rule 12b-1 fees for any Fund, the Fund will not be obligated to pay Forum an
additional amount and if Forum's distribution related expenses are less than its
Rule 12b-1 fees, Forum will realize a profit.
FAdS, FFSI, FIA, FAcS and FSS are members of the Forum Financial Group of
Companies and together provide a full range of services to the investment
company and financial services industry. As of the date of this Prospectus, each
of these companies was controlled by John Y. Keffer, President and Chairman of
the Trust and FAdS and FFSI provide administration services to registered
investment companies with assets of approximately $30 billion.
INVESTMENT ADVISER
Subject to the general supervision of the Core Trust Board, FIA makes investment
decisions for each Portfolio and monitors the Portfolios' investments. FIA,
which is located at Two Portland Square, Portland, Maine 04101, provides
investment advisory services to six other mutual funds. Prior to January 2,
1998, Linden Asset Management, Inc. ("Linden") served as investment adviser to
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio and
provided professional management of those Portfolios' investments, and Forum
Advisors, Inc. served as investment adviser to Government Portfolio and provided
professional management of that Portfolio's investments. Linden and Forum
Advisors, Inc. also acted as investment subadvisors to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into a new company named Forum Investment
Advisors, LLC.
Anthony R. Fischer, Jr. is primarily responsible for the day-to-day management
of the Portfolios. Mr. Fischer was the sole stockholder and President of Linden
Asset Management, Inc. from 1992 until January 2, 1998. He has been primarily
responsible for the day-to-day management of Treasury Cash Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio since their
inception. Mr. Fischer has over twenty-five years experience in the money market
industry and during that time has managed money market investment portfolios for
various banks and investment firms.
For its services, FIA receives an advisory fee at an annual rate of 0.05% of
Government Portfolio's and Municipal Cash Portfolio's average daily net assets
For services provided to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio, FIA receives an advisory fee based upon the total average daily
net assets of those Portfolios ("Total Portfolio Assets"). FIA's fee is
calculated at an annual rate on a cumulative basis as follows: 0.06% of the
first $200 million of Total Portfolio Assets, 0.04% of the next $300 million of
Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. A
Fund's expenses include the Fund's pro rata portion of the advisory fee paid by
the corresponding Portfolio.
SHAREHOLDER SERVICING
TRANSFER AND DIVIDEND DISBURSING AGENT. Shareholder inquiries and communications
concerning the Funds may be directed to FSS at the address and telephone numbers
on the first page of this Prospectus. FSS maintains an account for each
shareholder of the Funds (unless such accounts are maintained by sub-transfer
agents or processing agents) and performs other transfer agency and related
functions. FSS is authorized to subcontract any or all of its functions to one
or more qualified sub-transfer agents or processing agents, which may be its
affiliates, who agree to comply with the terms of FSS's agreement with the
Trust. FSS may pay those agents for their services, but no such payment will
increase FSS's compensation from the Trust. For its services, FSS is paid a fee
at an annual rate of 0.25% of the average daily net assets of
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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-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request.
EXPENSES OF THE FUNDS
Each Fund's expenses comprise Trust expenses attributable to the Fund, which are
charged to the Fund, and expenses not attributable to a particular fund of the
Trust, which are allocated among the Fund and all other funds of the Trust in
proportion to their average net assets. Each service provider in its sole
discretion may elect to waive (or continue to waive) all or any portion of its
fees, which are accrued daily and paid monthly, and may reimburse a Fund for
certain expenses. Any such waivers or reimbursements would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.
Each Fund's expenses include the service fees described in this Prospectus, the
fees and expenses of the Board, applicable insurance and bonding expenses and
state and SEC registration fees. Each Fund bears its pro rata portion of the
expenses of the Portfolio in which it invests along with all other investors in
the Portfolio.
5. PURCHASES AND REDEMPTIONS OF SHARES
GENERAL INFORMATION
All transactions in Fund shares are effected through FSS, which accepts orders
for purchases and redemptions from shareholders of record and new investors.
Shareholders of record will receive from the Trust periodic statements listing
all account activity during the statement period. The Trust reserves the right
in the future to modify, limit or terminate any shareholder privilege, upon
appropriate notice to shareholders, and may charge a fee for certain shareholder
services, although no such fees are currently contemplated.
PURCHASES. Fund shares are sold at a price equal to their net asset value
next-determined after receipt of an order in proper form, on each Fund Business
Day. Fund shares are issued immediately after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by FSS. Each Fund's net asset value is calculated at 4:00
p.m., Eastern time.
Fund shares become entitled to receive distributions on the day the purchase
order is accepted if the order and payment are received by FSS as follows:
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<TABLE>
ORDER MUST BE RECEIVED BY PAYMENT MUST BE RECEIVED BY
<S> <C> <C>
Daily Assets Government Fund and
Daily Assets Municipal Fund 12:00 p.m., Eastern time 4:00 p.m., Eastern time
All other Funds 2:00 p.m., Eastern time 4:00 p.m., Eastern time
</TABLE>
If a purchase order is transmitted to FSS (or the wire is received) after the
times listed above, the investor will not receive a distribution on that day. On
days that the New York Stock Exchange or Federal Reserve Bank of San Francisco
(Boston in the case of Daily Assets Government Fund) closes early or the Public
Securities Association recommends that the government securities markets close
early, the Trust may advance the time by which FSS must receive completed wire
purchase orders and the cut-off times set forth above.
Each Fund reserves the right to reject any subscription for the purchase of Fund
shares. Stock certificates are issued only to shareholders of record upon their
written request and no certificates are issued for fractional shares.
REDEMPTIONS. Fund shares may be redeemed without charge at their net asset value
on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following receipt by FSS of the
redemption order in proper form (and any supporting documentation which FSS may
require). Shares redeemed are not entitled to receive distributions declared on
or after the day on which the redemption becomes effective.
For wire redemption orders received after 12:00 p.m., Eastern time, in the case
of Daily Assets Government Fund and Daily Assets Municipal Fund, and after 2:00
p.m., Eastern Time, in the case of each other Fund, FSS will wire proceeds the
next Fund Business Day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco (Boston in the case of Daily Assets Government
Fund) closes early or the Public Securities Association recommends that the
government securities markets close early, the Trust may advance the time by
which FSS must receive completed wire redemption orders.
Normally, redemption proceeds are paid immediately, but in no event later than
seven days, following acceptance of a redemption order. Proceeds of redemption
requests (and exchanges), however, will not be paid unless any check used to
purchase the shares has been cleared by the shareholder's bank, which may take
up to 15 calendar days. This delay may be avoided by investing through wire
transfers. Unless otherwise indicated, redemption proceeds normally are paid by
check mailed to the shareholder's record address. The right of redemption may
not be suspended nor the payment dates postponed for more than seven days after
the tender of the shares to the Fund except when the New York Stock Exchange is
closed (or when trading thereon is restricted) for any reason other than its
customary weekend or holiday closings or under any emergency or other
circumstance as determined by the SEC.
Proceeds of redemptions normally are paid in cash. However, payments may be made
wholly or partially in portfolio securities if the Board determines that payment
in cash would be detrimental to the best interests of the Fund.
The Trust employs reasonable procedures to ensure that telephone orders are
genuine (which include recording certain transactions and the use of shareholder
security codes). If the Trust did not employ such procedures, it could be liable
for any losses due to unauthorized or fraudulent telephone instructions.
Shareholders should verify the accuracy of telephone instructions immediately
upon receipt of confirmation statements. During times of drastic economic or
market changes, 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.
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INITIAL PURCHASE OF SHARES
There is a $10,000 minimum for initial investments in each Fund ($2,000 for
individual retirement accounts, $2,500 for exchanges).
BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to FSS. Checks are accepted at full value subject
to collection. Payment by a check drawn on any member of the Federal Reserve
System can normally be converted into Federal Funds within two business days
after receipt of the check. Checks drawn on some non-member banks may take
longer.
For individual or Uniform Gift to Minors Act accounts, the check or money order
used to purchase shares of a Fund must be made payable to "Forum Funds" or to
one or more owners of that account and endorsed to Forum Funds. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts, the check
used to purchase shares of a Fund must be made payable on its face to "Forum
Funds." No other method of payment by check will be accepted. All purchases must
be paid in U.S. dollars; checks must be drawn on U.S. banks. Payment by
Traveler's Checks is prohibited.
BY BANK WIRE. To make an initial investment in a Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Trust
at 800-94FORUM (800-943-6786) or (207) 879-0001 to obtain an account number. The
investor should then instruct a bank to wire the investor's money immediately
to:
BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Shareholder Services, LLC
Account #: 541-54171
Re: [Name of Fund] - Investor Shares
Account #: .........
Account Name: .........
The investor should then promptly complete and mail the account application. Any
investor planning to wire funds should instruct a bank early in the day so the
wire transfer can be accomplished the same day. There may be a charge imposed by
the bank for transmitting payment by wire, and there also may be a charge for
the use of Federal Funds.
THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks or other financial institutions ("Processing
Organizations"), including affiliates of FSS. Processing Organizations may
charge their customers a fee for their services and are responsible for promptly
transmitting purchase, redemption and other requests to a Fund. The Trust is not
responsible for the failure of any Processing Organization to promptly forward
these requests.
Investors who purchase or redeem shares in this manner will be subject to the
procedures of their Processing Organization, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Investors who purchase Fund shares
through a Processing Organization may or may not be the shareholder of record
and, subject to their institution's and the Fund's procedures, may have Fund
shares transferred into their name. Certain Processing Organizations may enter
purchase orders with payment to follow.
The Trust may confirm purchases and redemptions of a Processing Organization's
customers directly to the Processing Organization, which in turn will provide
its customers with such confirmations and periodic statements as may be required
by law or agreed to between the Processing Organization and its customers.
SUBSEQUENT PURCHASES OF SHARES
There is a $500 minimum for subsequent purchases. Subsequent purchases may be
made by mailing a check, by sending a bank wire or through a financial
institution as indicated above. Shareholders using the wire system for purchase
should first telephone the Trust at 800-94FORUM (800-943-6786) or (207) 879-0001
to notify it of the wire transfer. All payments should clearly
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<PAGE>
indicate the shareholder's name and account number.
Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to FSS.
REDEMPTION OF SHARES
Shareholders who wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several days after a shareholder's application is received.
Shares for which certificates have been issued may not be redeemed by telephone.
BY MAIL. Shareholders may make a redemption in any amount by sending a written
request to FSS accompanied by any stock certificate that may have been issued to
the shareholder. All written requests for redemption must be signed by the
shareholder with signature guaranteed and all certificates submitted for
redemption must be endorsed by the shareholder with signature guaranteed.
BY TELEPHONE. A shareholder who has elected telephone redemption privileges may
make a telephone redemption request by calling FSS at 800-94FORUM (800-943-6786)
or (207) 879-0001 and providing the shareholder's account number, the exact name
in which the shareholder's shares are registered and the shareholder's social
security or taxpayer identification number. In response to the telephone
redemption instruction, the Fund will mail a check to the shareholder's record
address or, if the shareholder has elected wire redemption privileges, wire the
proceeds.
BY BANK WIRE. For redemptions of more than $5,000, a shareholder who has elected
wire redemption privileges may request the Fund to transmit the redemption
proceeds by Federal Funds wire to a bank account designated on the shareholder's
account application. To request bank wire redemptions by telephone, the
shareholder also must have elected the telephone redemption privilege.
Redemption proceeds are transmitted by wire on the day the redemption request in
proper form is received by FSS.
AUTOMATIC REDEMPTIONS. Shareholders may redeem Fund shares at regular,
preselected intervals by authorizing the automatic redemption of shares from
their Fund account. Redemption proceeds will be sent either by check or by
automatic transfer to a designated bank account maintained with a United States
banking institution which is an Automated Clearing House member. Under this
program, shareholders may authorize the redemption of shares in amounts of $250
or more from their account monthly or quarterly. Shareholders may terminate
their automatic redemptions or change the amount to be redeemed at any time by
written notification to FSS.
OTHER REDEMPTION MATTERS. To protect shareholders and the Funds against fraud,
signatures on certain requests must have a signature guarantee. Requests must be
made in writing and include a signature guarantee for any of the following
transactions: (1) any endorsement on a stock certificate; (2) written
instruction to redeem Shares whose value exceeds $50,000; (3) instructions to
change a shareholder's record name; (4) redemption in an account in which the
account address or account registration has changed within the last 30 days; (5)
the proceeds are not being sent to the address of record, preauthorized bank
account, or preauthorized brokerage firm account; (6) proceeds are to be paid to
someone other than the registered owners or to an account with a different
registration; (7) change of automatic investment or redemption, dividend
election, telephone redemption or exchange option election or any other option
election in connection with the shareholder's account.
Signature guarantees may be provided by any eligible institution acceptable to
FSS, including a bank, a broker, a dealer, a national securities exchange, a
credit union, or a savings association that is authorized to guarantee
signatures. Whenever a signature guarantee is required, the signature of each
person required to sign for the account must be guaranteed. A notarized
signature is not sufficient.
FSS will deem a shareholder's account "lost" if correspondence to the
shareholder's address of record is returned as
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<PAGE>
undeliverable, unless FSS determines the shareholder's new address. When an
account is deemed lost all distributions on the account will be reinvested in
additional shares of the Fund. In addition, the amount of any outstanding
(unpaid for six months or more) checks for distributions that have been returned
to FSS will be reinvested and the checks will be canceled.
EXCHANGES
Shareholders may exchange their shares for Investor Shares of any other Fund,
for shares of the other funds of the Trust or for shares of any other mutual
fund administered by FAdS that participates with the Funds in the exchange
program.. Exchanges are subject to the fees charged by, and the restrictions
listed in the prospectus for, the fund into which a shareholder is exchanging,
including minimum investment requirements. The minimum amount required to open
an account in a Fund through an exchange from another fund (other than the
Funds) is $2,500. The Funds do not charge for exchanges, and there is currently
no limit on the number of exchanges a shareholder may make, but each Fund
reserves the right to limit excessive exchanges by any shareholder. See
"Additional Purchase and Redemption Information" in the SAI.
Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the new account. Shareholders may only exchange into a fund if
that fund's shares may legally be sold in the shareholder's state of residence.
The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Accordingly, a
shareholder may realize a capital gain or loss with respect to the shares
redeemed. Redemptions and purchases are effected at the respective net asset
values of the two funds as next determined following receipt of proper
instructions and all necessary supporting documents by the fund whose shares are
being exchanged.
If a shareholder exchanges into a fund that imposes a sales charge, that
shareholder is required to pay the difference between that fund's sales charge
and any sales charge the shareholder has previously paid in connection with the
shares being exchanged. For example, if a shareholder paid a 2% sales charge in
connection with the purchase of the shares of a fund and then exchanged those
shares into another fund with a 3% sales charge, that shareholder would pay an
additional 1% sales charge on the exchange. Shares acquired through the
reinvestment of dividends and distributions are deemed to have been acquired
with a sales charge rate equal to that paid on the shares on which the dividend
or distribution was paid. The exchange privilege may be modified materially or
terminated by the Trust at any time upon 60 days' notice to shareholders.
BY MAIL. Exchanges may be accomplished by written instruction to FSS accompanied
by any stock certificate that may have been issued to the shareholder. All
written requests for exchanges must be signed by the shareholder (a signature
guarantee is not required) and all certificates submitted for exchange must be
endorsed by the shareholder with signature guaranteed.
BY TELEPHONE. Exchanges may be accomplished by telephone by any shareholder who
has elected telephone exchange privileges by calling FSS at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number.
INDIVIDUAL RETIREMENT ACCOUNTS
Each Fund (other than Daily Assets Municipal Fund) may be a suitable investment
vehicle for part or all of the assets held in individual retirement accounts
("IRAs"). The minimum initial investment for IRAs is $2,000, and the minimum
subsequent investment is $500. There are limits on the amount of tax-deductible
contributions individuals may make into the various types of IRAs. Individuals
should consult their tax advisers with respect to their specific tax situations
as well as with respect to state and local taxes and read any materials supplied
by the Funds concerning Fund sponsored IRAs.
6. DISTRIBUTIONS AND TAX MATTERS
DISTRIBUTIONS
Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund
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Business Day of the month. Each type of net capital gain realized by a Fund, if
any, will be distributed annually. Shareholders may choose to have all
distributions reinvested in additional shares of the Fund or received in cash.
In addition, shareholders may have all distributions of net capital gain
reinvested in additional shares of the Fund and distributions of net investment
income paid in cash. All distributions are treated in the same manner for
Federal income tax purposes whether received in cash or reinvested in shares of
the Fund.
All distributions will be reinvested at the Fund's net asset value as of the
payment date of the dividend. All distributions are reinvested unless another
option is selected. All distributions not reinvested will be paid to the
shareholder in cash and may be paid more than seven days following the date on
which distribution would otherwise be reinvested.
TAXES
TAX STATUS OF THE FUNDS. Each Fund intends to qualify or continue to qualify to
be taxed as a "regulated investment company" under the Internal Revenue Code of
1986, as amended. Accordingly, no Fund will be liable for Federal income taxes
on the net investment income and capital gain distributed to its shareholders.
Because each Fund intends to distribute all of its net investment income and net
capital gain each year, the Funds should also avoid Federal excise taxes.
Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Two different tax rates apply to net capital gain --
that is, the excess of net gain from capital assets held for more than one year
over net losses from capital assets held for not more than one year. One rate
(generally 28%) applies to net gain on capital assets held for more than one
year but not more than 18 months and a second rate (generally 20%) applies to
the balance of such net capital gains. Distributions of net capital gain will be
taxable to shareholders as such, regardless of how long a shareholder has held
shares in the Fund.
THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.
DAILY ASSETS MUNICIPAL FUND. Distributions paid by Daily Assets Municipal Fund
out of federally tax-exempt interest income earned by the Fund ("exempt-interest
dividends") generally will not be subject to federal income tax in the hands of
the Fund's shareholders. Substantially all of the distributions paid by the Fund
are anticipated to be exempt-interest dividends. Persons who are "substantial
users" or "related persons" thereof of facilities financed by private activity
securities held by the Fund, however, may be subject to federal income tax on
their pro rata share of the interest income from those securities and should
consult their tax advisers before purchasing Shares. Exempt-interest dividends
are included in the "adjusted current earnings" of corporations for purposes of
the AMT.
Interest on indebtedness incurred by shareholders to purchase or carry shares of
the Fund generally is not deductible for federal income tax purposes. Under
rules for determining when borrowed funds are used for purchasing or carrying
particular assets, shares of the Fund may be considered to have been purchased
or carried with borrowed funds even though those funds are not directly linked
to the shares.
The income from the Municipal Cash Portfolio's investments may be subject to the
AMT. Interest on certain municipal securities issued to finance "private
activities" ("private activity securities") is a "tax preference item" for
purposes of the AMT applicable to certain individuals and corporations even
though such interest will continue to be fully tax-exempt for regular federal
income tax purposes. The Portfolio may purchase private activity securities, the
interest on which may constitute a "tax preference item" for purposes of the
AMT.
STATE AND LOCAL TAXES. Daily Assets Government Fund's investment policies are
structured to provide shareholders, to the extent permissible by Federal and
state law, with income that is exempt or excluded from income taxation at the
state and local level. Many states (by statute, judicial decision or
administrative action) do not tax dividends from a regulated investment company
that are attributable to interest on obligations of the U.S. 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
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<PAGE>
state income taxes, but these Funds are not managed to provide any specific
amount of state tax-free income to shareholders.
The exemption for federal income tax purposes of distributions derived from
interest on municipal securities does not necessarily result in an exemption
under the income or other tax laws of any state or local taxing authority.
Shareholders of Daily Assets Municipal Fund may be exempt from state and local
taxes on distributions of tax-exempt interest income derived from obligations of
the state and/or municipalities of the state in which they reside but may be
subject to tax on income derived from the municipal securities of other
jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in a Fund which may differ
from the federal income tax consequences described above.
GENERAL. Each Fund may be required by Federal law to withhold 31% of reportable
payments (which may include taxable distributions and redemption proceeds) paid
to individuals and certain other non-corporate shareholders. Withholding is not
required if a shareholder certifies that the shareholder's social security or
tax identification number provided to a Fund is correct and that the shareholder
is not subject to backup withholding.
Each Fund must include a portion of the original issue discount of zero-coupon
securities, if any, as income even though these securities do not pay any
interest until maturity. Because each Fund distributes all of its net investment
income, a Fund may have to sell portfolio securities to distribute imputed
income, which may occur at a time when the investment adviser would not have
chosen to sell such securities and which may result in a taxable gain or loss.
Shortly after the close of each year, a statement is sent to each shareholder of
the Funds advising the shareholder of the portions of total distributions paid
to the shareholder that is (1) derived from each type of obligation in which a
Fund has invested, (2) derived from the obligations of issuers in the various
states and (3) exempt from federal income taxes. These portions are determined
for the entire year and on a monthly basis and, thus, are an annual or monthly
average, rather than a day-by-day determination for each shareholder.
The foregoing is only a summary of some of the important Federal and state tax
considerations generally affecting the Funds and their shareholders. There may
be other Federal, state or local tax considerations applicable to a particular
investor. Prospective investors are urged to consult their tax advisers.
7. OTHER INFORMATION
PERFORMANCE INFORMATION
Investor Shares' performance may be advertised. All performance information is
based on historical results, is not intended to indicate future performance and,
unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of 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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BANKING LAW MATTERS
Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a Processing
Organization or perform sub-transfer agent or similar services for the Trust and
its shareholders. If a bank or bank affiliate were prohibited from performing
all or a part of the foregoing services, its shareholder customers would be
permitted to remain shareholders of the Trust and alternative means for
continuing to service them would be sought.
DETERMINATION OF NET ASSET VALUE
The Trust determines the net asset value per share of each Fund as of 4:00 p.m.,
Eastern time, on each Fund Business Day by dividing the value of the Fund's net
assets (the value of its interest in the Portfolio and other assets less its
liabilities) by the number of shares outstanding at the time the determination
is made. In order to more easily maintain a stable net asset value per share,
each Portfolio's portfolio securities are valued at their amortized cost
(acquisition cost adjusted for amortization of premium or accretion of discount)
in accordance with Rule 2a-7. The Portfolios will only value their portfolio
securities using this method if the Core Trust Board believes that it fairly
reflects the market-based net asset value per share. The Portfolios' other
assets, if any, are valued at fair value by or under the direction of the Core
Trust Board.
THE TRUST AND ITS SHARES
The Trust is registered with the SEC as an open-end, management investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc., which was incorporated in 1980. The
Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create classes of
shares within each series. There are currently sixteen series of the Trust.
Each share of each fund of the Trust and each class of shares has equal
distribution, liquidation and voting rights, and fractional shares have those
rights proportionately, except that expenses related to the distribution of the
shares of each class (and certain other expenses such as transfer agency and
administration expenses) are borne solely by those shares and each class votes
separately with respect to the provisions of any Rule 12b-1 plan which pertain
to the class and other matters for which separate class voting is appropriate
under applicable law. Generally, shares will be voted in the aggregate without
reference to a particular fund or class, except if the matter affects only one
fund or class or voting by fund or class is required by law, in which case
shares will be voted separately by fund or class, as appropriate. Delaware law
does not require the Trust to hold annual meetings of shareholders, and it is
anticipated that shareholder meetings will be held only when specifically
required by Federal or state law. Shareholders (and Trustees) have available
certain procedures for the removal of Trustees. There are no conversion or
preemptive rights in connection with shares of the Trust. All shares when issued
in accordance with the terms of the offering will be fully paid and
nonassessable. Shares are redeemable at net asset value, at the option of the
shareholders. A shareholder in a fund is entitled to the shareholder's pro rata
share of all distributions arising from that fund's assets and, upon redeeming
shares, will receive the portion of the fund's net assets represented by the
redeemed shares.
As of May 1, 1998, Babb & Co. may be deemed to have controlled Daily Assets
Treasury Obligations Fund and Daily Assets Government Obligations Fund, H.M.
Payson & Co. may be deemed to have controlled Daily Assets Government Fund and
Daily Assets Cash Fund and Allagash & Co. may be deemed to have controlled Daily
Assets Government Obligations Fund and Daily Assets Cash Fund, through
investment in the Funds by their customers. From time to time, these
shareholders or other shareholders may own a large percentage of Shares of a
Fund and accordingly, may be able to greatly affect (if not determine) the
outcome of a shareholder vote.
FUND STRUCTURE
OTHER CLASSES OF SHARES. In addition to Investor Shares, each Fund may create
and issue shares of other classes of securities. Each Fund currently has two
other classes of shares authorized, Institutional Shares and Institutional
Service Shares. Institutional Shares have an investment minimum of $1,000,000.
Institutional Service Shares are offered solely through banks, trust companies
and certain other financial institutions, and their affiliates and
correspondents, for investment of their funds or funds for which they act in a
fiduciary, agency or custodial capacity. Institutional Shares and Institutional
Service Shares incur less expenses than Investor Shares. See, "Additional
Information" below. Except for certain
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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 each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact
FFSI at 207-879-1900. If an investor invests through a financial institution,
the investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
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FORUM FUNDS
DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
(FORMERLY DAILY ASSETS TREASURY FUND)
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
(FORMERLY DAILY ASSETS GOVERNMENT FUND)
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND
(FORMERLY DAILY ASSETS TAX-EXEMPT FUND)
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
May 27, 1998
This Statement of Additional Information supplements the Prospectuses dated May
27, 1998, offering Investor Shares, Institutional Service Shares and
Institutional Shares of Daily Assets Treasury Obligations Fund, Daily Assets
Government Fund, Daily Assets Government Obligations Fund, Daily Assets Cash
Fund and Daily Assets Municipal Fund, five portfolios of the Trust, and should
be read only in conjunction with the applicable Prospectus, a copy of which may
be obtained by an investor without charge by contacting the Trust's Distributor
at the address listed above.
<TABLE>
<S> <C>
TABLE OF CONTENTS
PAGE
1. General 2
2. Investment Policies 3
3. Investment Limitations 7
4. Investment by Financial Institutions 10
5. Performance Data 12
6. Management 14
7. Determination of Net Asset Value 22
8. Portfolio Transactions 22
9. Additional Purchase and Redemption Information 23
10. Taxation 25
11. Other Information 25
12. Financial Statements 27
Appendix A - Description of Securities Ratings 29
Appendix B - Performance Information 31
Appendix C - Miscellaneous Tables 32
Appendix D -Additional Advertising Materials 39
</TABLE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
<PAGE>
1. GENERAL
THE TRUST
The Trust is registered with the SEC as an open-end, management, investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc. Forum Funds, Inc. was incorporated
on March 24, 1980 and assumed the name of Forum Funds, Inc. on March 16, 1987.
The Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create separate
classes of shares within each series. The Trust currently offers shares of 23
series. The series of the Trust are as follows:
Daily Assets Treasury Obligations Fund Payson Value Fund
Daily Assets Government Fund Payson Balanced Fund.
Daily Assets Government Obligations Fund Polaris Global Value Fund
Daily Assets Cash Fund Austin Global Equity Fund
Daily Assets Municipal Fund Oak Hall Equity Fund
Investors Bond Fund Quadra Growth Fund
TaxSaver Bond Fund Quadra Value Equity Fund
Investors High Grade Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Investors Index Fund
Investors Equity Fund
Investors Growth Fund
Small Company Opportunities Fund
International Fund
Emerging Markets Fund
DEFINITIONS
As used in this Statement of Additional Information, the following terms shall
have the meanings listed:
"FIA" means Forum Investment Advisors, LLC.
"Board" means the Board of Trustees of the Trust.
"Core Trust" means Core Trust (Delaware).
"Core Trust Board" means the Board of Trustees of Core Trust.
"FAdS" means Forum Administrative Services, LLC.
"FSS" means Forum Forum Shareholder Services, LLC
"FFSI" means Forum Financial Services, Inc.
"FAcS" means Forum Accounting Services, LLC.
"Fund" means Daily Assets Treasury Obligations Fund, Daily Assets Government
Fund, Daily Assets Government Obligations Fund, Daily Assets Cash Fund or Daily
Assets Municipal Fund.
"Fund Business Day" has the meaning ascribed thereto in the current Prospectus
of the Funds.
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"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 an investment policy that allows it to invest all of its
investable assets in its corresponding Portfolio. All other investment policies
of each Fund and its corresponding Portfolio are identical. Therefore, although
this and the following sections provide supplemental information regarding the
investment policies of the Portfolios (and the responsibilities of the Core
Trust Board), they apply equally to the investment policies of the Funds (and
the responsibilities of the Board). Information with respect to Daily Assets
Government Fund for periods prior to December 5, 1995 (for instance, investment
advisory fees paid), the date that Fund began investing in Treasury Portfolio,
reflects information with respect to the Fund and the Fund's direct investment
in securities.
Debt securities with longer maturities tend to produce higher yields and are
generally subject to greater price movements than obligations with shorter
maturities. An increase in interest rates will generally reduce the market value
of portfolio investments, and a decline in interest rates will generally
increase the value of portfolio investments.
Each Portfolio invests at least 95% of its total assets in securities in the
highest rating category (as determined pursuant to Rule 2a-7 under the 1940
Act).
Government Cash Portfolio and Cash Portfolio currently are prohibited from
purchasing any security issued by the Federal Home Loan Mortgage Corporation.
This does not prohibit the Portfolios from entering into repurchase agreements
collateralized with securities issued by the Federal Home Loan Mortgage
Corporation.
Except for U.S. Government Securities and to the limited extent otherwise
permitted by Rule 2a-7 under the 1940 Act, the Portfolios may not invest more
than five percent of their total assets in (i) the securities of any one issuer
or (ii) securities that are rated (or are issued by an issuer with comparable
outstanding short-term debt that is rated) in the second highest rating category
or are unrated and determined by an Adviser to be of comparable quality.
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RATINGS AS INVESTMENT CRITERIA
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P") and other NRSROs are private services that provide ratings of the credit
quality of debt obligations. A description of the higher quality ratings
assigned to debt securities by several NRSROs is included in Appendix A to this
SAI. The Portfolios use these ratings in determining whether to purchase, sell
or hold a security. It should be emphasized, however, that ratings are general
and are not absolute standards of quality. Consequently, securities with the
same maturity, interest rate and rating may have different market prices.
Subsequent to its purchase by a Portfolio, an issue of securities may cease to
be rated or its rating may be reduced. FIA , and in certain cases the Core Trust
Board, will consider such an event in determining whether the Portfolio should
continue to hold the obligation. Credit ratings attempt to evaluate the safety
of principal and interest payments and do not evaluate the risks of fluctuations
in market value. Also, rating agencies may fail to make timely changes in credit
ratings in response to developments and events, so that an issuer's current
financial condition may be better or worse than the rating indicates.
ADJUSTABLE RATE MORTGAGE/ASSET BACKED SECURITIES
The Portfolios may purchase adjustable rate mortgage backed or other asset
backed securities that are U.S. Government Securities. Treasury Cash Portfolio
may purchase mortgage backed or asset backed securities that are U.S. Treasury
Securities. These types of securities directly or indirectly represent a
participation in, or are secured by and payable from, adjustable rate mortgages
or other loans which may be secured by real estate or other assets. Unlike
traditional debt instruments, payments on these securities include both interest
and a partial payment of principal. Prepayments of the principal of underlying
loans may shorten the effective maturities of these securities. Some adjustable
rate securities (or the underlying loans) are subject to caps or floors that
limit the maximum change in interest rate during a specified period or over the
life of the security.
Adjustable rate mortgage backed securities ("MBSs") are securities that have
interest rates that are reset at periodic intervals, usually by reference to
some interest rate index or market interest rate. MBSs represent interests in
pools of mortgages made by lenders such as commercial banks, savings
associations, mortgage bankers and mortgage brokers and may be issued by
governmental or government-related entities or by non-governmental entities such
as commercial banks, savings associations, mortgage bankers and other secondary
market issuers.
MBSs differ from other forms of debt securities, which normally provide for
periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates in that MBSs provide periodic payments which
consist of interest and, in most cases, principal. In effect, these payments are
a "pass-through" of the periodic payments and optional prepayments made by the
individual borrowers on their mortgage loans, net of any fees paid to the issuer
or guarantor of such securities. Additional payments to holders of MBSs are
caused by prepayments resulting from the sale of the underlying property or the
refinancing or foreclosure of the underlying mortgage loans. Such prepayments
may significantly shorten the effective maturities of MBSs, and occur more often
during periods of declining interest rates.
Although the rate adjustment feature of MBSs may act as a buffer to reduce sharp
changes in the value of MBSs, these securities are still subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rate is reset only periodically, changes
in the interest rate on MBSs may lag behind changes in prevailing market
interest rates. Also, some MBSs (or the underlying mortgages) are subject to
caps or floors that limit the maximum change in interest rate during a specified
period or over the life of the security.
During periods of declining interest rates, income to the Portfolios derived
from mortgages which are not prepaid will decrease as the coupon rate resets
along with the decline in interest rates in contrast to the income on fixed-rate
mortgages, which will remain constant. At times, some of the MBSs in which the
Portfolios will invest will have higher-than-market interest rates, and will
therefore be purchased at a premium above their par value. Unscheduled
prepayments, which are made at par, will cause the Portfolios to suffer a loss
equal to the unamortized premium, if any.
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During periods of rising interest rates, changes in the coupon rates of the
mortgages underlying the Portfolios' investments may lag behind changes in
market interest rates. This may result in a slightly lower value until the
coupons reset to market rates. Many MBSs in the Portfolios' portfolios will have
"caps" that limit the maximum amount by which the interest rate paid by the
borrower may change at each reset date or over the life of the loan and
fluctuation in interest rates above these levels could cause these securities to
"cap out" and to behave more like fixed-rate debt securities.
The Portfolios may purchase collateralized mortgage obligations ("CMOs"), which
are collateralized by MBSs or by pools of conventional mortgages. CMOs are
typically structured with a number of classes or series that have different
maturities and are generally retired in sequence. Each class of bonds receives
periodic interest payments according to the coupon rate on the bonds. However,
all monthly principal payments and any prepayments from the collateral pool are
paid first to the "Class 1" bondholders. The principal payments are such that
the Class 1 bonds will be completely repaid no later than, for example, five
years after the offering date. Thereafter, all payments of principal are
allocated to the next most senior class of bonds until that class of bonds has
been fully repaid. Although full payoff of each class of bonds is contractually
required by a certain date, any or all classes of bonds may be paid off sooner
than expected because of an acceleration in pre-payments of the obligations
comprising the collateral pool.
Since the inception of the mortgage-related pass-through security in 1970, the
market for these securities has expanded considerably. The size of the primary
issuance market and active participation in the secondary market by securities
dealers and many types of investors make government and government-related
pass-through pools highly liquid.
Governmental or private entities may create new types of MBSs in response to
changes in the market or changes in government regulation of such securities. As
new types of these securities are developed and offered to investors, the FAI
may, consistent with the investment objective and policies of a Portfolio,
consider making investments in such new types of securities.
SMALL BUSINESS ADMINISTRATION SECURITIES. Government Cash Portfolio and Cash
Portfolio may purchase securities issued by the Small Business Administration
("SBA"). SBA securities are variable rate securities that carry the full faith
and credit of the United States Government, and generally have an interest rate
that resets monthly or quarterly based on a spread to the Prime rate. SBA
securities generally have maturities at issue of up to 30 years. No Portfolio
may purchase an SBA security if, immediately after the purchase, (i) the
Portfolio would have more than 15% of its net assets invested in SBA securities
or (ii) either the unamortized premium or unaccreted discount on SBA securities
held by the Portfolio divided by the sum of the premium or discount securities'
par amount, respectively, would exceed 2.5% (0.025).
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY SECURITIES
Each Portfolio may purchase securities on a when-issued or delayed delivery
basis. In those cases, the purchase price and the interest rate payable on the
securities are fixed on the transaction date and delivery and payment may take
place a month or more after the date of the transaction. At the time a Portfolio
makes the commitment to purchase securities on a when-issued or delayed delivery
basis, the Portfolio will record the transactions as a purchase and thereafter
reflect the value each day of such securities in determining its net asset
value. If a Portfolio chooses to dispose of the right to acquire a when-issued
security prior to its acquisition, it could, as with the disposition of any
other portfolio obligation, incur a gain or loss due to market fluctuation.
Failure of an issuer to deliver the security may result in the Portfolio
incurring a loss or missing an opportunity to make an alternative investment.
When a Portfolio agrees to purchase a security on a when-issued or delayed
delivery basis, its custodian will set aside and maintain in a segregated
account cash, U.S. Government Securities or other liquid assets with a market
value at all times at least equal to the amount of its commitment.
Core Trust's custodian will set aside and maintain in a segregated account cash
and securities with a market value at all times equal to the amount of each
Portfolio's forward commitment obligations.
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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 the FAI and,
with respect to certain types of restricted securities which may be deemed to be
liquid, has adopted guidelines to be followed by the FAI. FAI takes into account
a number of factors in reaching liquidity decisions, including but not limited
to (1) the frequency of trades and quotations for the security; (2) the number
of dealers willing to purchase or sell the security and the number of other
potential buyers; (3) the willingness of dealers to undertake to make a market
in the security; (4) the nature of the marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer; (5) whether the security is registered; and (6) if
the security is not traded in the United States, whether it can be freely traded
in a liquid foreign securities market. FAI monitors the liquidity of the
securities in each Portfolio's portfolio and report periodically to the Core
Trust Board.
Certificates of deposit and other fixed time deposits that carry an early
withdrawal penalty or mature in greater than seven days are treated by the
Portfolio as illiquid securities if there is no readily available market for the
instrument.
REPURCHASE AGREEMENTS AND SECURITIES LENDING
In order to obtain additional income, the Portfolios may from time to time lend
securities from their portfolio to brokers, dealers and financial institutions.
Securities loans must be callable at any time and must be continuously secured
by collateral from the borrower in the form of cash or U.S. Government
Securities. The Portfolios receive fees in respect of securities loans from the
borrower or interest from investing the cash collateral. The Portfolios may pay
fees to arrange the loans. The Portfolios may not lend portfolio securities in
an amount greater than 33 1/3% of the value of their total assets.
In connection with entering into repurchase agreements and securities loans, the
Portfolios require continual maintenance by Core Trust's custodian of the market
value of the underlying collateral in amounts equal to, or in excess of, the
repurchase price plus the transaction costs (including loss of interest) that
the Portfolios could expect to incur upon liquidation of the collateral if the
counterparty defaults. The Portfolios' use of securities lending entails certain
risks not associated with direct investments in securities. For instance, in the
event that bankruptcy or similar proceedings were commenced against a
counterparty in these transactions or a counterparty defaulted on its
obligations, a Portfolio might suffer a loss. Failure by the other party to
deliver a security purchased by a Portfolio may result in a missed opportunity
to make an alternative investment. FAI monitors the creditworthiness of
counterparties to these transactions under the Core Trust Board's general
supervision and pursuant to specific Core Trust Board adopted procedures and
intend to enter into these transactions only when they believe the
counterparties present minimal credit risks and the income to be earned from the
transaction justifies the attendant risks.
VARIABLE AND FLOATING RATE SECURITIES
The yield of variable and floating rate securities varies in relation to changes
in specific money market rates, such as the Prime Rate. A "variable" interest
rate adjusts at predetermined intervals (for example, daily, weekly or monthly),
while a "floating" interest rate adjusts whenever a specified benchmark rate
(such as the bank prime lending rate) changes. These changes are reflected in
adjustments to the yields of the variable and floating rate securities, and
different securities may have different adjustment rates. Accordingly, as
interest rates increase or decrease, the capital appreciation or depreciation
may be less on these obligations than for fixed rate obligations. To the extent
that the Portfolios invest in long-term variable or floating rate securities,
FAI believes that the Portfolios may be able to take advantage of the higher
yield that is usually paid on long-term securities.
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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 FAI
believes that the investment is in the best interest of the Portfolio. In
addition to the Portfolio's expenses (including the various fees), as a
shareholder in another investment company, the Portfolio bears its pro rata
portion of the other investment company's expenses (including fees). Those
expenses are not part of the Portfolio's (or Fund's) expense ratio, but rather
are reflected in the yield of the investment in the money market fund.
ZERO-COUPON SECURITIES
Government Portfolio may invest in zero-coupon securities such as Treasury bills
and separately traded principal and interest components of Treasury Securities
issued or guaranteed under the U.S. Treasury's Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program. These securities are
sold at original issue discount and pay no interest to holders prior to
maturity. Because of this, zero-coupon securities may be subject to greater
fluctuation of market value than the other securities in which the Portfolios
may invest. All zero-coupon securities in which the Portfolio invests will have
a maturity of less than 13 months.
The Portfolio (and thus the Fund) must include a portion of the original issue
discount of zero-coupon securities, if any, as income even though these
securities do not pay any interest until maturity. Because the Fund distributes
all of its net investment income, the Fund may have to sell portfolio securities
to distribute imputed income, which may occur at a time when FAI would not have
chosen to sell such securities and which may result in a taxable gain or loss.
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.
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GOVERNMENT PORTFOLIO - FUNDAMENTAL POLICIES
Government Portfolio has adopted the following fundamental investment
limitations which are in addition to those contained in the Prospectus of Daily
Assets Government Fund and which may not be changed without shareholder
approval. The Portfolio may not:
(1) DIVERSIFICATION. With respect to 75% of its assets, purchase
securities, other than U.S. Government Securities, of any one issuer if
more than 5% of the value of the Portfolio's total assets would at the
time of purchase be invested in any one issuer.
(2) CONCENTRATION. Purchase securities, other than U.S. Government
Securities, if more than 25% of the value of the Portfolio's total
assets would be invested in securities of issuers conducting their
principal business activity in the same industry, provided that
consumer finance companies and industrial finance companies are
considered to be separate industries and that there is no limit on the
purchase of the securities of domestic commercial banks.
(3) UNDERWRITING. Act as an underwriter of securities of other issuers,
except to the extent that, in connection with the disposition of
portfolio securities, the Portfolio may be deemed to be an underwriter
for purposes of the Securities Act of 1933.
(4) REAL ESTATE. Purchase or sell (i) real estate or any interest therein,
except that the Portfolio may invest in debt obligations secured by
real estate or interests therein or issued by companies that invest in
real estate or interests therein and (ii) real property (including
limited partnership interests, but excluding readily marketable
interests in real estate investment trusts or readily marketable
securities of companies which invest in real estate.)
(5) COMMODITIES. Purchase or sell physical commodities or contracts
relating to physical commodities, provided that currencies and
currency-related contracts will not be deemed to be physical
commodities.
(6) BORROWING. Borrow money, except for temporary or emergency purposes
(including the meeting of redemption requests). Total borrowings may
not exceed 33 1/3% of the Portfolio's total assets and borrowing for
purposes other than meeting redemptions may not exceed 5% of the value
of each the Portfolio's total assets. Outstanding borrowings in excess
of 5% of the value of the Portfolio's total assets must be repaid
before any subsequent investments are made by the Portfolio.
(7) SENIOR SECURITIES. Issue senior securities except pursuant to Section
18 of the 1940 Act and except that the Portfolio may borrow money
subject to investment limitations specified in the Portfolio's
Prospectus.
(8) LENDING. Make loans, except that the Portfolio may (i) purchase debt
securities which are otherwise permissible investments, (ii) enter into
repurchase agreements and (iii) lend portfolio securities. The
Portfolio may not lend portfolio securities in an amount greater than
33 1/3% of the value of its total assets.
(9) PLEDGING. Pledge, mortgage or hypothecate its assets, except to secure
permitted indebtedness. Collateralized loans of securities are not
deemed to be pledges or hypothecations for this purpose.
(10) OPTIONS. Write put and call options.
(11) INVEST FOR CONTROL. Invest for the purpose of exercising control over
any person.
(12) RESTRICTED SECURITIES. Purchase restricted securities.
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GOVERNMENT PORTFOLIO - NONFUNDAMENTAL POLICIES
Government Portfolio has adopted the following nonfundamental investment
limitations that may be changed by the Core Trust Board without shareholder
approval. The Portfolio may not:
(a) SECURITIES WITH VOTING RIGHTS. Purchase securities having voting
rights, except the Portfolio may invest in securities of other
investment companies to the extent permitted by the 1940 Act.
(b) MARGIN; SHORT SALES. Purchase securities on margin, or make short sales
of securities, except for the use of short-term credit necessary for
the clearance of purchases and sales of portfolio securities.
(c) LIQUIDITY. Acquire securities or invest in repurchase agreements with
respect to any securities if, as a result, more than 10% of the
Portfolio's net assets (taken at current value) would be invested in
repurchase agreements not entitling the holder to payment of principal
within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.
TREASURY CASH PORTFOLIO, GOVERNMENT CASH PORTFOLIO, CASH PORTFOLIO
AND MUNICIPAL CASH PORTFOLIO -- FUNDAMENTAL POLICIES
Treasury Cash Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal
Cash Portfolio have adopted the following fundamental investment limitations
which are in addition to those contained in the Prospectuses offering Daily
Assets Treasury Obligations Fund, Daily Assets Government Obligations Fund,
Daily Assets Cash Fund and Daily Assets Municipal Fund and which may not be
changed without shareholder approval. No Portfolio may:
(1) DIVERSIFICATION. With respect to 75% of its assets, purchase a security
other than a U.S. Government Security (or, in the case of Municipal
cash Portfolio, other than a security of an investment company) if, as
a result, more than 5% of the Portfolio's total assets would be
invested in the securities of a single issuer.
(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.
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(9) THRIFT INVESTOR LIMITATIONS. With respect to Government Cash Portfolio,
purchase or hold any security that (i) a Federally chartered savings
association may not invest in, sell, redeem, hold or otherwise deal
pursuant to law or regulation, without limit as to percentage of the
association's assets and (ii) pursuant to 12 C.F.R. Section 566.1 would
cause shares of the Portfolio not to be deemed to be short term liquid
assets when owned by Federally chartered savings associations.
For purposes of limitation (2): (i) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (ii)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.
TREASURY CASH PORTFOLIO, GOVERNMENT CASH PORTFOLIO, CASH PORTFOLIO
AND MUNICIPAL CASH PORTFOLIO - NONFUNDAMENTAL POLICIES
Treasury Cash Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal
Cash Portfolio - have adopted the following nonfundamental investment
limitations that may be changed by the Core Trust Board without shareholder
approval. Each Portfolio may not:
(a) DIVERSIFICATION. With respect to 100% of its assets, purchase a
security other than a U.S. Government Security if, as a result, more
than 5% of the Portfolio's total assets would be invested in the
securities of a single issuer, unless the investment is permitted by
Rule 2a-7 under the 1940 Act.
(b) BORROWING. Purchase securities for investment while any borrowing
equaling 5% or more of the Portfolio's total assets is outstanding; and
if at any time the Portfolio's borrowings exceed the Portfolio's
investment limitations due to a decline in net assets, such borrowings
will be promptly (within three days) reduced to the extent necessary to
comply with the limitations. Borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's
total assets.
(c) Purchase securities that have voting rights, except the Portfolio may
invest in securities of other investment companies to the extent
permitted by the 1940 Act.
(d) MARGIN; SHORT SALES. Purchase securities on margin, or make short sales
of securities, except for the use of short-term credit necessary for
the clearance of purchases and sales of portfolio securities.
(e) LIQUIDITY. Acquire securities or invest in repurchase agreements with
respect to any securities if, as a result, more than 10% of the
Portfolio's net assets (taken at current value) would be invested in
repurchase agreements not entitling the holder to payment of principal
within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.
4. INVESTMENTS BY FINANCIAL INSTITUTIONS
INVESTMENT BY SHAREHOLDERS THAT ARE BANKS - DAILY ASSETS GOVERNMENT OBLIGATIONS
FUND
Government Cash Portfolio invests only in instruments which, if held directly by
a bank or bank holding company organized under the laws of the United States or
any state thereof, would be assigned to a risk-weight category of no more than
20% under the current risk based capital guidelines adopted by the Federal bank
regulators (the "Guidelines"). In the event that the Guidelines are revised, the
Portfolio's portfolio will be modified accordingly, including by disposing of
portfolio securities or other instruments that no longer qualify under the
Guidelines. In addition, the Portfolio does not intend to hold in its portfolio
any securities or instruments that would be subject to restriction as to amount
held by a National bank under Title 12, Section 24 (Seventh) of the United
States Code. If the Portfolio's portfolio includes any instruments that would be
subject to a restriction as to amount held by a National bank, investment in the
Portfolio may be limited.
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The Guidelines provide that shares of an investment fund are generally assigned
to the risk-weight category applicable to the highest risk-weighted security or
instrument that the fund is permitted to hold. Accordingly, Portfolio shares
should qualify for a 20% risk weighting under the Guidelines. The Guidelines
also provide that, in the case of an investment fund whose shares should qualify
for a risk weighting below 100% due to limitations on the assets which it is
permitted to hold, bank examiners may review the treatment of the shares to
ensure that they have been assigned an appropriate risk-weight. In this
connection, the Guidelines provide that, regardless of the composition of an
investment fund's assets, shares of a fund may be assigned to the 100%
risk-weight category if it is determined that the fund engages in activities
that appear to be speculative in nature or has any other characteristics that
are inconsistent with a lower risk weighting. FIA has no reason to believe that
such a determination would be made with respect to the Portfolio. Their are
various subjective criteria for making this determination and, therefore, it is
not possible to provide any assurance as to how Portfolio shares will be
evaluated by bank examiners.
Before acquiring Fund shares, prospective investors that are banks or bank
holding companies, particularly those that are organized under the laws of any
country other than the United States or of any state, territory or other
political subdivision of the United States, and prospective investors that are
U.S. branches and agencies of foreign banks or Edge Corporations, should consult
all applicable laws, regulations and policies, as well as appropriate regulatory
bodies, to confirm that an investment in Fund Shares is permissible and in
compliance with any applicable investment or other limits.
Fund shares held by National banks are generally required to be revalued
periodically and reported at the lower of cost or market value. Such shares may
also be subject to special regulatory reporting, accounting and tax treatment.
In addition, a bank may be required to obtain specific approval from its board
of directors before acquiring Fund shares, and thereafter may be required to
review its investment in a Fund for the purpose of verifying compliance with
applicable Federal banking laws, regulations and policies.
National banks generally must review their holdings of shares of a Fund at least
quarterly to ensure compliance with established bank policies and legal
requirements. Upon request, the Portfolios will make available to the Funds
investors information relating to the size and composition of their portfolio
for the purpose of providing Fund shareholders with this information.
INVESTMENT BY SHAREHOLDERS THAT ARE CREDIT UNIONS - DAILY ASSETS TREASURY
OBLIGATIONS FUND AND DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Treasury Cash Portfolio and Government Cash Portfolio limit their investments to
investments that are legally permissible for Federally chartered credit unions
under applicable provisions of the Federal Credit Union Act (including 12 U.S.C.
Section 1757(7), (8) and (15)) and the applicable rules and regulations of the
National Credit Union Administration (including 12 C.F.R. Part 703, Investment
and Deposit Activities), as such statutes and rules and regulations may be
amended. The Portfolios limit their investments to U.S. Government Securities
(including Treasury STRIPS) and repurchase agreements fully collateralized by
U.S. Government Securities. Certain U.S. Government Securities owned by a
Portfolio may be mortgage or asset backed, but, except to reduce interest rate
risk, no such security will be (i) a stripped mortgage backed security ("SMBS"),
(ii) a collateralized mortgage obligation ("CMO") or real estate mortgage
investment conduit ("REMIC") that meets any of the tests outlined in 12 C.F.R.
Section 703.5(g) or (iii) a residual interest in a CMO or REMIC. In order to
reduce interest rate risk, the Portfolios may purchase a SMBS, CMO, REMIC or
residual interest in a CMO or REMIC but only in accordance with 12 C.F.R.
Section 703.5(i). Treasury Cash Portfolio and Government Cash Portfolio have no
current intention to make any such investment. The Portfolios also may invest in
reverse repurchase agreements in accordance with 12 C.F.R. 703.4(e) to the
extent otherwise permitted herein and in the Prospectus.
INVESTMENTS BY SHAREHOLDERS THAT ARE SAVINGS ASSOCIATIONS - DAILY ASSETS
TREASURY OBLIGATIONS FUND AND DAILY ASSETS GOVERNMENT OBLIGATIONS PORTFOLIO
Treasury Cash Portfolio and Government Cash Portfolio limit their investments to
investments that are legally permissible for Federally chartered savings
associations without limit as to percentage under applicable provisions
11
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of the Home Owners' Loan Act (including 12 U.S.C. Section 1464) and the
applicable rules and regulations of the Office of Thrift Supervision, as such
statutes and rules and regulations may be amended. In addition, the Portfolios
limit their investments to investments that are permissible for an open-end
investment company to hold and would permit shares of the investment company to
qualify as liquid assets under 12 C.F.R. Section 566.1(g) and as short-term
liquid assets under 12 C.F.R. Section 566.1(h). These policies may be amended
only by approval of a Portfolio's interestholders or Fund's shareholders, as
applicable.
5. PERFORMANCE DATA
For a listing of certain performance data as of August 31, 1997, see Appendix B.
YIELD INFORMATION
Each Fund may provide current annualized and effective annualized yield
quotations for each class based on its daily dividends. These quotations may
from time to time be used in advertisements, shareholder reports or other
communications to shareholders. All performance information supplied by a Fund
is historical and is not intended to indicate future returns.
In performance advertising the Funds may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC Financial Data, Inc. or CDA/Wiesenberger
or other companies which track the investment performance of investment
companies ("Fund Tracking Companies"). The Funds may also compare any of their
performance information with the performance of recognized stock, bond and other
indices. The Funds may also refer in such materials to mutual fund performance
rankings and other data published by Fund Tracking Companies. Performance
advertising may also refer to discussions of a Fund and comparative mutual fund
data and ratings reported in independent periodicals, such as newspapers and
financial magazines.
Any current yield quotation of a class of a Fund which is used in such a manner
as to be subject to the provisions of Rule 482(d) under the Securities Act of
1933, as amended, shall consist of an annualized historical yield, carried at
least to the nearest hundredth of one percent, based on a specific
seven-calendar-day period and shall be calculated by dividing the net change
during the seven-day period in the value of an account having a balance of one
share at the beginning of the period by the value of the account at the
beginning of the period, and multiplying the quotient by 365/7. For this
purpose, the net change in account value would reflect the value of additional
shares purchased with dividends declared on the original share and dividends
declared on both the original share and any such additional shares, but would
not reflect any realized gains or losses from the sale of securities or any
unrealized appreciation or depreciation on portfolio securities. In addition,
any effective annualized yield quotation used by a Fund shall be calculated by
compounding the current yield quotation for such period by adding 1 to the
product, raising the sum to a power equal to 365/7, and subtracting 1 from the
result.
Although published yield information is useful to investors in reviewing a
class' performance, investors should be aware that each Fund's yield fluctuates
from day to day and that the class' yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Fund's shares. Also, Participating Organizations (as that term is used in
the Prospectus) may charge their customers direct fees in connection with an
investment in a Fund, which will have the effect of reducing the class' net
yield to those shareholders. The yields of a class are not fixed or guaranteed,
and an investment in the Fund is not insured or guaranteed. Accordingly, yield
information may not necessarily be used to compare shares of the Fund with
investment alternatives which, like money market instruments or bank accounts,
may provide a fixed rate of interest. Also, it may not be appropriate directly
to compare a Fund's yield information to similar information of investment
alternatives which are insured or guaranteed.
Income calculated for the purpose of determining a class' yield differs from
income as determined for other accounting purposes. Because of the different
accounting methods used, and because of the compounding assumed in yield
calculations, the yield quoted for a class may differ from the rate of
distribution the class paid over the same period or the rate of income reported
in the Fund's financial statements.
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<PAGE>
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 Portfolios) portfolio holdings and
portfolio allocation as of certain dates, such as portfolio diversification by
instrument type, by instrument or by maturity, (ii) descriptions of the
portfolio managers of the Fund or the Fund's corresponding Portfolio and the
portfolio management staff of FIA or summaries of the views of the portfolio
managers with respect to the financial markets, (iii) the results of a
hypothetical investment in a Fund over a given number of years, including the
amount that the investment would be at the end of the period, (iv) the effects
of earning Federally and, if applicable, state tax-exempt income from the Fund
or investing in a tax-deferred account, such as an individual retirement account
and (v) the net asset value, net assets or number of shareholders of a Fund as
of one or more dates.
In connection with its advertisements a Fund may provide "shareholders' letters"
which serve to provide shareholders or investors an introduction into the
Fund's, the Portfolio's, the Trust's, the Core Trust's or any of the Trust's or
the Core Trust's service providers' policies or business practices.
Appendix D contains further information on matters that may be advertised.
13
<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. Prior thereto, Dr. Azariadis was Professor of Economics at
the University of Pennsylvania. His address is Department of
Economics, University of California, Los Angeles, 405 Hilgard Avenue,
Los Angeles, California 90024.
James C. Cheng, Trustee (age 55)
President of Technology Marketing Associates (a marketing consulting
company) since September 1991. Prior thereto, Mr. Cheng was President
and Chief Executive Officer of Network Dynamics, Incorporated (a
software development company). His address is 27 Temple Street,
Belmont, Massachusetts 02178.
J. Michael Parish, Trustee (age 54)
Partner at the law firm of Winthrop Stimson Putnam & Roberts since
1989. Prior thereto, he was a partner at LeBoeuf, Lamb, Leiby &
MacRae, a law firm of which he was a member from 1974 to 1989. His
address is 40 Wall Street, New York, New York 10005.
Mark D. Kaplan, Vice President (age 42)
Director, Investments, Forum Financial Group, LLC with which he has
been associated since September 1995. Prior thereto, Mr. Kaplan was
Managing Director and Director of Research at H.M. Payson & Co. His
address is Two Portland Square, Portland, Maine 04101.
Stacey Hong, Treasurer (age 32)
Director, Fund Accounting, Forum Financial Group, LLC, with which he
has been associated since April 1992. Prior thereto, Mr. Hong was as
Senior Accountant with Ernst and Young. His address is Two Portland
Square, Portland, Maine 04101.
Max Berueffy, Secretary (age 46)
Senior Counsel, Forum Financial Group, LLC, with which he has been
associated since 1994. Prior thereto, Mr. Berueffy was on the staff of
the U.S. Securities and Exchange Commission for seven years, first in
the appellate branch of the Office of the General Counsel, then as a
counsel to Commissioner Grundfest and finally as a senior special
counsel in the Division of Investment Management. Mr. Berueffy also
serves as an officer of other registered investment companies for
which the Forum Financial Group of Companies provides services. His
address is Two Portland Square, Portland, Maine 04101.
14
<PAGE>
Leslie K. Klenk, Assistant Secretary (age 33)
Assistant Counsel, Forum Financial Group, LLC, with which she has been
associated since April 1998. Prior thereto, Ms. Klenk was Vice
President and Associate General Counsel at Smith Barney Inc. . Her
address is Two Portland Square, Portland, Maine 04101.
Pamela Stutch, Assistant Secretary (age 30)
Fund Administrator, Forum Financial Group, LLC, with which she has
been associated since May 1998. Prior thereto, Ms. Stutch attended
Temple University School of Law and graduated in 1997. Ms. Stutch was
as a legal intern for the Maine Department of the Attorney General.
TRUSTEES AND OFFICERS OF CORE TRUST
The Trustees and officers of Core Trust and their principal occupations during
the past five years are set forth below. Each of the Trustees of the Trust is
also a Trustee of Core Trust and several officers of the Trust serve as officers
of Core Trust . Each Trustee who is an "interested person" (as defined by the
1940 Act) of Core Trust is indicated by an asterisk. Accordingly, for background
information pertaining to the Trustees and these officers, see "Trustees and
Officers of the Trust" above.
John Y. Keffer,* Chairman and President.
Costas Azariadis, Trustee.
James C. Cheng, Trustee.
J. Michael Parish, Trustee.
Thomas G. Sheehan, Vice President (age 44)
Director, Relationship Management, Forum Financial Group, LLC, with
which he has been associated since October, 1993. Prior thereto, Mr.
Sheehan was a Special Counsel in the Division of Investment Management
of the U.S. Securities and Exchange Commission in Washington, D.C. His
address is Two Portland Square, Portland, Maine 04101.
Stacey Hong, Treasurer
Pamela J. Wheaton, Assistant Treasurer (age 38)
Manager, Tax and Compliance, Forum Financial Group, LLC, with which
she has been associated since 1989. Ms. Wheaton is also an officer of
other registered investment companies for which the Forum Financial
Group of Companies provides services. Her address is Two Portland
Square, Portland, Maine 04101.
David I. Goldstein, Vice President and Secretary (age 37)
General Counsel, Forum Financial Group, LLC, with which he has been
associated since 1991. Mr. Goldstein also serves as an officer of
other registered investment companies for which the Forum Financial
Group of Companies provides services. His address is Two Portland
Square, Portland, Maine 04101.
Max Berueffy, Vice President and Assistant Secretary
Leslie K. Klenk, Assistant Secretary.
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<PAGE>
Pam Stutch, Assistant Secretary
TRUSTEE COMPENSATION
THE TRUST. Each Trustee of the Trust (other than John Y. Keffer, who is an
interested person of the Trust) is paid $1,000 for each Board meeting attended
(whether in person or by electronic communication) and $1,000 for each committee
meeting attended on a date when a Board meeting is not held. As of March 31,
1997, in addition to the $1,000 for each Board meeting attended, each Trustee is
paid $100 per active portfolio of the Trust. To the extent a meeting relates to
only certain portfolios of the Trust, Trustees are paid the $100 fee only with
respect to those portfolios. Trustees are also reimbursed for travel and related
expenses incurred in attending meetings of the Board. No officer of the Trust is
compensated by the Trust.
The following table provides the aggregate compensation paid to each Trustee.
The Trust has not adopted any form of retirement plan covering Trustees or
officers. Information is presented for the six months ended February 28, 1998.
<TABLE>
<S> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Keffer None None None None
Mr. Azariadis $5,219 None None $5,219
Mr. Cheng $5,219 None None $5,219
Mr. Parish $5,219 None None $5,219
</TABLE>
CORE TRUST. Each of the Trustees of the Trust is also a Trustee of Core Trust.
Each Trustee of Core Trust is paid $1,000 for each meeting of the Core Trust
Board attended (whether in person or by electronic communication) plus $100 for
each active portfolio of Core Trust and is paid $1000 for each committee meeting
attended on a date when the Core Trust Board meeting is not held. As of August
31, 1997, there were fifteen active portfolios of Core Trust (including certain
of the Portfolios). Trustees are also reimbursed for travel and related expenses
incurred in attending meetings of the Core Trust Board. No officer of Core Trust
is compensated or reimbursed for expenses by Core Trust. Since commencement of
the Trust's operations, Mr. Keffer has not accepted any fees for his services as
Trustee.
The following table provides the aggregate compensation paid to each trustee of
Core Trust for the six months ended February 28, 1998. Core Trust has not
adopted any form of retirement plan covering trustees or officers of Core Trust.
<TABLE>
<S> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Keffer None None None None
Mr. Azariadis $1,044 None None $1,044
Mr. Parish $1,044 None None $1,044
Mr. Cheng $1,044 None None $1,044
</TABLE>
Each Trustee of Core Trust (other than John Y. Keffer, who is an interested
person of Core Trust) is paid $1,000 for each Core Trust Board meeting attended
(whether in person or by electronic communication) plus $100 per active
portfolio of Core Trust and is paid $1,000 for each committee meeting attended
on a date when a Core Trust Board meeting is not held. To the extent a meeting
relates to only certain portfolios of Core Trust, trustees are paid the $100 fee
only with respect to those portfolios. Core Trust trustees are also reimbursed
for travel and related expenses incurred in attending meetings of the Core Trust
Board
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<PAGE>
INVESTMENT ADVISERS
FIA furnishes to the Portfolios at its own expense all services, facilities and
personnel necessary in connection with managing the Portfolios' investments and
effecting portfolio transactions for the Portfolios, pursuant to an investment
advisory agreement between FIA and Core Trust (an "Advisory Agreement"). The
Advisory Agreement provides, with respect to each Portfolio, for an initial term
of one year from its effective date and for its continuance in effect for
successive twelve-month periods thereafter, provided the Advisory Agreement is
specifically approved at least annually by the Core Trust Board or by vote of
the interestholders of the Portfolios, and in either case by a majority of the
Trustees who are not parties to the Advisory Agreement or interested persons of
any such party.
Prior to January 2, 1998, Linden Asset Management, Inc. ("Linden") served as
investment adviser to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio, and Forum Advisors, Inc. served as investment adviser to
Government Portfolio. Linden and Forum Advisors, Inc. also acted as investment
subadvisors to each Portfolio that they did not manage on a daily basis. On
January 2, 1998, Forum Advisors, Inc. acquired Linden and reorganized into a new
company named Forum Investment Advisors, LLC. These transactions have not
effected any change in advisory staff, portfolio managers, or advisory fees, or
any other material change.
Table 1 in Appendix C shows the dollar amount of fees paid under the investment
advisory agreements between Core Trust and Linden and between Core Trust and
Forum Advisors, Inc., as applicable, with respect to each Portfolio or, prior to
Daily Assets Government Fund investing in Government Portfolio, the dollar
amount of fees paid under the Investment Advisory Agreement between the Trust
and Forum Advisors, Inc. with respect to the Fund. This information is provided
for the past three years (or shorter time a Fund or Portfolio has been
operational).
The Advisory Agreement is terminable without penalty by Core Trust with respect
to the Portfolio on 60 days' written notice when authorized either by vote of
the Portfolio's interestholders or by a vote of a majority of the Core Trust
Board, or by FIA on not more than 60 days' nor less than 30 days' written
notice, and will automatically terminate in the event of its assignment. The
Advisory Agreement also provides that, with respect to a Portfolio, FIA shall
not be liable for any error of judgment or mistake of law or for any act or
omission in the performance of its duties to the Portfolio, except for willful
misfeasance, bad faith or gross negligence in the performance of FIA's duties or
by reason of reckless disregard of its obligations and duties under the Advisory
Agreement. The Advisory Agreement provides that FIA may render services to
others.
For its services, FIA receives an advisory fee at an annual rate of 0.05% of
Government Portfolio's and Municipal Cash Portfolio's average daily net assets
For services provided to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio, FIA receives an advisory fee based upon the total average daily
net assets of those Portfolios ("Total Portfolio Assets"). FIA's fee is
calculated at an annual rate on a cumulative basis as follows: 0.06% of the
first $200 million of Total Portfolio Assets, 0.04% of the next $300 million of
Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets.
Prior to January 15, 1996, Forum Advisors, Inc. acted as Daily Assets Government
Fund's investment adviser under an investment advisory agreement with Forum
Funds, Inc. Under that investment advisory agreement, Forum Advisors, Inc.
received a fee at an annual rate of 0.20% of the average daily net assets of the
Fund.
In addition to receiving an advisory fee from a Portfolio it advises, FIA may
also act and be compensated as investment manager for its clients with respect
to assets which are invested in the Portfolio. In some instances, FIA may elect
to credit against any investment management fee received from a client who is
also a shareholder in the Portfolio an amount equal to all or a portion of the
fees received by FIA or any affiliate of FIA from the Portfolio with respect to
the client's assets invested in the Portfolio.
The Trust has confirmed its obligation to pay all of its expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the custodian, transfer agent
and dividend disbursing agent; telecommunications expenses; auditing, legal and
compliance expenses; costs of forming the trust and maintaining corporate
existence; costs of preparing and printing the Trust's prospectuses,
17
<PAGE>
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.
Anthony R. Fischer, Jr., is primarily responsible for the day-to-day management
of the Portfolios. Mr. Fischer was the sole stockholder, director and officer of
Linden from 1992 until its acquisition by FIA. He has been primarily responsible
for the day-to-day management of Treasury Cash Portfolio, Government Cash
Portfolio and Cash Portfolio since their inception. Mr. Fischer has over
twenty-five years experience in the money market industry. From 1984 through
1989, Mr. Fischer served as Senior Vice President and Treasurer of United
California Savings Bank, Santa Ana, California, and prior thereto, as a Manager
for five years at PaineWebber Jackson & Curtis, New York, New York.
ADMINISTRATION
Table 2 in Appendix C shows the dollar amount of fees paid for administrative
services by the Funds and the Portfolios. This information is provided for the
past three years (or shorter time a Fund or Portfolio has been operational).
THE TRUST. Pursuant to an administration agreement (the "Trust Administration
Agreement"), FAdS supervises the overall management of the Trust (which
includes, among other responsibilities, negotiation of contracts and fees with,
and monitoring of performance and billing of, the transfer agent and custodian
and arranging for maintenance of books and records of the Trust) and provides
the Trust with general office facilities. The Trust Administration Agreement may
be terminated by either party without penalty on 60 days' written notice and may
not be assigned except upon written consent by both parties. The Trust
Administration Agreement also provides that FAdS shall not be liable for any
error of judgment or mistake of law or for any act or omission in the
administration or management of the Trust, except for willful misfeasance, bad
faith or gross negligence in the performance of FAdS's duties or by reason of
reckless disregard of its obligations and duties under the Trust Administration
Agreement. Prior to June 19, 1997, FFSI provided administration services to the
Trust.
FAdS provides persons satisfactory to the Board to serve as officers of the
Trust. Those officers, as well as certain other employees and Trustees of the
Trust, may be Trustees, officers or employees of (and persons providing services
to the Trust may include) FAdS, FFSI, their affiliates or affiliates of FIA.
CORE TRUST. Pursuant to a management agreement with Core Trust (the "Core Trust
Management Agreement"), FAdS supervises the overall management of Core Trust
(which includes, among other responsibilities, negotiation of contracts and fees
with, and monitoring of performance and billing of, the custodian and arranging
for maintenance of books and records of Core Trust) and provides Core Trust with
general office facilities. The Core Trust Management Agreement provides, with
respect to the Portfolios, for an initial term of one year from its effective
date and for its continuance in effect for successive twelve-month periods
thereafter, provided the agreement is specifically approved at least annually by
the Core Trust Board or by the interestholders of the Portfolios, and in either
case by a majority of the Trustees who are not parties to the Core Trust
Management Agreement or interested persons of any such party. Prior to November
15, 1997, FFSI provided administration services to Core Trust.
The Core Trust Management Agreement terminates automatically if it is assigned
and may be terminated without penalty with respect to the Portfolio by vote of a
Portfolio's shareholders or by either party on 60 days' written notice. The Core
Trust Management Agreement also provides that FAdS shall not be liable for any
error of judgment or mistake of law or for any act or omission in the
administration or management of Core Trust, except for willful misfeasance, bad
faith or gross negligence in the performance of Forum's duties or by reason of
reckless disregard of its obligations and duties under the Core Trust Management
Agreement.
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<PAGE>
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
FFSI was incorporated under the laws of the State of Delaware on February 7,
1986 and serves as distributor of shares of the Funds pursuant to a Distribution
Agreement between FFSI and the Trust (the "Distribution Agreement"). The
Distribution Agreement provides, with respect to each Fund, for an initial term
of one year from its effective date and for its continuance in effect for
successive twelve-month periods thereafter, provided the Distribution Agreement
is specifically approved at least annually by the Board or by the shareholders
of the Fund, and in either case by a majority of the Trustees who are not
parties to the Distribution Agreement or interested persons of any such party.
The Distribution Agreement terminates automatically if it is assigned and may be
terminated without penalty with respect to each Fund by vote of the Fund's
shareholders or by either party on 60 days' written notice. The Distribution
Agreement also provides that FFSI shall not be liable for any error of judgment
or mistake of law or for any act or omission in the performance of services to
the Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of FFSI's duties or by reason of reckless disregard of its
obligations and duties under the Distribution Agreement.
With respect to any class that has adopted a distribution plan, the Distribution
Agreement is also terminable upon similar notice by a majority of the Trustees
who (i) are not interested persons of the Trust and (ii) have no direct or
indirect financial interest in the operation of that distribution plan or in the
Distribution Agreement ("Qualified Trustees").
FFSI acts as sole placement agent for interests in the Portfolios and receives
no compensation for those services from the portfolios.
INVESTOR CLASS DISTRIBUTION PLAN. In accordance with Rule 12b-1 under the 1940
Act, with respect to the Investor Class of each Fund, the Trust adopted a
distribution plan (the "Investor Class Plan") which provides for the payment to
Forum of a Rule 12b-1 fee at the annual rate of 0.15% of the average daily net
assets of the Investor class of each Fund as compensation for Forum's services
as distributor.
The Investor Class Plan provides that all written agreements relating to that
plan must be approved by the Board, including a majority of the Qualified
Trustees. In addition, the Investor Class Plan (as well as the Distribution
Agreement) requires the Trust and Forum to prepare and submit to the Board, at
least quarterly, and the Board will review, written reports setting forth all
amounts expended under the Investor Class Plan and identifying the activities
for which those expenditures were made.
The Investor Class Plan provides that it will remain in effect for one year from
the date of its adoption and thereafter shall continue in effect provided it is
approved at least annually by the shareholders or by the Board, including a
majority of the Qualified Trustees. The Investor Class Plan further provides
that it may not be amended to increase materially the costs which may be borne
by the Trust for distribution pursuant to the Investor Class Plan without
shareholder approval and that other material amendments of the Investor Class
Plan must be approved by the Qualified Trustees. The Investor Class Plan may be
terminated at any time by the Board, by a majority of the Qualified Trustees, or
by a Fund's Investor class shareholders.
Table 3 in Appendix C shows the dollar amount of fees payable under the Investor
Class Plan with respect to each Fund. This information is provided for the past
three years (or shorter time a Fund has been operational).
19
<PAGE>
TRANSFER AGENT
FSS acts as transfer agent of the Trust pursuant to a transfer agency agreement
with the Trust (the "Transfer Agency Agreement"). The Transfer Agency Agreement
provides, with respect to the Funds, for an initial term of one year from its
effective date and for its continuance in effect for successive twelve-month
periods thereafter, provided that the Transfer Agency Agreement is specifically
approved at least annually by the Board or by a vote of the shareholders of each
Fund, and in either case by a majority of the Trustees who are not parties to
the Transfer Agency Agreement or interested persons of any such party at a
meeting called for the purpose of voting on the Transfer Agency Agreement.
Among the responsibilities of FSS as transfer agent for the Trust are: (1)
answering customer inquiries regarding account status and history, the manner in
which purchases and redemptions of shares of each Fund may be effected and
certain other matters pertaining to each Fund; (2) assisting shareholders in
initiating and changing account designations and addresses; (3) providing
necessary personnel and facilities to establish and maintain shareholder
accounts and records, assisting in processing purchase and redemption
transactions and receiving wired funds; (4) transmitting and receiving funds in
connection with customer orders to purchase or redeem shares; (5) verifying
shareholder signatures in connection with changes in the registration of
shareholder accounts; (6) furnishing periodic statements and confirmations of
purchases and redemptions; (7) arranging for the transmission of proxy
statements, annual reports, prospectuses and other communications from the Trust
to its shareholders; (8) arranging for the receipt, tabulation and transmission
to the Trust of proxies executed by shareholders with respect to meetings of
shareholders of the Trust; and (9) providing such other related services as the
Trust or a shareholder may reasonably request.
FSS or any sub-transfer agent or processing agent may also act and receive
compensation as custodian, investment manager, nominee, agent or fiduciary for
its customers or clients who are shareholders of a Fund with respect to assets
invested in that Fund. FSS or any sub-transfer agent or other processing agent
may elect to credit against the fees payable to it by its clients or customers
all or a portion of any fee received from the Trust or from the Transfer Agent
with respect to assets of those customers or clients invested in the Portfolio.
FSS, FAdS or sub-transfer agents or processing agents retained by the FSS may be
Processing Organizations (as defined in the Prospectus) and, in the case of
sub-transfer agents or processing agents, may also be affiliated persons of FSS
or FAdS.
For its services under the Transfer Agency Agreement, FSS receives an annual fee
from each Fund of (i) 0.02% of each Fund's average daily net assets attributable
to institutional Shares and 0.25% of each Fund's average daily net assets
attributable to Institutional Service Shares and Investor Shares (computed and
paid monthly in arrears by the Fund), (ii) $12,000 per year (computed and paid
monthly in arrears by the Fund) and (iii) Annual Shareholder Account Fees of
$125 per shareholder account in Institutional Shares and $18.00 per shareholder
account in Institutional Service Shares and Investor Shares (computed as of the
last business day of the prior month).
Table 4 in Appendix C shows the dollar amount of fees paid for transfer agency
services by the Funds. This information is provided for the past three years (or
shorter time a Fund has been operational).
SHAREHOLDER SERVICE PLAN AND AGREEMENTS
The Trust has adopted a shareholder service plan ("Shareholder Service Plan")
with respect to the Institutional Service class and the Investor class of each
Fund which provides that FAdS may obtain the services of financial institutions
to act as shareholder servicing agents for their customers invested in those
classes. The Shareholder Service Plan was effective on November 15, 1997 for the
Institutional Service class of those Funds then operating.
The Shareholder Service Plan provides that all written agreements relating to
that plan must be approved by the Board, including a majority of the Qualified
Trustees. In addition, the Shareholder Service Plan (as well as the various
shareholder service agreements) requires the Trust and FAdS to prepare and
submit to the Board, at least quarterly, and the Board will review written
reports setting forth all amounts expended under the plan and identifying the
activities for which those expenditures were made.
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The Shareholder Service Plan provides that it will remain in effect for one year
from the date of its adoption and thereafter shall continue in effect provided
it is approved at least annually by the shareholders or by the Board. The
Shareholder Service Plan further provides material amendments of the plan must
be approved by the Qualified Trustees. The Shareholder Service Plan may be
terminated at any time by the Board or by a majority of the Qualified Trustees.
The Trust may enter into shareholder servicing agreements with various
Shareholder Servicing Agents pursuant to which those agents, as agent for their
customers, may agree among other things to: (i) answer shareholder inquiries
regarding the manner in which purchases, exchanges and redemptions of shares of
the Trust may be effected and other matters pertaining to the Trust's services;
(ii) provide necessary personnel and facilities to establish and maintain
shareholder accounts and records; (iii) assist shareholders in arranging for
processing purchase, exchange and redemption transactions; (iv) arrange for the
wiring of funds; (v) guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
(vi) integrate periodic statements with other shareholder transactions; and
(vii) provide such other related services as the shareholder may request.
As Participating Organizations, some Shareholder Servicing Agents also may
impose certain conditions on their customers, subject to the terms of the
Trust's Prospectus, in addition to or different from those imposed by the Trust,
such as requiring a minimum initial investment or by charging their customers a
direct fee for their services. Some Shareholder Servicing Agents may also act
and receive compensation for acting as custodian, investment manager, nominee,
agent or fiduciary for its customers or clients who are shareholders of the
Funds with respect to assets invested in the Funds. These Shareholder Servicing
Agents may elect to credit against the fees payable to it by its clients or
customers all or a portion of any fee received from the Trust with respect to
assets of those customers or clients invested in the Funds.
Table 5 in Appendix C shows the dollar amount of fees paid under the Shareholder
Service Plan with respect to Institutional Service Shares and Investor Shares of
each Fund services by the Funds. This information is provided for the past three
years (or shorter time a Fund has been operational).
FUND ACCOUNTING
Pursuant to a Fund Accounting Agreement, FAcS provides the Funds with accounting
services, including the calculation of the Fund's net asset value. For these
services, FAcS receives an annual fee ranging from $12,000 to $36,000 depending
upon the number of securities in which the Fund invests and the number of
classes in the Fund. Pursuant to a Fund Accounting Agreement with Core Trust,
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 year plus surcharges depending upon the
amount and type of the Portfolio's portfolio transactions and positions. The Fee
for Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio is the
lesser of 0.05% of the average daily net assets of the Portfolios or $48,000
plus, for each investor in a Portfolio above one (excluding FFSI and its
affiliates), $6,000 per year.
FAcS is required to use its best judgment and efforts in rendering fund
accounting services and is not liable to Core Trust for any action or inaction
in the absence of bad faith, willful misconduct or gross negligence. FAcS is not
responsible or liable for any failure or delay in performance of its fund
accounting obligations arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control and Core Trust has agreed to
indemnify and hold harmless FAcS, its employees, agents, officers and directors
against and from any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising out of or in any way related to FAcS's
actions taken or failures to act with respect to a Portfolio or based, if
applicable, upon information, instructions or requests with respect to a
Portfolio given or made to FAcS by an officer of the Trust duly authorized. This
indemnification does not apply to FAcS actions taken or failures to act in cases
of FAcS's own bad faith, willful misconduct or gross negligence.
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Table 6 in Appendix C shows the dollar amount of fees paid for accounting
services by the Funds and the Portfolios. This information is provided for the
past three years (or shorter time a Fund or Portfolio has been operational).
FORUM FINANCIAL GROUP
FIA, FFSI, FSS and FAcS are members of the Forum Financial Group of Companies.
Each of these companies are affiliated through the common control by John Y.
Keffer.
7. DETERMINATION OF NET ASSET VALUE
The Funds do not determine net asset value on the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas. Purchases and redemptions are effected at the time of the next
determination of net asset value following the receipt of any purchase or
redemption order.
Pursuant to the rules of the SEC, both the Board and the Core Trust Board have
established procedures to stabilize each Fund's and each Portfolio's, as
applicable, net asset value at $1.00 per share. These procedures include a
review of the extent of any deviation of net asset value per share as a result
of fluctuating interest rates, based on available market rates, from each Fund's
and Portfolio's, as applicable, $1.00 amortized cost price per share. Should
that deviation exceed 1/2 of 1%, the Board and the Core Trust Board,
respectively, will consider whether any action should be initiated to eliminate
or reduce material dilution or other unfair results to shareholders. Such action
may include redemption of shares in kind, selling portfolio securities prior to
maturity, reducing or withholding dividends and utilizing a net asset value per
share as determined by using available market quotations.
In determining the approximate market value of portfolio investments, the
Portfolios may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried at their face value.
Each investor in a Portfolio, including the Funds, may add to or reduce its
investment in that Portfolio on each business day of the Portfolios (which
corresponds to Fund Business Days). The Portfolios maintain the same Business
Days as do the Funds. As of the close of regular trading on any Fund Business
Day, the value of a Fund's beneficial interest in a Portfolio is determined by
multiplying the net asset value of the Portfolio by the percentage, effective
for that day, which represents the Fund's share of the aggregate beneficial
interests in the Portfolio. Any additions or reductions, which are to be
effected as of the close of the Fund Business Day, are then effected. The Fund's
percentage of the aggregate beneficial interests in the Portfolio are then
recomputed as the percentage equal to the fraction (i) the numerator of which is
the value of the Fund's investment in the Portfolio as of the close of the Fund
Business Day plus or minus, as the case may be, the amount of net additions to
or reductions from the Fund's investment in the Portfolio effected as of that
time, and (ii) the denominator of which is the aggregate net asset value of the
Portfolio as of the close of the Fund Business Day plus or minus, as the case
may be, the amount of net additions to or reductions from the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
determined is then applied to determine the value of the Fund's interest in the
Portfolio as of the close of the next Fund Business Day.
8. PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities for the Portfolio usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. Although Core
Trust does not anticipate that the Portfolio will pay any amounts of commission,
in the event the Portfolio pays brokerage commissions or other
transaction-related
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compensation, the payments may be made to broker-dealers who pay expenses of the
Portfolio that it would otherwise be obligated to pay itself. Any transaction
for which the Portfolio pays transaction-related compensation will be effected
at the best price and execution available, taking into account the amount of any
payments made on behalf of the Portfolio by the broker-dealer effecting the
transaction. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market makers include the spread between the bid and
asked prices.
Since each Fund's and Portfolio's inception, no brokerage fees were paid by any
Fund (during those periods of the Funds invested directly in securities), nor
any Portfolio.
Allocations of transactions to dealers and the frequency of transactions are
determined for each Portfolio by FIA in its best judgment and in a manner deemed
to be in the best interest of shareholders of that Portfolio rather than by any
formula. The primary consideration is prompt execution of orders in an effective
manner and at the most favorable price available to the Portfolio.
Investment decisions for the Portfolios will be made independently from those
for any other account or investment company that is or may in the future become
managed by FIA or its respective affiliates. If, however, a Portfolio and other
investment companies or accounts managed by FIA is contemporaneously engaged in
the purchase or sale of the same security, the transactions may be averaged as
to price and allocated equitably to each account. In some cases, this policy
might adversely affect the price paid or received by a Portfolio or the size of
the position obtainable for the Portfolio. In addition, when purchases or sales
of the same security for a Portfolio and for other investment companies managed
by FIA occur contemporaneously, the purchase or sale orders may be aggregated in
order to obtain any price advantages available to large denomination purchases
or sales.
No portfolio transactions are executed with FIA or any of its affiliates.
9. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Funds are sold on a continuous basis by the distributor without
any sales charge.
In addition to the situations described in the Prospectus, the Trust may redeem
shares involuntarily to reimburse a Fund for any loss sustained by reason of the
failure of a shareholder to make full payment for shares purchased by the
shareholder or to collect any charge relating to transactions effected for the
benefit of a shareholder which is applicable to a Fund's shares as provided in
the Prospectus from time to time.
The Trust has filed a formal election with the SEC pursuant to which the Funds
will only effect a redemption in portfolio securities in kind if a shareholder
is redeeming more than $250,000 or 1% of the Fund's total net assets, whichever
is less, during any 90-day period.
The Funds may wire proceeds of redemptions to shareholders that have elected
wire redemption privileges only if the wired amount is greater than $5,000. In
addition, the Funds will only wire redemption proceeds to financial institutions
located in the United States.
By use of the telephone redemption or exchange privilege, the shareholder
authorizes FSS to act upon the instruction of any person representing himself to
either be, or to have the authority to act on behalf of, the investor and
believed by FSS to be genuine. The records of FSS of such instructions are
binding.
FSS will deem a shareholder's account "lost" if correspondence to the
shareholder's address of record is returned for six months, unless the Transfer
Agent determines the shareholder's new address. When an account is deemed lost
all distributions on the account will be reinvested in additional shares of the
Fund. In addition, the amount of any outstanding (unpaid for six months or more)
checks for distributions that have been returned to FSS will be reinvested and
the checks will be canceled.
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EXCHANGE PRIVILEGE
The exchange privilege permits shareholders of the Funds to exchange their
shares for shares of any Participating Fund, which includes (i) the same class
of the other Funds and (ii) any other mutual fund for which Forum or its
affiliates act as investment adviser, manager or distributor and which
participates in the Trust's exchange privilege program. The following table
summarizes the current exchange opportunities associated with class of each
shares of the Funds.
<TABLE>
<S> <C>
Class of Shares Exchange Opportunities
--------------- ----------------------
Investor Shares Other Funds (Investor Shares)
Other series of the Trust
Sound Shore Fund, Inc.
The CRM Funds (Investor Shares)
The Cutler Trust
Memorial Funds (Trust Shares)
Institutional Shares Other Funds (Institutional Shares)
Institutional Service Shares Other Funds (Institutional Service Shares)
The CRM Funds (Institutional Shares)
Memorial Funds (Institutional Shares)
</TABLE>
Exchange transactions are made on the basis of relative net asset values per
share at the time of the exchange transaction plus any applicable sales charge
of the Participating Fund whose shares are acquired. Exchanges are accomplished
by (i) a redemption of the shares of the Fund exchanged at the next
determination of that Fund's net asset value after the exchange order in proper
form (including any necessary supporting documents required by the Fund whose
shares are being exchanged) is accepted by the Transfer Agent and (ii) a
purchase of the shares of the fund acquired at the next determination of that
fund's net asset value after (or occurring simultaneously with) the time of
redemption.
Shares of any Participating Fund may be exchanged without a sales charge for
shares of any Participating Fund that are offered without a sales charge. If the
Participating Fund whose shares are purchased in the exchange transaction
imposes a higher sales charge the shareholder will be required to pay the sales
charge on the purchased shares. Shareholders are entitled to any reduced sales
charges of the Participating Fund into which they are exchanging to the extent
those reduced sales charges would be applicable to that shareholder's purchase
of shares.
The Funds do not charge for the exchange privilege and there is currently no
limit on the number of exchanges a shareholder may make, but each Fund reserves
the right to limit excessive exchanges by any shareholder. A pattern of frequent
exchanges may be deemed by the Transfer Agent to be contrary to the best
interests of the Fund's other shareholders and, at the discretion of the
Transfer Agent, may be limited by that Fund's refusal to accept additional
exchanges from the investor.
The terms of the exchange privilege are subject to change, and the privilege may
be terminated by any Participating Fund or the Trust. However the privilege will
not be terminated, and no material change that restricts the availability of the
privilege to shareholders will be implemented, without 60 days' advance notice
to shareholders. No notice need be given of an amendment whose only material
effect is to reduce amount of sales charge required to be paid on the exchange
and no notice need be given if redemptions of shares of a Fund are suspended or
a Fund temporarily delays or ceases the sale of its shares.
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INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The Funds (other than Daily Assets Municipal Fund) offer an individual
retirement plan (the "IRA") for individuals who wish to use shares of a Fund as
a medium for funding individual retirement savings. Under the IRA, distributions
of net investment income and capital gain will be automatically reinvested in
the IRA established for the investor. The Funds' custodian furnishes custodial
services to the IRAs for a service fee. Shareholders wishing to invest in a Fund
through an IRA should contact the Transfer Agent for further information.
10. TAXATION
Qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended, does not involve governmental supervision of management or
investment practices or policies. The information set forth in the Prospectuses
and the following discussion relate solely to Federal income taxes on
distributions and other distributions by the Funds and assumes that the Funds
each qualify for treatment as a regulated investment company. Investors should
consult their own counsel for further details and for the application of
Federal, state and local tax laws to the investor's particular situation.
In order to continue to qualify for treatment as a regulated investment company
under the Internal Revenue Code, a Fund must distribute to its shareholders for
each taxable year at least 90% of its net investment income and must meet
several additional requirements. Among these requirements are the following: (1)
the Fund must derive at least 90% of its gross income each taxable year from
distributions, interest, payments with respect to securities loans, gains from
the sale or other disposition of securities and certain other income; (2)
subject to certain exceptions, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, securities of investment companies, U.S. Government
Securities and other securities, with these other securities limited, in respect
of any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets; and (3) subject to certain exceptions, at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than securities of investment
companies and U.S. Government Securities) of any one issuer.
The Funds expect to derive substantially all of their gross income (exclusive of
capital gain) from sources other than dividends. Accordingly, it is expected
that none of the Funds' dividends or distributions will qualify for the
dividends-received deduction for corporations.
Distributions declared by the Fund in October, November, or December of any year
and payable to shareholders of record on a date in such a month will be deemed
to have been paid by the Fund and received by the shareholders on December 31 of
the year declared if paid by the Fund during the following January.
11. OTHER INFORMATION
CUSTODIAN
Pursuant to a Custodian Agreement with Core Trust, BankBoston N.A., 100 Federal
Street, Boston, Massachusetts 02106, acts as the custodian of Government
Portfolio's assets. Pursuant to a Custodian Agreement with Core Trust, Imperial
Trust Company, 201 North Figueroa Street, Suite 610, Los Angeles, California
90012, acts as the custodian of each other Portfolio's assets. The custodians'
responsibilities include safeguarding and controlling the Portfolios cash and
securities and determining income payable on and collecting interest on
Portfolio investments.
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.
FUND STRUCTURE
CORE AND GATEWAY. The Funds seek to achieve their objective by investing all of
their investable assets in a separate portfolio of a registered, open-end
management investment company with substantially the same investment objective
and policies as the Fund. This "Core and Gateway" fund structure is an
arrangement whereby one or more investment companies or other collective
investment vehicles that share investment objectives -- but offer their shares
through distinct distribution channels -- pool their assets by investing in a
single investment company having substantially the same investment objective and
policies (a "Core Portfolio"). This means that the only investment securities
that will be held by a Fund will be the Fund's interest in the Core Portfolio.
This structure permits other collective investment vehicles to invest
collectively in a Core Portfolio, allowing for greater
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economies of scale in managing operations of the single Core Portfolio. The
Board retains the right to withdraw a Fund's investments from a Core Portfolio
at any time; the Fund would then resume investing directly in individual
securities of other issuers or could re-invest all of its assets in another Core
Portfolio.
FUND SHAREHOLDERS' VOTING RIGHTS. A Core Portfolio normally will not hold
meetings of its investors except as required under the 1940 Act. As a
shareholder in a Core Portfolio, a Fund is entitled to vote in proportion to its
relative interest in the Core Portfolio. On any issue, a Fund will vote its
shares in a Core Portfolio in proportion to the votes cast by its shareholders.
If there are other investors in a Core Portfolio, there can be no assurance that
any issue that receives a majority of the votes cast by the Fund's shareholders
will receive a majority of votes cast by all Core Portfolio shareholders.
Generally, a Fund will hold a meeting of its shareholders to obtain instructions
on how to vote its interest in a Core Portfolio when the Core Portfolio is
conducting a meeting of its shareholders. However, subject to applicable
statutory and regulatory requirements, a Fund will not seek instructions from
its shareholders with respect to (i) any proposal relating to a Core Portfolio
that, if made with respect to the Fund, would not require the vote of Fund
shareholders, or (ii) any proposal relating to the Core Portfolio that is
identical to a proposal previously approved by the Fund's shareholders.
In addition to a vote to remove a trustee or change a fundamental policy,
examples of matters that will require approval of shareholders of a Core
Portfolio include, subject to applicable statutory and regulatory requirements:
the election of trustees; approval of an investment advisory contract; the
dissolution of a Core Portfolio; certain amendments of the organizational
documents for the Core Portfolio; a merger, consolidation or sale of
substantially all of a Core Portfolio's assets; or any additional matters
required or authorized by the charter or trust instrument and by-laws of a Core
Portfolio or any registration statement of a Core Portfolio, or as the directors
or trustees of the Core Portfolio may consider desirable. The board of trustees
of a Core Portfolio will typically reserve the power to change nonfundamental
policies without prior shareholder approval.
CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Core
Portfolio may be affected by the actions of other large investors in the Core
Portfolio, if any. For example, if the Core Portfolio had a large investor other
than the Fund that redeemed its interest in the Core Portfolio, the Core
Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from the Core Portfolio at any time,
if the Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if other investors in
the Core Portfolio, by a vote of shareholders, changed the investment objective
or policies of the Core Portfolio in a manner not acceptable to the Board. A
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Core Portfolio. That distribution could
result in a less diversified portfolio of investments for the Fund and could
affect adversely the liquidity of the Fund's portfolio. If the Fund decided to
convert those securities to cash, it normally would incur transaction costs. If
a Fund withdrew its investment from the Core Portfolio, the Board would consider
what action might be taken, including the management of the Fund's assets in
accordance with its investment objective and policies by FIA or the investment
of all of the Fund's investable assets in another pooled investment entity
having substantially the same investment objective as the Fund.
12. FINANCIAL STATEMENTS
AUGUST 31, 1997 ANNUAL REPORT
The Statements of Assets and Liabilities, Statements of Operations, Statements
of Changes in Net Assets, Financial Highlights and Notes Thereto of Daily Assets
Government Fund (formerly known as Daily Assets Treasury Fund) and Daily Assets
Cash Fund for the fiscal year ended August 31, 1997 and the Independent
Auditors' Report thereon (included in the Annual Report to Shareholders), which
are delivered along with this SAI, are incorporated herein by reference. Also
incorporated by reference into this SAI are the Schedules of Investments,
Statements of Assets and Liabilities, Statements of Operations, Statements of
Changes in Net Assets, and notes thereto, of Government Portfolio (formerly
known as Treasury Portfolio) and Cash Portfolio for the fiscal year ended August
31, 1997 and the Independent Auditors' Report thereon.
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FEBRUARY 28, 1998 SEMI-ANNUAL REPORT
The Statements of Assets and Liabilities, Statements of Operations, Statements
of Changes in Net Assets, Financial Highlights and Notes Thereto of Daily Assets
Government Fund (formerly known as Daily Assets Treasury Fund), Daily Assets
Treasury Obligations Fund, Daily Assets Government Obligations Fund (formerly
known as Daily Assets Government Fund) and Daily Assets Cash Fund for the
semi-annual period ended February 28, 1998 (included in the Semi-Annual Report
to Shareholders), which are delivered along with this SAI, are incorporated
herein by reference. Also incorporated by reference into this SAI are the
Schedules of Investments, Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets, and notes thereto, of
Government Portfolio (formerly known as Treasury Portfolio) and Cash Portfolio
for the semi-annual period ended February 28, 1998.
DAILY ASSETS MUNICIPAL FUND
As Daily Assets Municipal Fund and Municipal Cash Portfolio had not as of
February 28, 1998 commenced operations, no financial statements will be
available until after August 31, 1998.
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APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
CORPORATE BONDS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S"). Bonds which are rated Aaa are
judged by Moody's to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Note: Those bonds in the Aa and A groups which Moody's believes possess the
strongest investment attributes are
designated by the symbols Aa1 and A1.
STANDARD AND POOR'S CORPORATION ("S&P"). Bonds rated AAA have the highest rating
assigned by S&P. Capacity to pay interest and repay principal is extremely
strong.
Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.
Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt rated in higher rated
categories.
Note: The ratings for AA and A may be modified by the addition of a plus (+) or
minus (-) sign to show the relative standing within the rating category.
FITCH INVESTORS SERVICE, INC. ("FITCH"). AAA Bonds are considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events.
AA Bonds are considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, shorter-term debt of these issuers is generally rate F-1+.
A Bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA categories.
29
<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 INVESTORS SERVICE, INC. Fitch's short-term ratings apply to debt
obligations that are payable on demand or have original maturities of generally
up to three years, including commercial paper, certificates of deposit,
medium-term notes, and municipal and investment notes.
F-1+. Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
F-2. Issues assigned this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1 ratings.
30
<PAGE>
APPENDIX B - PERFORMANCE INFORMATION
For the seven day period ended August 31, 1997, the annualized yields of each of
the classes of the Funds that were then operating were as follows:
<TABLE>
<S> <C> <C> <C> <C>
TAX EQUIVALENT TAX EQUIVALENT
CURRENT YIELD EFFECTIVE YIELD CURRENT YIELD EFFECTIVE YIELD
DAILY ASSETS TREASURY
OBLIGATIONS FUND
Investor Shares -- -- -- --
Institutional Service Shares -- -- -- --
Institutional Shares -- -- -- --
DAILY ASSETS GOVERNMENT FUND
Investor Shares -- -- -- --
Institutional Service Shares 4.76% 4.87% -- --
Institutional Shares -- -- -- --
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
Investor Shares -- -- -- --
Institutional Service Shares -- -- -- --
Institutional Shares -- -- -- --
DAILY ASSETS CASH FUND
Investor Shares -- -- -- --
Institutional Service Shares 5.19% 5.33% -- --
Institutional Shares -- -- -- --
DAILY ASSETS MUNICIPAL FUND
Investor Shares -- -- -- --
Institutional Service Shares -- -- -- --
Institutional Shares -- -- -- --
</TABLE>
As of August 31, 1997, there were no outstanding Institutional Shares, Investor
Shares or Institutional Service Shares of each Fund other than Daily Assets
Government Fund and Daily Assets Cash Fund.
31
<PAGE>
APPENDIX C- MISCELLANEOUS TABLES
TABLE 1 - INVESTMENT ADVISORY FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1997 0
Year ended August 31, 1996 12,930 0 12,930
GOVERNMENT PORTFOLIO
Period ended August 31, 1997 9,064 0 9,064
Year ended March 31, 1997 20,637 0 20,637
Year ended March 31, 1996 69,466 0 69,466
Year ended March 31, 1995 59,382 53,382 6,000
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1997 196,857 0 196,857
Year ended August 31, 1996 156,552 0 156,552
CASH PORTFOLIO
Year ended August 31, 1997 72,872 0 72,872
Year ended August 31, 1996 38,083 0 38,083
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1997 -- -- --
</TABLE>
32
<PAGE>
TABLE 2 - ADMINISTRATION FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1997 24,287 14,346 9,941
Year ended August 31, 1996 19,198 9,307 9,891
GOVERNMENT PORTFOLIO
Period ended August 31, 1997 18,128 18,128 0
Year ended March 31, 1997 41,274 41,274 0
Year ended March 31, 1996(1)
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1997 252,821 0 252,821
Year ended August 31, 1996 230,547 104,558 125,989
CASH PORTFOLIO
Year ended August 31, 1997 92,652 7,621 85,031
Year ended August 31, 1996 56,125 3,719 52,406
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1997 -- -- --
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Period ended August 31, 1997 18,123 0 18,123
Year ended March 31, 1997 41,232 7,453 33,779
Year ended March 31, 1996
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Year ended August 31, 1997 7,453 7,453 0
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1997 -- -- --
</TABLE>
33
<PAGE>
TABLE 3 - INVESTOR SHARES RULE 12B-1 FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Period ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Period ended August 31, 1997 -- -- --
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1997 -- -- --
</TABLE>
For the fiscal year ended August 31, 1997, no Investor Shares were outstanding
and, accordingly, no fees were payable under the Investor Class Plan.
34
<PAGE>
TABLE 4 - TRANSFER AGENCY FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
Period ended August 31, 1997 50,810 44,054 6,756
Year ended March 31, 1997 116,051 101,485 14,566
Year ended March 31, 1996 110,792 96,881 13,911
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Institutional Service Shares
Period ended August 31, 1997 29,772 17,766 12,006
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
</TABLE>
As of August 31, 1997, there were no outstanding Institutional Shares, Investor
Shares or Institutional Service Shares of each Fund other than Daily Assets
Government Fund and Daily Assets Cash Fund.
35
<PAGE>
TABLE 5 - SHAREHOLDER SERVICE FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
Period ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
Year ended August 31, 1997 -- -- --
Investor Shares
Period ended August 31, 1997 -- -- --
</TABLE>
As of August 31, 1997, there were no outstanding Investor Shares and no
effective Shareholder Plan with respect to Institutional Service Shares of any
Fund.
36
<PAGE>
TABLE 6 - FUND ACCOUNTING FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1997 24,279 0 24,279
Year ended August 31, 1996 28,518 19,955 8,563
GOVERNMENT PORTFOLIO
Period ended August 31, 1997 20,000 0 20,000
Year ended March 31, 1997 48,000 0 48,000
Year ended March 31, 1996(1)
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1997 48,000 0 48,000
Year ended August 31, 1996 42,000 0 42,000
CASH PORTFOLIO
Year ended August 31, 1997 48,000 0 48,000
Year ended August 31, 1996 42,000 14,957 27,043
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1997 -- -- --
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Period ended August 31, 1997 5,000 0 5,000
Year ended March 31, 1997 12,000 0 12,000
Year ended March 31, 1996
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Year ended August 31, 1997
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1997 -- -- --
</TABLE>
37
<PAGE>
TABLE 7 - 5% SHAREHOLDERS
As of May 1, 1998, the officers and Trustees of the Trust as a group owned less
than 1% of the outstanding shares of each Fund. Also as of that date, the
following table lists the persons who owned of record 5% or more of the
outstanding shares of a class of shares, as well as their percentage holding of
all shares of the Fund
<TABLE>
<S> <C> <C>
PERCENTAGE OF SHARES PERCENTAGE OF SHARES
OF CLASS OWNED OF FUND OWNED
DAILY ASSETS TREASURY OBLIGATIONS FUND
Investor Shares
Forum Administrative Services, LLC 100.00 0.00
Two Portland Square, Portland, ME 04101
Institutional Shares
Babb & Co., C/O Bank of New Hampshire 99.90 96.97
P.O. Box 477, Concord, NH 03302
Institutional Service Shares
Allagash & Co., C/O Bank of New Hampshire 100.00 2.93
P.O. Box 477, Concord, NH 03302
DAILY ASSETS GOVERNMENT FUND
Institutional Shares
Forum Financing 100.00 0.00
Two Portland Square, Portland, ME 04101
Institutional Service Shares
H.M. Payson & Co. Custody Account 54.07 54.07
P.O. Box 31, Portland, ME 04112
H.M. Payson & Co. Custody Account 25.71 25.71
P.O. Box 31, Portland, ME 04112
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Investor Shares
Forum Administrative Services, LLC 100.00 0.00
Two Portland Square, Portland, ME 04101
Institutional Shares
Allagash & Co., C/O Bank of New Hampshire 61.79 61.77
P.O. Box 477, Concord, NH 03302
Babb & Co., C/O Bank of New Hampshire 38.21 38.20
P.O. Box 477, Concord, NH 03302
Institutional Service Shares
Mike Stone, C/O Peoples Heritage Bank 99.85 0.03
P.O. Box 9540, Portland, ME04112
DAILY ASSETS CASH FUND
Investor Shares
Forum Administrative Services, LLC 100.00 0.00
Two Portland Square, Portland, ME 04101
Institutional Shares 100.00 34.66
Allagash & Co., C/O Bank of New Hampshire
P.O. Box 477, Concord, NH 03302
Institutional Service Shares
H.M. Payson & Co. Custody Account 58.43 38.17
P.O. Box 31, Portland, ME 04112
H.M. Payson & Co. Trust Account 37.29 24.36
P.O. Box 31, Portland, ME 04112
</TABLE>
38
<PAGE>
APPENDIX D- ADDITIONAL ADVERTISING MATERIALS
TEXT OF PEOPLES HERITAGE NEWS RELEASE
Peoples Heritage Financial Group, Inc. (NASDAQ:PHBK) announced today that it has
formed an alliance with a major mutual fund provider and an investment advisory
firm to expand its mutual fund offerings. The alliance with Forum Financial
Group and H.M. Payson & Company will result in 18 funds, including the unique
Maine Municipal Bond Fund and New Hampshire Bond Fund, being offered through the
branches of Peoples' affiliate banks in Maine, New Hampshire and northern
Massachusetts and the Company's trust and investment subsidiaries
'There is no secret to where financial services are moving, under one roof,"
said William J. Ryan, Chairman, President and Chief Executive Officer of Peoples
Heritage. "One only has to watch the virtually daily announcements of
consolidations in the financial sector to understand that customers are
demanding and receiving 'one-stop' financial services.
"We think we are adding the additional competitive advantage of funds that are
managed and administered close to home."
Eighteen Forum funds will be offered including two Payson funds. The tax-free
Maine and New Hampshire state bond funds are the only two such funds available
and usually invest 80% of total assets in municipal securities. Other funds
being provided by the alliance include money market, fixed income and equity
funds.
Forum Financial, based in Portland, Maine since 1987, administers 146 funds with
more than $36 billion in assets. Forum manages mutual funds for independent
investment advisors such as Payson and for banks. Forum Investment Advisors, LLC
an affiliate, is the largest Maine-based investment advisor with approximately
$1.7 billion in fund assets under management.
"We are providing a great product set to the customers served by Peoples' nearly
200 branches in northern New England," said John Y. Keffer, Forum Financial
president, "The key today is to link a wide variety of investment options with
convergent, easy access for customers. I believe this alliance does just that."
H.M. Payson & Co., founded in 1854, is one of the nation's oldest investment
firms with nearly $1 billion in assets under management and $300 million in
non-managed custodial accounts. The Payson value Fund and Payson Balanced Fund
are among the 18 offerings.
"I believe we have all the ingredients of a tremendous alliance," said John
Walker, Payson president and managing director. "We have the region's premier
community banking company, a community-based investment advisor, and a local
mutual fund company that operates nationally and specializes in working with
banks. We are poised to provide solid investment performance and service."
39
<PAGE>
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.
40
<PAGE>
FORUM FINANCIAL GROUP:
Headquarters: Two Portland Square, Portland, Maine 04101
President: John Y. Keffer
Offices: Portland, Seattle, Warsaw, Bermuda
*Established in 1986 to administer mutual funds for independent investment
advisors and banks *Among the nation's largest third-party fund administrators
*Uses proprietary in-house systems and custom programming capabilities
*ADMINISTRATION AND DISTRIBUTION SERVICES: Regulatory, compliance,
expense accounting, budgeting for all funds
*FUND ACCOUNTING SERVICES: Portfolio valuation, accounting, dividend
declaration, and tax advice
*SHAREHOLDER SERVICES: Preparation of statements, distribution
support, inquiries and processing of trades
*CLIENT ASSETS UNDER ADMINISTRATION AND DISTRIBUTION: $36.9 billion
*CLIENT ASSETS PROCESSED BY FUND ACCOUNTING: $47.6 billion
*CLIENT FUNDS UNDER ADMINISTRATION AND DISTRIBUTION: 146 mutual funds with 219
share classes
*INTERNATIONAL VENTURES:
Joint venture with Bank Handlowy in Warsaw, Poland, using Forum's
proprietary transfer agency and distribution systems Off-shore
investment fund administration, using Bermuda as Forum's center of
operations
*FORUM EMPLOYEES: United States -198, Poland - 61, Bermuda - 3
FORUM CONTACTS:
Mark Kaplan, Managing Director and Portfolio Manager, Forum Investment Advisors,
LLC,
(207) 879-1900 X 6123
Tony Santaniello, Director of Marketing, (207) 879-1900 X 6175
41
<PAGE>
H.M. PAYSON & CO.:
Headquarters: One Portland Square, Portland, Maine
President and Managing Director: John Walker
Quality investment services and conservative wealth management since 1854
*Assets under Management: $1 Billion
*Custody Income Assets: $300 Million
*Client Base: 85% individuals; 15% institutional
*Owned by 11 shareholders; 11 managing directors
*Payson Balanced Fund and Payson Value Fund (administrative and shareholder
services provided by Forum Financial Group)
*Employees: 45
H.M. PAYSON & CO. CONTACT:
Joel Harris, Portfolio/Marketing Coordinator, (207) 772-3761
42
<PAGE>
TEXT OF FORUM BROCHURE
In connection with its advertisements, a Fund may provide a description of the
Fund's investment adviser and its affiliates, which are service providers to the
Fund. Text which is currently in use is set forth below.
"FORUM FINANCIAL GROUP OF COMPANIES
Forum Financial Group of Companies represent more than a decade of diversified
experience with every aspect of mutual funds. The Forum Family of Funds has
benefited from the informed, sharply focused perspective on mutual funds that
experience makes possible.
The Forum Family of Funds has been created and managed by affiliated companies
of Portland-based Forum Financial Group, among the nation's largest mutual fund
administrators providing clients with a full line of services for every type of
mutual fund.
The Forum Family of Funds is designed to give investment representatives and
investors a broad choice of carefully structured and diversified portfolios,
portfolios that can satisfy a wide variety of immediate as well as long-term
investment goals.
Forum Financial Group has developed its "brand name" family of mutual funds and
has made them available to the investment public and to institutions on both the
national and regional levels.
For more than a decade Forum has had direct experience with mutual funds from a
different perspective, a perspective made possible by Forum's position as a
leading designer and full-service administrator and manager of mutual funds of
all types.
Today Forum Financial Group administers and provides services for over 120
mutual funds for 17 different fund managers, with more than $30 billion in
client assets. Forum has its headquarters in Portland, Maine, and has offices in
Seattle, Bermuda, and Warsaw, Poland. In a joint venture with Bank Handlowy, the
largest and oldest commercial bank in Poland, Forum operates the only
independent transfer agent and mutual fund accounting business in Poland. Forum
directs an off-shore and hedge fund administration business through its Bermuda
office. It employs more than 230 professionals worldwide.
From the beginning, Forum developed a plan of action that was effective with
both start- up funds, and funds that needed restructuring and improved services
in order to live up to their potential. The success of its innovative approach
is evident in Forum's growth rate over the years, a growth rate that has
consistently outstripped that of the mutual fund industry as a whole, as well as
that of the fund service outsource industry.
Forum has worked with both domestic and international mutual fund sponsors,
designing unique mutual fund structures, positioning new funds within the
sponsors' own corporate planning and targeted markets.
43
<PAGE>
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.
Forum's full service commitment includes providing state-of- the-art accounting
support (Forum has 8 CPAs on staff, as well as senior accountants who have been
associated with Big 6 accounting firms). Forum's proprietary accounting system
is continually upgraded and can provide custom-built modules to satisfy a fund's
specific requirements. This service is joined with transfer agency and
shareholder service groups that draw their strength both from the high caliber
of the people staffing each unit and from Forum's advanced technology support
system.
More than a decade of experience with mutual funds has given Forum practical
hands-on experience and knowledge of how mutual funds function "from the inside
out."
Forum has put that experience to work by creating the Forum Family of Funds, a
family where each member is designed and positioned for your best investment
advantage, and where each fund is serviced with the utmost attention to the
delivery of timely, accurate, and comprehensive shareholder information.
INVESTMENT ADVISERS
Forum Investment Advisors, LLC offers the services of portfolio managers with
the highest qualifications--because without such direction, a comprehensive and
goal-oriented investment program and ongoing investment strategy are not
possible. Serving as portfolio managers for the Forum Family of Funds are
individuals with decades of experience with some of the country's major
financial institutions.
Individual funds in the Forum Family of Funds invest in portfolios that have as
their investment adviser nationally recognized institutions, including Schroder
Capital Management International, Inc., a major figure in worldwide mutual funds
that, with its affiliates, managed over $175 billion as of September 30, 1997.
Forum Funds are also managed by the portfolio managers of H.M. Payson & Co.,
founded in Portland, Maine in 1854 and one of the oldest investment firms in the
country. Payson has approximately $1 billion in assets under management, with
clients that include pension plans, endowment funds, and institutional and
individual accounts.
44
<PAGE>
FORUM INVESTMENT ADVISORS, LLC
Forum Investment Advisors, LLC is the largest Maine based investment adviser
with approximately $1.4 billion in assets under management. The portfolio
managers have decades of combined experience in a cross section of the country's
financial markets. The managers have specific, day-to-day experience in the
asset class portfolios they manage, bringing critical focus to meeting each
fund's explicit investment objectives. The portfolio managers have been involved
in investing the assets of large insurance companies, banks, pension plans,
individuals, and of course mutual funds. Forum Investment Advisors, LLC has a
staff of analysts and investment administrators to meet the demands of serving
shareholders in our funds.
FORUM FAMILY OF FUNDS
It has been said that mutual fund investment offerings--of which there are
nearly 10,000, with assets spread across stock, bond, and money market funds
worth more than $4 trillion--come in a rainbow of varieties. A better
description would be a "spectrum" of varieties, the spectrum graded from green
through amber and on to red. In simpler terms, from low risk investments,
through moderate to high risk. The lower the risk, the lower the possible reward
- -- the higher the risk, the higher the potential reward.
The Forum Family of Funds provides conservative investment opportunities that
reduce the risk of loss of capital, using underlying money market investments
U.S. Government securities (although the shares of the Forum Funds are neither
insured nor guaranteed by the U.S. Government or its agencies), thus cushioning
the investment against market volatility. These funds offer regular income,
ready access to your money, and flexibility to buy or sell at any time.
In the less conservative but still not aggressive category are funds in the
Forum Family that seek to provide steady income and, in certain cases, tax-free
earnings. Such investments provide important diversification to an investment
portfolio.
Growth funds in the Forum Family more aggressively pursue a high return at the
risk of market volatility. These funds include domestic and international stock
mutual funds."
45
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements
Prospectus:
For Institutional Shares, Institutional Service
Shares and Investor Shares of Daily Assets Treasury
Obligations Fund, Daily Assets Government Fund
(formerly known as Daily Assets Treasury Fund), Daily
Assets Government Obligations Fund (formerly known as
Daily Assets Government Fund) and Daily Assets Cash
Fund (the "Funds"):
Financial Highlights.
Statement of Additional Information:
Annual Report:
The Funds' Statements of Assets and Liabilities,
Statements of Operations, Statements of Changes in
Net Assets, Financial Highlights and Notes to
Financial Statements for the year ended August 31,
1997, and the Schedules of Investments, Statements of
Assets and Liabilities, Statements of Operations,
Statements of Changes in Net Assets and Notes Thereto
for Government Portfolio (formerly known as Treasury
Portfolio) and Cash Portfolio, series of Core Trust
(Delaware), for the year ended August 31, 1997, both
of which were filed as part of the Funds' annual
report to shareholders with the Securities and
Exchange Commission on November 12, 1997, accession
number 0001004402-97-000179 pursuant to Rule 30b2-1
under the Investment Company Act of 1940, as amended.
Semi-Annual Report:
The Funds' Statements of Assets and Liabilities,
Statements of Operations, Statements of Changes in
Net Assets, Financial Highlights and Notes to
Financial Statements for the semi-annual period ended
February 28, 1998, and the Schedules of Investments,
Statements of Assets and Liabilities, Statements of
Operations, Statements of Changes in Net Assets and
Notes Thereto for Government Portfolio (formerly
known as Treasury Portfolio), Treasury Cash
Portfolio, Government Cash Portfolio and Cash
Portfolio, series of Core Trust (Delaware), for the
semi-annual period ended February 28, 1998, both of
which were filed as part of the Funds' semi-annual
report to shareholders with the Securities and
Exchange Commission on May 8, 1998, accession number
0001004402-98-000290 pursuant to Rule 30b2-1 under
the Investment Company Act of 1940, as amended.
(b) Exhibits
(1) Trust Instrument of Registrant dated August 29, 1995
(see note 1).
(2) By-Laws of Registrant dated August 29, 1995 (see note
2).
(3) None.
(4) See the following Sections in the Trust Instrument
filed as Exhibit 24(b)(1)(a): 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 (filed
herewith).
(b) Investment Advisory Agreement between Registrant and
Quadra Capital Partners, L.P. relating to Quadra Value
Equity Fund, Quadra International Equity Fund, Quadra
Opportunistic Bond Fund and Quadra Restricted Maturity
Treasury Fund dated as of December 20, 1996 (see note
3).
(c) Investment Subadvisory Agreement between Quadra Capital
Partners, L.P. and Carl Domino Associates, L.P.
relating to Value Equity Fund dated as of October 18,
1996 (see note 3).
(d) Investment Advisory Agreement between Registrant and
Austin Investment Management, Inc. relating to Austin
Global Equity Fund dated as of June 14, 1996 (filed
herewith).
(e) Investment Advisory Agreement between Registrant and
Oak Hall Capital Advisors, Inc. relating to Oak Hall
Equity Fund dated as of June 14, 1996 (filed herewith).
(f) Investment Advisory Agreement between Registrant and
Forum Investment Advisors, LLC relating to Investors
Bond Fund, TaxSaver Bond Fund, Maine Municipal Bond
Fund, Investors High Grade Bond Fund and Investors
Growth Fund dated as of January 2, 1998 (see note 4).
(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 5).
(6)(a) Selected Dealer Agreement between Forum Financial
Services, Inc. and securities brokers (filed herewith).
(b) Bank Affiliated Selected Dealer Agreement between Forum
Financial Services, Inc. and bank affiliates (filed
herewith).
(c) Distribution Agreement between Registrant and Forum
Financial Services, Inc. relating to Quadra
Opportunistic Bond Fund, Quadra Limited Maturity
Treasury Fund, Quadra International Equity Fund, Quadra
Value Equity Fund, Investor Bond Fund, TaxSaver Bond
Fund, Maine Municipal Bond Fund, New Hampshire Bond
Fund, Payson Balanced Fund, Payson Value Fund, Daily
Assets Cash Fund, Daily Assets Treasury Fund, Oak Hall
Equity Fund and Austin Global Equity Fund dated as of
June 19, 1997 (filed herewith).
(7) None.
(8)(a) Transfer Agency and Services Agreement between
Registrant and Forum Shareholder Services, LLC relating
to Investors Bond Fund TaxSaver Bond Fund, Maine
Municipal Bond Fund, New Hampshire Bond Fund, Payson
Balanced Fund, Payson Value Fund, Equity Index Fund,
Small Cap Fund, International Equity Fund, Emerging
Markets Fund, Investors Equity Fund, Investors Growth
Fund, Investors High Grade Bond Fund, Daily Assets Cash
Fund, Daily Assets Treasury Fund, Daily Assets
Government Fund, Daily Assets Tax-Exempt Fund, Daily
Assets Treasury Obligations Fund, Austin Global Equity
Fund, Oak Hall Equity Fund, Quadra Value Equity Fund
andQuadra Growth Fund dated May 19, 1998 (filed
herewith).
(b) Custodian Agreement between Registrant and BankBoston
N.A.,relating to Daily Assets Treasury Fund, Daily
Assets Treasury Obligations Fund, Daily Assets
Government 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, Payson
Balanced Fund, Equity Index Fund, Investors Equity
Fund, Payson Value Fund, Investors Growth Fund,
International Equity Fund, Emerging Markets Fund, Small
Company Opportunities Fund, Quadra Limited Maturity
Treasury Fun, Quadra Growth Fund, Oak Hall Small Cap
Contrarian Fund, Austin Global Equity Fund and Polaris
Global Value Fund dated as of May 19, 1998 (filed
herewith).
(c) Sub-Transfer Agent Agreement between Forum Financial
Corp., Administrative Data Management Corp. and Forum
Funds dated December 18, 1995 (filed herewith).
(9)(a) Administration Agreement between Registrant and Forum
Administrative Services, LLC relating to Investor Bond
Fund, TaxSaver Bond Fund, Maine Municipal Bond Fund,
New Hampshire Bond Fund, Payson Balanced Fund, Payson
Value Fund, Equity Index Fund, Small Cap Fund,
International Equity Fund, Emerging Markets Fund,
Investors Equity Fund, Investors Growth Fund, Daily
Assets Cash Fund, Daily Assets Treasury Fund, Daily
Assets Government Fund, Daily Assets Tax-Exempt Fund,
Daily Assets Treasury Obligations Fund, Austin Global
Equity Fund, Oak Hall Equity Fund, Quadra International
Equity Fund, Quadra Value Equity Fund, Quadra
Opportunistic Bond Fund, Quadra Limited Maturity
Treasury Fund and Quadra Growth Fund dated as of June
19, 1997 and amended as of December 5, 1997(filed
herewith ).
(b) Shareholder Service Plan of Registrant relating to
Quadra Funds dated June 19, 1997, amended September 22,
1997 and Form of Shareholder Service Agreement relating
to Quadra Funds (see note 6).
(c) Form of Shareholder Service Plan of Registrant dated
September 22, 1997 and Form of Shareholder Service
Agreement dated ___/____/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 7).
(10) Opinion of Seward & Kissel dated January 5, 1996 (see
note 8).
(11) Consent of Independent Auditors (filed herewith).
(12) None.
(13) Investment Representation letter of Reich & Tang, Inc.
as original purchaser of shares of Registrant (filed
herewith).
(14) Form of Disclosure Statement and Custodial Account
Agreement applicable to individual retirement accounts
(filed herewith).
(15) Rule 12b-1 Plan adopted by Registrant(filed herewith).
<PAGE>
(16) Schedule of Sample Performance Calculations (see note
9) relating to:
<TABLE>
<S> <C>
Investors High Grade Bond Fund Oak Hall Small Cap Contrarian Fund
Investors Bond Fund Quadra Limited Maturity Treasury Fund
TaxSaver Bond Fund Quadra Value Equity Fund
Maine Municipal Bond Fund Quadra Growth Fund
New Hampshire Bond Fund Quadra International Equity Fund
Daily Assets Treasury Obligations Fund Quadra Opportunistic Bond Fun
Daily Assets Government Fund Equity Index Fund
Daily Assets Government Obligations Fund Investors Equity Fund
Daily Assets Cash Fund Investors Growth Fund
Daily Assets Municipal Fund Small Company Opportunities Fund
Payson Value Fund International Equity Fund
Payson Balanced Fund Emerging Markets Fund
Austin Global Equity Fund
</TABLE>
(17) Financial Data Schedules (filed herewith).
(18) 18f-3 Plan adopted by Registrant (filed herewith).
Other Exhibits:
Powers of Attorney (see note 1).
---------------
Note: (1) Exhibit incorporated by reference as filed on PEA No. 34 via
EDGAR on May 9, 1996, accession number 0000912057-96-008780.
(2) Exhibit incorporated by reference as filed on PEA No. 43 via
EDGAR on July 31, 1997, accession number 0000912057-97-025707.
(3) Exhibit incorporated by reference as filed on PEA No. 41 via
EDGAR on December 31, 1996, accession number
0000912057-96-030646.
(4) Exhibit incorporated by reference as filed on PEA 56 via EDGAR on
December 31, 1997, accession number 0001004402-97-000281.
(5) Exhibit incorporated by reference as filed on PEA 48 via EDGAR on
October 31, 1997, accession number 0001004402-97-000152.
(6) Exhibit incorporated by reference as filed on PEA No. 49 via
EDGAR on November 5, 1997, accession number 0001004402-97-000163.
(7) Exhibit incorporated by reference as filed on PEA No. 50 via
EDGAR on November 12, 1997, accession no. 0001004402-97-000189.
(8) Exhibit incorporated by reference as filed on PEA No. 33 via
EDGAR on January 5, 1996, accession number 0000912057-96-000216.
(9) Exhibit incorporated by reference as filed on PEA No. 61 via
EDGAR on May 8, 1998, accession number 0001004402-98-000295.
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 May 1, 1998
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Investors High Grade Bond Fund 2
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Investors Bond Fund 59
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
TaxSaver Bond Fund 42
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Maine Municipal Bond Fund 388
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
New Hampshire Bond Fund 76
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Daily Assets Treasury Fund
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Investor Shares 0
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Institutional Shares 1
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Institutional Service Shares 103
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Daily Assets Treasury Obligations Fund
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Investor Shares 1
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Institutional Shares 3
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Institutional Service Shares 3
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Daily Assets Government Fund
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Investor Shares 1
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Institutional Shares 3
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Institutional Service Shares 3
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Daily Assets Cash Fund 0
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Investor Shares 1
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Institutional Shares 2
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Institutional Service Shares 29
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Daily Assets Municipal Fund
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Investor Shares 1
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Institutional Shares 1
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Institutional Service Shares 1
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Payson Value Fund 360
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Payson Balanced Fund 388
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Austin Global Equity Fund 13
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Oak Hall Small Cap Contrarian Fund 165
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Quadra Limited Maturity Treasury Fund 0
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Quadra Value Equity Fund 17
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Quadra Growth Fund 14
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Quadra International Equity Fund 0
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Quadra Opportunistic Bond Fund 0
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Equity Index Fund 2
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Investors Equity Fund 6
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Investors Growth Fund 4
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Small Company Opportunities Fund 1
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
International Equity Fund 2
------------------------------------------------------------------------- --------------------------------
------------------------------------------------------------------------- --------------------------------
Emerging Markets Fund 2
------------------------------------------------------------------------- --------------------------------
</TABLE>
ITEM 27. INDEMNIFICATION
Pursuant to 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.
"(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
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
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 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.
Both Forum Holdings Corp. and Forum Financial Group, LLC
("Forum") are controlled by John Y. Keffer, Chairman and
President of the Registrant. Mr. Keffer is President of
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 of Companies
provides services.
The following are the officers of Forum Investment Advisors,
LLC, including their business connections which are of a
substantial nature. Each officer may serve as an officer of
various registered investment companies for which the Forum
Financial Group of Companies provides services.
<TABLE>
<S> <C> <C>
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
William J. Lewis Director Forum Investment Advisors, LLC.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
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
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Dana A. Lukens Assistant Secretary Forum Investment Advisors, LLC.
------------------------------------ ----------------------------------
Corporate Counsel Forum Financial Group, LLC.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Other Forum affiliated companies
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Margaret J. Fenderson Assistant Treasurer Forum Investment Advisors, LLC.
------------------------------------ ----------------------------------
Corporate Accounting Manager Forum Financial Group, LLC.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer Other Forum affiliated companies
---------------------------------- ------------------------------------ ----------------------------------
</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.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Thomas M. Pierce Managing Director H.M. Payson & Co.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Peter E. Robbins Managing Director H.M. Payson & Co.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
John H. Walker Managing Director, President H.M. Payson & Co.
------------------------------------ ----------------------------------
Director York Holding Company
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director York Insurance Company
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
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>
(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 Inc.
Secretary
---------------------------------- ------------------------------------ ----------------------------------
</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, LLP,. 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
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
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 Manager Carl Domino Associates, L.P.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
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
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
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.
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.
<PAGE>
<TABLE>
<S> <C> <C>
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Stephen Smith Chief Investment Officer Smith Asset Management Group,
L.P.
---------------------------------- ------------------------------------ ----------------------------------
</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., 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 Officer, Norwest Investment Management,
President Inc.
------------------------------------ ----------------------------------
Executive Vice President, Employee Norwest Bank Minnesota, N.A.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Chairman Galliard Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
James W. Paulsen Chief Investment Officer Norwest Investment Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Stephen P. Gianoli Senior Vice President, Chief Norwest Investment Management,
Executive Officer Inc.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Director Crestone Capital Management, Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
David S. Lunt Vice President, Senior Portfolio Norwest Investment Management,
Manager Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Richard C. Villars Vice President, Senior Portfolio Norwest Investment Management,
Manager Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Lee K. Chase Senior Vice President Norwest Investment Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Andrew Owen Vice President Norwest Investment Management,
Inc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
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. ("Schroder") in the Prospectus 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
Schroder, including their business connections of a
substantial nature. The address of each company listed, unless
otherwise noted, is 33 Gutter Lane, London EC2V 8AS, United
Kingdom. Schroder Capital Management International Limited
("Schroder Ltd.") is a United Kingdom affiliate of Schroder
which provides investment management services international
clients located principally in the United States.
<TABLE>
<S> <C> <C>
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
David M. Salisbury Chief Executive Officer, Director, SCMI
Chairman
------------------------------------ ----------------------------------
Chief Executive, Director Schroder Ltd.
------------------------------------ ----------------------------------
Director Schroders plc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Richard R. Foulkes Deputy Chairman/Executive Vice SCMI
President
------------------------------------ ----------------------------------
Director Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
John A. Troiano Chief Executive, Director SCMI
------------------------------------
----------------------------------
Director Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
David Gibson Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Capital Management
------------------------------------ ----------------------------------
Senior Vice President Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
John S. Ager Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Sharon L. Haugh Executive Vice President, Director SCMI
----------------------------------
------------------------------------ ----------------------------------
Director, Chairman Schroder Advisors
------------------------------------ ----------------------------------
Director Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Gavin D. L. Ralston Senior Vice President, Managing SCMI
Director
------------------------------------ ----------------------------------
Director Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Mark J. Smith Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Name Title Business Connection
------------------------------------
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ----------------------------------
------------------------------------
Robert G. Davy Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Ltd.
------------------------------------ ----------------------------------
------------------------------------ ----------------------------------
Officer of open end investment companies
for which SCMI and/or its
affiliates provide investment
services
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Jane P. Lucas Senior Vice President, Director SCMI
------------------------------------ ----------------------------------
Director Schroder Advisors
------------------------------------ ----------------------------------
Director Schroder Capital Management
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
C. John Govett Director SCMI
------------------------------------ ----------------------------------
Group Managing Director Schroder Ltd.
----------------------------------
------------------------------------
Director Schroders plc.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Phillipa J. Gould Senior Vice President, Director SCMI
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Louise Croset First Vice President, Director SCMI
------------------------------------ ----------------------------------
First Vice President Schroder Ltd.
---------------------------------- ------------------------------------ ----------------------------------
---------------------------------- ------------------------------------ ----------------------------------
Abdallah Nauphal Group Vice President, Director SCMI
---------------------------------- ------------------------------------ ----------------------------------
</TABLE>
(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>
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:
<TABLE>
<S><C> <C>
The CRM Funds BT Alex. Brown Cash Reserve Fund, Inc
The Cutler Trust Flag Investors Telephone Fund, Inc.
Forum Funds Flag Investors International Fund, Inc.
Flag Investor Family of Funds Flag Investors Emerging Growth Fund, Inc.
The Glenmede Fund, Inc. Total Return U.S. Treasury Fund, Inc.
The Glenmede Portfolios Managed Municipal Fund, Inc.
Memorial Funds Flag Investors Value Builder Fund, Inc.
Monarch Funds Flag Investors Real Estate Securities Fund, Inc.
Norwest Advantage Funds Flag Investors Equity Partners Fund, Inc.
Norwest Select Funds Flag Investors Maryland Intermediate Tax-Free Income Fund, Inc.
Sound Shore Fund, Inc. Flag Investors Short-Intermediate Income Fund, Inc.
</TABLE>
(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
N.A., 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 advisers or subadvisers,
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 and the Investment
Company Act of 1940, 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 and has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Portland, and State of Maine on the 22nd day of
May, 1998.
FORUM FUNDS
By: /s/ John Y. Keffer
--------------------
John Y. Keffer
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement amendment has been signed below by the following persons on the 22nd
day of May, 1998.
SIGNATURES TITLE
(a) Principal Executive Officer
/s/ John Y. Keffer Chairman and President
-----------------------------
John Y. Keffer
(b) Principal Financial and Accounting Officer
/s/ Sara M. Morris Treasurer
-----------------------------
Sara M. Morris
(c) A Majority of the Trustees
/s/ John Y. Keffer Chairman
----------------------------
John Y. Keffer
James C. Cheng* Trustee
J. Michael Parish* Trustee
Costas Azariadis* Trustee
*By: /s/ John Y. Keffer
-------------------------
John Y. Keffer
Attorney in Fact
<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 22nd day of May, 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 22nd day of
May, 1998.
SIGNATURES TITLE
(a) Principal Executive Officer
/s/ John Y. Keffer Chairman and President
------------------------------
John Y. Keffer
(b) Principal Financial and Accounting Officer
/s/ Sara M. Morris Treasurer
-----------------------------
Sara M. Morris
(c) A Majority of the Trustees
/s/ John Y. Keffer Chairman
------------------------------
John Y. Keffer
J. Michael Parish* Trustee
James C. Cheng* Trustee
Costas Azariadis* Trustee
*By: /s/ John Y. Keffer
-------------------------
John Y. Keffer
Attorney in Fact
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
5(a) Investment Advisory Agreement between Registrant and H.M. Payson & Co.
relating to the Payson Value Fund and the Payson Balanced Fund dated
December 18, 1995.
5(d) Investment Advisory Agreement between Registrant and Austin
Investment Management, Inc. relating to Austin Global Equity Fund dated
as of June 14, 1996.
5(e) Investment Advisory Agreement between Registrant and Oak Hall Capital
Advisors, Inc. relating to Oak Hall Equity Fund dated as of June 14,
1996.
6(a) Selected Dealer Agreement between Forum Financial Services, Inc. and
securities brokers.
6(b) Bank Affiliated Selected Dealer Agreement between Forum Financial
Services, Inc. and bank affiliates.
6(c) Distribution Agreement between Registrant and Forum Financial Services,
Inc. relating to Quadra Opportunistic Bond Fund, Quadra Limited
Maturity Treasury Fund, Quadra International Equity Fund, Quadra Value
Equity Fund, Investor Bond Fund, TaxSaver Bond Fund, Maine Municipal
Bond Fund, New Hampshire Bond Fund, Payson Balanced Fund, Payson Value
Fund, Daily Assets Cash Fund, Daily Assets Treasury Fund, Oak Hall
Equity Fund and Austin Global Equity Fund dated as of June 19, 1997
8(a) Transfer Agency and Services Agreement between Registrant and Forum
Shareholder Services, LLC relating to Investors Bond Fund TaxSaver Bond
Fund, Maine Municipal Bond Fund, New Hampshire Bond Fund, Payson
Balanced Fund, Payson Value Fund, Equity Index Fund, Small Cap Fund,
International Equity Fund, Emerging Markets Fund, Investors Equity
Fund, Investors Growth Fund, Investors High Grade Bond Fund, Daily
Assets Cash Fund, Daily Assets Treasury Fund, Daily Assets Government
Fund, Daily Assets Tax-Exempt Fund, Daily Assets Treasury Obligations
Fund, Austin Global Equity Fund, Oak Hall Equity Fund, Quadra Value
Equity Fund andQuadra Growth Fund dated December 18, 1995.
8(b) Custodian Agreement between Registrant and BankBoston N.A.,relating to
Daily Assets Treasury Fund, Daily Assets Treasury Obligations Fund,
Daily Assets Government 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,
Payson Balanced Fund, Equity Index Fund, Investors Equity Fund, Payson
Value Fund, Investors Growth Fund, International Equity Fund, Emerging
Markets Fund, Small Company Opportunities Fund, Quadra Limited Maturity
Treasury Fun, Quadra Growth Fund, Oak Hall Small Cap Contrarian Fund,
Austin Global Equity Fund and Polaris Global Value Fund dated as of May
19, 1998.
8(c) Sub-Transfer Agent Agreement between Forum Financial Corp.,
Administrative Data Management Corp. and Forum Funds dated December
18, 1995.
9(a) Administration Agreement between Registrant and Forum Administrative
Services, LLC relating to Investor Bond Fund, TaxSaver Bond Fund,
Maine Municipal Bond Fund, New Hampshire Bond Fund, Payson Balanced
Fund, Payson Value Fund, Equity Index Fund, Small Cap Fund,
International Equity Fund, Emerging Markets Fund, Investors Equity
Fund, Investors Growth Fund, Daily Assets Cash Fund, Daily Assets
Treasury Fund, Daily Assets Government Fund, Daily Assets Tax-Exempt
Fund, Daily Assets Treasury Obligations Fund, Austin Global Equity
Fund, Oak Hall Equity Fund, Quadra International Equity Fund, Quadra
Value Equity Fund, Quadra Opportunistic Bond Fund, Quadra Limited
Maturity Treasury Fund and Quadra Growth Fund dated as of June 19,
1997 and amended as of December 5, 1997.
11 Consent of Independent Auditors.
13 Investment Representation letter of Reich & Tang, Inc. as original
purchaser of shares of Registrant.
14 Form of Disclosure Statement and Custodial Account Agreement applicable
to individual retirement accounts.
15 Rule 12b-1 Plan adopted by Registrant.
17 Financial Data Schedules.
18 Rule 18f-3 Plan adopted by Registrant.
Exhibit 5(a)
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
December 18, 1995
H. M. Payson & Co.
One Portland Square
Portland, Maine 04112
Dear Sirs:
We, the undersigned Forum Funds, herewith confirm our agreement with
you as follows:
1. We propose to engage in the business of investing and reinvesting
our assets in securities of the type and in accordance with the limitations
specified in our Trust Instrument, By-Laws and registration statement filed with
the Securities and Exchange Commission under the Investment Company Act of 1940
(the "Investment Company Act") and the Securities Act of 1933 (the "Securities
Act"), including any representations made in our prospectuses and statements of
additional information, all in such manner and to such extent as may from time
to time be authorized by our Board of Trustees. We are currently authorized to
issue twelve classes of shares and our Board of Trustees is authorized to
reclassify and issue any unissued shares to any number of additional classes or
series each having its own investment objective, policies and restrictions. We
enclose copies of the documents listed above and will from time to time furnish
you with any amendments thereof.
2. We hereby employ you, subject to the direction and control of our
Board of Trustees, to manage the investment and reinvestment of the assets in
our Payson Value Fund and Payson Balanced Fund (the "Funds") as specified below,
and, without limiting the generality of the foregoing, to provide management and
other services specified below.
(a) You will make decisions with respect to all purchases and
sales of securities in the Funds. To carry out such decisions, you are hereby
authorized, as our agent and attorney-in-fact, for our account and at our risk
and in our name, to place orders for the investment and reinvestment of the
assets of the Funds. In all purchases, sales and other transactions in
securities in the Funds you are authorized to exercise full discretion and act
for us in the same manner and with the same force and effect as we might or
could do with respect to such purchases, sales or other transactions, as well as
with respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions.
(b) You will report to our Board of Trustees at each meeting
thereof all changes in the Funds since the prior report, and will also keep us
in touch with important developments affecting the Funds and on your own
initiative will furnish us from time to time with such information as you may
believe appropriate for this purpose, whether concerning the individual
companies whose securities are included in the Funds, the industries in which
they engage, or the conditions prevailing in the economy generally. You will
also furnish us with such statistical and analytical information with respect to
securities in the Funds as you may believe appropriate or as we reasonably may
request. In making such purchases and sales of securities in the Funds, you will
bear in mind the policies set from time to time by our Board of Trustees as well
as the limitations imposed by our Articles of Incorporation and in our
Registration Statements under the Act and the Securities Act of 1933, the
limitations in the Act and of the Internal Revenue Code in respect of regulated
investment companies and the investment objective, policies and restrictions for
the Funds.
(c) It is understood that you will from time to time employ or
associate with yourselves such persons as you believe to be particularly fitted
to assist you in the execution of your duties hereunder, the cost of performance
of such duties to be borne and paid by you. No obligation may be incurred on our
behalf in any such respect.
3. It is further agreed that, subject to paragraph 4 of the Management
and Distribution Agreement between us and Forum Financial Services, Inc. that
relates to the Funds (the "Management and Distribution Agreement"), we shall be
responsible and hereby assume the obligation for payment of all our other
expenses, including: (a) payment of the fee payable to you under paragraph 5
hereof, the fee payable to Forum Financial Services, Inc. pursuant to the
Management and Distribution Agreement between Forum Financial Services, Inc. and
us and fees payable to investment advisers who manage our other investment
portfolios; (b) interest charges, taxes, brokerage fees and commissions; (c)
certain insurance premiums; (d) fees, interest charges and expenses of our
custodian, transfer agent and dividend disbursing agent; (e) telecommunications
expenses; (f) auditing, legal and compliance expenses; (g) costs of our
formation and maintaining our corporate existence; (h) costs of preparing and
printing our Prospectuses, Statements of Additional Information, account
application forms and shareholder reports and their delivery to existing and
prospective shareholders; (i) 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 our shares; (j) costs of reproduction,
stationery and supplies; (k) compensation of our trustees, officers and
employees and costs of other personnel performing services for us who are not
your officers or officers of Forum Financial Services, Inc., or your and its
respective affiliates; (l) costs of corporate meetings; (m) Securities and
Exchange Commission registration fees and related expenses; (n) state securities
laws registration fees and related expenses and (o) all fees and expenses paid
by us in accordance with any distribution plan adopted by us pursuant to Rule
12b-1 under the Act.
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.
5. In consideration of the foregoing we will pay you, with respect to
the Payson Value Fund, a fee at an annual rate of .80% of the Fund's average
daily net assets and, with respect to the Payson Balanced Fund, a fee at an
annual rate of .60% of the Fund's average daily net assets. Such fees shall be
accrued by us daily and shall be payable monthly in arrears on the first day of
each calendar month for services performed hereunder during the prior calendar
month. Payment of the advisory fees will be reduced or postponed, if necessary,
with any adjustments made within three months after the end of the year.
6. This agreement shall become effective immediately upon approval by a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of each Fund and shall remain in effect for a period of two years
from the date of such approval and shall continue in effect thereafter for
successive twelve-month periods (computed from each anniversary date of the
effective date) with respect to each Fund, provided that such continuance is
specifically approved at least annually by our Board of Trustees or by majority
vote of the holders of the outstanding voting securities (as defined) of each
Fund, and, in either case, by a majority of our trustees who are not parties to
this agreement or interested persons, as defined in the Act, of any such party
(other than as our trustees), provided further, however, that if this agreement
or its continuation is not so approved as to a Fund, you may continue to render
to such Fund the services described herein in the manner and to the extent
permitted by the Act and the rules and regulations thereunder. Upon the
effectiveness of this agreement, it shall supersede all previous agreements
between us covering the subject matter hereof. This agreement may be terminated
with respect to any Fund at any time, without the payment of any penalty, by
vote of a majority of the outstanding voting securities (as so defined) of such
Fund, or by a vote of a majority of our entire Board of Trustees on 60 days'
written notice to you, or by you with respect to any Fund on not more than 60
days' nor less than 30 days' written notice to us.
7. This agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you and this agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer," "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations promulgated by the
Securities and Exchange Commission thereunder.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, trustees or employees who may also be a
trustee, officer or employee of ours, or persons otherwise affiliated with us
(within the meaning of the Act) 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.
If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
FORUM FUNDS
By /S/JOHN Y. KEFFER
John Y. Keffer
Accepted: December 18, 1995
H. M. PAYSON & CO.
By /S/JOHN C. DOWNING
John C. Downing
Exhibit 5(d)
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 14th day of June, 1996, between Forum Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at Two Portland Square, Portland, Maine
04101, and Austin Investment Management, Inc. (the "Adviser"), a corporation
organized under the laws of State of New York with its principal place of
business at 375 Park Avenue, Suite 2207, New York, New York 10152-2207.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end management investment company and is
authorized to issue its shares in separate series and classes; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for certain investment portfolios of the Trust as listed on Schedule A
hereto (each a "Fund" and, collectively, the "Funds") and the Adviser is willing
to provide those services on the terms and conditions set forth in this
Agreement;
NOW THEREFORE, the Trust and the Adviser agree as follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints the Adviser, and the Adviser hereby agrees,
to act as investment adviser to the Funds for the period and on the terms set
forth in this Agreement. In connection therewith, the Trust has delivered to the
Adviser copies of its Trust Instrument and By-laws, the Trust's Registration
Statement and all amendments thereto filed pursuant to the Act or the Securities
Act of 1933, as amended (the "Registration Statement") and the current
Prospectus and Statement of Additional Information of the Funds (collectively,
as currently in effect and as amended or supplemented, the "Prospectus") and,
will from time to time furnish the Adviser with all amendments of or supplements
to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
Subject to the direction and control of the Trust's Board of Trustees
(the "Board"), the Adviser shall manage the investment and reinvestment of the
assets of the Funds, and, without limiting the generality of the foregoing,
shall provide the management and other services specified below, all in such
manner and to such extent as may be authorized by the Board.
(a) The Adviser shall make decisions with respect to all purchases and
sales and other transactions of securities and other investment assets of the
Funds, including the selection of brokers, dealers and other persons to
introduce or execute those transactions. To carry out such decisions, the
Adviser is authorized, as agent and attorney-in-fact for the Trust, for the
account of, at the risk of and in the name of the Trust, to place orders and
issue instructions with respect to those transactions of the Funds. In all
purchases, sales and other transactions in securities or other assets for the
Funds, the Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) In making decisions with respect to all purchases and sales and
other transactions of securities and other investment assets of the Funds, the
Adviser shall follow and comply with the policies set forth from time to time by
the Board (to the extent communicated to the Adviser in writing or at a Board
meeting attended by a representative of the Adviser) as well as the limitations
imposed by the Trust's Trust Instrument and By-laws, the Trust's Registration
Statement and the Funds' Prospectuses (in each case, to the extent copies
thereof are furnished to the Adviser) and, the limitations in the Act and in the
Internal Revenue Code of 1986, as amended, in respect of regulated investment
companies.
(c) The Adviser shall either monitor the performance of brokers,
dealers and other persons who introduce or execute purchases, sales and other
transactions of securities and other investment assets of the Funds or select an
introducing broker who shall, as part of its transaction charges, monitor such
performance. Such persons may be affiliated persons of the Adviser to the extent
permitted by the Act.
(d) The Adviser shall maintain such records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act and will provide copies of such
records to the Trust's fund accountant as the accountant reasonably may request.
The Adviser shall prepare and maintain, or cause to be prepared and maintained,
in such form, for such periods and in such locations as may be required by
applicable law, all documents and records relating to the services provided by
the Adviser pursuant to this Agreement required to be prepared and maintained by
the Trust pursuant to the rules and regulations of any national, state, or local
government entity with jurisdiction over the Trust, including the Securities and
Exchange Commission and the Internal Revenue Service. The books and records of
the Trust which are in the possession of the Adviser shall be the property of
the Trust. The Trust, or the Trust's authorized representatives, shall have
access to such books and records at all times during the Adviser's normal
business hours. Upon the reasonable request of the Trust, copies of any such
books and records shall be provided promptly by the Adviser to the Trust or the
Trust's authorized representatives.
(e) The Adviser shall determine in its sole discretion the propriety of
(i) honoring requests for orders to purchase Fund shares "in kind" for a
consideration consisting of securities determined to be suitable to purchase,
(ii) honoring requests by shareholders for proceeds upon redemption of Fund
shares to be paid "in kind" by delivery of portfolio securities, and (iii)
decisions to pay redemption proceeds "in kind" even though not requested by a
Fund shareholder, consistent with any elections or undertakings the Trust may
have made to certain redemption proceeds in cash
(f) The Adviser shall provide to the Board at each regularly scheduled
meeting thereof (or such other meetings as may be requested by the Trust) a
report containing an appropriate summary of all changes in the Funds since the
prior report, will inform the Board of important developments affecting the
Funds, and on its own initiative will furnish the Board from time to time with
such information as it believes appropriate for this purpose, whether concerning
the individual companies whose securities are included in the Funds, the
industries in which they engage, or the economic, social or political conditions
prevailing in each country in which the Funds maintain investments. The Adviser
also shall provide the Board with such statistical and analytical information
with respect to securities in the Funds as the Adviser believes appropriate or
as the Trust reasonably may request. The Adviser shall provide the Trust's fund
accountant, in such forms and at such times as the fund accountant shall
request, complete information about all portfolio transactions and borrowings
and the requested information about prices or yield quotations of portfolio
securities.
(g) The Adviser shall from time to time employ or associate with such
persons as it believes to be particularly fitted to assist it in the execution
of its duties under this Agreement, the cost of performance of such duties to be
borne and paid by the Adviser. No obligation may be incurred on behalf of the
Trust in any such respect.
SECTION 3. EXPENSES
The Adviser shall be responsible for the portion of the net expenses
that relate to each of the Funds (except interest, taxes, brokerage, fees and
expenses paid by the Trust in accordance with an effective plan pursuant to Rule
12b-1 under the Act and organization expenses, all to the extent such exclusions
are permitted by applicable state law) incurred by the Trust during each of its
fiscal years or portion thereof that this Agreement is in effect which, as to a
Fund, in any such year exceeds the limits applicable to the Fund under the laws
of any state in which its shares are qualified for sale (reduced pro rata for
any portion of less than a year). Subject to the foregoing and any other
agreement by the Adviser to reimburse the Trust, the Trust shall be responsible
and assumes the obligation for payment of all its other expenses.
SECTION 4. STANDARD OF CARE
The Adviser shall give the Trust the benefit of its best judgment and
efforts in rendering its services to the Trust and shall not be liable for error
of judgment or mistake of law, for any loss arising out of any investment, or in
any event whatsoever, provided that nothing herein shall be deemed to protect,
or purport to protect, the Adviser against any liability to the Trust or to the
security holders of the Trust to which it would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder, or by reason of reckless disregard of its obligations and
duties under hereunder.
SECTION 5. COMPENSATION
(a) For the services provided by the Adviser pursuant to this
Agreement, the Trust shall pay the Adviser, with respect to each of the Funds, a
fee at an annual rate equal to the amount set forth in Schedule B hereto. Such
fees shall be accrued by the Trust daily and shall be payable monthly in arrears
on the first day of each calendar month for services performed under this
Agreement during the prior calendar month. Any reimbursement provided for in
Section 3 of this Agreement shall be estimated and paid to the Trust monthly in
arrears, at the same time as payment to the Adviser for such month. Payment of
the fees hereunder will be reduced or postponed, if necessary, with any
adjustments made after the end of the year.
(b) Notwithstanding anything in this Agreement to the contrary, the
Adviser and its affiliated persons may receive compensation or reimbursement
from the Trust with respect to (i) the provision of distribution services on
behalf of the Funds in accordance with any distribution plan adopted by the
Trust pursuant to Rule 12b-1 under the Act or (ii) the provision of shareholder
support or other services.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund on the
latter of the date on which the Trust's Registration Statement relating to the
shares of the Fund becomes effective and date of its approval by a vote of a
majority of the outstanding voting securities of the Fund. Upon the
effectiveness of this Agreement, it shall supersede all previous agreements
between the Trust and the Adviser covering the subject matter hereof.
(b) This Agreement shall continue in effect with respect to a Fund for
twelve months and, thereafter, shall continue in effect for successive
twelve-month periods (computed from each anniversary date of the approval),
provided that such 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 at a meeting
called for the purpose of voting on such approval. If the continuation of this
Agreement is not approved as to a Fund, the Adviser may continue to render to
the Fund the services described herein in the manner and to the extent permitted
by the Act.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Adviser or (ii) by the Adviser on 60 days' written notice to the
Trust. This Agreement shall terminate with respect to a Fund if it has not been
approved in the manner specified in clauses (i) and (ii) of Section 6(b) within
two years from its effective date. This Agreement also shall automatically
terminate in the event of its assignment.
SECTION 7. ACTIVITIES OF THE ADVISER
(a) Except to the extent necessary to perform its obligations under
this Agreement, nothing herein shall be deemed to limit or restrict the
Adviser's right, or the right of any of its officers, directors or employees
(whether or not they are a trustee, officer, employee or other affiliated person
of the Trust) to engage in any other business or to devote time and attention to
the management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.
(b) The Adviser represents that it is currently registered as an
investment adviser under the Investment Advisers Act of 1940 and will continue
to be registered as such so long as this agreement remains in effect.
SECTION 8. "AUSTIN" NAME
If the Adviser ceases to act as investment adviser to the Austin Global
Equity Fund or any other Fund whose name includes the word "Austin," or if the
Adviser requests in writing, the Trust shall take prompt action to change the
name of any such Fund to a name that does not include the word "Austin." The
Adviser may from time to time make available without charge to the Trust for the
Trust's use any marks or symbols owned by the Adviser, including marks or
symbols containing the word "Austin" or any variation thereof, as the Adviser
deems appropriate. Upon the Adviser's request in writing at any time, the Trust
shall cease to use any such mark or symbol. The Trust acknowledges that any
rights in or to the word "Austin" and any such marks or symbols which may exist
on the date of this Agreement or arise hereafter are, and under any and all
circumstances shall continue to be, the sole property of the Adviser. The
Adviser may permit other parties, including other investment companies, to use
the word "Austin" in their names without the consent of the Trust. The Trust
shall not use the word "Austin" in conducting any business other than that of an
investment company registered under the Act without the permission of the
Adviser.
SECTION 9. MISCELLANEOUS
(a) Except for the Schedules, no provisions of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the Act, by a
vote of a majority of the outstanding voting securities of any Fund thereby
affected.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
(f) 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 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
FORUM FUNDS
/S/JOHN Y. KEFFER
John Y. Keffer
Chairman and President
AUSTIN INVESTMENT MANAGEMENT, INC.
/S/PETER A. VLACHOS
Peter A. Vlachos
President
<PAGE>
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
SCHEDULE A
FUNDS OF THE TRUST
Austin Global Equity Fund
SCHEDULE B
ADVISORY FEES
Advisory Fee as a % of the Annual Average Daily Net
Fund Assets of the Fund
- ----------------------------------------------------------- -------------------
Austin Global Equity Fund 1.50%
Exhibit 5(e)
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 14th day of June, 1996, between Forum Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
with its principal place of business at Two Portland Square, Portland, Maine
04101, and Oak Hall Capital Advisors, Inc. (the "Adviser"), a corporation
organized under the laws of State of New York with its principal place of
business at 122 East 42nd Street, New York, New York 10168.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end management investment company and is
authorized to issue its shares in separate series and classes; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for certain investment portfolios of the Trust as listed on Schedule A
hereto (each a "Fund" and, collectively, the "Funds") and the Adviser is willing
to provide those services on the terms and conditions set forth in this
Agreement;
NOW THEREFORE, the Trust and the Adviser agree as follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints the Adviser, and the Adviser hereby agrees,
to act as investment adviser to the Funds for the period and on the terms set
forth in this Agreement. In connection therewith, the Trust has delivered to the
Adviser copies of its Trust Instrument and By-laws, the Trust's Registration
Statement and all amendments thereto filed pursuant to the Act or the Securities
Act of 1933, as amended (the "Registration Statement") and the current
Prospectus and Statement of Additional Information of the Funds (collectively,
as currently in effect and as amended or supplemented, the "Prospectus") and,
will from time to time furnish the Adviser with all amendments of or supplements
to the foregoing.
SECTION 2. DUTIES OF THE ADVISER
Subject to the direction and control of the Trust's Board of Trustees
(the "Board"), the Adviser shall manage the investment and reinvestment of the
assets of the Funds, and, without limiting the generality of the foregoing,
shall provide the management and other services specified below, all in such
manner and to such extent as may be authorized by the Board.
(a) The Adviser shall make decisions with respect to all purchases and
sales and other transactions of securities and other investment assets of the
Funds, including the selection of brokers, dealers and other persons to
introduce or execute those transactions. To carry out such decisions, the
Adviser is authorized, as agent and attorney-in-fact for the Trust, for the
account of, at the risk of and in the name of the Trust, to place orders and
issue instructions with respect to those transactions of the Funds. In all
purchases, sales and other transactions in securities or other assets for the
Funds, the Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) In making decisions with respect to all purchases and sales and
other transactions of securities and other investment assets of the Funds, the
Adviser shall follow and comply with the policies set forth from time to time by
the Board (to the extent communicated to the Adviser in writing or at a Board
meeting attended by a representative of the Adviser) as well as the limitations
imposed by the Trust's Trust Instrument and By-laws, the Trust's Registration
Statement and the Funds' Prospectuses (in each case, to the extent copies
thereof are furnished to the Adviser) and, the limitations in the Act and in the
Internal Revenue Code of 1986, as amended, in respect of regulated investment
companies.
(c) The Adviser shall either monitor the performance of brokers,
dealers and other persons who introduce or execute purchases, sales and other
transactions of securities and other investment assets of the Funds or select an
introducing broker who shall, as part of its transaction charges, monitor such
performance. Such persons may be affiliated persons of the Adviser to the extent
permitted by the Act.
(d) The Adviser shall maintain such records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act and will provide copies of such
records to the Trust's fund accountant as the accountant reasonably may request.
The Adviser shall prepare and maintain, or cause to be prepared and maintained,
in such form, for such periods and in such locations as may be required by
applicable law, all documents and records relating to the services provided by
the Adviser pursuant to this Agreement required to be prepared and maintained by
the Trust pursuant to the rules and regulations of any national, state, or local
government entity with jurisdiction over the Trust, including the Securities and
Exchange Commission and the Internal Revenue Service. The books and records of
the Trust which are in the possession of the Adviser shall be the property of
the Trust. The Trust, or the Trust's authorized representatives, shall have
access to such books and records at all times during the Adviser's normal
business hours. Upon the reasonable request of the Trust, copies of any such
books and records shall be provided promptly by the Adviser to the Trust or the
Trust's authorized representatives.
(e) The Adviser shall determine in its sole discretion the propriety of
(i) honoring requests for orders to purchase Fund shares "in kind" for a
consideration consisting of securities determined to be suitable to purchase,
(ii) honoring requests by shareholders for proceeds upon redemption of Fund
shares to be paid "in kind" by delivery of portfolio securities, and (iii)
decisions to pay redemption proceeds "in kind" even though not requested by a
Fund shareholder, consistent with any elections or undertakings the Trust may
have made to certain redemption proceeds in cash
(f) The Adviser shall provide to the Board at each regularly scheduled
meeting thereof (or such other meetings as may be requested by the Trust) a
report containing an appropriate summary of all changes in the Funds since the
prior report, will inform the Board of important developments affecting the
Funds, and on its own initiative will furnish the Board from time to time with
such information as it believes appropriate for this purpose, whether concerning
the individual companies whose securities are included in the Funds, the
industries in which they engage, or the economic, social or political conditions
prevailing in each country in which the Funds maintain investments. The Adviser
also shall provide the Board with such statistical and analytical information
with respect to securities in the Funds as the Adviser believes appropriate or
as the Trust reasonably may request. The Adviser shall provide the Trust's fund
accountant, in such forms and at such times as the fund accountant shall
request, complete information about all portfolio transactions and borrowings
and the requested information about prices or yield quotations of portfolio
securities.
(g) The Adviser shall from time to time employ or associate with such
persons as it believes to be particularly fitted to assist it in the execution
of its duties under this Agreement, the cost of performance of such duties to be
borne and paid by the Adviser. No obligation may be incurred on behalf of the
Trust in any such respect.
SECTION 3. EXPENSES
The Adviser shall be responsible for the portion of the net expenses
that relate to each of the Funds (except interest, taxes, brokerage, fees and
expenses paid by the Trust in accordance with an effective plan pursuant to Rule
12b-1 under the Act and organization expenses, all to the extent such exclusions
are permitted by applicable state law) incurred by the Trust during each of its
fiscal years or portion thereof that this Agreement is in effect which, as to a
Fund, in any such year exceeds the limits applicable to the Fund under the laws
of any state in which its shares are qualified for sale (reduced pro rata for
any portion of less than a year). Subject to the foregoing and any other
agreement by the Adviser to reimburse the Trust, the Trust shall be responsible
and assumes the obligation for payment of all its other expenses.
SECTION 4. STANDARD OF CARE
The Adviser shall give the Trust the benefit of its best judgment and
efforts in rendering its services to the Trust and shall not be liable for error
of judgment or mistake of law, for any loss arising out of any investment, or in
any event whatsoever, provided that nothing herein shall be deemed to protect,
or purport to protect, the Adviser against any liability to the Trust or to the
security holders of the Trust to which it would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder, or by reason of reckless disregard of its obligations and
duties under hereunder.
SECTION 5. COMPENSATION
(a) For the services provided by the Adviser pursuant to this
Agreement, the Trust shall pay the Adviser, with respect to each of the Funds, a
fee at an annual rate equal to the amount set forth in Schedule B hereto. Such
fees shall be accrued by the Trust daily and shall be payable monthly in arrears
on the first day of each calendar month for services performed under this
Agreement during the prior calendar month. Any reimbursement provided for in
Section 3 of this Agreement shall be estimated and paid to the Trust monthly in
arrears, at the same time as payment to the Adviser for such month. Payment of
the fees hereunder will be reduced or postponed, if necessary, with any
adjustments made after the end of the year.
(b) Notwithstanding anything in this Agreement to the contrary, the
Adviser and its affiliated persons may receive compensation or reimbursement
from the Trust with respect to (i) the provision of distribution services on
behalf of the Funds in accordance with any distribution plan adopted by the
Trust pursuant to Rule 12b-1 under the Act or (ii) the provision of shareholder
support or other services.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund on the
latter of the date on which the Trust's Registration Statement relating to the
shares of the Fund becomes effective and date of its approval by a vote of a
majority of the outstanding voting securities of the Fund. Upon the
effectiveness of this Agreement, it shall supersede all previous agreements
between the Trust and the Adviser covering the subject matter hereof.
(b) This Agreement shall continue in effect with respect to a Fund for
twelve months and, thereafter, shall continue in effect for successive
twelve-month periods (computed from each anniversary date of the approval),
provided that such 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 at a meeting
called for the purpose of voting on such approval. If the continuation of this
Agreement is not approved as to a Fund, the Adviser may continue to render to
the Fund the services described herein in the manner and to the extent permitted
by the Act.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Adviser or (ii) by the Adviser on 60 days' written notice to the
Trust. This Agreement shall terminate with respect to a Fund if it has not been
approved in the manner specified in clauses (i) and (ii) of Section 6(b) within
two years from its effective date. This Agreement also shall automatically
terminate in the event of its assignment.
SECTION 7. ACTIVITIES OF THE ADVISER
(a) Except to the extent necessary to perform its obligations under
this Agreement, nothing herein shall be deemed to limit or restrict the
Adviser's right, or the right of any of its officers, directors or employees
(whether or not they are a trustee, officer, employee or other affiliated person
of the Trust) to engage in any other business or to devote time and attention to
the management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.
(b) The Adviser represents that it is currently registered as an
investment adviser under the Investment Advisers Act of 1940 and will continue
to be registered as such so long as this agreement remains in effect.
SECTION 8. "OAK HALL" NAME
If the Adviser ceases to act as investment adviser to the Oak Hall
Equity Fund or any other Fund whose name includes the words "Oak Hall," or if
the Adviser requests in writing, the Trust shall take prompt action to change
the name of any such Fund to a name that does not include the words "Oak Hall."
The Adviser may from time to time make available without charge to the Trust for
the Trust's use any marks or symbols owned by the Adviser, including marks or
symbols containing the words "Oak Hall" or any variation thereof, as the Adviser
deems appropriate. Upon the Adviser's request in writing at any time, the Trust
shall cease to use any such mark or symbol. The Trust acknowledges that any
rights in or to the words "Oak Hall" and any such marks or symbols which may
exist on the date of this Agreement or arise hereafter are, and under any and
all circumstances shall continue to be, the sole property of the Adviser. The
Adviser may permit other parties, including other investment companies, to use
the words "Oak Hall" in their names without the consent of the Trust. The Trust
shall not use the words "Oak Hall" in conducting any business other than that of
an investment company registered under the Act without the permission of the
Adviser.
SECTION 9. MISCELLANEOUS
(a) Except for the Schedules, no provisions of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the Act, by a
vote of a majority of the outstanding voting securities of any Fund thereby
affected.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
(f) 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 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
FORUM FUNDS
/S/JOHN Y. KEFFER
John Y. Keffer
Chairman and President
OAK HALL CAPITAL ADVISORS, INC.
/S/DAVID P. STEINMANN
David P. Steinmann
Executive Vice President
<PAGE>
FORUM FUNDS
INVESTMENT ADVISORY AGREEMENT
SCHEDULE A
FUNDS OF THE TRUST
Oak Hall Equity Fund
SCHEDULE B
ADVISORY FEES
Advisory Fee as a % of the Annual Average Daily Net
Fund Assets of the Fund
- ----------------------------------------------------------- -------------------
Oak Hall Equity Fund 0.75
Exhibit 6(a)
SELECTED DEALER AGREEMENT
Ladies and Gentlemen:
We are the principal underwriter of Forum Funds ("Forum Funds") and
distribute shares of certain of the separate investment portfolios of Forum
Funds (each a "Fund" and collectively the "Funds") at their net asset value plus
applicable sales charges pursuant to our Distribution Services Agreement with
Forum Funds. We hereby invite you to participate as a principal in the
distribution of shares of the Funds upon the following terms and conditions:
1. You are to offer and sell shares of a Fund only at the public
offering price which shall be currently in effect in accordance with the terms
of the then current prospectus of the Fund. You agree to act only as principal
in such transactions and shall not have authority to act as agent for the Fund,
for us, or for any other dealer in any respect. All orders are subject to
acceptance by us and become effective only upon confirmation by us.
2. On each purchase of shares by you from us, the total sales charge
and discount to selected dealers shall be as stated in the Fund's then current
prospectus. Such sales charge and discount are subject to reductions under a
variety of circumstances as described in the Fund's then current prospectus. To
obtain these reductions, we must be notified when a sale takes place that would
qualify for the reduced charge. There is no sales charge or discount to selected
dealers on the reinvestment of dividends or distributions.
3. As a selected dealer, you are hereby authorized (i) to place orders
with the Fund for its shares to be resold by us to you subject to the applicable
terms and conditions set forth in the Fund's then current prospectus governing
the placement of orders by us and compensation and (ii) to tender shares
directly to the Fund or its agent for redemption subject to the applicable terms
and conditions set forth in the Fund's then current prospectus.
4. Repurchases of shares will be made at the net asset value of such
shares in accordance with the Fund's then current prospectus.
5. Both parties represent that they are members in good standing of the
National Association of Securities Dealers, Inc. and both parties agree to abide
by the Rules of Fair Practice of this association. Both parties represent that
they are qualified to act as a broker-dealer in the states or other
jurisdictions where they transact business, and agree to maintain such
registrations, qualifications and membership in good standing in full force and
effect throughout the term of this Agreement. Our obligations under this
Agreement are subject to all of the provisions of the Distribution Services
Agreement between us and Forum Funds.
6. This Agreement is in all respects subject to Rule 26 of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. which
shall control any provisions to the contrary in this Agreement.
7. You agree:
(a) To purchase shares only from us or only from your customers.
(b) To purchase shares from us only for the purpose of covering
purchase orders already received or for your own bona fide
investment.
(c) That you will not purchase any shares from your customers at
prices lower than the redemption or repurchase prices then
quoted by the Fund. You shall, however, be permitted to sell
shares for the account of their record owners to the Fund at
the repurchase prices currently established for such shares
and may charge the owner a fair commission for handling the
transaction.
(d) That if any shares confirmed to you hereunder are redeemed or
repurchased by the Fund within seven business days after such
confirmation of your original order, you shall forthwith
refund to us the full discount reallowed to you on such sales.
We shall forthwith pay to the Fund both our share of the sales
charge on the original sale and the refund from you as herein
provided. We shall notify you of such redemption or repurchase
within ten (10) days from the date of the redemption or
repurchase. Termination or cancellation of this Agreement
shall not relieve you or us from the requirements of this
subparagraph.
8. We shall not accept from you any conditional orders for shares.
Delivery of certificates for shares purchased and book-entry recording on the
books of the Fund for shares purchased (if certificates have not been requested)
shall be made by the Fund only against receipt of the purchase price, subject to
deduction for the discount reallowed to you and our portion of the sales charge
on such sale. Payment for the Fund shares by you shall be made on or before the
settlement date specified in our confirmation at the office of our clearing
agent or, at such time and place as you and we may agree from time to time.
Payment for Fund shares shall be by check or wire payable to the order of Forum
Funds, which reserves the right to delay issuance or transfer of shares until
such payment is available in investable Federal Funds. If such payment is not
received by us, we reserve the right, without notice, forthwith either to cancel
the sale, or, at our option, to sell the shares ordered back to the Fund, and in
either case, we may hold you responsible for any loss, including loss of profit,
suffered by us or by the Fund resulting from your failure to make payment as
aforesaid.
9. You will not offer or sell any of the shares except under
circumstances that will result in compliance with the applicable Federal and
State securities laws, as well as with all undertakings made by any Fund with
any state in connection with the sale of shares in such state to the extent such
undertakings are communicated to you, including any applicable requirements to
deliver confirmations to your customers, and in connection with sales and offers
to sell shares you will furnish to each person to whom any such sale or offer is
made, a copy of the Fund's then current prospectus and statement of additional
information, if requested. We shall be under no liability to you except for lack
of good faith and for obligations expressly assumed by us herein. Nothing herein
contained however, shall be deemed to be a condition, stipulation or provision
binding any persons acquiring any securities to waive compliance with any
provision of the Securities Act of 1933, the Securities Exchange Act of 1934 or
the Rules and Regulations of the Securities and Exchange Commission or to
relieve the parties hereto from any liability arising under the Securities Act
of 1933. We shall advise you as to the states or other jurisdictions in which
shares of the Fund have been qualified for sale under, or are exempt from the
requirements of the respective securities laws of such states and jurisdictions
and any undertakings made by any Fund with any state in connection with the sale
of shares in such states.
10. No person is authorized to make any representations concerning
shares of a Fund except those contained in the Fund's then current prospectus
and printed information issued by the Fund or by us as information supplemental
to the prospectus. We shall supply you with prospectuses, reasonable quantities
of supplemental sales literature and additional information as issued or as
requested by you. You agree not to use other advertising or sales material
relating to a Fund unless approved in writing by us in advance of such use. Any
printed information furnished by us other than the then current prospectus,
periodic reports and proxy solicitation materials are our sole responsibility
and are not the responsibility of the Fund and you agree that the Fund shall
have no liability or responsibility to you in these respects unless expressly
assumed in connection therewith. You shall have no responsibility with regard to
the accuracy or completeness of any of the printed information furnished by us
and you shall be held harmless from and against any cost or loss arising
therefrom.
You agree to hold us harmless and indemnify the Funds and us
in the event that you, or any of your sales representatives, violates any
federal or state law, rule or regulation or any provision of this agreement
which may result in any damage, liability or expense to the Funds or their
trustees, or to us.
11. Either party to this Agreement may cancel this agreement by giving
written notice to the other. Such notice shall be deemed to have been given on
the date on which it was either delivered personally to the other party or any
officer or member thereof or was mailed postpaid or delivered in a telegraph
office for transmission to the other party at his or its address as shown below.
This Agreement may be amended by us at any time, any such amendment to be
effective upon delivery to you, and your placing of an order after the effective
date of any such amendment shall constitute your acceptance thereof.
12. This Agreement shall be construed in accordance with the laws of
the State of New York and shall be binding upon both parties hereto when signed
by us and accepted by you in the space provided below.
13. Any notice or communication to Forum shall be duly given if mailed,
telegraphed, telecopied or hand delivered to Forum Financial Services, Inc. at
the following address:
Forum Financial Services, Inc.
Attention: Legal Department
Two Portland Square
Portland, Maine 04101
Very truly yours,
FORUM FINANCIAL SERVICES, INC.
By: /S/JOHN Y. KEFFER
John Y. Keffer
President
Firm Name__________________________________________________________________
Address____________________________________________________________________
City________________________________________ State __________ Zip Code _______
ACCEPTED BY (signature)
Name __________________________________________ Title ______________________
Date ______________________________________________________________________
Exhibit 6(b)
BANK AFFILIATED
SELECTED DEALER AGREEMENT
Dear Sirs:
We are the principal underwriter of Forum Funds ("Forum Funds") and
distribute shares of certain of the separate investment portfolios of Forum
Funds (each a "Fund" and collectively the "Funds") at their net asset value plus
applicable sales charges pursuant to our Distribution Services Agreement with
Forum Funds. We hereby invite you to participate as a principal in the
distribution of shares of the Funds upon the following terms and conditions:
1. You are to offer and sell shares of a Fund only at the public
offering price which shall be currently in effect in accordance with the terms
of the then current prospectus of the Fund. You agree to make available, under
an agency relationship with your customers, shares of the Funds. All orders are
subject to acceptance by us and become effective only upon confirmation by us.
2. On each purchase of shares by you from us, the total sales charge
and discount to selected dealers shall be as stated in the Fund's then current
prospectus. Such sales charge and discount are subject to reductions under a
variety of circumstances as described in the Fund's then current prospectus. To
obtain these reductions, we must be notified when a sale takes place that would
qualify for the reduced charge. There is no sales charge or discount to selected
dealers on the reinvestment of dividends or distributions.
3. With respect to any and all transactions in the shares of a Fund
pursuant to this Agreement, it is understood and agreed that:
(a) You shall be acting solely as agent for the account of your
customer.
(b) Each transaction shall be initiated solely upon the order of your
customer.
(c) We shall execute transactions only upon receiving instructions from
you acting as agent for your customer.
(d) As between you and your customer, the customer will have full
beneficial ownership of all Fund shares.
(e) Each transaction shall be for the account of your customer and not
for your own account.
Each transaction shall be without recourse to you provided that you act
in accordance with this Agreement. You represent and warrant to us that you will
have full right, power and authority to effect transactions (including, without
limitation, any purchases and redemptions) in Fund shares on behalf of all
customer accounts provided by you to us or to a Fund's transfer agent.
4. All orders for the purchase of a Fund's shares shall be executed at
the then current public offering price per share (i.e., the net asset value plus
the applicable sales load, if any) and all orders for the redemption of a Fund's
shares shall be executed at the net asset value per share, in each case as
described in the Fund's then current prospectus. A Fund's minimum initial
purchase order and minimum subsequent purchase order (if any) shall be as set
forth in the Fund's then current prospectus. All orders are subject to
acceptance or rejection at our sole discretion. Unless otherwise mutually agreed
in writing, each transaction shall be promptly confirmed in writing directly to
the customer on a fully disclosed basis and a copy of each confirmation shall be
sent simultaneously to you. We reserve the right, at our discretion and without
notice, to suspend the sale of shares or withdraw entirely the sale of shares of
any or all of the Funds.
5. You agree that you shall not make shares available to your customers
except in compliance with all applicable federal and state laws and the rules
and regulations of applicable regulatory agencies or authorities. You agree that
you shall not purchase any Fund shares, as agent for any customer, unless you
deliver or cause to be delivered to the customer, at or prior to the time of
purchase, a copy of the then current prospectus of the Fund, or unless the
customer has acknowledged receipt of such prospectus. You further agree to
obtain from each customer for whom you act as agent for the purchase of Fund
shares any taxpayer identification certification required under the Internal
Revenue Code of 1986 (the "Code"), and the regulations promulgated thereunder,
and to provide us or our designee with timely written notice of any failure to
obtain such taxpayer identification number certification in order to enable the
implementation of any required backup withholding in accordance with the Code
and the regulations promulgated thereunder. Unless otherwise mutually agreed in
writing, you shall deliver or cause to be delivered to each of the customers who
purchases shares of any Fund through you pursuant to this Agreement copies of
all annual and interim reports, proxy solicitation materials and any other
information and materials relating to the Fund and prepared by or on behalf of
us, the Fund or its investment adviser, custodian or transfer agent for
distribution to each such customer. We agree to supply you with copies of the
Prospectus, annual reports, interim reports, proxy solicitation materials and
any such other information and materials in reasonable quantities upon request.
6. Both parties represent that they are a member of the National
Association of Securities Dealers, Inc. and both parties agree to abide by the
Rules of Fair Practice of such Association.
7. This Agreement is in all respects subject to Rule 26 of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. which
shall control any provisions to the contrary in this Agreement.
8. You agree to pay for purchase orders for any Fund shares from you as
agent for your customers in accordance with the terms of the prospectus of the
applicable Fund. On or before settlement date of each purchase order for shares
of any Fund, you shall either (i) remit to an account designated by us an amount
equal to the then current public offering price of such Fund being purchased
less your reallowance, if any, with respect to such purchase order in accordance
with the applicable Fund's then current prospectus, or (ii) remit to any account
designated by us an amount equal to the then current public offering price of
the shares of such Fund being purchased without deduction for your reallowance,
if any, with respect to such purchase order in accordance with the applicable
Fund's then current prospectus, in which case your reallowance, if any, shall be
payable by us to you on a monthly basis. If payment for any purchase order is
not received in accordance with the applicable Fund's then current prospectus,
we reserve the right, without notice, to cancel the sale and to hold you
responsible for any loss sustained as a result thereof.
If any shares sold by you as agent for your customers under the terms
of this Agreement are sold with a sales load and are redeemed for the account of
the Fund or are tendered for redemption within seven days after the confirmation
of your purchase order for such shares, you shall forthwith pay to the Fund the
portion of the sales load which had been retained by you.
9. You will not offer or sell any of the shares except under
circumstances that will result in compliance with the applicable federal and
state securities laws, including any applicable requirements to deliver
confirmations to your customers, and in connection with sales and offers to sell
shares you will furnish to each person to whom any such sale or offer is made, a
copy of the Fund's then current prospectus. We shall be under no liability to
you except for lack of good faith and for obligations expressly assumed by us
herein. Nothing herein contained however, shall be deemed to be a condition,
stipulation or provision binding any persons acquiring any securities to waive
compliance with any provision of the Securities Act of 1933, the Securities
Exchange Act of 1934 or the Rules and Regulations of the Securities and Exchange
Commission or to relieve the parties hereto from any liability arising under the
Securities Act of 1933. We shall advise you as to the states or other
jurisdictions in which shares of the Fund have been qualified for sale under, or
are exempt from the requirements of, the respective securities laws of such
states and jurisdictions.
10. No person is authorized to make any representations concerning
shares of a Fund except those contained in the Fund's then current prospectus
and printed information issued by the Fund or by us as information supplemental
to the prospectus. We shall supply you with prospectuses, reasonable quantities
of supplemental sales literature and additional information as issued or as
requested by you. You agree not to use other advertising or sales material
relating to a Fund unless approved in writing by us in advance of such use. Any
printed information furnished by us other than the then current prospectus,
periodic reports and proxy solicitation materials are our sole responsibility
and are not the responsibility of the Fund and you agree that the Fund shall
have no liability or responsibility to you in these respects unless expressly
assumed in connection therewith. You shall have no responsibility with regard to
the accuracy or completeness of any of the printed information furnished by us
and you shall be held harmless from and against any cost or loss arising
therefrom.
11. Either party to this Agreement may cancel this Agreement by giving
written notice to the other. Such notice shall be deemed to have been given on
the date on which it was either delivered personally to the other party or any
officer or member thereof or was mailed postpaid or delivered in a telegraph
office for transmission to the other party at his or its address as shown below.
This Agreement may be amended by us at any time, any such amendment to be
effective upon delivery to you, and your placing of an order after the effective
date of any such amendment shall constitute your acceptance thereof.
12. This Agreement shall be construed in accordance with the laws of
the State of New York and shall be binding upon both parties hereto when signed
by us and accepted by you in the space provided below.
Very truly yours,
FORUM FINANCIAL SERVICES, INC.
Two Portland Square
Portland, Maine 04101
By: /S/John Y. Keffer
--------------------------
John Y. Keffer
President
Firm Name_________________________________________________________________
Address___________________________________________________________________
City_________________________________ State _________ Zip Code____________
ACCEPTED BY (signature)
Name (print)___________________________________ Title _____________________
Date _____________________________
Exhibit 6(c)
FORUM FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 19th day of June, 1997, 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
Financial Services, Inc., a Delaware corporation 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
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
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.
(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 corporation 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;
(ii) It is empowered under applicable laws and by its Articles of
Incorporation 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 Articles of
Incorporation.
(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
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
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 the Trust or counsel to the Distributor;
(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,
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 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.
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.
(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.
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 each 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 the 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.
(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.
(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.
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: /s/Mark D. Kaplan
--------------------------
Mark D. Kaplan
Vice President, Assistant Treasurer
and Assistant Secretary
FORUM FINANCIAL SERVICES, INC.
By: /s/John Y. Keffer
-------------------------
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 JUNE 19, 1997
Quadra Opportunistic Bond Fund
Quadra Limited Maturity Treasury Fund
Quadra Invernational Equity Fund
Quadra Value Equity Fund
Investors Bond Fund
TaxSaver Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Payson Balanced Fund
Payson Value Fund
Daily Assets Cash Fund
Daily Assets Treasury Fund
Oak Hall Equity Fund
Austin Global Equity Fund
<PAGE>
FORUM FUNDS
DISTRIBUTION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF SEPTEMBER 22, 1997
Quadra Opportunistic Bond Fund
Quadra Limited Maturity Treasury Fund
Quadra Invernational Equity Fund
Quadra Value Equity Fund
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 Cap Fund
International Equity Fund
Emerging Markets Fund
Investors Growth Fund
Investors Equity Fund
Payson Balanced Fund
Payson Value Fund
Oak Hall Equity Fund
Austin Global Equity Fund
INVESTOR SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets TaxSaver Fund
Daily Assets Treasury Fund II
INSTITUTIONAL SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets TaxSaver Fund
Daily Assets Treasury Fund II
INSTITUTIONAL SERVICE SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets TaxSaver Fund
Daily Assets Treasury Fund II
Exhibit 8(a)
FORUM FUNDS
TRANSFER AGENCY AND SERVICES AGREEMENT
AGREEMENT made as of the 19 day of May, 1998, 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
Shareholder Services, LLC, a corporation organized under the laws of the State
of Delaware its principal office and place of business at Two Portland Square,
Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets, and is authorized to divide those series into
separate classes; and
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 in accordance with
Section 13, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers 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 on behalf of the Funds desires to appoint Forum as
its transfer agent and dividend disbursing agent and Forum desires to accept
such appointment;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) APPOINTMENT. The Trust, on behalf of the Funds, hereby appoints
Forum to act as, and Forum agrees to act as, (i) transfer agent for the
authorized and issued shares of beneficial interest of the Trust representing
interests in each of the respective Funds and Classes thereof ("Shares"), (ii)
dividend disbursing agent and (iii) agent in connection with any accumulation,
open-account or similar plans provided to the registered owners of shares of any
of the Funds ("Shareholders") and set out in the currently effective
prospectuses and statements of additional information (collectively
"prospectus") of the applicable Fund, including, without limitation, any
periodic investment plan or periodic withdrawal program.
(b) DOCUMENT DELIVERY. The Trust has delivered to Forum 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 (the "Securities
Act"), or the Investment Company Act of 1940, as amended ("1940 Act")(the
"Registration Statement"), (iii) the Trust's current Prospectus and Statement of
Additional Information of each Fund (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 (v) all procedures adopted by the
Trust with respect to the Funds (i.e., repurchase agreement procedures), and
shall promptly furnish Forum 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. DUTIES OF FORUM
(a) SERVICES. Forum agrees that in accordance with procedures
established from time to time by agreement between the Trust on behalf of each
of the Funds, as applicable, and Forum, Forum will perform the following
services:
(i) provide the services of a transfer agent, dividend disbursing agent
and, as relevant, agent in connection with accumulation, open-account
or similar plans (including without limitation any periodic investment
plan or periodic withdrawal program) that are customary for open-end
management investment companies including: (A) maintaining all
Shareholder accounts, (B) preparing Shareholder meeting lists, (C)
mailing proxies to Shareholders, (D) mailing Shareholder reports and
prospectuses to current Shareholders, (E) withholding taxes on U.S.
resident and non-resident alien accounts, (F) preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required by
federal authorities with respect to distributions for Shareholders, (G)
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, (H) preparing and
mailing activity statements for Shareholders, and (I) providing
Shareholder account information;
(ii) receive for acceptance orders for the purchase of Shares and
promptly deliver payment and appropriate documentation therefor to the
custodian of the applicable Fund (the "Custodian") or, in the case of
Fund's operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
(iii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(iv) receive for acceptance redemption requests and deliver the
appropriate documentation therefor to the Custodian or, in the case of
Fund's operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
(v) as and when it receives monies paid to it by the Custodian with
respect to any redemption, pay the redemption proceeds as required by
the prospectus pursuant to which the redeemed Shares were offered and
as instructed by the redeeming Shareholders;
(vi) effect transfers of Shares upon receipt of appropriate
instructions from Shareholders;
(vii) prepare and transmit to Shareholders (or credit the appropriate
Shareholder accounts) payments for all distributions declared by the
Trust with respect to Shares;
(viii) issue share certificates and replacement share certificates for
those share certificates alleged to have been lost, stolen, or
destroyed upon receipt by Forum of indemnification satisfactory to
Forum and protecting Forum and the Trust and, at the option of Forum,
issue replacement certificates in place of mutilated share certificates
upon presentation thereof without requiring indemnification;
(ix) receive from Shareholders or debit Shareholder accounts for sales
commissions, including contingent deferred, deferred and other sales
charges, and service fees (i.e., wire redemption charges) and prepare
and transmit payments to underwriters, selected dealers and others for
commissions and service fees received;
(x) track shareholder accounts by financial intermediary source and
otherwise as requested by the Trust and provide periodic reporting to
the Trust or its administrator or other agent;
(xi) maintain records of account for and provide reports and statements
to the Trust and Shareholders as to the foregoing;
(xii) record the issuance of Shares of the Trust and maintain pursuant
to Rule 17Ad-10(e) under the Securities Exchange Act of 1934, as
amended ("1934 Act") a record of the total number of Shares of the
Trust, each Fund and each Class thereof, that are authorized, based
upon data provided to it by the Trust, and are issued and outstanding
and provide the Trust on a regular basis a report of the total number
of Shares that are authorized and the total number of Shares that are
issued and outstanding; and
(xiii) provide a system which will enable the Trust to calculate the
total number of Shares of each Fund and Class thereof sold in each
State.
(b) OTHER SERVICES. Forum shall provide the following additional
services on behalf of the Trust and such other services agreed to in
writing by the Trust and Forum:
(i) monitor and make appropriate filings with respect to the
escheatment laws of the various states and territories of the United
States; and
(ii) receive and tabulate proxy votes/oversee the activities of proxy
solicitation firms and coordinate the tabulation of proxy and
shareholder meeting votes.
(c) BLUE SKY MATTERS. The Trust or its administrator or other agent (i)
shall identify to Forum in writing those transactions and assets to be treated
as exempt from reporting for each state and territory of the United States and
for each foreign jurisdiction (collectively "States") and (ii) shall monitor the
sales activity with respect to Shareholders domiciled or resident in each State.
The responsibility of Forum for the Trust's State registration status is solely
limited to the reporting of transactions to the Trust, and Forum shall have no
obligation, when recording the issuance of Shares, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole responsibility of the Trust or
its administrator or other agent.
(d) SAFEKEEPING. Forum shall establish and maintain facilities and
procedures reasonably acceptable to the Trust for the safekeeping, control,
preparation and use of share certificates, check forms, and facsimile signature
imprinting devices. Forum shall establish and maintain facilities and procedures
reasonably acceptable to the Trust for safekeeping of all records maintained by
Forum pursuant to this Agreement.
(e) COOPERATION WITH ACCOUNTANTS. Forum shall cooperate with each
Fund's independent public accountants and shall take reasonable action to make
all necessary information available to the accountants for the performance of
the accountants' duties.
(f) RESPONSIBILITY FOR COMPLIANCE WITH LAW. Except with respect to
Forum's duties as set forth in this Section 2 and except as otherwise
specifically provided herein, the Trust assumes all responsibility for ensuring
that the Trust complies with all applicable requirements of the Securities Act,
the 1940 Act and any laws, rules and regulations of governmental authorities
with jurisdiction over the Trust. All references to any law in this Agreement
shall be deemed to include reference to the applicable rules and regulations
promulgated under authority of the law and all official interpretations of such
law or rules or regulations.
SECTION 3. RECORDKEEPING
(a) PREDECESSOR RECORDS. Prior to the commencement of Forum's
responsibilities under this Agreement, if applicable, the Trust shall deliver or
cause to be delivered over to Forum (i) an accurate list of Shareholders of the
Trust, showing each Shareholder's address of record, number of Shares owned and
whether such Shares are represented by outstanding share certificates and (ii)
all Shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by Forum under this Agreement
(collectively referred to as the "Materials"). The Trust shall on behalf of each
applicable Fund or Class indemnify and hold Forum harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any error, omission, inaccuracy or
other deficiency of the Materials, or out of the failure of the Trust to provide
any portion of the Materials or to provide any information in the Trust's
possession or control reasonably needed by Forum to perform the services
described in this Agreement.
(b) RECORDKEEPING. Forum shall keep records relating to the services to
be performed under this Agreement, in the form and manner as it may deem
advisable and as required by applicable law. To the extent required by Section
31 of the 1940 Act, and the rules thereunder, Forum agrees that all such records
prepared or maintained by Forum relating to the services to be performed by
Forum under this Agreement are the property of the Trust and will be preserved,
maintained and made available in accordance with Section 31 of the 1940 Act and
the rules thereunder, and will be surrendered promptly to the Trust on and in
accordance with the Trust's request. The Trust and the Trust's authorized
representatives shall have access to Forum's records relating to the services to
be performed under this Agreement at all times during Forum's normal business
hours. Upon the reasonable request of the Trust, copies of any such records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives.
(c) CONFIDENTIALITY OF RECORDS. Forum and the Trust agree that all
books, records, information, and data pertaining to the business of the other
party which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required by law.
(d) INSPECTION OF RECORDS BY OTHERS. In case of any requests or demands
for the inspection of the Shareholder records of the Trust, Forum will endeavor
to notify the Trust and to secure instructions from an authorized officer of the
Trust as to such inspection. Forum shall abide by the Trust's instructions for
granting or denying the inspection; provided, however, that Forum may grant the
inspection without instructions if Forum is advised by counsel to Forum that
failure to do so will result in liability to Forum.
SECTION 4. ISSUANCE AND TRANSFER OF SHARES
(a) ISSUANCE OF SHARES. Forum shall make original issues of Shares of
each Fund and Class thereof in accordance with the Trust's then current
prospectus only upon receipt of (i) instructions requesting the issuance, (ii) a
certified copy of a resolution of the Board authorizing the issuance, (iii)
necessary funds for the payment of any original issue tax applicable to such
Shares, and (iv) an opinion of the Trust's counsel as to the legality and
validity of the issuance, which opinion may provide that it is contingent upon
the filing by the Trust of an appropriate notice with the SEC, as required by
Section 24 of the 1940 Act or the rules thereunder. If the opinion described in
(iv) above is contingent upon a filing under Section 24 of the 1940 Act, the
Trust shall indemnify Forum for any liability arising from the failure of the
Trust to comply with that section or the rules thereunder.
(b) TRANSFER OF SHARES. Transfers of Shares of each Fund and Class
thereof shall be registered on the Shareholder records maintained by Forum. In
registering transfers of Shares, Forum may rely upon the Uniform Commercial Code
as in effect in the State of Delaware or any other statutes that, in the opinion
of Forum's counsel, protect Forum and the Trust from liability arising from (i)
not requiring complete documentation, (ii) registering a transfer without an
adverse claim inquiry, (iii) delaying registration for purposes of such inquiry
or (iv) refusing registration whenever an adverse claim requires such refusal.
As Transfer Agent, Forum will be responsible for delivery to the transferor and
transferee of such documentation as is required by the Uniform Commercial Code.
SECTION 5. SHARE CERTIFICATES
(a) CERTIFICATES. The Trust shall furnish to Forum a supply of blank
share certificates of each Fund and Class thereof and, from time to time, will
renew such supply upon Forum's request. Blank share certificates shall be signed
manually or by facsimile signatures of officers of the Trust authorized to sign
by the Organic Documents of the Trust and, if required by the Organic Documents,
shall bear the Trust's seal or a facsimile thereof. Unless otherwise directed by
the Trust, Forum may issue or register Share certificates reflecting the manual
or facsimile signature of an officer who has died, resigned or been removed by
the Trust.
(b) ENDORSEMENT; TRANSPORTATION. New Share certificates shall be issued
by Forum upon surrender of outstanding Share certificates in the form deemed by
Forum to be properly endorsed for transfer and satisfactory evidence of
compliance with all applicable laws relating to the payment or collection of
taxes. Forum shall forward Share certificates in "non-negotiable" form by
first-class or registered mail, or by whatever means Forum deems equally
reliable and expeditious. Forum shall not mail Share certificates in
"negotiable" form unless requested in writing by the Trust and fully indemnified
by the Trust to Forum's satisfaction.
(c) NON-ISSUANCE OF CERTIFICATES. In the event that the Trust informs
Forum that any Fund or Class thereof does not issue share certificates, Forum
shall not issue any such share certificates and the provisions of this Agreement
relating to share certificates shall not be applicable with respect to those
Funds or Classes thereof.
SECTION 6. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS
(a) PURCHASE ORDERS. Shares shall be issued in accordance with the
terms of a Fund's or Class' prospectus after Forum or its agent receives either:
(i) (A) an instruction directing investment in a Fund or Class, (B) a
check (other than a third party check) or a wire or other electronic
payment in the amount designated in the instruction and (C), in the
case of an initial purchase, a completed account application; or
(ii) the information required for purchases pursuant to a selected
dealer agreement, processing organization agreement, or a similar
contract with a financial intermediary.
(b) DISTRIBUTION ELIGIBILITY. Shares issued in a Fund after receipt of
a completed purchase order shall be eligible to receive distributions of the
Fund at the time specified in the prospectus pursuant to which the Shares are
offered.
(c) DETERMINATION OF FEDERAL FUNDS. Shareholder payments shall be
considered Federal Funds no later than on the day indicated below unless other
times are noted in the prospectus of the applicable Class or Fund:
(i) for a wire received, at the time of the receipt of the wire;
(ii) for a check drawn on a member bank of the Federal Reserve System,
on the second Fund Business Day following receipt of the check; and
(iv) for a check drawn on an institution that is not a member of the
Federal Reserve System, at such time as Forum is credited with Federal
Funds with respect to that check.
SECTION 7. FEES AND EXPENSES
(a) FEES. For the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to pay Forum the fees set
forth in Clauses (i) and (ii) of Appendix B hereto. Fees will begin to accrue
for each Fund on the latter of the date of this Agreement or the date of
commencement of operations of the Fund. If fees begin to accrue in the middle of
a month or if this Agreement terminates before the end of any month, all fees
for the period from that date to the end of that month or from the beginning of
that month to the date of termination, as the case may be, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. Upon the termination of this Agreement with
respect to a Fund, the Trust shall pay to Forum such compensation as shall be
payable prior to the effective date of termination.
(b) EXPENSES. In connection with the services provided by Forum
pursuant to this Agreement, the Trust, on behalf of each Fund, agrees to
reimburse Forum for the expenses set forth in Appendix B hereto. In addition,
the Trust, on behalf of the applicable Fund, shall reimburse Forum for all
expenses and employee time (at 150% of salary) attributable to any review of the
Trust's accounts and records by the Trust's independent accountants or any
regulatory body outside of routine and normal periodic reviews. Should the Trust
exercise its right to terminate this Agreement, the Trust, on behalf of the
applicable Fund, shall reimburse Forum for all out-of-pocket expenses and
employee time (at 150% of salary) associated with the copying and movement of
records and material to any successor person and providing assistance to any
successor person in the establishment of the accounts and records necessary to
carry out the successor's responsibilities.
(c) PAYMENT. All fees and reimbursements are payable in arrears on a
monthly basis and the Trust, on behalf of the applicable Fund, agrees to pay all
fees and reimbursable expenses within five (5) business days following receipt`
of the respective billing notice.
SECTION 8. REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS AND WARRANTIES OF FORUM. Forum represents and
warrants to the Trust that:
(i) It is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware.
(ii) It is duly qualified to carry on its business in the State of
Maine.
(iii) It is empowered under applicable laws and by its Article of
Incorporation and Bylaws to enter into this Agreement and perform its
duties under this Agreement.
(iv) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement.
(v) It has access to the necessary facilities, equipment, and personnel
to perform its duties and obligations under this Agreement.
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of Forum, enforceable against Forum
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) It is registered as a transfer agent under Section 17A of the
1934 Act.
(b) REPRESENTATIONS AND WARRANTIES OF THE TRUST. The Trust represents
and warrants to Forum that:
(i) It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
(ii) It is empowered under applicable laws and by its Organic Documents
to enter into this Agreement and perform its duties under this
Agreement.
(iii) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement.
(iv) It is an open-end management investment company registered under
the 1940 Act.
(v) 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.
(vi) A registration statement under the Securities Act is currently
effective and will remain effective, and appropriate State securities
law filings have been made and will continue to be made, with respect
to all Shares of the Funds and Classes of the Trust being offered for
sale.
SECTION 9. PROPRIETARY INFORMATION
(a) PROPRIETARY INFORMATION OF FORUM. The Trust acknowledges that the
databases, computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals maintained by Forum on databases under the
control and ownership of Forum or a third party constitute copyrighted, trade
secret, or other proprietary information (collectively, "Proprietary
Information") of substantial value to Forum or the third party. The Trust agrees
to treat all Proprietary Information as proprietary to Forum and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided under this Agreement.
(b) PROPRIETARY INFORMATION OF THE TRUST. Forum acknowledges that the
Shareholder list and all information related to Shareholders furnished to Forum
by the Trust or by a Shareholder in connection with this Agreement
(collectively, "Customer Data") constitute proprietary information of
substantial value to the Trust. In no event shall Proprietary Information be
deemed Customer Data. Forum agrees to treat all Customer Data as proprietary to
the Trust and further agrees that it shall not divulge any Customer Data to any
person or organization except as may be provided under this Agreement or as may
be directed by the Trust.
SECTION 10. INDEMNIFICATION
(a) INDEMNIFICATION OF FORUM. Forum shall not be responsible for, and
the Trust shall on behalf of each applicable Fund or Class thereof indemnify and
hold Forum harmless from and against, any and all losses, damages, costs,
charges, reasonable counsel fees, payments, expenses and liability arising out
of or attributable to:
(i) all actions of Forum or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without gross negligence or willful misconduct;
(ii) the Trust's lack of good faith or the Trust's gross negligence or
willful misconduct;
(iii) the reliance on or use by Forum or its agents or subcontractors
of information, records, documents or services which have been
prepared, maintained or performed by the Trust or any other person or
firm on behalf of the Trust, including but not limited to any previous
transfer agent or registrar;
(iv) the reasonable reliance on, or the carrying out by Forum or its
agents or subcontractors of, any instructions or requests of the Trust
on behalf of the applicable Fund; and
(v) the offer or sale of Shares in violation of any requirement under
the Federal securities laws or regulations or the securities laws or
regulations of any State that such Shares be registered in such State
or in violation of any stop order or other determination or ruling by
any federal agency or any State with respect to the offer or sale of
such Shares in such State.
(b) INDEMNIFICATION OF TRUST. Forum shall indemnify and hold the Trust
and each Fund or Class thereof harmless from and against any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributed to any action or failure or omission to
act by Forum as a result of Forum's lack of good faith, gross negligence or
willful misconduct with respect to the services performed under or in connection
with this Agreement.
(c) RELIANCE. At any time Forum may apply to any officer of the Trust
for instructions, and may consult with legal counsel to the Trust or to Forum
with respect to any matter arising in connection with the services to be
performed by Forum under this Agreement, and Forum and its agents or
subcontractors shall not be liable and shall be indemnified by the Trust on
behalf of the applicable Fund for any action taken or omitted by it in
reasonable reliance upon such instructions or upon the advice of such counsel.
Forum, its agents and subcontractors shall be protected and indemnified in
acting upon (i) any paper or document furnished by or on behalf of the Trust,
reasonably believed by Forum to be genuine and to have been signed by the proper
person or persons, (ii) any instruction, information, data, records or documents
provided Forum or its agents or subcontractors by machine readable input, telex,
CRT data entry or other similar means authorized by the Trust, and (iii) any
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to Forum in person or by telephone, vocal telegram or other
electronic means, reasonably believed by Forum to be genuine and to have been
given by the proper person or persons. Forum shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Trust. Forum, its agents and subcontractors shall also be protected and
indemnified in recognizing share certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Trust, and
the proper countersignature of any former transfer agent or former registrar or
of a co-transfer agent or co-registrar of the Trust.
(d) RELIANCE ON ELECTRONIC INSTRUCTIONS. If the Trust has the ability
to originate electronic instructions to Forum in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information, then in such event Forum shall be entitled to rely on the
validity and authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with security
procedures established by Forum from time to time.
(e) USE OF FUND/SERV AND NETWORKING. The Trust has authorized or in the
future may authorize Forum to act as a "Mutual Fund Services Member" for the
Trust or various Funds. Fund/SERV and Networking are services sponsored by the
National Securities Clearing Corporation ("NSCC") and as used herein have the
meanings as set forth in the then current edition of NSCC RULES AND PROCEDURES
published by NSCC or such other similar publication as may exist from time to
time. The Trust shall indemnify and hold Forum harmless from and against any and
all losses, damages, costs, charges, reasonable counsel fees, payments, expenses
and liability arising directly or indirectly out of or attributed to any action
or failure or omission to act by NSCC.
(f) NOTIFICATION OF CLAIMS. In order that the indemnification
provisions contained in this Section shall apply, upon the assertion of a claim
for which either party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion, and
shall keep the other party advised with respect to all developments concerning
such claim. The party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense of such claim
or to defend against said claim in its own name or in the name of the other
party. The party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
SECTION 11. EFFECTIVENESS, DURATION AND TERMINATION
(a) EFFECTIVENESS. This Agreement shall become effective with respect
to each Fund or Class on December 1, 1997. 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) DURATION. This 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).
(c) TERMINATION. This 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 Forum or (ii) by Forum on 60 days' written notice to the
Trust. Any termination shall be effective as of the date specified in the
notice. Upon notice of termination of this Agreement by either party, Forum
shall promptly transfer to the successor transfer agent the original or copies
of all books and records maintained by Forum under this Agreement including, in
the case of records maintained on computer systems, copies of such records in
machine-readable form, and shall cooperate with, and provide reasonable
assistance to, the successor transfer agent in the establishment of the books
and records necessary to carry out the successor transfer agent's
responsibilities.
(d) SURVIVAL. The obligations of Sections 7, 9 and 10 shall survive any
termination of this Agreement.
SECTION 12. ADDITIONAL FUNDS AND CLASSES. In the event that the Trust
establishes one or more series of Shares or one or more classes of Shares after
the effectiveness of this Agreement, such series of Shares or classes of Shares,
as the case may be, shall become Funds and Classes under this Agreement. Forum
or the Trust may elect not to make and such series or classes subject to this
Agreement.
SECTION 13. ASSIGNMENT. Except as otherwise provided in this Agreement,
neither this Agreement nor any rights or obligations under this Agreement may be
assigned by either party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns. Forum may, without further
consent on the part of the Trust, subcontract for the performance hereof with
any entity, including affiliated persons of Forum; provided however, that Forum
shall be as fully responsible to the Trust for the acts and omissions of any
subcontractor as Forum is for its own acts and omissions.
SECTION 14. FORCE MAJEURE. Forum 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 or any transportation medium, communication system or power
supply.
SECTION 15. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS,
OFFICERS, EMPLOYEES AND AGENTS. 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 Forum 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 Forum'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 16. TAXES. Forum shall not be liable for any taxes, assessments
or governmental charges that may be levied or assessed on any basis whatsoever
in connection with the Trust or any Shareholder or any purchase of Shares,
excluding taxes assessed against Forum for compensation received by it under
this Agreement.
SECTION 17. MISCELLANEOUS
(a) NO CONSEQUENTIAL DAMAGES. Neither party to this Agreement shall be
liable to the other party for consequential damages under any provision of this
Agreement.
(b) AMENDMENTS. 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) CHOICE OF LAW. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of
Delaware.
(d) ENTIRE AGREEMENT. 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) COUNTERPARTS. 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) SEVERABILITY. 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) HEADINGS. Section and paragraph headings in this Agreement are
included for convenience only and are not to be used to construe or interpret
this Agreement.
(h) NOTICES. Notices, requests, instructions and communications
received by the parties at their respective principal addresses, or at such
other address as a party may have designated in writing, shall be deemed to have
been properly given.
(i) BUSINESS DAYS. Nothing contained in this Agreement is intended to
or shall require Forum, in any capacity hereunder, to perform any functions or
duties on any day other than a Fund Business Day. Functions or duties normally
scheduled to be performed on any day which is not a Fund Business Day shall be
performed on, and as of, the next Fund Business Day, unless otherwise required
by law.
(j) DISTINCTION OF FUNDS. Notwithstanding any other provision of this
Agreement, the parties agree that the assets and liabilities of each Fund of the
Trust 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.
(k) NONLIABILITY OF AFFILIATES. No affiliated person (as that term is
defined in the 1940 Act), employee, agent, director, officer or manager of Forum
shall be liable at law or in equity for Forum's obligations under this
Agreement.
(l) REPRESENTATION OF SIGNATORIES. Each of the undersigned expressly
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.
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
persons, as of the day and year first above written.
FORUM FUNDS
By: /s/John Y. Keffer
------------------------------
John Y. Keffer, President
FORUM SHAREHOLDER SERVICES, LLC
By: /s/David I. Goldstein
------------------------------
David I. Goldstein, Secretary
<PAGE>
FORUM FUNDS
TRANSFER AGENCY AND SERVICE AGREEMENT
APPENDIX A
FUNDS AND CLASSES
AS OF MAY 19, 1998
Investors Bond Fund
TaxSaver Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Payson Balanced Fund
Payson Value Fund
Equity Index Fund
Small Cap Fund
International Equity Fund
Emerging Markets Fund
Investors Equity Fund
Investors Growth Fund
Investors High Grade Bond Fund
INVESTOR SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets Tax-Exempt Fund
Daily Assets Treasury Obligations Fund
INSTITUTIONAL SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets Tax-Exempt Fund
Daily Assets Treasury Obligations Fund
INSTITUTIONAL SERVICE SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets Tax-Exempt Fund
Daily Assets Treasury Obligations Fund
<PAGE>
FORUM FUNDS
TRANSFER AGENCY AGREEMENT
APPENDIX A (CONTINUED)
FUNDS AND CLASSES OF THE TRUST
MAY 19, 1998
Austin Global Equity Fund
Oak Hall Equity Fund
Quadra Value Equity Fund
Quadra Growth Fund
<PAGE>
FORUM FUNDS
TRANSFER AGENCY AGREEMENT
APPENDIX B
Fees
<TABLE>
<S> <C>
Transfer Agency Fee as % of the Average
Fund Daily Net Assets of the Fund
- -------------------------------------------------------------------------------------------------------------------
Maine Municipal Bond Fund 0.25% per year plus $12,000 per year and
New Hampshire Bond Fund annual shareholder account fees of $18.00
Investors Bond Fund per shareholder account
TaxSaver Bond Fund
Payson Value Fund
Payson Balanced Fund
Investors Equity Fund
Investors Growth Fund
Investors High Grade Bond Fund
Equity Index Fund
Small Cap Fund
Emerging Markets Fund
International Equity Fund
- -------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
Daily Assets Treasury Fund 0.05% per year plus $12,000 per year and Daily Assets
Cash Fund annual shareholder account fees of $18.00 Daily Assets Government Fund
per shareholder account Daily Assets Tax-Exempt Fund
- -------------------------------------------------------------------------------------------------------------------
Daily Assets Treasury Obligations Fund
INSTITUTIONAL SERVICE SHARES
Daily Assets Treasury Fund 0.10% per year plus $12,000 per year and Daily Assets
Cash Fund annual shareholder account fees of $18.00 Daily Assets Government Fund
per shareholder account Daily Assets Tax-Exempt Fund
- -------------------------------------------------------------------------------------------------------------------
Daily Assets Treasury Obligations Fund
</TABLE>
<PAGE>
FORUM FUNDS
TRANSFER AGENCY AGREEMENT
APPENDIX B
Fees (continued)
<TABLE>
<S> <C>
Fund
- -------------------------------------------------------------------------------------------------------------------
INVESTOR SHARES
Daily Assets Treasury Fund 0.25% per year plus $12,000 per year and Daily Assets
Cash Fund annual shareholder account fees of $18.00 Daily Assets Government Fund
per shareholder account Daily Assets Tax-Exempt Fund
- -------------------------------------------------------------------------------------------------------------------
Daily Assets Treasury Obligations Fund
Oak Hall Equity Fund $12,000 per year plus $25 per shareholder
Austin Global Equity Fund account
- -------------------------------------------------------------------------------------------------------------------
Quadra Value Equity Fund $24,000 per year plus shareholder account Quadra Growth
Fund charges in the amount of $25 for retail accounts and $125 for institutional
accounts
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 8(b)
CUSTODIAN AGREEMENT
FORUM FUNDS
THIS AGREEMENT made as of this 19th day of May, 1998, between, Forum
Funds, a Delaware business trust, with its principal place of business at Two
Portland Square, Portland, Maine 04101 (hereinafter called the "Trust"), and
BankBoston, N.A., a national banking association with its principal place of
business in Boston, Massachusetts (hereinafter called the "Custodian").
WHEREAS, the Trust desires that the securities and cash of certain of
its separate series shall be hereafter held and administered by Custodian as the
Trust's agent pursuant to the terms of this Agreement; and
WHEREAS, the Custodian provides services in the ordinary course of its
business which will meet the Trust's needs as provided for hereinafter;
NOW, THEREFORE, in consideration of the mutual promises herein made,
the Trust and the Custodian agree as follows:
SECTION 1. DEFINITIONS
(a) "Account" shall mean the applicable custodial account maintained by
the Custodian on behalf of the Trust for each Fund. The Account of each Fund
shall be separate from the Account of each other Fund and the assets of a Fund's
Account shall not in any way be charged with the liabilities of any other Fund's
Account.
(b) "Bank" shall mean a bank as defined in Section 2(a)(5) of the 1940
Act.
(c) "Fund" shall mean each of the separate series of the Trust as
listed in Appendix A hereto and each other series of the Trust as may be made
subject to this Agreement by a writing between the Trust and the Custodian.
(d) "Securities" shall mean and include stocks, shares, bonds,
debentures, notes, money market instruments, "foreign securities," as that term
is defined in Rule 17f-5 under the 1940 Act, and other obligations and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase, or subscribe for the same, or evidencing or representing any
other rights or interests therein, or in any property or assets.
(e) "Officers' Certificate" shall mean a request or direction in
writing or a written confirmation of an oral request or direction signed in the
name of the Trust by any two of the Officers of the Trust, the Chariman or any
other persons duly authorized to sign by the Board of Trustees of the Trust.
(f) "1940 Act" shall mean the United States Investment Company Act of
1940, as amended.
(g) "Officer of the Trust" shall mean any President, Vice-President,
Treasurer, Assistant Treasurer, Secretary of Assistant Secretary of the Trust.
(h) "Securities Depository" means a clearing corporation registered
under Section 17A of the Securities Exchange Act of 1934 which maintains a
system for the central handling of securities in which all securities of any
particular class or series of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the securities.
(i) "Book-Entry securities" means securities issued by the Treasury of
the United States of America and Federal agencies and instrumentalities of the
United States of America that are maintained in the book-entry system provided
by the Federal Reserve Banks.
(j) "Book-Entry Account" means an account maintained by a Federal
Reserve Bank.
SECTION 2. CUSTODIAN AS AGENT
The Custodian is authorized to act under the terms of this Agreement as
the Trust's agent and to represent the Trust and a particular Fund of the Trust
whenever acting within the scope of the Agreement.
SECTION 3. NAMES, TITLES AND SIGNATURE OF FUND'S OFFICERS
(a) An Officer of the Trust will certify to the Custodian the names,
titles, and signatures of those persons authorized to sign the Officers'
Certificates, as well as names of the Board of Trustees and the Executive
Committee. Said Officer, or his or her successor, will provide the Custodian
with any changes which may occur from time to time.
(b) The Custodian is authorized to rely and act upon written and
manually signed instructions of any person or persons (if Custodain has been
directed to act on the instructions of more than one person) identified on a
separate list ("Authorized Persons") of those persons who may authorize the
withdrawal of any portion of the cash or Securities contained in an Account
furnished to the Custodian from time to time and signed by an Officer of the
Trust and certified by its Secretary or an Assistant Secretary. The Trust will
provide the Custodian with authenticated specimen signatures of all Authorized
Persons.
(c) The Custodian is further authorized to rely upon any instructions
received by any other means and identified as having been given or authorized by
any Authorized Person; regardless of whether such instructions shall in fact
have been authorized or given by any such persons; provided, that,
(i) the Custodian and the Trust shall have previously agreed in writing
upon the means of transmission and the method of identification for
such instructions;
(ii) the Custodian has not been notified by the Trust to cease to
recognize such means and methods; and
(iii) such means and methods have in fact been used.
(d) If the Trust should choose to have dial-up or other means of direct
access to the Custodian's accounting system for Securities in custodial
accounts, the Custodian is also authorized to rely and act upon any instructions
received by the Custodian through the terminal device, regardless of whether
such instructions shall in fact have been given or authorized by the Trust,
provided that such instructions are accompanied by passwords which have been
mutually agreed to in writing by the Custodian and the Trust and the Custodian
has not been notified by the Trust to cease recognizing such passwords.
When dial-up or other direct means of access to the Custodian's
accounting system for cash or Securities is utilized, the Trust agrees to
indemnify the Custodian and hold it harmless from and against any and all
liabilities, losses, damages, costs, reasonable counsel fees, and other
reasonable expenses of every nature suffered or incurred by the Custodian by
reason of or in connection with the improper use, unauthorized use and misuse by
the Trust or its employees of any terminal device with access to the Custodian's
accounting system for cash or Securities in custodial accounts, unless such
losses, damages, etc., result from negligent or wrongful acts of the Custodian,
its employees or agents.
SECTION 4. RECEIPT AND DISBURSEMENT OF MONEY
(a) The Custodian shall open and maintain a separate Account with
respect to each Fund, subject to debit only by a draft or order by the Custodian
acting pursuant to the terms of this Agreement. The Custodian shall hold in each
Account, subject to the provisions hereof, all cash received by it from or for
the Account of the applicable Fund.
(b) With respect to the Account of each Fund, the Custodian shall make
payment of cash to the Account or shall debit the Account only:
(i) for the purchase of Securities for the portfolio of the Fund
upon the delivery of such Securities to the Custodian;
(ii) for payments in connection with the conversion, exchange or
surrender of Securities owned or subscribed to by the Fund held by or
to be delivered to the Custodian;
(iii) for payments in connection with the return of the cash collateral
received in connection with Securities loaned by the Fund;
(iv) for payments in connection with futures contracts positions held
by the Fund;
(v) for payments of interest, dividends, taxes and in connection with
rights offerings; or
(vi) for other proper Fund purposes.
All Securities accepted in connection with the purchase of such
Securities, if (a) usual in the course of local market practice or (b)
specifically required in instructions from the Fund, shall be accompanied by
payment of, or a "due bill" for, any dividends, interest or other distributions
of the issue due the purchaser.
(c) Except as hereinafter provided, the Custodian shall make any
payment for which it receives direction from an Authorized Person so long as
such direction is (A) in writing (or is a facsimile transmission of a written
direction), (B) electronically transmitted to the Custodian as provided in
Section 3 or (C) orally when written or electronic directions cannot reasonably
be given within the relevant time period, when the person giving the direction
is known to the Custodian's employee and when the person giving such direction
(i) assures the Custodian that the directions will be confirmed in writing by an
Authorized Person within twenty-four (24) hours and (ii) states that such
payment is for a purpose permitted under the terms of this subsection.
(d) All funds received by the Custodian in connection with the sale,
transfer, exchange or loan of Securities will be credited to the applicable
Account in immediately available funds as soon as reasonably possible on the
date such received funds are immediately available. Payments for purchase of
Securities for an Account made in immediately available funds will be charged
against the Account on the day of delivery of such Securities and all other
payments will be charged on the business day after the day of delivery.
(i) The Custodian is hereby authorized and required to (A) collect on a
timely basis all income and other payments with respect to Securities
held hereunder to which a Fund shall be entitled either by law or
pursuant to custom in the securities business, and to credit such
income to the Account, (B) detach and present for payment all coupons
and other income items requiring presentation as and when they become
due, (C) collect interest when due on Securities held hereunder, and
(D) endorse and collect all checks, drafts or other orders for the
payment of money received by the Custodian for the account of the Fund.
(ii) If the Custodian agrees to advance cash or Securities of the
Custodian for delivery on behalf of a Fund to a third party, any
property received by the Custodian on behalf of the Fund in respect of
such delivery shall serve as security for the Fund's obligation to
repay such advance until such time as such advance is repaid, and, in
the case where such advance is extended for the purchase of Securities
which constitute "margin stock" under Regulation U of the Board of
Governors of the Federal Reserve System, such additional Securities of
the Fund, as shall be necessary for the Custodian, in the Custodian's
reasonable determination, to be in compliance with such Regulation U
also shall constitute security for the Fund's obligation to repay such
advance. Each Fund hereby grants the Custodian a security interest in
such property of the Fund to secure such advance and agrees to repay
such advance promptly without demand from the Custodian (and in any
event, as soon as reasonably practicable following any demand by the
Custodian), unless otherwise agreed by both parties. Should a Fund fail
to repay such advance as required, the Custodian shall be entitled
immediately to apply such security to the extent necessary to obtain
repayment of the advance, subject, in the case of a Fund's failure to
make prompt repayment without demand, to prior notice to the Fund.
SECTION 5. RECEIPT OF SECURITIES
(a) The Custodian shall hold in each Fund's Account, segregated at all
times from those of any other persons, firms or corporations (including the
Accounts of other Funds), pursuant to the provisions hereof, all Securities
received by it from or for the account of the applicable Fund. All such
Securities are to be held or disposed of by the Custodian for, and subject at
all times to the instructions of, the applicable Fund pursuant to the terms of
this Agreement. The Custodian shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any of the Securities and cash,
except pursuant to the directive of the applicable Fund and only for the account
of the Fund as set forth in Section 7 of this Agreement.
(b) The Trust hereby authorizes the Custodian to deposit assets of the
Funds of the Trust as follows:
(i) deposit with the Custodian or any opther bank licensed and examined
by the United States or any state thereof;
(ii) deposit in the Custodian's account(s) with any Securities
Depository all or any part of the Securities as may from time to time
be held for the Trust; and
(iii) deposit Book-Entry Securities belonging to the Funds in a
Book-Entry Account maintained for the Custodian by a Federal Reserve
Bank.
So long as any deposit referred to in (ii) or (iii) above is maintained for the
Trust, the Custodian shall:
(A) deposit the Securities in an account that includes only assets held
by it for customers;
(B) with respect to Securities of the Trust transferred to the account,
identify as belonging to the Trust a quantity of securities in a
fungible bulk of securities that are registered in the name of the
Custodian or its nominee, or shown on the Custodian's account on the
books of the Securities Depository, the Book-Entry System, or the
Custodian's agent;
(C) promptly send to the Trust all reports the Custodian receives from
the appropriate Federal Reserve Bank or Securities Depository on its
respective system of internal accounting control; and
(D) send to the Trust such reports of the systems of internal
accounting control of the Custodian and its agents through which such
Securities are deposited as are available and as the Trust may
reasonably request from time to time.
The Custodian shall not waive any rights it may have against a Securities
Depository or Federal Reserve Bank. The Trust may elect to be subrogated to the
rights of the Custodian against the Securities Depository or Federal Reserve
Bank or any other person with respect to any claim that the Custodian may have
as a consequence of any loss or damage suffered by the Trust as a result of the
Custodian's use of the Securities Depository or Book-Entry account if and to the
extent that the Trust has not been made whole for any such loss or damage.
SECTION 6. FOREIGN SUBCUSTODIANS AND OTHER AGENTS
(a) In the event the Custodian places Securities, pursuant to this
Agreement, with any foreign subcustodian, the Custodian agrees that it shall
place such Securities only with those foreign subcustodians which either are
"eligible foreign custodians" as defined in Rule 17f-5 under the 1940 Act, or
with respect to which exemptive relief has been granted by the U. S. Securities
and Exchange Commission from the requirements of Section 17(f).
The Custodian agrees further that in placing Securities with any such
foreign subcustodian, it will enter into a written subcustodian agreement which
shall provide that: (i) the Custodian will be adequately indemnified and the
Securities so placed adequately insured in the event of loss, as provided in
subsection 6(b); (ii) the Securities will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the foreign
subcustodian or its creditors (except any claim for payment for the services
provided by such subcustodian and any related expenses; provided, however that
the Custodian shall use its best efforts promptly to release any such right,
charge, security interest, lien or claim on the assets, except to the extent
such right, charge, security interest, lien or claim arises with respect to a
special request or requirement by the Fund for services the cost of which and
the expenses incurred in connection with which the Fund has not paid or has
declined to pay, it being agreed and understood that, in the ordinary course,
all payments for usual and routine services rendered and expenses incurred by a
subcustodian shall be the obligation of the Custodian); (iii) beneficial
ownership of the Securities will be freely transferable without payment of money
or value other than for safe custody or administration; (iv) adequate records
will be maintained identifying the Securities as belonging to the Funds of the
Trust; (v) the Custodian's independent public accountants will be given access
to those records or the confirmation of the contents of those records; and (vi)
the Custodian will receive periodic reports with respect to the safekeeping of
the Securities, including, but not necessarily limited to, notification of any
transfer to or from the Accounts.
(b) In addition to the indemnities included in Section 13 hereof, the
Custodian agrees that the Custodian shall be liable to the Trust for any loss
which shall occur as a result of the failure of a subcustodian as listed in
exhibit B hereto to exercise reasonable care with respect to the safekeeping of
the Securities and cash of the Trust to the same extent that the Custodian would
be liable to the Trust if the Custodian were holding such Securities or cash in
NewYork.
(c) With respect to any Securities to be placed with foreign
subcustodians pursuant to this section, the Custodian represents and warrants
that during the term of this Agreement it will carry a Bankers Blanket Bond or
similar insurance for losses incurred as a result of such sub-custodial
arrangements.
(d) The Trust authorizes the Custodian to release any and all
information regarding Securities placed with foreign subcustodians hereunder as
may be required by court order of a court of competent jurisdiction.
(e) So long as Rule 17f-5 under the 1940 Act so requires the Trust's
Board of Trustees or Funds's investment adviser to review or monitor the
Custodian's global custody network, the Custodian shall (a) furnish annually to
the Trust information concerning the foreign sub-custodians employed by the
Custodian similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Agreement; (b) promptly inform the Trust in
the event that the custodian learns of (i) a material adverse change in the
financial condition of a foreign sub-custodian, (ii) any material loss of the
assets of a Fund or (iii) a foreign sub-custodian not the subject of an
exemptive order from the U.S. Securities and Exchange Commission ceasing, or
becoming likely to cease, to meet applicable minimum shareholders' equity
requirements.
SECTION 7. TRANSFER, EXCHANGE AND REDELIVERY OF SECURITIES
The Custodian (or a subcustodian or any other agent of the Custodian)
shall have sole power to release or deliver any Securities of a Fund held by the
Custodian (or such subcustodian or agent) pursuant to this Agreement. The
Custodian agrees (and will obtain an undertaking from each subcustodian or other
agent) that Securities held by the Custodian (or by a subcustodian or other
agent of the Custodian) will be transferred, exchanged or delivered only:
(i) for sales of Securities for the account of the Fund in accordance
with (A) "New York Street Practice", (B) predominant established
practice in the relevant local market, or (C) specific instructions
from the Fund;
(ii) when Securities are called, redeemed or retired or otherwise
become payable;
(iii) for examination by any broker selling any such Securities in
accordance with "street delivery" custom or other relevant local market
practice;
(iv) in exchange for or upon conversion into other Securities whether
pursuant to any plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise;
(v) upon conversion of such Securities pursuant to their terms into
other Securities;
(vi) upon exercise of subscription, purchase or other similar rights
represented by such Securities pursuant to their terms;
(vii) for the purpose of exchanging interim receipts or temporary
Securities for definitive Securities;
(viii) for the purpose of tendering Securities;
(ix) for the purpose of delivering Securities lent by the Fund;
(x) for purposes of delivering collateral upon redelivery of Securities
lent or for purposes of delivering excess collateral; or
(xi) for other proper Fund purposes.
As to any deliveries made by the Custodian pursuant to items (ii), (iv), (v),
(vi), (vii), (ix), (x) and (xi), Securities in exchange therefor shall be
deliverable to the Custodian (or a subcustodian or other agent of the
Custodian). The Custodian may rely upon any written, electronic or oral
instructions or an Officers' Certificate relating thereto as provided for in
Sections 3 and 4 hereof.
SECTION 8. THE CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS
Unless and until the Custodian receives instructions to the contrary,
the Custodian (or a subcustodian or other agent of the Custodian)
shall:
(i) present for payment all coupons and other income items held by it
for the account of each Fund which call for payment upon presentation
and hold the cash received by it upon such payment in the applicable
Account;
(ii) collect interest and cash dividends and other distributions,
provide notice to the Fund of receipts, and deposit to the Account;
(iii) hold for the account of the Fund all stock dividends, rights and
similar Securities issued with respect to any Securities held by the
Custodian under the terms of this Agreement;
(iv) execute as agent on behalf of the Fund all necessary ownership
certificates required by the United States Internal Revenue Code of
1986, as amended, the Income Tax Regulations of the United States
Treasury Department, the laws of any State or territory of the United
States, or, in the case of Securities held through foreign
subcustodians, the laws of the jurisdiction in which such Securities
are held, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the Securities covered thereby, to the
extent it may lawfully do so;
(v) use its best efforts, in cooperation with the Fund, to file such
forms, certificates and other documents as may be required to comply
with all applicable laws and regulations relating to withholding
taxation applicable to the Securities; and
(vi) use its best efforts to assist the Fund in obtaining any refund of
local taxes to which the Fund may have a reasonable claim.
The Trust agrees to furnish to the Custodian such information and to execute
such forms and other documents as the Custodian may reasonably request or as
otherwise may be reasonably necessary in connection with the Custodian's
performance of its obligations under clauses (v) and (vi).
SECTION 9. REGISTRATION OF SECURITIES
(a) Except as otherwise directed by an Officers' Certificate, the
Custodian shall register all Securities, except such as are in bearer form, in
the name of the Trust or the applicable Fund or a registered nominee of the
Trust or the Fund or a registered nominee of the Custodian or a subcustodian.
Securities deposited with a Securities Depository or with a foreign subcustodian
permitted under Section 6 may be registered in the nominee name of the
Securities Depository or such foreign subcustodian. The Custodian shall execute
and deliver all such certificates in connection therewith as may be required by
the applicable provisions of the United States Internal Revenue Code fo 1986, as
amended, the Income Tax Regulations of the United States Treasury Department,
the laws of any State or territory of the United States, or, in the case of
Securities placed with foreign subcustodians, the laws of the jurisdiction in
which such Securities are held. The Custodian shall maintain such books and
records as may be necessary to identify the specific Securities held by it
hereunder at all times.
(b) The Trust shall from time to time furnish the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Securities
which it may hold for the account of a Fund and which may from time to time be
registered in the name of a Fund.
SECTION 10. VOTING AND OTHER ACTION
Neither the Custodian nor any nominee of the Custodian or of DTC shall
vote any of the Securities held hereunder by or for the account of a Fund except
in accordance with the instructions contained in an Officers' Certificate.
The Custodian shall deliver or have delivered to the Trust all notices,
proxies and proxy soliciting materials with relation to such Securities, such
proxies to be executed by the registered holder of such Securities (if
registered otherwise than in the name of a Fund), but without indicating the
manner in which such proxies are to be voted.
With respect to Securities deposited with a Securities Depository or a
foreign subcustodian, as provided for in Section 6 hereof, that may be
registered in the nominee name of the Securities Depository or the foreign
subcustodian, the Custodian shall request that the nominee shall not vote any of
such deposited Securities or execute any proxy to vote thereon or give any
consent or take any other action with respect thereto unless instructed to do so
by the Custodian following receipt by the Custodian of an Officers' Certificate.
SECTION 11. TRANSFER TAX AND OTHER DISBURSEMENTS
The Trust, on behalf of each Fund, shall pay or reimburse the Custodian
from time to time for any transfer taxes payable upon transfers of Securities
made hereunder and for all other necessary and proper disbursements and expenses
made or incurred by the Custodian in the performance of this Agreement, as
required by U.S. law or the laws of the jurisdiction in which the Securities are
held, as the case may be.
The Custodian shall execute and deliver such certificates in connection
with Securities delivered to it or by it under this Agreement as may be required
under the laws of any jurisdiction to exempt from taxation any exemptible
transfers and/or deliveries of any such Securities.
SECTION 12. COMPENSATION AND THE CUSTODIAN'S EXPENSES
The Custodian shall be paid as compensation for its services pursuant
to this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties.
SECTION 13. INDEMNIFICATION
The Trust, on behalf of each Fund, agrees to indemnify and hold
harmless the Custodian and its employees, agents and nominee from all taxes,
charges, expenses, assessments, claims and liabilities (including attorneys'
fees) incurred or assessed against them in connection with the performance of
the Agreement, except such as may arise from their own negligent action,
negligent failure to act or willful misconduct. The Custodian agrees to
indemnify and hold harmless the Trust and its trustees, officers, employees, and
agents from all taxes, charges, expenses, assessments, claims and liabilities
(including attorneys fees) incurred or assessed against the Trust in connection
with the performance of the Agreement, which may arise from negligent action,
negligent failure to act or willful misconduct on the part of the Custodian. In
the event of any advance of cash for any purpose made by the Custodian resulting
from orders or instructions of a Fund, or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Agreement,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time held
for the account of the Fund shall be security therefor.
Within a reasonable time after receipt by an indemnified party of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party, notify in
writing the indemnifying party of the commencement thereof; and the omission so
to notify the indemnifying party will not relieve it from any liability
hereunder as to the particular item for which indemnification is then being
sought, unless such omission is a result of the failure to exercise reasonable
care on the part of the indemnified party. In case any such action is brought
against an indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to assume the defense thereof, with counsel who shall be to the
reasonable satisfaction of such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation. Any such indemnifying party shall not be liable to any such
indemnified party on account of any settlement of any claim or action effected
without the consent of such indemnifying party.
SECTION 14. MAINTENANCE OF RECORDS
The Custodian will maintain records with respect to each Fund,
including general ledgers, portfolio ledgers, subsidiary ledgers, if any,
appropriate journals or other records reflecting (i) Securities maintained in
the portfolio of a Fund, (ii) Securities borrowed, loaned or collateralizing
obligations of a Fund, (iii) monies borrowed and monies loaned (together with a
record of the collateral thereto and substitutions of such collateral), (iv)
dividends and interest received, and (v) dividends receivable and interest
accrued, in compliance with the rules and regulations of the 1940 Act, where
applicable.
SECTION 15. REPORTS BY THE CUSTODIAN
The Custodian will furnish to the Trust at the end of every month, and
at the close of each quarter of a Fund's fiscal year, a list of the portfolio
Securities and the aggregate amount of cash in each Account and will assist in
the preparation of the financial data for the N-SAR annual report to be filed on
behalf of a Fund.
The Custodian shall furnish the Trust with such other reports
concerning transactions in the Accounts and/or the Securities as may be agreed
upon from time to time. The books and records of the Custodian pertaining to its
actions under this Agreement shall be kept and preserved by the Custodian in the
manner and, in accordance with applicable rules and regulations under the 1940
Act, and shall be open to inspection and audit at reasonable times and upon
reasonable notice to the Custodian, by officers of any auditors employed by the
Trust (and such other persons as the Trust may designate from time to time). All
such books and records shall be the property of the Trust and the Custodian
shall forthwith upon the Trust's request, turn over to the Trust and cease to
retain in its files, records and documents created and maintained by the
Custodian pursuant to this Agreement, except that the Custodian may maintain
copies of any such files, records and documents to the extent needed for its
protection.
SECTION 16. FUND VALUATION -- INTENTIONALLY LEFT BLANK
SECTION 17. TERMINATION AND ASSIGNMENT
(a) This agreement may be terminated with respect to one or more Funds
by the Trust or by the Custodian, immediately upon written notice from the Trust
or the Custodian, as applicable, to the other party, if the other party fails
materially to perform its obligations hereunder, and may otherwise be terminated
by the Trust or by the Custodian on sixty (60) days' notice, given in writing
and sent by registered mail to the Custodian or the Trust as the case may be.
Upon termination of this Agreement, the Custodian shall deliver the Securities
and cash in the Account of the Funds for which this Agreement has been
terminated to the Trust as is designated in writing by the Trust and, in the
absence of such a designation may, but shall not be obligated to, deliver them
to a bank or trust company of the Custodian's own selection having an aggregate
capital, surplus and undivided profits as shown by its last published report of
not less than 50 million dollars ($50,000,000), the Securities and cash to be
held by such bank or trust company for the benefit of the Trust under terms
similar to those of this Agreement, and the Trust shall be obligated to pay to
such transferee the then current rates of such transferee for services rendered
by it. The Custodian may decline, however, to transfer such amount of such
Securities equivalent to all fees and other sums owing by the applicable Fund to
the Custodian, and the Custodian shall have a charge against and security
interest in such amount until all monies owing to it have been paid or escrowed
to its satisfaction.
(b) This Agreement may not be assigned by the Custodian without the
consent of the Trust, authorized or approved by a resolution of the Trust's
Board of Trustees.
SECTION 18. FORCE MAJEURE
The Custodian shall not be liable or accountable for any loss or damage
resulting from any condition or event beyond its reasonable control; provided,
however, that the Custodian shall promptly use its best efforts to mitigate any
such loss or damage to the Trust or a Fund as a result of any such condition or
event. For the purposes of the foregoing, the actions or inactions of the
Custodian's subcustodians and other agents shall not be deemed to be beyond the
reasonable control of the Custodian. In connection with the foregoing, the
Custodian agrees (and agrees that it will use its best efforts to obtain the
undertaking of its subcustodians and other agents to the effect) that the
Custodian (and/or such subcustodian or agent) shall maintain such alternate
power sources for computer and related systems and alternate channels for
electronic communication with such computers and related systems that the
failure of the primary power source and/or communications channel of the
Custodian (and/or its subcustodians or other agents) will not foreseeably result
in any loss or damage to the Trust or any Fund.
SECTION 19. THIRD PARTIES
This Agreement shall be binding upon and the benefits hereof shall
inure to the parties hereto and their respective successors and assigns.
However, nothing in this Agreement shall give or be construed to give or confer
upon any third party any rights hereunder.
SECTION 20. AMENDMENTS
The terms of this Agreement shall not be waived, altered, modified,
amended, supplemented or terminated in any manner whatsoever, except by written
instrument signed by both of the parties hereto.
SECTION 21. GOVERNING LAW
This Agreement shall be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts.
SECTION 22. COUNTERPARTS
This agreement may be executed in several counterparts, each of which
is an original.
SECTION 23. ENTIRE AGREEMENT
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.
SECTION 24. NOTICES
All notices provided for herein shall be in writing and shall become
effective when deposited in the United States mail, postage prepaid and
certified, addressed
(i) if to the Custodian, at: 150 Royall Street
Canton, MA 02021
Attention: Worldwide Custody - MS: 45-02-90
(ii) if to the Trust, at: Two Portland Square
Portland, Maine 04101
Attention: Secretary
or to such other address as either party may notify the other in writing.
A copy of the Trust Instrument of the Trust has been delivered to the
Custodian is on file with the Secretary of the Trust and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees, and the obligations of this instrument are not binding upon any of the
Trustees, officers, or shareholders of the Trust individually but binding only
upon assets and property of the applicable Fund of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
FORUM FUNDS
By: /s/Max Berueffy
---------------------------
Max Berueffy, Secretary
BANKBOSTON, N.A.
By: ________________________________
Name:_______________________________
Title:______________________________
<PAGE>
CUSTODIAN AGREEMENT
FORUM FUNDS
APPENDIX A
FUNDS OF THE TRUST
MAY 1, 1998
Polaris Global Value Fund
<PAGE>
CUSTODIAN AGREEMENT
FORUM FUNDS
APPENDIX A
FUNDS OF THE TRUST
MAY 19, 1998
(A) MONEY MARKET FUNDS (INSTITUTIONAL, INSTITUTIONAL SERVICE, AND INVESTOR
SHARE CLASS)
Daily Assets Treasury Fund
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund
(B) FORUM FIXED INCOME FUNDS
Investors High Grade Bond Fund
Investors Bond Fund
TaxSaver Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
(C) FORUM EQUITY FUNDS
Payson Balanced Fund
Equity Index Fund
Investors Equity Fund
Payson Value Fund
Investors Growth Fund
International Equity Fund
Emerging Markets Fund
Small Company Opportunities Fund
(D) QUADRA FUNDS
Quadra Limited Maturity Treasury Fund
Quadra Growth Fund
(E) OTHER FUNDS
Oak Hall Small Cap Contrarian Fund
Austin Global Equity Fund
Polaris Global Value Fund
<PAGE>
CUSTODIAN AGREEMENT
FORUM FUNDS
APPENDIX B
SUBCUSTODIANS FOR WHICH THE CUSTODIAN IS LIABLE
<TABLE>
<S> <C>
COUNTRY SUBCUSTODIAN
Australia Australia & New Zealand Banking Group, Ltd.
Austria Creditanstalt-Bankverein
Belgium Banque Bruxelles Lambert, S.A.
Canada Canadian Imperial Bank of Commerce
Denmark Den Danske Bank
Finland Merita Bank
France Credit Agricole Indosuez
Germany Dresdner Bank AG
Greece Citibank, N.A.
Hong Kong Standard Chartered Bank
Hungary Creditanstalt-Bankverein
Indonesia Standard Chartered Bank
Ireland The Bank of Ireland
Italy Banque Paribas
Japan Bank of Tokyo-Mitsubishi, Ltd.
Korea Standard Chartered Bank
Malaysia Standard Chartered Bank
Mexico Citibank, N.A.
Netherlands Kas-Associatie N.V.
New Zealand Australia & New Zealand Banking Group, Ltd.
Norway Den norske Bank
Portugal Banco Espirito Santo Commercial de Lisboa
Singapore Standard Chartered Bank
South Africa Standard Bank of South Africa Ltd.
Spain Banco Bilboa Vizcaya
Sweden Skandinaviska Enskilda Banken
Switzerland Bank Leu Ltd.
Transitional Cedel, S.A.
United Kingdom Midland Bank plc
First Chicago Clearing Centre
Venezuela Citibank, N.A.
Argentina, Brazil, Chile , Columbia, Panama, Peru, Bank Boston, N.A.
United States and Uruguay
</TABLE>
Exhibit 8(c)
FORUM FUNDS
SUB-TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made this 18th day of December, 1995 by and between
Forum Financial Corp., a corporation organized under the laws of Delaware
("FFC"), Administrative Data Management Corp., a corporation organized and
existing under the laws of the State of New York ("ADM") and Forum Funds, a
business trust organized under the laws of Delaware (the "Trust").
R E C I T A L S
WHEREAS, FFC is a registered transfer agent under the Securities and
Exchange Commission Act of 1934 and serves as the transfer agent, register and
dividend disbursing agent of the Trust, which is registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, FFC desires to retain ADM to serve as a sub-transfer agent and
dividend disbursing agent for certain accounts of each of the Trust's separate
investment portfolios as listed on Appendix E hereto (each a "Fund" and
collectively, the "Funds"), and ADM is willing to furnish such services;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. FFC hereby appoints ADM to serve as sub-transfer agent
and dividend disbursing agent for the accounts of the Funds for the period and
on the terms set forth in this Agreement. ADM accepts such appointment and
agrees to furnish the services herein set forth in return for the compensation
as provided for in Paragraph 15 of this Agreement.
2. DELIVERY OF DOCUMENTS.
a. FFC has furnished ADM with copies properly certified or
authenticated of each of the following:
1) Resolutions of the Trust's Board of Trustees(the "Board")
authorizing the execution of this Agreement;
2) Appendix B identifying and containing the signatures of the
Trust's officers and other persons authorized to sign Written Instructions and
give Oral Instructions (referred to herein as "Authorized Persons"), each as
hereinafter defined, on behalf of the Trust;
3) The Trust's Articles of Incorporation filed with the
Secretary of State and all amendments thereto (such Articles of Incorporation,
as presently in effect and as they shall from time to time be amended, are
herein referred to as the "Articles");
4) The Trust's By-Laws and all amendments thereto (such
By-Laws, as presently in effect and as they shall from time to time be amended,
are herein called the "By-Laws");
5) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act") and under the 1940 Act as
filed with the Securities and Exchange Commission ("SEC") and all amendments
thereto; and
6) Each of the Fund's most recent prospectus and statement of
additional information (such prospectus and statement of additional information,
as from time to time in effect and all amendments and supplements thereto are
herein called the "Prospectus").
b. ADM has furnished FFC with copies properly certified or
authenticated of its Registration Statement on Form TA-1 under the Securities
Exchange Act of 1934, as amended and all annual or other public reports filed
with the SEC as may be requested by FFC.
c. Each party from time to time will furnish the other with copies,
properly certified or authenticated, of all amendments or supplements to the
foregoing, if any. Neither party is obligated hereby to provide the other with
otherwise confidential information.
3. DEFINITIONS.
a. "AUTHORIZED PERSON". As used in this Agreement, the term "Authorized
Person" means FFC's and the Trust's officers and other persons duly authorized
by the Board to give Oral and Written Instructions on behalf of a Fund and
listed on the Certificate annexed hereto as Appendix B or any amendment thereto
as may be received by ADM from time to time.
b. "ORAL INSTRUCTIONS". As used in this Agreement, the term "Oral
Instructions" means verbal instructions actually received by ADM from an
Authorized Person or from a person reasonably believed by ADM to be an
Authorized Person.
c. "WRITTEN INSTRUCTIONS". As used in this Agreement, the term "Written
Instructions" means written instructions delivered by mail, telegram, cable,
telex or facsimile sending device (a "fax"), and received by ADM and signed by
an Authorized Person or reasonably believed by ADM to have been signed by or
authorized by an Authorized Person unless otherwise required by a resolution of
the Board furnished to ADM pursuant to Section 2(a) hereof.
4. INSTRUCTIONS CONSISTENT WITH ARTICLES, ETC.
a. Unless otherwise provided in this Agreement, ADM shall act only upon
Oral or Written Instructions. Although ADM may take cognizance of the provisions
of the Articles and By-Laws of the Trust, each Fund's Prospectus and laws, rules
and regulations applicable to the Funds, ADM may assume that any Oral or Written
Instructions received hereunder are not in any way inconsistent with any
provisions of such Articles or By-Laws, a Fund's Prospectus or with any laws,
rules or regulations applicable to the Funds or any vote, resolution or
proceeding of the Shareholders, or of the Board, or of any committee thereof.
b. ADM shall be entitled to rely upon any Oral instructions and any
Written Instructions actually received by ADM pursuant to this Agreement and
shall have no liability for any action which it takes or omits in accordance
with such Oral Instructions or Written Instructions. FFC shall forward to ADM
Written Instructions confirming Oral Instructions in such manner that the
Written Instructions are received by ADM, whether by hand delivery, telex,
facsimile sending device or otherwise, as promptly as practicable after Oral
Instructions are given to ADM. FFC agrees that the fact that such confirming
Written Instructions are not received by ADM shall in no way affect the validity
of the actions or transactions or enforceability of the actions or transactions
authorized by giving Oral Instructions.
5. TRANSACTIONS NOT REQUIRING INSTRUCTIONS.
a. In the absence of contrary Written Instructions, ADM is authorized
to take and to the extent set forth in the Activities List shall take the
following actions:
1) Issuing, transferring and redeeming shares of the Funds in
accounts established on the books and records of ADM (the "Shares");
2) Opening, maintaining and closing accounts of the registered
owners of Shares (the "Shareholders");
3) Answering procedural and administrative inquiries from
Shareholders and their brokers;
4) Causing the reinvestment in Shareholders' accounts of
dividends and distributions declared upon Shares;
5) Transferring the investment of an investor into, or from,
the Shares of other open-end investment companies, if and to the extent
permitted by the Prospectus;
6) Processing redemptions of Shares;
7) Examining and approving legal transfers of the Shares;
8) Furnishing to Shareholders confirmation of transactions
relating to their Shares;
9) Preparing and mailing to the Internal Revenue Service and
all payees all information returns and payee statements required under the
Internal Revenue Code in respect to the Funds' dividends and distributions on
the Shares and taking all other necessary actions with respect to the Shares in
connection with the dividend and other withholding requirements of the Internal
Revenue Code;
10) Mailing to Shareholders annual and semi-annual reports
prepared by or on behalf of the Funds, and mailing new Prospectuses upon their
issue to Shareholders;
11) Preparation and sending such other information from the
Funds records with respect to Shares maintained by ADM as may be reasonably
requested by an Authorized Person;
12) Preparing and sending to the Funds such affidavits of
mailing and certifications as are reasonably requested by an Authorized
Person; and
13) Maintaining such books and records relating to
transactions effected by ADM as are required by the 1940 Act, or by any other
applicable provisions of law, to be maintained by the Funds or ADM with respect
to such transactions, and preserving, or causing to be preserved, any such books
and records for such period as may be required by any such law, rule or
regulation, and which is consistent with ADM's current procedures.
b. In connection with the holding of annual or special meetings of
shareholders of any Fund, ADM agrees to prepare and furnish to FFC certified
lists of Shareholders as of such meeting date, in such form and containing such
information as FFC may request, provided the cost or effort required by ADM to
comply with such request is not unduly burdensome. ADM shall be reimbursed for
out-of-pocket expenses in performing such services, such as the costs of forms,
envelopes and postage. ADM, at its cost with the consent of FFC may employ
another firm to perform all or some of the functions required by this
subsection. FFC shall pay such additional charges as the parties may agree upon
for the services of ADM in connection with special meetings of Shareholders of a
Fund in excess of one such meeting per Fund held in any fiscal year of the Fund.
c. ADM shall furnish to FFC such information and at such intervals as
FFC may reasonably request for the Funds to comply with the normal registration
and/or the normal reporting requirements of the SEC, Blue Sky authorities or
other regulatory agencies. All such information shall be materially correct and
complete based upon information supplied to ADM.
d. ADM shall, in addition to the services herein itemized, if so
requested by FFC and for such additional fees as FFC and ADM may from time to
time agree upon, perform and do all other acts and services that are customarily
performed and done by transfer agents, dividend disbursing agents and
shareholder servicing agents of mutual funds such as the Funds, PROVIDED that
normally occurring improvements in the services of such agents will be provided
without initial capital cost to FFC and at service fees which are competitive
with those prevailing in the industry.
e. The parties hereto agree that without prejudice to any other
provisions of this Agreement, the functions of ADM and FFC under this Agreement
will be substantially performed in accordance with the requirements for the
relevant function specified in the Activities List set forth in Appendix A to
this Agreement. Such Activities List as amended from time to time is an integral
part of this Agreement. In the event that the provisions of this Agreement are
in conflict with or are inconsistent with those set forth in such Activities
List the provisions of the Activities List shall govern.
f. ADM agrees to provide to FFC upon request such information as may
reasonably be required to enable FFC to reconcile the number of outstanding
Shares of each Fund between ADM's records and the master shareholder record of
each Fund.
6. AUTHORIZED SHARES. FFC shall advise ADM from time to time or upon
ADM's request of the number of authorized and unissued shares available with
respect to each Fund. FFC hereby represents that the Articles authorizes the
Board to issue a total of 10,000,000,000 shares.
7. DIVIDENDS AND DISTRIBUTIONS. FFC shall furnish ADM with the amount
of each dividend and with appropriate evidence of action by the Board
authorizing the declaration of dividends and distributions in respect of Shares
as described in the then current Prospectus. Upon declaration of each dividend,
each capital gain distribution or other distribution by the Board, FFC shall
promptly notify ADM of the date of such declaration, the amount payable per
share, the record date for determining the Shareholders entitled to payment, the
payment date, and the reinvestment date and price which is to be used to
purchase Shares for reinvestment, all sufficiently in advance (at least one
business day prior to the record date) to permit ADM to process properly such
dividend or capital gain distribution or other distribution with respect to the
Shares in a timely and orderly manner.
Sufficiently in advance of each payment date to permit ADM to have
federal funds available to it for the payment thereof, FFC will transfer, or
cause the Custodian to transfer, to ADM in its capacity as sub-dividend
disbursing agent, at First Financial Savings Bank, S.L.A. or at such bank or
other financial institution as ADM with the consent of FFC shall select, which
may but need not be an affiliate of ADM, the total amount of the remit portion
of the dividend or distribution currently payable with respect to the Shares.
After deducting any amount reasonably believed by ADM to be required to be
withheld by any applicable tax laws, rules and regulations or other applicable
laws, rules and regulations, based upon information available to it, ADM shall,
as agent for each Shareholder and in accordance with the provisions of the
Articles, then current Prospectus, and shareholder elections, invest dividends
in Shares in the manner described in the Prospectus or pay them in cash.
ADM shall prepare, file with the Internal Revenue Service, and address
and mail to shareholders such returns and information relating to dividends and
distributions paid by the Funds as are required to be so prepared, filed and
mailed by applicable laws, rules and regulations, or such substitute form of
notice as may from time to time be permitted or required by the Internal Revenue
Service. FFC shall promptly provide ADM with the information necessary to
prepare such returns and information with respect to the Shares, all
sufficiently in advance to permit ADM to prepare properly and mail such returns
and information in a timely and orderly manner. On behalf of the Funds, ADM
shall remit on a timely basis to the appropriate Federal authorities any taxes
withheld on dividends and distributions paid by the Funds with respect to the
Shares.
8. NOTIFICATION TO ADM: FFC shall promptly notify ADM of the closing
net asset value per share and the offering price per share each day there are
any transactions in shares of a Fund, but in any event not later than 90 minutes
after the closing of the New York Stock Exchange. ADM will process all
transactions based on the current day's net asset value price per share and the
offering price per share, provided that ADM receives such prices no later than
7:00 p.m. In the event FFC provides such prices after 5:30 p.m., FFC shall pay
ADM the Late Pricing Charges set forth on Appendix D. In the event that FFC is
unable to provide ADM with such prices, FFC may elect to instruct ADM either to
process the day's transactions at an alternative price ("Alternative Price"),
calculated either at (i) the previous day's prices, or (ii) such other price
determined by the Fund. In the event FFC fails to notify ADM of an Alternate
Price before 7:30 p.m., then ADM, at its sole discretion, may process
transactions at the price last determined by FFC. In the event ADM is not so
notified, it may assume that the price is unchanged from the prior price, and
process the days work using the prior price.
9. COMMUNICATIONS WITH SHAREHOLDERS.
a. COMMUNICATIONS TO SHAREHOLDERS. FFC shall prepare, print and provide
ADM with sufficient quantities of all communications by the Funds to their
Shareholders all sufficiently in advance to permit ADM to properly address and
mail to Shareholders in a timely and orderly manner all such communications,
including reports to Shareholders, dividend and distribution notices and proxy
material for its meetings of Shareholders. ADM agrees to mail all such material
to Shareholders in a timely manner. ADM shall not be responsible for receiving
and tabulating the proxy cards for the meetings of the Funds' shareholders
unless agreed to by FFC and ADM with mutually agreed upon compensation. ADM
shall, however, upon request, provide FFC with a list of Shareholders as of a
specific date.
b. CORRESPONDENCE. ADM will answer such correspondence from
Shareholders, securities brokers and others relating to its duties hereunder and
such other correspondence as may from time to time be mutually agreed upon
between ADM and FFC.
10. RECORDS. ADM shall keep the records described on the
Activities List, including but not limited to the following:
a. Accounts for each Shareholder showing the following information:
1) Name, address and United States Taxpayer Identification
Number;
2) Number of Shares held and number of Shares for which
certificates, if any, have been issued, including certificate numbers and
denominations;
3) Historical information starting on the date ADM posts an
account regarding the account of each Shareholder, including dividends and
distributions paid and the date and the price, if applicable, for all
transactions in a Shareholder's account;
4) Any stop or restraining order placed against a
Shareholder's account;
5) Any correspondence relating to the current maintenance of
a Shareholder's account;
6) Information with respect to withholding in the case of a
foreign account; and
7) Information with respect to withholding in the case of an
account subject to backup withholding; and
8) Any information required in order for ADM to perform any
calculations contemplated or required by this Agreement.
The books and records pertaining to the Funds which are in the
possession of ADM shall be the property of the Funds. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws and rules and regulations in effect from time to
time, and consistent with ADM's current practices. ADM will, if so requested by
the counsel to the Trust, modify the manner in which such books and records are
prepared and maintained so as to comply with the reasonable opinion of such
counsel as to such laws and rules. The Trust's or FFC's authorized
representatives, shall have access to such books and records at all times during
ADM's normal business hours. Upon the reasonable request of FFC, copies of any
such books and records shall be provided by ADM to FFC or the Trust's authorized
representative at the Fund's expense.
11. REPORTS AND OTHER INFORMATION. Upon reasonable request of FFC,
PROVIDED that the cost or effort required therefore are, singly or in the
aggregate, not unduly burdensome or expensive to it, ADM will promptly transmit
to FFC, at no additional cost to FFC, (a) documents and information in the
possession of ADM and not otherwise available necessary to enable the Trust, FFC
and their affiliates to comply with the requirements of the Internal Revenue
Service, the SEC, the National Association of Securities Dealers, Inc., State
blue sky authorities, and any other regulatory bodies having jurisdiction; (b)
documents and information in the possession of ADM necessary to enable the Funds
to conduct annual and special meetings of Shareholders; and (c) such other
information, including shareholder lists and statistical information concerning
accounts as may be agreed upon from time to time between FFC and ADM.
12. COOPERATION WITH ACCOUNTANTS. ADM shall cooperate with the Trust's
independent public accountants and shall take all reasonable action in the
performance of its obligations under this Agreement to assure that the necessary
information is made available on a timely basis to such accountants for the
expression of their unqualified opinion, including but not limited to the
opinion included in the Funds' annual report to Fund shareholders and on Form
N-SAR, or similar form.
13. CONFIDENTIALITY. ADM agrees on behalf of itself and its employees
to treat confidentially all confidential records and other confidential
information relative to the Funds and their prior, present or potential
Shareholders and relative to the Funds' distributor and its prior, present or
potential customers. ADM will not divulge any such confidential records or
information to anyone other than the Shareholder, broker, or other person, firm,
corporation or other entity (governmental or otherwise) which ADM reasonably
believes is entitled to such records or information, PROVIDED that it shall,
with respect to any non-routine governmental investigation or inquiry, first
provide notice thereof to FFC.
14. EQUIPMENT FAILURES. ADM shall maintain adequate and reliable
computer and other equipment necessary or appropriate to carry out its
obligations under this Agreement. In the event of computer or other equipment
failures at its own facilities beyond ADM's reasonable control, ADM shall, at
its expense, use its best efforts to minimize service interruptions. The
foregoing obligation of ADM shall not extend to computer terminals owned or
maintained by others, and located outside of premises maintained by ADM. ADM
represents that it has presently in effect backup and emergency systems
described on Appendix C hereto. ADM will maintain such arrangements or
equivalent while this Agreement is in force unless ADM notifies FFC to the
contrary and establishes to the satisfaction of FFC that industry standards no
longer require such arrangements.
15. COMPENSATION. As compensation for the services rendered by ADM
during the term of this Agreement, ADM shall be entitled to receive such
reimbursement for out-of-pocket expenses and such compensation as is specified
on Appendix D attached hereto or as may from time to time be otherwise mutually
agreed on in writing between FFC and ADM. The Trust will pay all compensation to
ADM as contemplated by this Section 15 upon (i) notice from ADM of the expense
or fee and (ii) certification from ADM that the expense or fee has been properly
billed to FFC, that FFC has not paid the expense or fee and that the expense or
fee is 15 days or more overdue.
16. RESPONSIBILITY OF ADM. In the performance of its duties hereunder,
ADM shall be obligated to exercise care and diligence and to act in good faith
and to use its best efforts within reasonable limits to insure the accuracy and
completeness of all services performed under this Agreement.
ADM and the affiliates and agents of ADM shall not be responsible for
or liable for any taxes, assessments, penalties, fines or other governmental
charges of whatever description which may be levied or assessed on any basis
whatsoever in connection with withholding of amounts, verifying or providing
taxpayer identification numbers or otherwise under applicable tax laws and
preparing and filing of tax forms, excepting only for taxes assessed on the
basis of its compensation hereunder, provided that ADM exercises the care and
diligence required by this Agreement.
ADM and the affiliate and agents of ADM shall not be responsible or
liable for the actions, inactions, or any losses or damages caused by any such
actions or inactions of any agents, brokers or others who are specifically
selected by FFC in writing.
17. RELEASE. ADM understands that the obligations of this Agreement are
not binding upon any Shareholder of the Funds personally, but bind only the
Funds' property; ADM represents that it has notice of the provisions of the
Trust's Articles disclaiming Shareholder liability for acts or obligations of
the Funds.
FFC understands that the obligations of this Agreement are not binding
upon the parent corporation of ADM or any affiliated or subsidiaries of ADM and
that FFC, its Trustees, Officers, Shareholders and others shall look only to the
separate assets of ADM.
18. RIGHT TO RECEIVE ADVICE.
a. ADVICE OF FFC. If ADM shall be in reasonable doubt as to any action
to be taken or omitted by it, it may request, and shall receive, from FFC,
directions or advice, including Oral or Written Instructions where appropriate.
b. ADVICE OF COUNSEL. If ADM shall be in doubt as to any
question of law involved in any action to be taken or omitted by ADM, it may
-----------------
request advice from counsel of its own choosing.
c. CONFLICTING ADVICE. In case of conflict between directions, advice
or Oral or Written Instructions received by ADM pursuant to subparagraph (a) of
this paragraph and advice received by ADM pursuant to subparagraph (b) of this
paragraph, ADM shall be entitled to rely on and follow the advice received
pursuant to the latter provision alone.
d. PROTECTION OF ADM. FFC and the Trust shall each indemnify and hold
harmless ADM, each of ADM's affiliated companies, and all of the divisions,
subsidiaries, trustees, officers, agents, employees and assigns of each of the
foregoing (collectively, "Indemnified Transfer Agent Parties"), against and from
any and all demands, damages, liabilities, and losses, or any threatened,
pending or completed actions, claims, suits, complaints, proceedings, or
investigations (including reasonable attorneys fees and other costs, including
all expenses of litigation or arbitration, judgments, fines or amounts paid in
settlement) to which any of them may be or become subject as a result or arising
out of: (i) any action or inaction which it takes in reliance on the provisions
of the Funds' Prospectuses; procedures established between ADM and FFC, or in
reliance on any directions, advice or Oral or Written Instructions received
pursuant to subparagraph (a) or (b) of this paragraph which ADM, after receipt
of any such directions, advice or Oral or Written Instructions, in good faith
reasonably believes to be consistent with such directions, advice or Oral or
Written Instructions, as the case may be; (ii) any negligent act or omission by
FFC or its officers, employees or agents; (iii) FFC's failure to comply with any
of the terms of this Agreement. However, nothing in this paragraph shall be
construed as imposing upon ADM any obligation (i) to seek such directions,
advice or Oral or Written Instructions, or (ii) to act in accordance with such
directions, advice or Oral or Written Instructions when received, unless, under
the terms of another provision of this Agreement, the same is a condition to
ADM's properly taking or omitting to take such action. However, this
indemnification shall not apply to actions or omissions of ADM in cases of its
own bad faith, willful misfeasance, negligence or from reckless disregard by it
of its obligations and duties hereunder; and provided further that prior to
confessing any claim against it which may be the subject of this
indemnification, ADM shall give FFC and each Fund from which ADM is seeking
indemnification written notice of and a reasonable opportunity to defend against
said claim in its own name or in the name of ADM.
19. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. ADM shall have
no responsibility for insuring that the contents of each Prospectus of the Funds
comply with all applicable requirements of the 1933 Act, the 1940 Act, and any
laws, rules and regulations of governmental authorities having jurisdiction,
except that ADM shall cause a senior officer of ADM, or his or her designee to
provide such information and represents and warrants that all information so
furnished by it for specific use in any such Prospectus will be correct and
complete in all material respects.
20. RECORDS FROM OTHERS. ADM, its affiliates and agents shall have no
responsibility or liability for the accuracy or completeness of any documents,
records, or information maintained or provided by or reasonably believed by ADM
to have been maintained or provided by FFC or any Fund or anyone on behalf of
FFC or any Fund and FFC and each Fund hereby specifically agrees that ADM, its
affiliates and agents may rely on and will be fully protected in so relying on
the completeness and accuracy of all such documents, records and information;
PROVIDED that ADM will inform FFC of material errors coming to its attention in
the course of the performance of its duties hereunder; and further PROVIDED that
the failure by ADM, its affiliates and agents to notice any material errors will
not result in any liability on the part of ADM, its affiliates and agents.
ADM, its affiliates and agents may conclusively rely on, and will be
fully protected in relying on, the authenticity and accuracy of any documents or
communications, whether oral, written or facsimile, it receives from FFC or any
Fund or which ADM, its affiliates or agents reasonably believes are from FFC or
any Fund, provided these are received from Authorized Persons in accordance with
this Agreement. This provision will apply to, among other things, the daily
public offering and net asset value prices for Fund shares; instructions from
FFC concerning dividends and other distributions; and other matters relating to
the Funds and their shareholders.
21. RESPONSIBILITIES OF FFC. FFC hereby acknowledges and agrees that
ADM, its affiliates and its agents are responsible only for those functions and
duties set forth in this Agreement and unless so set forth are not responsible
for any of the following which are to be handled by FFC.
a. Creating or maintaining any records on behalf of the Funds or others
with respect to the Shares required by any federal or state law, or regulation
or rule of any agency thereof or any self-regulatory authority except (i) those
relating to shareholder account information set forth in Rule 31a-1(b)(2)(iv)
promulgated under the 1940 Act or equivalent regulation applicable from time to
time; and (ii) such additional records as may reasonably be requested from time
to time by FFC which are customarily maintained by transfer agents to mutual
funds, and which ADM by use of its best efforts may provide at minimal cost and
inconvenience to it; with respect to these records ADM agrees that they: (i) are
the property of the Trust; (ii) will be maintained by ADM for the period
prescribed in Rule 31a-2 or equivalent regulation; (iii) will be made available,
upon request to FFC, the Trust and the SEC; and (iv) will be surrendered
promptly upon the request of the Trust;
b. Determining the legality of any sale, exchange, issuance or
redemption of any shares of the Funds;
c. Determining the legality of any communications, oral or written,
which are sent or provided by ADM, its affiliates or its agents on behalfof the
Trust or FFC;
d. Complying with any federal or state laws or the regulations or rules
of any agency thereof or of any self-regulatory authority except those
specifically applicable to ADM as a sub-transfer agent;
e. Filing any documents on behalf of the Funds or any one else with any
federal or state government or with any agency thereof or of any self-regulatory
authority except ADM will file with the Internal Revenue Service copies of
1099-Div, 1099-B, 5498 and 1042S Forms sent to Shareholders and forms relating
to withholding and non-resident alien withholding;
f. Monitoring the activities of the Funds or any one else for their
compliance with applicable law, rules and regulations or with the provisions of
the Funds Prospectus, its Articles, By-Laws or other governing instruments;
g. Compliance of the Funds or others with applicable federal and state
laws, regulations and rules of any agency thereof, or of any self-regulatory
authority pertaining to the registration of the Funds or of shares of the Funds
or the legality of their sale although ADM will, in order to provide the Funds
with assistance in complying with normal Blue Sky requirements, upon the
reasonable request of FFC provide FFC with a report generated from the
information readily available to ADM detailing the amount of Shares purchased
and redeemed and the states of residence of the Shareholders purchasing or
redeeming such Shares; or
h. Paying of any penalty or assessment imposed by the Internal Revenue
Service for failure to certify a shareholder's taxpayer identification number,
or for an incorrect taxpayer identification number.
22. INFORMATION AND DOCUMENTS.
a. FFC shall promptly provide ADM with the current Prospectus for the
Funds, the Annual and Semi-Annual Reports to shareholders of the Funds, Proxy
Statements and other Fund material, all in sufficient quantities and
sufficiently in advance to permit ADM to provide them to Shareholders in a
timely and orderly fashion.
b. To the extent necessary or appropriate to enable ADM to carry out
its responsibilities under this Agreement, FFC shall:
1) Promptly notify ADM of all material events which affect
the Trust or any affiliate of the Trust;
2) Promptly notify ADM or any suits or other proceedings
threatened or actually instituted against the Trust or any affiliate of the
Trust by the federal government, any state government, or any agency thereof
(including but not limited to the SEC or the Securities Commission of any state)
or by the National Association of Securities Dealers, Inc., or any other
self-regulatory authority;
3) Promptly notify ADM of any consent orders, stop orders or
similar orders affecting the Trust or any affiliate or the Trust issued by the
federal government, any state government, or any agency thereof (including but
not limited to the SEC or the Securities Commission or any state) or by the
National Association of Securities Dealers, Inc. or any other self-regulatory
authority;
4) Promptly provide ADM with copies of the audited Annual
Financial Statements for each affiliate of the Trust which is an Investment
Advisor, Investment Sub-Advisor, Distributor or Administrator of a Fund;
5) Promptly provide ADM, upon request, with copies of any
filings made by the Trust or any affiliate of the Trust which is an Investment
Advisor, Investment Sub-Advisor, Distributor or Administrator of a Fund with the
federal government or any state government or any agency thereof or with any
self-regulatory authority;
6) Promptly provide ADM, upon request, with copies of any
documents relating to items (2) and (3) above; and
7) Discuss with ADM the description of ADM and the services
which ADM provides to Shareholders contained in the Prospectuses of the Funds at
the time of filing any amendments to the registration statement of the Trust
involving any such change. ADM shall use its best efforts to assure the accuracy
and completeness of all material information furnished by it for inclusion in
any such document.
23. INDEMNIFICATION. None of the parties nor any of their nominees
shall be indemnified against any liability to the other party (or any expenses
incident to such liability) arising solely out of (a) such party's or such
nominee's own willful misfeasance, bad faith or gross negligence or reckless
disregard of its duties in connection with the performance of any duties,
obligations or responsibilities provided for in this Agreement or (b) such
party's or such nominee's own negligent failure to perform its duties expressly
provided for in this Agreement or otherwise agreed to in writing.
24. LIABILITY.
a. ADM shall be responsible for the performance of its obligations
under this Agreement notwithstanding the delegation of some or all of such
obligations to others in accordance with the terms of this Agreement.
b. ADM shall not be responsible for loss, liability, cost or expense
arising out of occurrences beyond its control caused by fire, flood, power
failure, unanticipated equipment failure, acts of God, or war or civil
insurrection; provided, however, that it shall have contingency planning for
equipment or electrical failure and such other contingencies as provided in this
Agreement.
25. INSURANCE. ADM shall maintain fidelity, errors and omissions and
other insurance coverage in amounts and on terms and conditions as set forth in
information provided to FFC from time to time.
26. ADVANCEMENT OF MONIES: Nothing in this Agreement shall require ADM
or any affiliate or agent of ADM to pay any monies prior to its receipt of
federal funds for such payment or for ADM or any of its affiliates or agents to
incur or assume any liability for the payment of any such monies prior to its
receipt of federal funds for such payment.
27. EXCLUSIVITY. It is expressly understood and agreed that the
services to be rendered by ADM to the Fund under the provisions of this
Agreement are not deemed to be exclusive and ADM shall be free to render similar
or different services to others.
28. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are reasonably necessary to effectuate the
purposes hereof.
29. AMENDMENT. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
30. ASSIGNMENT. This Agreement and the performance hereunder may not be
assigned by ADM without FFC written consent. Notwithstanding the previous
sentence, ADM may, without FFC's consent, assign the performance of all or a
portion of its responsibilities and duties hereunder to an affiliate of ADM,
provided that FFC shall incur no additional cost or expense in connection
therewith.
31. TERMINATION OF AGREEMENT. This Agreement shall continue unti
termination by FFC or ADM on ninety (90) days' advance written notice to the
other party.
32. NOTICES. All notices and other communications, including Written
Instructions (collectively referred to as "Notice" or "Notices" in this
paragraph), hereunder shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notices shall be addressed:
a. If to ADM:
Administrative Data Management Corp.
10 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Attention: Ms. Anne Condon, Senior Vice President
or to such other address as ADM shall instruct FFC, in writing
from time to time;
b. If to FFC at:
Two Portland Square
Portland, Maine 04101
Attention: Legal Department
or to such other address as FFC shall instruct ADM, in writing
from time to time;
c. If to the Trust at:
Two Portland Square
Portland, Maine 04101
Attention: Forum Financial Services, Inc. Legal Dept.
or to such other address as the Trust shall instruct ADM, in
writing, from time to time; or
d. If not to any of the foregoing at such other address as shall
have been notified to the sender of any such Notice or other
communication.
33. SINGULAR VERSUS PLURAL. When the context so requires, "Fund"
shall mean "Funds".
34. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided that the
parties hereto may embody in one or more separate documents their agreement, if
any, with respect to Oral Instructions. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in New York and governed by New
York law. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. None of the provisions contained in this
Agreement shall be deemed waived or modified because of a previous failure of a
party to insist upon strict performance thereof. This Agreement shall be binding
and shall inure to the benefit of the parties hereto and their respective
successors.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
ADMINISTRATIVE DATA
Attest: MANAGEMENT CORP.
___________________________ By: /s/ Anne Condon
-----------------------------
Anne Condon
Senior Vice President
Attest: FORUM FINANCIAL CORP.
___________________________ By: /s/ John Y. Keffer
----------------------------
John Y. Keffer
President
Attest: FORUM FUNDS
___________________________ By: /s/ John Y. Keffer
------------------------------
John Y. Keffer
President
<PAGE>
APPENDIX A
ACTIVITIES LIST
It is understood that the Fund, its Custodian, and other persons,
firms, corporations or other entities performing services for or on behalf of
the Fund shall provide ADM and the Fund with such services, information, or
other assistance as may be necessary or appropriate to permit ADM to properly
perform the services hereunder.
A. SHAREHOLDER ACCOUNTING SERVICES
1. GENERAL SCOPE. In accordance with the terms of the Agreement, ADM will
provide a comprehensive accounting service for the Shareholders generally
consistent with that provided to other investment companies, including:
a. Dividend accounting;
b. Arrangement for wire receipt and pay out of Shareholder funds;
c. To the extent that it is reasonably within the control of, or can be
reasonably arranged without additional cost by ADM, the rapid and efficient
transfer of investment monies between various accounts, as follows: (i) Federal
funds will be available immediately and (ii) monies generated from checks
deposited will be available on the second business day subsequent to the date of
deposit.
d. To the extent that it is reasonably within the control of, or can
reasonably be arranged without additional cost incurred by ADM, the effective
and controlled processing of expedited redemptions and exchanges by telegraphic
and telephonic means.
2. COMPUTER ACCOUNTING AND RECORD KEEPING.
a. ADM will perform daily maintenance and routine file update.
b. ADM will perform a dividend credit run as required in order to
credit all existing Shareholder accounts with each daily dividend, monthly
dividend, capital gain distribution or other distribution. ADM will establish
new and adjust or close existing Shareholder accounts if necessary on or as of
each business day.
c. ADM will take reasonable precautions for safeguarding of all
Shareholder accounts during these computer runs.
d. ADM will provide continuous proof to the outstanding Shares
maintained by the Fund on a daily basis, and off-line availability of all file
data pertaining to Shareholder accounts.
e. ADM will, to the extent technically feasible, create and maintain
the ability to liquidate and back out dividends reinvested in accounts which are
subsequently liquidated by or on behalf of the Fund due to nonreceipt of funds,
improper registration, or other sufficient reason.
3. ESTABLISHING AND SERVICING ACCOUNTS. ADM will, as set forth in the Fund's
Prospectus, or substantially in conformity with procedures established by or on
behalf of the Fund, accept instructions from investors to open new accounts and
perform such functions consistent with opening a new account:
a. Accept applications in proper form sent directly to the Fund or its
custodian when they are properly delivered to ADM;
b. Accept applications in proper form sent directly to it when they are
received by ADM;
c. Transfer Shares accompanied by apparent proper instructions;
d. Audit and verify payment items for apparent compliance with the
requirements established by the Fund, e.g. minimum investment amount, apparent
proper endorsements and other particulars as prescribed in the prospectus. FFC
will provide ADM from time to time, with names and taxpayer identification
number of individuals entitled to purchase shares at a reduced offering price as
described in the prospectus;
e. Process W-9 or similar forms received by ADM; and compare upon
receipt of a computer tape from the Internal Revenue Service taxpayer
identification numbers contained in such tape against those maintained by ADM.
f. Assign account numbers as necessary and, where appropriate, indicate
the account number on applications;
g. Review payment items to determine whether the payee, original or by
endorsement, on such payment items corresponds to the registration of the
account to which it is to be credited (permitted exceptions include ADM or the
Fund specified as the payee when accompanied by a valid account number or all
necessary documents to establish a new account or such other exceptions as ADM
and the Fund shall agree upon);
h. Time stamp all incoming mail;
i. Produce microfilm record of all incoming checks and other
documentation on filmstrips or other microfilm retrieval method so as to be
retrievable and reproducible upon request;
j. Process address changes and acknowledge such changes to previous
address of record;
k. Answer inquiries from Shareholders or other individuals,
corporations, or other entities who appear to be the Shareholder, dealer or
otherwise entitled to receive information as to account information;
l. Prepare confirmations in such form as may be agreed between the Fund
and ADM from time to time for all "Open Accounts" after each non-dividend
transaction in a Shareholder's account which affects the share balance; mailing
confirmations to the Shareholder as such changes occur;
m. Process on a daily basis if necessary or appropriate routine
transactions such as:
(1) Deposit or withdrawal of Shares from Shareholders'
accounts;
(2) Changes of address;
(3) Miscellaneous changes;
(4) Stops or holds on transfers; or
(5) Instructions relating to the remittance or reinstatement
of dividends and other distributions.
n. Incorporate in the Shareholder accounting software and procedures
the necessary flags, audits, and tests reasonably designed to assure that the
various provisions and requirements specified elsewhere in this Agreement to be
performed by ADM will be substantially satisfied.
B. TRANSFER AGENT SERVICES
In accordance with the Agreement, and in particular Section 5(d)
thereof, ADM will perform the functions normally performed by the transfer agent
for other investment companies of a similar type. Such functions shall include
but not necessarily be limited to:
1. PROCESSING
a. Keep such records in the form and manner as ADM may deem advisable
but not inconsistent with the rules and regulations of appropriate governmental
authorities applicable to ADM or as may otherwise be agreed from time to time in
writing between FFC and ADM;
b. Process transfers as requested by Shareholders or persons, firms,
corporations or other entities ADM reasonably believes to be the Shareholder or
authorized to act on behalf of the Shareholder including obtaining and reviewing
papers and all other documents necessary to satisfy transfer requirements; FFC
will, upon the request of ADM, advise ADM of the transfer requirements of ADM,
and ADM will be fully protected by FFC and the Fund if ADM is following such
transfer requirements;
c. Process eligible initial and subsequent investments;
d. Process payments into Shareholder accounts through the Automated
Clearing House ("ACH") system;
e. Transmit dividends to Shareholders' checking or savings accounts
through the ACH system, provided that ADM has received written authorization
from each such shareholder in a form approved in a form approved by ADM;
f. Process and record redemption of Shares to satisfy ordinary
redemptions;
g. Proportionally allocate dividends, which are provided to ADM by the
Fund in gross dollar amount, to the benefit of the Shareholders entitled to
receive them. The procedure used must show that the amounts allocated daily
substantially balance to the gross dollar amount provided by the Fund to ADM.
2. CUSTODY AND CONTROL OF SHARES. Shares will be credited to the Shareholder's
account in non-certificate form. ADM will examine requests for transfer or
redemption of shares for apparent genuineness or alterations; pass upon the
apparent validity thereof including endorsements, signature guarantees and (if
applicable) tax stamps or waivers, provided that ADM shall not be required to
compare any such endorsements against other records it maintains except in
accordance with written procedures agreed upon between it and the Fund.
C. SUBSCRIPTION AGENT SERVICES
ADM will act as Subscription Agent for the Fund. In addition to
subscription functions described elsewhere in this Agreement, the Transfer Agent
will:
1. MAINTAIN A SUBSCRIPTION ACCOUNT. This account shall be established and
operated so as to satisfy the following criteria:
a. The account shall be established in the name "FFC Subscription
Account" for the benefit of Funds in accordance with the terms of the
Agreement;
b. The account shall be provided by First Financial Savings Bank,
S.L.A. at the costs set forth in Appendix D-1 or by such other financial
institution determined by ADM in its sole discretion at such financial
institution's usual and customary charges;
c. The account shall serve as the sole depository for subscription
monies for the purchase of Shares until such funds are transferred to a Fund's
custody account;
d. ADM shall be prepared to receive and efficiently process incoming
cash, checks, Federal Reserve Drafts and bank wire transfers of funds;
e. Withdrawals from the account shall be for the purpose of
transferring funds into a Fund's custody account or, where appropriate, the
crediting or payment of commissions including dealer's commissions; withdrawals
are also permitted to accommodate net settlements with the Fund's custodian, or
required refunds to brokers due to canceled trades;
f. No dividend or redemption or any other payments shall be made to
Shareholders from the Subscription Account;
g. ADM will cashier all items presented in payment as expeditiously a
possible.
2. In connection with managing the Subscription Account, ADM will exercise all
possible care in satisfying operational requirements in each of the following
critical areas:
a. VALIDATION OF RECEIPT OF GOOD SUBSCRIPTION FUNDS. Procedures and
criteria are to be established by ADM and approved by an Authorized Person for
the purpose of providing assurance that good (collected) funds were received
from Shareholders prior to paying out any redemption proceeds (as a result of
one or more specific redemption requests). Such procedures are to deal with:
(1)Establishing and maintaining procedures reasonably designed
to assure the clearance and collection of checks which are otherwise properly
drawn.
(a) ADM shall not honor any redemption payment until
it has determined, by telephone call to the drawee bank or otherwise,that the
deposit has cleared the drawee bank or fifteen (15) calendar days after the
receipt of such subscription payment, in order to permit the orderly
clearing thereof.
(2) Returned Checks. Shareholder checks returned for account
closures or check stops will be promptly processed. Shares purchased will be
reversed as of the original purchase date. Upon receipt of returned checks for
other reason, ADM will send a letter notifying the shareholder and allow 10
business days for response before the item will be processed for liquidation.
Returned checks will be cleared promptly and processed through the Subscription
Account in conjunction with the following actions:
(a) Place a hold on the account to prevent
redemption of the amount of such returned check or such lesser amount as is in
the affected amount;
(b) Determine how many shares are to be liquidated
due to the investment attributable to such returned check;
(c) Calculate and back out accrued dividends, if
any, attributable to such investment;
(d) Process the liquidation for the appropriate
amount;
(e) Mail the Shareholder confirmation of the
liquidation and the check with a letter of explanation;
(f) Take reasonable steps to recover commissions or
dealer concessions applicable to such returned check, although the
Distributor shall be ultimately responsible therefor.
b. ESTABLISH PROCEDURES TO PROCESS EFFECTIVELY BANK WIRE TRANSFERS.
Establish and maintain procedures reasonably designed by ADM and approved by an
Authorized Person to maintain positive control over movements of incoming money
by bank wire so as to:
(1) Accept requests (WATTS and local calls) for bank wire
instructions, record account information and client telephone number, assign as
appropriate a wire control number, establish Shareholder pending file, and if
appropriate alert the bank wire department;
(2) Confirm to FFC actual bank wire receipts at selected cut-
off times during the course of each business day;
(3) Close out pending Shareholder files if bank wire receipts
are not received as of the date agreed upon; and
(4) Open new or credit existing Shareholder account in
accordance with the provisions of the current prospectus upon receipt of bank
wire funds.
D. DIVIDEND DISBURSING AND REDEMPTION AGENT SERVICES
In performance of the Dividend Disbursing and Redemption Agent
functions, ADM will provide the Fund with regular checks (or electronic funds
transfer if available, at the Shareholder's option) and carry out the following
functional activities:
1. DIVIDENDS.
a. FFC shall advise ADM of dividend amounts which shall then be applied
to the Shares as described in the Prospectus or as directed by the Trust, or its
officers or Trustees;
b. Confirmation of dividend reinvestments shall be mailed to
Shareholders after each reinvestment.
c. Additional dividend information, if provided by FFC or the Trust to
ADM shall then be provided to Shareholders upon written request.
2. REDEMPTION PROCEDURES. ADM with the approval of FFC shall establish
procedures reasonably designed to insure that redemption requirements
established by ADM and agreed to by FFC have been met, including signature
guarantees and obtaining any needed papers or documents.
a. ADM will provide a means to record, retrieve, and display on a
monitor or otherwise an appropriate symbol or other indication that redemption
authorization instructions are on file and appear to be in proper form.
b. All redemption requests will be promptly reviewed to insure:
(1) That there are sufficient Shares available in the
Shareholder's account;
(2) The applicable subscription check has not been returned to
ADM or its agent and the applicable period of days has expired before using the
funds for redemption (see above);
(3) That no signature guarantees shall be acceptable unless
they reasonably appear to have been provided by an eligible guarantor
institution. Some eligible guarantor institutions include members of the
Securities Transfer Agent Medallion Program ("STAMP"), the Stock Exchange
Medallion Program ("SEMP") or the New York Stock Exchange, Inc. Medallion
Signature Program ("MSP").
3. CHECK REPLACEMENT. A replacement check would be issued to the Shareholder,
after verifying that the check to be replaced has not been cashed, and placing a
stop payment order on such check, replacement dividend and redemption checks
alleged to have been lost, stolen, destroyed, or not received.
4. DIVIDEND & REDEMPTION ACCOUNT. ADM will maintain a single Dividend and
Redemption Account for all Funds. This account shall be established and operated
so as to satisfy the following criteria:
a. This account shall be used to disburse cash in payment of dividends,
capital gain distributions and returns of capital.
b. All withdrawals from the Disbursement Account shall be for the
exclusive purpose of making payments to Shareholders. These payments are to be
made only to satisfy automatic or other account liquidation payment
requirements. ADM will advise FFC on the following day of all subscriptions and
redemptions.
c. No deposits or subscription receipts shall be made directly into the
Disbursement Account.
d. Each Fund agrees to fund, or cause the Custodian to fund, the
Disbursement Account sufficiently. Each Fund and ADM agree that a goal of this
procedure is to allow for the maximum employment of Fund assets while still
adequately funding the Disbursement Account. ADM and its affiliates shall not be
required to honor any demand for payment for which previously collected funds
have not been received from a Fund's custodian or other Authorized Person.
e. Employ due diligence in servicing redemption requests as promptly
as possible.
E. EXCHANGE AGENT SERVICES
ADM will provide services as are required to implement the exchange
privileges described from time to time in the prospectus of the Fund. ADM will
install and utilize a telephonic system that is designed to afford the
Shareholder the opportunity to exchange Shares among the eligible Funds and that
will record the telephone request for such exchange. It is understood that ADM
is only able to effect exchanges among Funds or funds for which ADM has entered
into an agreement similar to this Agreement for provision of transfer agency
services.
F. PROXY AGENT SERVICES
If agreed to by FFC and ADM, ADM, for compensation mutually agreeable
to the parties hereto, shall act as Proxy Agent for Shareholders in connection
with the holding of annual or special meetings of a Fund's shareholders, mailing
to Shareholders notices, proxies and proxy statements in connection with the
holding of such meetings, receiving and tabulating votes cast by proxy and
communicating to the Fund the results of such tabulation accompanied by
appropriate certificates, and preparing and communicating to the Fund certified
lists of Shareholders as of such date, and in such form and containing such
information as may be required by the Fund to comply with any applicable
provisions relating to such meetings. ADM may at its expense employ another firm
to provide all or a portion of such services.
Regardless of whether the parties agree to appoint ADM as Proxy Agent,
ADM shall, upon written request of an Authorized Person, provide certified lists
of Shareholders, in such form and containing such information as requested by
FFC.
G. REPORTS TO BE PROVIDED TO FFC BY ADM:
1. DAILY.
a. Copies of confirmations to dealers.
b. "Stats at a Glance", showing numbers of accounts, number of
outstanding shares and changes in shares.
c. Purchases and redemptions.
d. Paid or unpaid trade reports.
e. 10-day notices required by the NASD.
2. MONTHLY.
a. Sales By State and Dividends Reinvested.
b. Withdrawals and Dividends Paid in Cash List (if agreed to
specifically by the parties).
c. Record of Out-of-Pocket Costs Incurred.
3. ANNUAL REPORTS. Provide FFC upon request with all reports reasonably required
to conduct an annual review of ADM's functions relating to a Fund, including but
not limited to performance, volume, error ratios, costs and other matters
relating to the Fund. ADM shall also provide to FFC general information
concerning its operations which might be believed to affect adversely the future
services to the Fund.
4. PERIODIC MARKETING REPORT. Provided these reports are readily
available from existing information and can be produced without unreasonable
effort or expense by ADM, including, e.g.,
a. Geographic Distribution Data.
b. Size of Holdings Data.
H. OTHER SERVICES
ADM will provide the following additional services:
1. SECURITY.
a. Design and maintain security procedures reasonably designed to guard
against the possible theft and/or use by others of the names and addresses of
Shareholders.
b. Periodically duplicate of all records
(computer/microfilm/hardcopy/copy) at a frequency and in a detail reasonably
designed to assure protection of Shareholder record information in the event of
a disaster to ADM's facilities, including:
(1) Significant voltage drop;
(2) Power blackout;
(3) Major destruction of ADM's central facilities.
c. ADM will maintain equipment reasonably designed or represented to
assure an uninterrupted power supply of at least 10 minutes at the offices of
ADM to allow for orderly shut down of hardware in the event of a power outage;
periodic back-up of tapes to be stored at an off-site facility of ADM's
choosing; and will provide redundancy capacity in accordance with the Agreement.
2. STATEMENTS.
a. Provide for up to two extra lines of print on Shareholder statements
which may be employed by a Fund to advise Shareholders of such information as
yield or other explanatory account information. FFC will advise ADM of such
information no less than two business days in advance to permit it to properly
insert such information in a timely and orderly manner.
b. Provide a combined dividend check and statement to Shareholders
electing cash distributions.
3. PROCESSING ROUTINE SHAREHOLDER INQUIRIES.
a. Receive, control, research, and promptly reply to all routine
Shareholder and other inquiries whether received by written or telephonic means
which pertain to a Shareholder's account.
b. Exercise due care to protect confidential information in responding
to inquiries.
c. Request AT&T or such other telephone company as may be appropriate
to provide, at the Distributor's expense, for a dedicated transmission line
between Forum Financial Services, Inc. located at 2 Portland Square, Portland,
Maine 04101 and ADM, 10 Woodbridge Center Drive, Woodbridge, New Jersey 07095
for inquiry via a dedicated or P.C. terminal.
d. Provide adequate personnel for live telephone response generally
until 6:00PM, New York time on normal business days.
e. Provide for the automated tracking of all Shareholder and broker
telephone inquiries with on line update status.
4. OTHER MAILINGS.
a. Mailing services include addressing, enclosing, and mailing
semi-annual reports, annual reports, prospectuses and notices to all accounts
will be provided. To the extent ADM utilizes the services of another firm to
accomplish this for any First Investors Fund, it shall be permitted to do so for
FFC, at ADM's expense.
b. All routine mailings to Shareholders and brokers will, where
appropriate, utilize pre-sorted zip codes.
c. All month-end reinvestment statements, with any month-end dividend
check attached, will generally be mailed to Shareholders, with copies to
broker/dealer.
d. Commission checks and statements will generally be mailed to
brokerage firms on at least a weekly basis for direct investments of prior
weeks.
5. OTHER SERVICES.
a. Refer all Shareholder, broker or governmental inquiries of a policy
or non-routine nature to FFC.
b. Provide an Account Officer to serve as the primary point of contact
between FFC and ADM. ADM will exercise due care in assigning an individual who
is both conversant with standard investment company practices and of sufficient
stature to deal quickly and efficiently with problems peculiar to placing a new
investment company on line.
6. MESSENGER SERVICE. Upon request, provide messenger pick-up and delivery as
necessary between FFC's or the Trust's offices provided they are located within
the borough of Manhattan and the offices of ADM. The party requesting messenger
service shall bear the cost of such service.
<PAGE>
APPENDIX B
FORUM FUNDS
We, Mark D. Kaplan and Michael D. Martins, doe hereby certify that:
The following officers and employees of FORUM FINANCIAL SERVICES, INC.,
administrator of Forum Funds, or FORUM FINANCIAL CORP., transfer agent for the
Corporation, have been duly authorized as Authorized persons to deliver oral and
signed written instructions to Administrative Data Management Corp., a
sub-transfer agent of the Corporation. The signatures set forth opposite their
respective names are their true signatures, and each has been duly elected or
appointed to and currently serves Forum Financial Services, Inc., or Forum
Financial Corporation, in the position indicated.
John Y. Keffer President /S/ JOHN Y. KEFFER_________
Benjamin L Niles Managing Director /S/ BENJAMIN L. NILES______
Richard C. Butt Managing Director, Operation /S/ RICHARD C. BUTT________
Lisa J. Weymouth Manager, Shareholder Services /S/ LISA J WEYMOUTH_______
Mark D. Kaplan Managing Director /S/ MARK D. KAPLAN________
David I Goldstein Managing Director, Counsel /S/ DAVID I. GOLDSTEIN____
________5/6/96____________________ /S/ MARK D. KAPLAN
Date Mark D. Kaplan, Vice President
Assistant Treasurer, Assistant Secretary
________5/6/96___________________ /S/ MICHAEL D. MARTINS
Date Michael D. Martins, Treasurer
<PAGE>
APPENDIX C
Backup Arrangement
ADM currently has in effect a redundancy arrangement with Comdisco
Disaster Recovery Services, Inc. The agreement with Comdisco provides that in
the event of a data processing systems disaster at ADM's facilities in
Woodbridge, New Jersey, ADM may use equipment available at Comdisco's facilities
for routine and other processing. The agreement with Comdisco also provides for
dedicated time on Comdisco's data processing equipment each year to allow ADM to
test the redundancy system.
<PAGE>
APPENDIX D
FFC shall pay ADM the following amounts:
1. Set-up Charge: One time set-up charge of $3,000.00 per each Fund.
2. Account Maintenance Charges: $1.50 per account per month.
3. Account Opening Charge/Account Closing Charge: One-time charge of
$1.50 per account to open or close and account.
4. Minimum Monthly Charges:
$1,000.00 per active class of shares for each Fund.
$ 300.00 per inactive class of shares for each Fund.
5. Disbursements: All reasonable disbursements, including, without
limitation, messenger charges.
6. Late Pricing Charges:
a. $50 on each day the Fund fails to notify ADM of the Fund's
closing net asset value and offering price after 5:30 p.m. and before 6:15 p.m.
$100 on each day the Fund fails to notify ADM of the Fund's closing net asset
value and offering price after 6:15 p.m. and before 7:30 p.m.
b. In the event of a subsequent price adjustment, (i) $50 per
hour for actual time spent on manual corrections and (ii) $300 per hour for
actual time spent for adjustments requiring computer processing.
7. Demand Deposit Account Fees: Fees payable to First Financial
Savings Bank, S.L.A. in the amounts set forth on Appendix D-1.
8. Tax Forms: $1.00 for each tax form generated.
9. FundServ and Networking Fees: As incurred.
<PAGE>
APPENDIX E
Maine Municipal Bond Fund
New Hampshire Bond Fund
Investors Bond Fund
TaxSaver Bond Fund
<PAGE>
a. ADM will accept redemption requests in written, or telephonic form
provided the necessary instructions and authorizations are reasonably believed
by ADM to be in good form. Generally, telephonic redemption requests will be
repeated for confirmation to the person making the request, and upon voice
confirmation by such person, will be recorded in a log kept for that purpose.
b. Requests for the redemption of Shares received without signature
guarantees will be honored only if:
(1) The applicable portion of the Application has been
completed and the proceeds are forwarded to the previously designated bank
account, address, or other destination identified on the Application;
(2) Expedited Redemption Authorization instructions filed at
any time other than upon the original opening of a Shareholder's account are
filed on an appropriate form and bear or reasonably appear to bear a signature
guarantee;
(3) Shareholder accounts in the name of joint tenants shall
generally be handled on the basis of jointly signed instructions and signature
guarantees (where applicable) for any payments.
Exhibit 9(a)
FORUM FUNDS
ADMINISTRATION AGREEMENT
AGREEMENT made as of the 19th day of June, 1997, as amended December 5,
1997, 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 Administrative Services, Limited Liability Company, a
Delaware limited liability company with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
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 in accordance with
Section 6, 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");
WHEREAS, the Trust desires that Forum perform certain administrative
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
administrator of the Trust for the period and on the terms set forth in this
Agreement.
(b) In connection therewith, the Trust has delivered to Forum 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 (the "Securities
Act"), or the 1940 Act (the "Registration Statement"), (iii) the Trust's current
Prospectus and Statement of Additional Information of each Fund (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 (i.e., repurchase
agreement procedures), and shall promptly furnish Forum 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. DUTIES OF FORUM AND THE TRUST
(a) Subject to the direction and control of the Board, Forum shall
manage all aspects of the Trust's operations with respect to the Funds except
those that are the responsibility of Forum Advisors, Inc., any other investment
adviser or investment subadviser to a Fund or the Funds (collectively, the
"Adviser") or any other service provider hired by the Trust, all in such manner
and to such extent as may be authorized by the Board.
(b) With respect to the Trust or each Fund, as applicable, Forum shall:
(i) at the Trust's expense, provide the Trust with, or arrange for the
provision of, the services of persons competent to perform such legal,
administrative and clerical functions not otherwise described in this
Section 2(b) as are necessary to provide effective operation of the
Trust;
(ii) oversee (A) the preparation and maintenance by the Adviser and the
Trust's custodian, transfer agent, dividend disbursing agent and fund
accountant in such form, for such periods and in such locations as may
be required by applicable United States law, of all documents and
records relating to the operation of the Trust required to be prepared
or maintained by the Trust or its agents pursuant to applicable law;
(B) the reconciliation of account information and balances among the
Adviser and the Trust's custodian, transfer agent, dividend disbursing
agent and fund accountant; (C) the transmission of purchase and
redemption orders for Shares; (D) the notification to the Adviser of
available funds for investment; and (E) the performance of fund
accounting, including the calculation of the net asset value of the
Shares;
(iii) oversee the performance of administrative and professional
services rendered to the Trust by others, including its custodian,
transfer agent and dividend disbursing agent as well as legal,
auditing, shareholder servicing and other services performed for the
Funds;
(iv) file or oversee the filing of each document required to be filed
by the Trust in either written or, if required, electronic format
(e.g., electronic data gathering analysis and retrieval system or
"EDGAR") with the SEC;
(v) assist in and oversee the preparation, filing and printing and the
periodic updating of the Registration Statement and Prospectuses;
(vi) oversee the preparation and filing of the Trust's tax returns;
(vii) oversee the preparation of financial statements and related
reports to the Trust's shareholders, the SEC and state and other
securities administrators;
(xiii) assist in and oversee the preparation and printing of proxy and
information statements and any other communications to shareholders;
(ix) provide the Trust with adequate general office space and
facilities and provide persons suitable to the Board to serve as
officers of the Trust;
(x) assist the Advisers in monitoring Fund holdings for compliance with
Prospectus investment restrictions and assist in preparation of
periodic compliance reports;
(xi) prepare, file and maintain the Trust's Organic Documents and
minutes of meetings of Trustees, Board committees and shareholders;
(xii) with the cooperation of the Trust's counsel, Advisers, the
officers of the Trust and other relevant parties, prepare and
disseminate materials for meetings of the Board;
(xiii) maintain the Trust's existence and good standing under
applicable state law;
(xiv) monitor sales of Shares, ensure that the Shares are properly and
duly registered with the SEC and register, or prepare applicable
filings with respect to, the Shares with the various state and other
securities commissions;
(xv) oversee the calculation of performance data for dissemination to
information services covering the investment company industry, for
sales literature of the Trust and other appropriate purposes;
(xvi) oversee the determination of the amount of and supervise the
declaration of dividends and other distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Internal Revenue Code
of 1986, as amended (the "Code"), and prepare and distribute to
appropriate parties notices announcing the declaration of dividends and
other distributions to shareholders;
(xvii) advise the Trust and the Board on matters concerning the Trust
and its affairs;
(xviii) calculate, review and account for Fund expenses and report on
Fund expenses on a periodic basis;
(xix) authorize the payment of Trust expenses and pay, from Trust
assets, all bills of the Trust;
(xx) prepare Fund budgets, pro-forma financial statements, expense and
profit/loss projections and fee waiver/expense reimbursement
projections on a periodic basis;
(xxi) prepare financial statement expense information;
(xxii) assist the Trust in the selection of other service providers,
such as independent accountants, law firms and proxy solicitors; and
(xxii) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the
Board; provided, that Forum need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
(c) Forum shall provide such other services and assistance relating to
the affairs of the Trust as the Trust or an Adviser may, from time to time,
reasonably request pursuant to mutually acceptable compensation agreements.
(d) Forum shall maintain records relating to its services, such as
journals, ledger accounts and other records, as are required to be maintained
under the 1940 Act and Rule 31a-1 thereunder. The books and records pertaining
to the Trust that are in possession of Forum shall be the property of the Trust.
The Trust, or the Trust's authorized representatives, shall have access to such
books and records at all times during Forum's normal business hours. Upon the
reasonable request of the Trust, copies of any such books and records shall be
provided promptly by Forum to the Trust or the Trust's authorized
representatives. In the event the Trust designates a successor that assumes any
of Forum's obligations hereunder, Forum shall, at the expense and direction of
the Trust, transfer to such successor all relevant books, records and other data
established or maintained by Forum under this Agreement.
(e) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Fund to act in contravention of the Fund's Prospectus or
any provision of the 1940 Act. Except as otherwise specifically provided herein,
the Trust assumes all responsibility for ensuring that the Trust complies with
all applicable requirements of the Securities Act, the 1940 Act and any laws,
rules and regulations of governmental authorities with jurisdiction over the
Trust. All references to any law in this Agreement shall be deemed to include
reference to the applicable rules and regulations promulgated under authority of
the law and all official interpretations of such law or rules or regulations.
(f) In order for Forum to perform the services required by this Section
2, the Trust (i) shall cause all service providers to the Trust to furnish any
and all information to Forum, and assist Forum as may be required and (ii) shall
ensure that Forum has access to all records and documents maintained by the
Trust or any service provider to the Trust.
SECTION 3. STANDARD OF CARE AND RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the services
described in this Agreement. Forum shall not be liable to the Trust or any of
the Trust's shareholders 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 Forum's duties or obligations under this
Agreement or by reason of Forum's reckless disregard of its duties and
obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Fund that are consistent with
the standard of care set forth in Section 3(a) or based, if applicable, on good
faith reliance upon an item described in Section 3(d)(a "Claim"). The Trust
shall not be required to indemnify any Forum Indemnitee if, prior to confessing
any Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not
give the Trust written notice of and reasonable opportunity to defend against
the claim in its own name or in the name of the Forum Indemnitee.
(c) Forum agrees to indemnify and hold harmless the Trust, its
employees, agents, trustees and officers against and from any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character arising out of Forum's actions taken or failures to act with respect
to a Fund that are not consistent with the standard of care set forth in Section
3(a). Forum shall not be required to indemnify the Trust if, prior to confessing
any Claim against the Trust, the Trust does not give Forum written notice of and
reasonable opportunity to defend against the claim in its own name or in the
name of the Trust.
(d) A Forum Indemnitee 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 the
Trust or counsel to Forum, and upon statements of accountants, brokers
and other persons reasonably believed in good faith by Forum to be
expert in the matters upon which they are consulted;
(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. Forum 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 Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum 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
Forum to be genuine and to have been signed or presented by the Trust
or other proper party or parties;
and no Forum Indemnitee shall 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 Forum reasonably believes in good faith
to be genuine.
(e) Forum shall not be liable for the errors of other service providers
to the Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the administrative services provided by Forum
pursuant to this Agreement, the Trust shall pay Forum, with respect to each
Portfolio, the fees set forth in Appendix B hereto. These fees shall be accrued
by the Trust daily and shall be payable monthly in arrears on the first day of
each calendar month for services performed under this Agreement during the prior
calendar month. Any of the legal services identified in Appendix C hereto may be
provided to the Trust by personnel of the Legal Department of Forum, subject to
satisfaction of the conditions contained in Section 7(c) to the consents and
waivers by the Trust and Forum of any general conflict of interest existing as a
result of the provision of those services. Forum shall not charge the Trust for
providing the legal services identified in Appendix B, except for those matters
designated as Special Legal Services, as to which Forum may charge, and, subject
to review and approval by the Chairman of the Audit Committee or Trust Counsel,
the Trust shall pay, an additional amount as reimbursement of the cost to Forum
of providing the Special Legal Services. Reimbursement shall be payable monthly
in arrears on the first day of each calendar month for services performed under
this Agreement during the prior calendar month. Nothing in this Agreement shall
require Forum to provide any of the services listed in Appendix C, and each of
those services may be performed by an outside vendor if appropriate in the
judgment of Forum or the Trust.
If fees begin to accrue in the middle of a month or if this Agreement
terminates before the end of any month, all fees for the period from that date
to the end of that month or from the beginning of that month to the date of
termination, as the case may be, shall be prorated according to the proportion
that the period bears to the full month in which the effectiveness or
termination occurs. Upon the termination of this Agreement with respect to a
Fund, the Trust shall pay to Forum such compensation as shall be payable prior
to the effective date of termination.
(b) Notwithstanding anything in this Agreement to the contrary, Forum
and its affiliated persons may receive compensation or reimbursement from the
Trust with respect to (i) the provision of services on behalf of the Funds in
accordance with any Plan or Service Plan, (ii) the provision of shareholder
support or other services, (iii) service as a trustee or officer of the Trust
and (iv) services to the Trust, which may include the types of services
described in this Agreement, with respect to the creation of any Fund and the
start-up of the Fund's operations.
(c) The Trust shall be responsible for and assumes the obligation for
payment of all of its expenses, including: (a) the fee payable under this
Agreement; (b) the fees payable to each Adviser under an agreement between the
Adviser and the Trust; (c) expenses of issue, repurchase and redemption of
Shares; (d) interest charges, taxes and brokerage fees and commissions; (e)
premiums of insurance for the Trust, its trustees and officers and fidelity bond
premiums; (f) fees, interest charges and expenses of third parties, including
the Trust's independent accountant, custodian, transfer agent, dividend
disbursing agent and fund accountant; (g) fees of pricing, interest, dividend,
credit and other reporting services; (h) costs of membership in trade
associations; (i) telecommunications expenses; (j) funds transmission expenses;
(k) auditing, legal and compliance expenses; (l) costs of forming the Trust and
maintaining its existence; (m) costs of preparing, filing and printing the
Trust's Prospectuses, subscription application forms and shareholder reports and
other communications and delivering them to existing shareholders, whether of
record or beneficial; (n) expenses of meetings of shareholders and proxy
solicitations therefor; (o) costs of maintaining books of original entry for
portfolio and fund accounting and other required books and accounts, of
calculating the net asset value of Shares and of preparing tax returns; (p)
costs of reproduction, stationery, supplies and postage; (q) fees and expenses
of the Trust's trustees; (r) compensation of the Trust's officers and employees
and costs of other personnel (who may be employees of the Adviser, Forum or
their respective affiliated persons) performing services for the Trust; (s)
costs of Board, Board committee, shareholder and other corporate meetings; (t)
SEC registration fees and related expenses; (u) state, territory or foreign
securities laws registration fees and related expenses; and (v) all fees and
expenses paid by the Trust in accordance with any Plan or Service Plan or
agreement related to similar manners.
(d) Should the Trust exercise its right to terminate this Agreement,
the Trust, on behalf of the applicable Fund, shall reimburse Forum for all
out-of-pocket expenses and employee time (at 150% of salary) associated with the
copying and movement of records and material to any successor person and
providing assistance to any successor person in the establishment of the
accounts and records necessary to carry out the successor's responsibilities.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund on
the date on which the Trust's Registration Statement relating to the Shares of
the 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
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).
(c) This 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 Forum or (ii) by Forum on 60 days' written notice to the Trust. The
obligations of Sections 3 and 4 shall survive any termination of this Agreement.
(d) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or
one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement. Forum or the Trust may elect not to make any
such series or classes subject to this Agreement.
SECTION 7. CONFIDENTIALITY. Forum 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 Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) without limiting the generality of the Sections 7(a) and (b), the
Trust acknowledges that certain legal services may be provided to it by lawyers
who are employed by Forum or its affiliates and who render services to Forum and
its affiliates. A lawyer who provides such services to the Trust, and any lawyer
who supervises such lawyer, although employed generally by Forum or its
affiliates, will have a direct professional attorney-client relationship with
the Trust. Those services for which such a direct relationship will exist are
listed in Appendix C hereto. Provided (i) Forum agrees with any attorney
performing legal services for the Trust to not direct the professional judgment
of the attorney in performing those legal services and (ii) the attorney agrees
to disclose to the Chairman of the Audit Committee or to Trust counsel any
circumstance in which a legal service the attorney proposes to provide relates
to a matter in which the Trust and Forum or the Trust and any other investment
company to which the attorney is providing legal services have divergent legal
or economic interests, each of Forum and the Trust hereby consents to the
simultaneous representation by the attorney of both Forum and the Trust and
waives any general conflict of interest existing in such simultaneous
representation, and the Trust agrees that, in the event the attorney ceases to
represent the Trust, whether at the request of the Trust or otherwise, the
attorney may continue thereafter to represent Forum, and the Trust expressly
consents to such continued representation.
SECTION 8. FORCE MAJEURE
Forum 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
Forum's obligations hereunder are to oversee or monitor the activities of third
parties, Forum shall not be liable for any failure or delay in the performance
of Forum'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 Forum.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
(c) Without limiting the generality of the Sections 9(a) and (b), the
trust acknowledges that certain legal services may be rendered to it by lawyers
who are employed by Forum or its affiliates and who render services to Forum and
its affiliates. A lawyer who renders such services to the Trust, and any lawyer
who supervises such lawyer, although employed generally by Forum or its
affiliates, will have a direct professional attorney/client relationship with
the Trust. Those services for which such a direct relationship will exist are
listed in Appendix C hereto. Each of Forum and the Trust hereby consents to the
simultaneous representation by such lawyers of both Forum and the Trust, and
waives any conflict of interest existing in such simultaneous representation.
Furthermore, the Trust agrees that, in the event such lawyer ceases to represent
the Trust, whether at the request of the Trust or otherwise, the lawyer may
continue thereafter to represent Forum, and the Trust expressly consents to such
continued representation.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. 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 Forum 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
Forum'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 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance
with Section 6, 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 Delaware.
(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) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust 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.
(j) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) 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 and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party 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.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person," and "affiliated person" shall have the
meanings ascribed thereto in the 1940 Act.
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: /s/Mark D. Kaplan
-------------------------
Mark D. Kaplan
Vice President, Assistant Treasurer
and Assistant Secretary
FORUM ADMINISTRATIVE SERVICES,
LIMITED LIABILITY COMPANY
By: Forum Advisors, Inc., as Manager
By: /s/John Y. Keffer
-------------------------
John Y. Keffer
President
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
DECEMBER 5, 1997
Investors Bond Fund
TaxSaver Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Payson Balanced Fund
Payson Value Fund
Equity Index Fund
Small Cap Fund
International Equity Fund
Emerging Markets Fund
Investors Equity Fund
Investors Growth Fund
INVESTOR SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets Tax-Exempt Fund
Daily Assets Treasury Obligations Fund
INSTITUTIONAL SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets Tax-Exempt Fund
Daily Assets Treasury Obligations Fund
INSTITUTIONAL SERVICE SHARES:
Daily Assets Cash Fund
Daily Assets Treasury Fund
Daily Assets Government Fund
Daily Assets Tax-Exempt Fund
Daily Assets Treasury Obligations Fund
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX A (CONTINUED)
FUNDS AND CLASSES OF THE TRUST
DECEMBER 5, 1997
Austin Global Equity Fund
Oak Hall Equity Fund
Quadra International Equity Fund
Quadra Value Equity Fund
Quadra Opportunistic Bond Fund
Quadra Limited Maturity Treasury Fund
Quadra Growth Fund
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
DECEMBER 5, 1997
(I) ADMINISTRATIVE SERVICE FEES
<TABLE>
<S> <C>
- ------------------------------------------------------------------------- -------------------------------------------
Fee as a % of the Annual Average
Fund Daily Net Assets of Each Fund
- ------------------------------------------------------------------------- -------------------------------------------
Investors Bond Fund 0.20%
TaxSaver Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund
Payson Balanced Fund
Payson Value Fund
Equity Index Fund
Small Cap Fund
International Equity Fund
Emerging Markets Fund
Investors Equity Fund
Investors Growth Fund
- ------------------------------------------------------------------------- -------------------------------------------
</TABLE>
(II) OTHER SERVICES
<TABLE>
<S> <C>
SERVICE PROVIDED FEE
Preparation and filing of a document with the SEC in electronic format $200 plus (i) $5/text page and
(ii) $15/tabular page
Legal services Approximate cost to Forum as agreed to
from time to time
Legal Opinions for Section 24 Filings $1,000
</TABLE>
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
DECEMBER 5, 1997
(I) ADMINISTRATIVE SERVICE FEES
<TABLE>
<S> <C>
- ------------------------------------------------------------------------- -------------------------------------------
Fee as a % of the Annual Average
Fund Daily Net Assets of Each Fund
- ------------------------------------------------------------------------- -------------------------------------------
- ------------------------------------------------------------------------- -------------------------------------------
Austin Global Equity Fund 0.25%
Oak Hall Equity Fund
- ------------------------------------------------------------------------- -------------------------------------------
</TABLE>
(II) OTHER SERVICES
<TABLE>
<S> <C>
SERVICE PROVIDED FEE
Preparation and filing of a document with the SEC in electronic format $200 plus (i) $5/text page and
(ii) $15/tabular page
Legal services Approximate cost to Forum as agreed to
from time to time
Legal Opinions for Section 24 Filings $1,000
</TABLE>
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
DECEMBER 5, 1997
(I) ADMINISTRATIVE SERVICE FEES
<TABLE>
<S> <C>
- ------------------------------------------------------------------------- -------------------------------------------
Fee as a % of the Annual Average
Fund Daily Net Assets of Each Fund
- ------------------------------------------------------------------------- -------------------------------------------
- ------------------------------------------------------------------------- -------------------------------------------
Quadra International Equity Fund 0.10% of the first $50 million, 0.05%
Quadra Value Equity Fund over $50 million
Quadra Opportunistic Bond Fund
Quadra Limited Maturity Treasury Fund
Quadra Growth Fund
- ------------------------------------------------------------------------- -------------------------------------------
</TABLE>
(II) OTHER SERVICES
<TABLE>
<S> <C>
SERVICE PROVIDED FEE
Preparation and filing of a document with the SEC in electronic format $200 plus (i) $5/text page and
(ii) $15/tabular page
Legal services Approximate cost to Forum as agreed to
from time to time
Legal Opinions for Section 24 Filings $1,000
</TABLE>
<PAGE>
FORUM FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
DECEMBER 5, 1997
(I) ADMINISTRATIVE SERVICE FEES
<TABLE>
<S> <C>
- ------------------------------------------------------------------------- -------------------------------------------
Fee as a % of the Annual Average
Fund Daily Net Assets of Each Class of the Fund
- ------------------------------------------------------------------------- -------------------------------------------
- ------------------------------------------------------------------------- -------------------------------------------
Daily Assets Treasury Fund 0.05%
Daily Assets Cash Fund
Daily Assets Government Fund
Daily Assets Tax-Exempt Fund
Daily Assets Treasury Obligations Fund
- ------------------------------------------------------------------------- -------------------------------------------
</TABLE>
(II) OTHER SERVICES
<TABLE>
<S> <C>
SERVICE PROVIDED FEE
Preparation and filing of a document with the SEC in electronic format $200 plus (i) $5/text page and
(ii) $15/tabular page
Legal services Approximate cost to Forum as agreed to
from time to time
Legal Opinions for Section 24 Filings $1,000
</TABLE>
Exhibit 11
Consent of Independent Auditors
The Board of Trustees and Shareholders
Forum Funds:
We consent to the use of our reports dated October 3, 1997 for Daily Assets
Government Fund (formerly Daily Assets Treasury Fund) and Daily Assets Cash
Fund, series of Forum Funds, and for Government Portfolio (formerly Treasury
Portfolio) and Cash Portfolio, series of Core Trust (Delaware), incorporated
herein by reference into the statement of additional information and to the
references to our Firm under the headings, "Financial Highlights" in the
prospectuses and "Auditors" in the statement of additional information.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
May 26, 1998
Exhibit 13
INVESTMENT REPRESENTATION LETTER
March 24, 1980
Daily Income Extension Fund, Inc.
230 Park Avenue
New York, New York 10017
Dear Sirs:
We are purchasing from you today 100,000 shares of your Common Stock,
par value $.01 per share, at a price of $1.00 per share for a total purchase
price of $100,000. Such shares are to be newly issued shares, and the shares so
issued and sold to us are herein referred to as the "Stock".
We recognize that the Stock would have to be the subject of a
registration statement under the Securities Act of 1933 if an exemption under
that Act were not applicable to the transaction and that the investment
representation contained in this letter will be relied upon by you as the basis
for such exemption.
In consideration of your issuing and selling the stock to us, we hereby
represent to you that the Stock is being acquired for investment and not with a
present view to reselling or otherwise distributing the Stock or causing the
Stock to be redeemed by you.
Very truly yours, REICH &
TANG, INC.
BY /S/___________________
Exhibit 14
FORUM FUNDS
INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT
FORUM FUNDS
INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT
It is required that you be given this Disclosure Statement for the purpose of
insuring that you are informed and understand the nature of an Individual
Retirement Account ("IRA") sponsored by Forum Funds. This Disclosure Statement
explains the rules governing IRAs including the rules adopted by the Tax Reform
Act of 1986 which took effect on January 1, 1987.
If you should have any questions, you may contact us at the following address
and phone number:
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
(207) 879-0001
YOUR RIGHT TO REVOKE THIS IRA. You may revoke this IRA at any time in writing
within seven (7) days after the later of the date you received this Disclosure
Statement or the day you established this IRA. For purposes of revocation, it
will be assumed that you received the Disclosure Statement no later than the
date of your check or transfer direction with which you opened your IRA. To
revoke the IRA, you must either mail or deliver a notice of revocation to the
address listed above. Oral revocations are not accepted.
If after you have established an IRA and during the period in which you are
entitled to revoke the IRA, there becomes effective a material adverse change in
the information set forth in the Disclosure Statement or a material change in
the governing instrument used in establishing the IRA, you are entitled to
revoke your IRA on or before a date not less than seven days after the date on
which you receive such amendment under the same revocation procedure set forth
above.
If a notice of revocation is mailed, it shall be deemed mailed on the date of
the postmark (or if sent by certified or registered mail, the date of
certification or registration) if it is so deposited in the mail in the United
States, first class postage prepaid and properly addressed. If you revoke your
IRA, you are entitled to a return of the entire amount contributed.
TYPES OF IRAS; ELIGIBILITY
IN GENERAL. There are several types of IRAs. For example, there is a "Regular
IRA" to which you may make contributions for yourself. There is also a "Spousal
IRA" which you may be able to set up for your spouse. There is also a "Rollover
IRA" which you can set up to receive assets from a qualified plan, annuity or
another IRA. Finally, there is a "SEP-IRA" (which is also known as a Simplified
Employee Pension Plan) which your employer can establish for you. Following is a
general description of the rules which apply to each of these types of IRAs and
who is eligible to establish them.
REGULAR IRA. You may contribute up to the lesser of $2,000 or 100% of your
compensation if you have not reached age 70 1/2 during the taxable year. You may
make this contribution even if you or your spouse is an active participant in a
qualified employer plan. However, as explained below, the amount of the
contribution which you may deduct may be limited. Compensation includes wages,
salary, commissions, bonuses, tips, earned income of self-employed persons and
any amount includable in income as alimony or separate maintenance payments, but
does not include income from interest, dividends or other earnings or profits
from property, or amounts not includable in your gross income.
SPOUSAL IRA. You may contribute to your IRA and an IRA for your spouse who has
no compensation (or elects to be treated as having no compensation) if: (1) you
have received compensation during the taxable year and (2) you file a joint
income tax return for the year with your spouse. Under such an arrangement, you
may qualify for a total contribution equal to the lesser of $4,000 or 100% of
your compensation for the taxable year. You can determine how to divide the
contribution between the two accounts but you cannot contribute more than $2,000
annually into either one. While you cannot contribute to your IRA in the taxable
year in which you reach 70 1/2, you can still contribute to your spouse's IRA if
he or she has not reached 70 1/2. A Spousal IRA does not involve the creation of
a joint account. The account of each spouse is separately owned and treated
independently from the account of the other spouse.
ROLLOVER IRA. All or a portion of certain distributions (other than, among
others, required distributions made on account of your attaining age 70 1/2)
from qualified retirement plans (or the proceeds thereof), annuities and other
IRAs may be "rolled over" tax-free into an IRA within sixty (60) days after your
receipt of the distribution (or directly under the retirement plan rules
effective after 1992) without regard to the limits on deductible contributions,
but no deduction is allowed with respect to such a rollover. In the case of a
distribution from a qualified plan that contains a return of non-deductible
employee contributions, the returned contributions may not be rolled over. Under
certain circumstances, the law allows you to roll over a distribution from an
IRA into a qualified pension or profit-sharing plan, qualified annuity plan, or
tax sheltered annuity or custodial account; however, such a rollover cannot be
made from an IRA to which you have made any contributions. You can also transfer
assets you hold in one IRA to another IRA by directing the current trustee or
custodian to transfer those assets directly to the new IRA. However, if you
transfer assets other than cash, the identical property must be contributed to
the new IRA. You can direct such a so-called "trustee to trustee transfer" at
any time. However, you may make a rollover from one IRA to another IRA only once
during a one-year period. A decision to make a rollover from a qualified plan,
as signified by checking the rollover box on the Application, is irrevocable.
Rollover amounts you receive may not be deposited in your spouse's IRA, but if
you should die while still a participant in a qualified plan, in certain cases
your spouse may be allowed to make a tax-free rollover to an IRA of all or any
part of the assets distributed from the qualified plan, excluding any
contributions (other than voluntary deductible employee contributions) made by
you to such plan. The amount of such distributions rolled over by a spouse into
an IRA may not subsequently be rolled over into another employer's qualified
plan or annuity.
A distribution received under a qualified domestic relations order may be
eligible for rollover treatment.
Strict requirements must be met to qualify for tax-free rollover treatment.
Rollover treatment must be elected in writing. You should consult your personal
tax advisor in connection with rollovers to and from your IRA.
SIMPLIFIED EMPLOYEE PENSION (SEP-IRA). An employer may adopt a SEP and
contribute to your SEP-IRA even if you are covered by another retirement plan
within limits prescribed by SEP rules. The contributions are deductible to the
employer and are generally not includable in your income until you receive
distributions. To establish a SEP, your employer must sign a SEP agreement and
provide you with a copy of the agreement as well as certain information
concerning the rules applicable to such plans. Your employer can satisfy these
requirements by using Form 5305-SEP which is issued by the Internal Revenue
Service ("IRS").
CONTRIBUTIONS
IN GENERAL. As explained in this part, the amount of your IRA contributions
which you can deduct is subject to limits. Except in the case of rollover
contributions or trustee to trustee transfers, contributions to your Regular
IRA, Spousal IRA or SEP-IRA must be in cash. Contributions to your Regular IRA
or Spousal IRA may be made up to the due date for filing your tax return for the
taxable year (excluding extensions thereof) even if you file before the due
date. In making contributions, you must indicate the tax year to which the
contribution applies. If no tax year is designated, the Custodian will assume
that the contribution is intended to apply to the calendar year in which it is
received.
DEDUCTIBLE CONTRIBUTIONS. If you are single and are not an "active participant"
in a retirement plan maintained by your employer, you can deduct the full amount
of your IRA contribution up to the lesser of $2,000 or 100% of your compensation
for the year. If you are married and file a joint return, you can also deduct
the full amount of your IRA contribution so long as neither you nor your spouse
is an "active participant" in a retirement plan maintained by your respective
employers. These plans include qualified pension, profit sharing (including
401(k)), stock bonus or money purchase plans, SEP-IRAs, qualified annuity plans,
tax-sheltered annuities and custodial accounts and deferred compensation plans
of governmental agencies. You are generally considered to be an active
participant in a plan if you were entitled to have an employer contribution or
forfeiture credited to your account during the year in the case of a defined
contribution plan or, in the case of a defined benefit plan, you are eligible to
participate even if you choose not to. You are considered to be an active
participant in a plan if you make a contribution to the plan during a year even
if your employer does not. For active participation, it does not matter whether
any interest you have in a plan is vested or unvested. Your employer is required
to indicate on your Form W-2 whether you were an active participant for the year
covered by the form.
If you or your spouse is an active participant in a plan, the amount of the
deduction you can claim for an IRA contribution is reduced or totally denied
depending upon the amount by which your adjusted gross income for the year
exceeds the "applicable dollar amount." The applicable dollar amount is $25,000
for single people and $40,000 for married individuals filing a joint tax return.
If you are married but are filing separate tax returns, your applicable dollar
amount is $0.
If your adjusted gross income exceeds your applicable dollar amount by more than
$10,000, you may not deduct any portion of your IRA contribution. However, if it
is between $0 and $10,000 more than your applicable dollar amount, you can claim
a tax deduction for your contribution. To determine the amount of the deduction,
follow these steps. First, determine the amount of the contribution you can
make. If, for example, you have compensation in excess of $2,000 you could make
a $2,000 contribution to your Regular IRA. Next, subtract the applicable dollar
amount from your adjusted gross income. If you are single and your adjusted
gross income is $32,000, the difference would be $7,500. Next divide this
difference by $10,000. In the example $7,500/$10,000 equals 3/4. Accordingly,
you may deduct 3/4 of your contribution. If the deduction limitation is not a
multiple of $10, round the deduction to the next higher $10. If your adjusted
gross income does not exceed $35,000 and you are single, or $50,000 and you are
married and file a joint return, you can deduct $200 regardless of how the
computation comes out.
NONDEDUCTIBLE CONTRIBUTIONS. Even though you may not be entitled to claim a
deduction for contributions to your IRA, you are still allowed to make the
contributions to the extent described in "Types of IRA," above. To the extent
that the amount of your contribution exceeds the deduction limit, it is
considered a non-deductible contribution.
Earnings on these contributions are not taxed until distributed just like the
earnings on deductible contributions.
You are required to specify on your tax return the amount of your nondeductible
contribution. If you overstate this amount, you may be liable for a tax
penalty of $100 per overstatement.
INVESTMENT AND HOLDING OF CONTRIBUTIONS
Contributions to your IRA, and the earnings thereon, are invested in shares of
one or more separate series of Forum Funds. The assets in your account are held
in a custodial account exclusively for your benefit and the benefit of such
beneficiaries as you may designate in a writing delivered to the Custodian. The
balance in your IRA represents a separate account which is clearly identified as
your property and generally may not be combined for investment with the property
of another individual. Your right to the entire balance in your account is
nonforfeitable. No part of the assets of your account may be invested in life
insurance contracts or in collectibles such as works of art, antiques, coins,
stamps, etc.
DISTRIBUTIONS FROM YOUR IRA
DURING YOUR LIFE. The law permits distributions to be made from an IRA without
penalty any time after you attain age 59 1/2, and requires that distributions
commence no later than April 1st following the calendar year in which you attain
age 70 1/2. Distributions may be in the form of a single payment or, in
accordance with regulations, in monthly, quarterly, or annual payments over your
life, the joint lives of you and your designated beneficiary, or over a period
certain not extending beyond your life expectancy or the joint life and last
survivor expectancy of you and your designated beneficiary. Unless you elect
otherwise prior to the date distributions are required to begin, other than in
the case of a life annuity, life expectancies will be recalculated annually. The
election is irrevocable and applies to all subsequent years. The life expectancy
of a nonspouse beneficiary cannot be recalculated. If you direct distributions
over your life or the joint lives of you and your designated beneficiary, the
Custodian will purchase with your IRA balance an immediate annuity contract from
an insurance company you choose and your payments will be made under the
contract. You must provide a completed annuity application from the insurance
company of your choosing. Distributions may only be requested by proper
completion of a distribution form available from the Custodian.
AFTER YOUR DEATH. If you die after your "required beginning date," i.e., the
April 1 following the year you attain age 70 1/2, the balance of your IRA
generally must be distributed to your designated beneficiary at least as rapidly
as under the method of distribution in effect prior to your death.
If you die before your "required beginning date," the entire balance of the
account must be distributed by December 31 of the year in which the 5th
anniversary of your death occurs. However, distribution need not be made within
this 5-year period if your beneficiary receives payments over a period measured
by his or her life expectancy beginning no later than December 31 of the year
following the year in which you die. If the beneficiary is your spouse, those
installment payments don't have to begin until the later of December 31 of the
year following the year in which you die or December 31 of the year in which you
would have reached age 70 1/2. In addition, the above distribution rules will
not apply if your spouse is your beneficiary and he or she elects to treat the
entire interest in the IRA (or remaining part of such interest if distribution
has already begun) as his or her own IRA subject to the regular IRA distribution
requirements. In such a case, your spouse will be considered to be the Depositor
under the IRA. If you die before the entire IRA has been distributed to you and
your spouse is not your beneficiary, no additional cash contributions or
rollover contributions may be accepted by the Custodian.
INCOME AND PENALTY TAXES
INCOME TAX TREATMENT. Income tax on deductible IRA contributions and earnings on
both deductible and nondeductible IRA contributions is generally deferred until
you receive distributions. If you have made both deductible and nondeductible
contributions to IRAs you maintain, a portion of each distribution you receive
from any IRA (whether it is the one to which you made nondeductible
contributions) will be considered to be a return of nondeductible contributions
and therefore not included in your income for tax purposes. The balance of each
distribution will be taxed as ordinary income regardless of its original source.
The amount of any distribution which is considered to be a return of
nondeductible contributions (and therefore not taxed) is determined by
multiplying the amount of the distribution by a fraction. The numerator of the
fraction is the aggregate amount of nondeductible contributions you have made to
all of your IRAs over the years (less any distribution of nondeductible
contributions during those years) and the denominator is the balance in all your
IRAs at the end of the year (after adding back any distributions you received
during the year). The aggregate amount which can be excluded from income for all
years cannot exceed the amount of nondeductible contributions that you made.
Taxable distributions from your account are taxed as ordinary income regardless
of their original source. They are not eligible for special tax treatment that
may apply to lump sum distributions from qualified employer plans. A
distribution from your account after you attain age 65 is eligible for the
retirement income credit.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS. Your IRA is intended to provide income
for you upon retirement. Accordingly, the law generally imposes a penalty on
premature distributions. If you receive a taxable distribution from the IRA
before reaching age 59 1/2, a nondeductible 10% tax penalty will be imposed on
the portion of the distribution which is included in your gross income. This
penalty is in addition to any income tax you must pay on the distribution
itself. The penalty does not apply to the extent that the distribution is
considered a return of nondeductible contributions or a return of an excess
contribution which is permitted tax-free (see below). The penalty also will not
apply if the distribution is made due to your permanent disability or death, if
the distribution is one of a series of substantially equal periodic payments
made over your life (or life expectancy) or over the joint lives (or life
expectancies) of you and your beneficiary. Further, the penalty does not apply
in the case of a qualifying rollover distribution.
PENALTY TAX FOR EXCESS CONTRIBUTIONS. Contributions to an IRA above the
permissible limits are nondeductible and are subject to an annual nondeductible
excise tax of 6% of the amount of such excess contributions for each year that
the excess is not withdrawn or eliminated. The tax is paid by the person to whom
a deduction is allowed or, in the case of a Rollover IRA, by the person for
whose benefit it is established. If the person who contributed the excess takes
no deduction for it and withdraws the excess amount plus the net earnings
attributable to such excess on or before the due date (including extensions) for
filing the Federal income tax return for the year for which the contribution was
made, the 6% excise tax will not be applied but the 10% tax on premature
distributions will be applied to the net earnings if the person has not attained
age 59 1/2 and is not disabled. Generally, if the excess is withdrawn after the
due date (including extensions) for filing the tax return for the year for which
the contribution was made, not only will the excess contribution be subject to
the 6% excise tax, but the amount of such excess and the net income attributable
to it will also be includable in income; and if you have not attained the age of
59 1/2, and are not disabled, you will also be subject to the previously
mentioned 10% penalty tax on premature distributions. The law provides, however,
that if an individual has made a contribution to an IRA for a year which does
not exceed $2,250 (excluding rollover amounts) all or part of which is an excess
contribution for which he did not claim a deduction, and he does not correct the
excess contribution prior to the due date (including extensions) for filing his
tax return for the year, he nevertheless may withdraw the excess amount
contributed (without the net income attributable thereto) at any time without
incurring the 10% penalty tax on premature distributions or being required to
include the amount withdrawn in income. The 6% excise tax will be imposed even
in this special situation for the year of the excess contribution and each
subsequent year until the excess is withdrawn or eliminated.
The rules discussed above generally apply to SEP-IRAs as well. The law also
allows you to withdraw tax-free and without penalty an excess contribution,
regardless of the amount, made with respect to a rollover contribution
(including an attempted rollover contribution), if the excess contribution
occurred because you reasonably relied on erroneous information required to be
supplied by the plan, trust, or institution making the distribution that was the
subject of the rollover.
As an alternative to withdrawing excess contributions made to an IRA, such
amounts may be eliminated by making reduced contributions; however, you will be
required to pay the 6% excise tax on the amount of the excess for the year of
the contribution and for each subsequent year until the amount of the excess is
eliminated in a later year for which you have not contributed the maximum
deductible amount. If a contribution is made to your account in an amount less
than the permissible limit in order to correct an excess contribution for a
previous year for which you did not claim a deduction, under certain
circumstances, taking into account the limits on contributions, you may be
allowed to treat the amount of the reduction in the current year's contribution
as an additional contribution for the current taxable year.
PENALTY TAX FOR UNDER-DISTRIBUTION. If after April 1st following the year in
which you attain age 70 1/2, the amount distributed is less than the minimum
amount required by law to be distributed, a 50% excise tax may be imposed on any
such deficiency. The IRS may waive this penalty if the deficiency was due to
reasonable error and reasonable steps are taken to correct the deficiency.
PENALTY TAX FOR EXCESS DISTRIBUTIONS. A 15% penalty tax is imposed on annual
distributions from retirement arrangements (including IRAs) to the extent that
such distributions in a year are considered "excess distributions." A
distribution is generally an "excess distribution" if, in the case of a
distribution other than "lump sum" distributions, it exceeds $150,000 (or such
higher amount as may be specified by the IRS) during any calendar year. A "lump
sum" distribution will be an "excess distribution" if it exceeds $750,000 (or
such higher amount as may be specified by the IRS).
PROHIBITED TRANSACTIONS AND PLEDGING ACCOUNT ASSETS. If during any taxable year
you engage in a so-called "prohibited transaction" with respect to your IRA, the
account will lose its tax-exempt status. In this event, the fair market value of
all account assets, valued as of the first day of such taxable year, will be
deemed distributed to you and includable in your gross income. These prohibited
transactions would include borrowing money from your account. If you pledge your
account or any portion thereof as security for a loan, such pledged portion will
be deemed distributed to you and, to the extent that it does not represent a
return of nondeductible contributions, is includable in your gross income. If
you have not yet attained the age of 59 1/2 and are not totally and permanently
disabled, an additional tax equal to 10% of the amount pledged will be imposed
on such funds includable in gross income. If your spouse engages in a prohibited
transaction with respect to his or her account, the results will be the same.
MISCELLANEOUS
FEDERAL INCOME TAX WITHHOLDING. Distributions from an IRA to the covered
individual or to a beneficiary are subject to Federal income tax withholding
unless the covered individual or beneficiary elects to have no withholding
apply. The current withholding rate required by the Internal Revenue Code is
10%. Additional information concerning withholding and election forms will be
available no later than at the time a distribution is requested.
FEDERAL ESTATE AND GIFT TAXES. Generally, your IRA will be included in your
estate for Federal estate tax purposes. If your spouse is your beneficiary, your
IRA may qualify for a deduction for purposes of that tax. An election under an
IRA to have a distribution payable to a beneficiary on the death of the covered
individual will not be treated as a gift subject to Federal gift tax.
REPORTS TO THE IRS. You are not required to file Form 5329 with the IRS unless
you owe one of the IRA penalty taxes. These are the taxes on excess
contributions, premature distributions, prohibited transactions and under
distributions after age 70 1/2.
FINANCIAL INFORMATION. The growth in value of the mutual fund shares held in
your account can neither be guaranteed nor projected.
CUSTODIAN CHARGES. The First National Bank of Boston as the Custodian of your
IRA currently charges an annual maintenance fee of $10.00 per account. An
additional $10.00 fee is charged for each disbursement, other than an automatic
installment payout. The Custodian may change any of its fees from time to time
and may pay all or any portion of the fees to the Funds' Transfer Agent or other
agents or subcontractors performing services with respect to your IRA. Further
information regarding charges in connection with the administration of your IRA
is contained in the IRA Application and Fund prospectus.
IRS APPROVAL STATUS. Your IRA has been approved by the IRS but this
determination relates only to form and not to the merits of your account.
Further information concerning IRAs can be obtained from any district office of
the IRS.
<PAGE>
INTRODUCTION
By executing the Custodial Account Application with The First National Bank of
Boston as custodian ("Custodian"), the Depositor whose name appears on the
Individual Retirement Account ("IRA") Application ("Application") hereby
establishes an IRA as described in Section 408(a) of the Internal Revenue Code
of 1986 ("Code"), in order to provide for retirement or for the support of his
or her beneficiaries after death.
Forum Funds (the "Sponsor") is the sponsor of this Agreement. Articles I-VIII
are from the Internal Revenue Service's model custodial account (Form 5305-A,
rev. 10/92) for establishing tax qualified IRAs.
The Depositor has been given the disclosure statement required under
Regulations under Section 408(i) of the Code. The Depositor has deposited with
the Custodian the amount shown on the Application.
The Depositor and the Custodian agree as follows:
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in Section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in Section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code or an
employer contribution to a simplified employee pension plan as described in
Section 408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
Section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of Section 408(m) of the Code) except as otherwise permitted by Section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
Section 408(a)(6) and Proposed Regulations Section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations Section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin to
the Depositor under paragraph 3, or to the surviving spouse under paragraph 4,
other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be or begin to
be distributed by the Depositor's required beginning date (April 1 following the
calendar year end in which the Depositor reaches age 70 1/2). By that date, the
Depositor may elect, in a manner acceptable to the Custodian, to have the
balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy
of the Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as
follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of
the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following
the year of the Depositor's death. If, however, the
beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of
the year in which the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of Section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Depositor's required beginning date, even though payments may actually
have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
5. In the case of a distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each year,
divide the Depositor's entire interest in the Custodial account as of the close
of business on December 31 of the preceding year by life expectancy of the
Depositor (or the joint life and last survivor expectancy of the Depositor and
the Depositor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under paragraph 3,
determine the initial life expectancy (or joint life and last survivor
expectancy) using the attained ages of the Depositor and designated beneficiary
as of their birthdays in the year the Depositor reaches age 70 1/2. In the case
of a distribution in accordance with paragraph (4)(b)(ii), determine life
expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524 to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under Section 408(i) of the
Code and related Regulations Sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with Section 408(a) of the Code and
the related regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the Depositor.
ARTICLE VIII
1. INVESTMENT OF CONTRIBUTIONS.
(a) All contributions to the custodial account made by or on behalf of the
Depositor shall be invested in accordance with proper instructions
received from time to time from the Depositor and shall be applied to
purchase full and fractional shares ("Shares") of one or more of the
separate series of Forum Funds (each such series referred to as a
"Fund"). Fund shares held in the custodial account shall be registered
in the name of the Custodian or its nominee. The Depositor shall be the
beneficial owner of all the assets held in the custodial account.
(b) Except in the case of a rollover contribution or employer
contributions to a simplified employee pension plan as described in
Article I, the Depositor shall not for any taxable year of the
Depositor contribute to the custodial account an amount in excess of
the lesser of 100% of the compensation includable in his gross income
or $2,000, and the Depositor shall be fully and solely responsible for
all taxes, interest and penalties which might accrue or be assessed by
reason of any excess deposit and interest, if any, earned thereon.
Contributions must be made no later than the due date for filing the
Depositor's tax return for the tax year (excluding extensions) or by
such other date as from time to time provided by law. If a
contribution is intended to be a rollover contribution referred to in
Article I, the Depositor hereby certifies that the source of the
contribution qualifies the contribution as such, that no portion
thereof consists of any amount considered to have been previously
contributed by the Depositor as an employee (other than "deductible
employee contributions" as defined in Section 72(o)(5) of the Code),
that the contribution is being made to the custodial account no later
than 60 days after receipt by the Depositor of the distribution giving
rise to the rollover contribution, and that no previous rollover
contribution has been made by the Depositor within one year of the
date of the rollover contribution to or from another individual
retirement account or individual retirement annuity and that the
rollover is in all respects permitted by law. It shall be the sole
responsibility of the Depositor to determine the amount of the
contributions made hereunder. The Depositor shall execute such forms
as the Custodian may require in connection with any contribution
hereunder.
2. REINVESTMENT OF EARNINGS.
All dividends and capital gains distributions received on Fund Shares held in
the Depositor's account shall, unless received in additional Shares, be
reinvested in Shares of the Fund paying such dividends and distributions, which
Fund Shares shall be credited to such account. If any distributions of the Fund
may be received at the election of the Depositor in additional Shares or in cash
or other property, the Custodian shall elect to receive additional Shares.
3. PROXIES AND OTHER INFORMATION.
The Custodian shall forward to the Depositor all notices, prospectuses,
financial statements, proxies and proxy soliciting material which the Custodian
receives relating to such Shares. The Custodian shall not vote any such Shares
except in accordance with the written instructions of the Depositor.
ARTICLE IX (DISTRIBUTIONS)
The Custodian shall, from time to time, subject to the provisions of Article IV,
make distributions out of the custodial account to the Depositor, in such manner
and amounts as may be specified in written instructions of the Depositor. All
such instructions shall be deemed to constitute a certification by the Depositor
that the distribution so directed is one that the Depositor is permitted to
receive. The Custodian shall have no liability with respect to any contribution
to the custodial account, any investment of assets in the custodial account, or
any distribution therefrom pursuant to instructions received from the Depositor
or this Agreement, or for any consequences to the Depositor arising from such
contributions, investments or distributions including, but not limited to,
excise and other taxes and penalties which might accrue or be assessed by reason
thereof, nor shall the Custodian be under any duty to make any inquiry or
investigation with respect thereto.
ARTICLE X (BENEFICIARIES)
The Depositor may designate and redesignate his/her beneficiary or beneficiaries
on a form satisfactory to the Custodian and provided by the Fund for such
purpose. To be effective, such designation must be received by the Custodian
prior to the death of the Depositor. Such beneficiary or beneficiaries shall be
entitled to the balance in the custodial account of the Depositor as provided in
paragraph 4 of Article IV. Unless otherwise provided in the designation of
beneficiary form, amounts payable by reason of the Depositor's death will be
paid only to the primary beneficiary or beneficiaries who survive the Depositor
in equal shares, or, if no primary beneficiary or beneficiaries survive the
Depositor, to the contingent beneficiary or beneficiaries who survive the
Depositor in equal shares. If some but not all primary or contingent
beneficiaries, as applicable, do not survive the Depositor, any amounts that
such nonsurviving beneficiaries shall have been entitled to receive hereunder
shall be divided among the surviving primary or contingent beneficiaries, as
applicable, in proportion to the relative interests of the surviving primary or
contingent beneficiaries. If no designation of beneficiary is in effect at the
time of the Depositor's death or if no designated beneficiary survives the
Depositor, the balance in the custodial account of the Depositor shall be paid
to the legal representative of the estate of the Depositor. Unless otherwise
provided in the beneficiary designation form, the beneficiary may choose the
method of distribution from among those permitted by Article IV.
ARTICLE XI (RESPONSIBILITY OF DEPOSITOR)
Depositor acknowledges he or she has read the information distributed to him or
her by the Custodian and agrees to assume full responsibility for all decisions
as to deposits and withdrawals, and the Depositor indemnifies the Custodian and
saves it free and harmless from any and all claims arising out of any adverse
consequences experienced by the Depositor as a result of his or her own
decision, including but not limited to excise taxes and penalties. Any taxes
which may be imposed upon the custodial account or the income thereof, but not
excise taxes imposed upon the Depositor, may, in the discretion of the
Custodian, be deducted from and charged against the custodial account.
ARTICLE XII (ACCEPTANCE OF REPORTS)
If, within 60 days after the mailing by the Custodian to the Depositor of a
report pursuant to paragraph 2 of Article V, the Depositor has not given the
Custodian written notice of any exception or objection thereto, such report
shall be deemed to have been approved in its entirety and in such case, or upon
written approval of the Depositor, the Custodian shall be released, relieved,
and discharged with respect to all matters and statements set forth therein as
though the report had been settled by judgment or decree of a court of competent
jurisdiction.
ARTICLE XIII (RESPONSIBILITY OF CUSTODIAN)
The Custodian shall have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations shall
be read into this Agreement against the Custodian. The Custodian shall not be
liable under this Agreement, except for its own bad faith, gross negligence or
willful misconduct. In performing its duties under this Agreement, the Custodian
may hire agents, experts and attorneys. The Custodian may also delegate any of
its powers and duties hereunder to an agent.
ARTICLE XIV (PROHIBITION AGAINST ASSIGNMENT)
No interest right or claim in or to any part of the custodial account or any
payment therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, commutation, anticipation, garnishment,
attachment, execution, or levy of any kind and the Custodian shall not recognize
any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute,
or anticipate the same, except as required by law.
ARTICLE XV (AMENDMENT)
The Depositor hereby delegates to the Custodian the power to amend this
Agreement from time to time as it deems appropriate, and hereby consents to any
such amendment provided, however, that all such amendments are in compliance
with the provisions of the Code and the regulations thereunder. All such
amendments shall be effective as of the date set forth in a written notice of
amendment which will be sent to the Depositor.
ARTICLE XVI (TERMINATION)
This account and this Agreement may be terminated at any time by the Depositor
by delivering to the Custodian a written notice of termination. In addition, in
the event that either (a) all of the funds available for investment hereunder
are liquidated or otherwise terminated or (b) the sponsor of this IRA ceases to
act as such without a successor assuming the duties of the sponsor, the account
and this Agreement shall be terminated and the assets thereof shall be delivered
to the Depositor unless prior to such payment the Depositor provides written
instructions to the Custodian to transfer such proceeds to the trustee or
custodian of another IRA.
ARTICLE XVII (RESIGNATION OR
REMOVAL OF CUSTODIAN)
1. The Custodian may resign without liability, cost or expense of any kind, upon
written notice to that effect delivered to the Depositor and the Fund, such
resignation to be effective the 30th day following the mailing to the Depositor
of such notice. The Depositor may remove the Custodian upon 30 days' written
notice to that effect to the Custodian. Upon such resignation or removal, the
Depositor shall forthwith appoint a successor custodian which satisfies the
requirements of section 408(h) of the Code. Upon receipt of the Custodian of
written acceptances by the successor custodian of such appointment, the
Custodian shall deliver the assets of the custodial account to the successor
custodian. In the event the Depositor fails to appoint a successor custodian
which has accepted its appointment within 30 days of the mailing of the notice
of resignation, or removal, the Custodian shall terminate the Account and pay
the proceeds to the Depositor.
2. The Depositor and Custodian agree that the Sponsor of this Agreement may at
any time remove the Custodian and appoint a successor custodian. The effective
date of the removal and appointment shall be determined by the Custodian and the
successor custodian. On or after such date the Custodian shall deliver the
assets of the custodial account to the successor custodian.
3. The Sponsor will appoint another custodian upon notification from the
Commissioner of the Internal Revenue Service that such substitution is required
because the Custodian has failed to comply with the requirements of section
1.401-12(n) of the regulations or is not keeping such records, or making such
returns or rendering such statements as are required by forms or regulations.
4. Notwithstanding the foregoing, the Custodian may reserve such assets of the
custodial account as it may deem necessary for the payment of all its fees,
compensation, costs and expenses and for the payment of all other liabilities
which are a charge on or against the assets of the custodial account or on or
against the Custodian, and where necessary for this purpose may liquidate
reserved Fund Shares. Any balance of such reserve remaining after the payment of
all such items shall be paid over to the successor custodian, or, if the
Depositor has failed to appoint a successor custodian as provided in paragraph 1
above, to the Depositor.
5. The provisions of this Agreement shall apply to any successor custodian from
the effective date of its appointment as such with the same force and effect as
if such successor were the initial custodian hereunder.
ARTICLE XVIII (NOTICES)
1. Any notice herein required or permitted to be given to the Custodian shall
not be effective unless it is mailed to and actually received by the Custodian
at the address specified in the Disclosure Statement, or such other address as
the Custodian shall provide the Depositor from time to time in writing, stating
that such other address shall be used for purposes of this Agreement.
2. Any notice herein required or permitted to be given to the Depositor shall be
mailed to the Depositor at the Depositor's residence address given above or at
such other address as he/she shall provide the Custodian from time to time in
writing stating that such other address shall be used for purposes of this
Agreement, and any such notice shall be deemed accepted by the Depositor at the
time it is mailed. Depositor and his/her beneficiaries will be bound by the last
address furnished to the Custodian by the Depositor or his/her beneficiary.
ARTICLE XIX (MINIMUM WITHDRAWALS)
The Depositor shall be fully and solely responsible for all taxes and penalties
which might accrue or be assessed for having failed to make the annual minimum
withdrawal commencing no later than April 1 following the calendar year in which
he/she attains the age of 70 1/2 or for any year thereafter.
ARTICLE XX (TAXES AND CHARGES TO ACCOUNT)
Any income taxes or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect of the custodial account or the assets thereof, or
the income therefrom, any transfer taxes incurred in connection with the
investment and reinvestment of the assets of the custodial account, all other
reasonable administrative expenses incurred by the Custodian in the performance
of its duties hereunder, including fees for legal services rendered to the
Custodian, and such reasonable compensation to the Custodian for its services
under this Agreement as the Custodian may charge from time to time, may, in the
discretion of the Custodian, be charged against and paid from the assets of the
custodial account. Sufficient Fund Shares may be liquidated from the custodial
account to pay any such taxes, expenses, and compensation.
ARTICLE XXI (GOVERNING LAW)
This Agreement and the custodial account created hereby shall be subject to the
applicable laws, rules and regulations, as the same may from time to time be
amended, of the Federal government and the Commonwealth of Massachusetts and the
agencies and instrumentalities of each having jurisdiction thereof, and shall be
governed by and construed, administered and enforced according to the law of the
Commonwealth of Massachusetts. All contributions to the custodial account shall
be deemed to take place in the Commonwealth of Massachusetts.
ARTICLE XXII (FEES AND EXPENSES)
The Custodian shall be entitled to receive and may charge against the
Depositor's custodial account such reasonable compensation for its services in
accordance with its fee schedule as from time to time in effect, and shall also
be entitled to reimbursement of its expenses as Custodian under this Agreement.
The Custodian will notify the Depositor in writing of any change in its fee
schedule.
3/97
Exhibit 15
[FORM OF]
FORUM FUNDS
DISTRIBUTION PLAN
Distribution Plan (the "Plan") of Forum Funds (the "Trust") with
respect to Investor Shares of each of Daily Assets Treasury Fund, Daily Assets
Cash Fund, Daily Assets Government Fund, Daily Assets Tax-Exempt Fund and Daily
Assets Treasury Obligations Fund (the "Funds") in accordance with the provisions
of Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act").
SECTION 1. DISTRIBUTOR; ADVISER
The Trust has entered into a Distribution Agreement with Forum
Financial Services, Inc. (the "Distributor") whereby the Distributor acts as
principal underwriter of the Fund's shares (the "Shares"), and has entered into
an investment advisory agreement with Forum Advisors, Inc. (the "Adviser")
whereby the Adviser acts as investment adviser to the Funds, each in a form
satisfactory to the Trust's Board of Trustees (the "Board").
SECTION 2. DISTRIBUTION EXPENSES
The Trust may reimburse the Distributor for the distribution
expenses incurred by the Distributor on behalf of the Funds of up to 0.15% per
annum of the Funds'average daily net assets in accordance with the following:
(a) On behalf of the Funds, the Distributor may incur expenses for any
distribution-related purpose it deems necessary or appropriate, including: (i)
the incremental costs of printing (excluding typesetting) prospectuses,
statements of additional information, annual reports and other periodic reports
for use in connection with the offering or sale of Shares, to any prospective
investor, (ii) preparing, printing and distributing any other literature used by
the Distributor in connection with the offering of Shares for sale to the public
and the cost of administering the program, compensation to and expenses
(including overhead and telephone) of employees of the Distributor who engage in
sales support and distribution activities, (iii) compensating other persons for
providing assistance in distributing the Shares and (iv) reimbursement to the
Adviser of the Adviser's distribution-related expenses, including expenses of
employees of the Adviser who train or educate others with respect to the Funds
and the investment techniques employed to achieve the Funds' investment
objective.
(b) The schedule of such reimbursements and the basis upon which they
will be paid shall be determined from time to time by the Board. Unreimbursed
expenses of the Distributor incurred during a fiscal year of the Trust may not
be reimbursed by the Trust in subsequent fiscal years.
SECTION 3. REVIEW AND RECORDS
(a) The Trust and the Distributor shall prepare and furnish to the
Board, and the Board shall review at least quarterly, written reports setting
forth all amounts expended under the Plan by the Trust and the Distributor and
identifying the activities for which the expenditures were made.
(b) The Trust shall preserve copies of the Plan, each agreement
related to the Plan and each report prepared and furnished pursuant to this
Section in accordance with Rule 12b-1 under the Act.
SECTION 4. EFFECTIVENESS; DURATION; AND TERMINATION
(a) The Plan shall become effective upon approval by (i) a vote of at
least a majority of the outstanding voting securities of the Funds and (ii) the
Board, including a majority of the Trustees who are not interested persons of
the Trust and who have no direct or indirect financial interest in the operation
of the Plan or in any agreement related to the Plan (the "Qualified Trustees"),
pursuant to a vote cast in person at a meeting called for the purpose of voting
on approval of the Plan.
(b) The Plan shall remain in effect for a period of one year from the
date of its effectiveness, unless earlier terminated in accordance with this
Section, and thereafter shall continue in effect for successive twelve-month
periods, provided that such continuance is specifically approved at least
annually by the Board and a majority of the Qualified Trustees pursuant to a
vote cast in person at a meeting called for the purpose of voting on continuance
of the Plan.
(c) The Plan may be terminated without penalty at any time by a
vote of (i) a majority of the Qualified Trustees or (ii) a vote of a majority
of the outstanding voting securities of the Funds.
SECTION 5. AMENDMENT
The Plan may be amended at any time by the Board, provided that (i) any
material amendments to the Plan shall be effective only upon approval of the
Board and a majority of the Qualified Trustees pursuant to a vote cast in person
at a meeting called for the purpose of voting on the amendment to the Plan, and
(ii) any amendment which increases materially the amount which may be spent by
the Trust pursuant to the Plan shall be effective only upon the additional
approval a majority of the outstanding voting securities of the Funds.
SECTION 6. NOMINATION OF DISINTERESTED TRUSTEES
While the Plan is in effect, the selection and nomination of the
Trustees of the Trust who are not interested persons of the Trust shall be
committed to the discretion of the Trustees of the Trust who are not interested
persons of the Trust.
SECTION 7. MISCELLANEOUS
(a) The terms "majority of the outstanding voting securities" and
"interested person" shall have the meanings ascribed thereto in the Act.
(b) If any provision of the Plan shall be held invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORUM
FUNDS SEMI-ANNUAL REPORT DATED FEBRUARY 28, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000315774
<NAME> FORUM FUNDS
<SERIES>
<NUMBER> 019
<NAME> DAILY ASSETS CASH FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 13,354,954
<INVESTMENTS-AT-VALUE> 13,354,954
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,354,954
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51,200
<TOTAL-LIABILITIES> 51,200
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,303,659
<SHARES-COMMON-STOCK> 13,303,659
<SHARES-COMMON-PRIOR> 12,076,074
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 95
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 13,303,754
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 321,454
<OTHER-INCOME> (8,283)
<EXPENSES-NET> 18,127
<NET-INVESTMENT-INCOME> 295,044
<REALIZED-GAINS-CURRENT> 95
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 295,139
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 295,044
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,683,100
<NUMBER-OF-SHARES-REDEEMED> 13,471,728
<SHARES-REINVESTED> 16,213
<NET-CHANGE-IN-ASSETS> 1,277,680
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 42,133
<AVERAGE-NET-ASSETS> 11,381,861
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORUM
FUNDS SEMI-ANNUAL REPORT DATED FEBRUARY 28, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000315774
<NAME> FORUM FUNDS
<SERIES>
<NUMBER> 027
<NAME> DAILY ASSETS GOVERNMENT FUND
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> JAN-30-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 4,971,871
<INVESTMENTS-AT-VALUE> 4,971,871
<RECEIVABLES> 0
<ASSETS-OTHER> 6,568
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,978,439
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26,117
<TOTAL-LIABILITIES> 26,117
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,952,322
<SHARES-COMMON-STOCK> 4,952,322
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,952,322
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21,189
<OTHER-INCOME> (516)
<EXPENSES-NET> 222
<NET-INVESTMENT-INCOME> 20,451
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 20,451
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 20,451
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,493,736
<NUMBER-OF-SHARES-REDEEMED> 541,414
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,952,322
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,394
<AVERAGE-NET-ASSETS> 4,476,935
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .01
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORUM
FUNDS SEMI-ANNUAL REPORT DATED FEBRUARY 28, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000315774
<NAME> FORUM FUNDS
<SERIES>
<NUMBER> 012
<NAME> DAILY ASSETS TREASURY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 46,711,843
<INVESTMENTS-AT-VALUE> 46,711,843
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46,711,843
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 193,041
<TOTAL-LIABILITIES> 193,041
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46,517,664
<SHARES-COMMON-STOCK> 46,517,664
<SHARES-COMMON-PRIOR> 44,094,527
<ACCUMULATED-NII-CURRENT> 19,454
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18,316)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 46,518,802
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,145,480
<OTHER-INCOME> (31,958)
<EXPENSES-NET> 68,772
<NET-INVESTMENT-INCOME> 1,044,750
<REALIZED-GAINS-CURRENT> (20,126)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,024,624
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,044,750
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 71,713,517
<NUMBER-OF-SHARES-REDEEMED> 69,387,765
<SHARES-REINVESTED> 97,385
<NET-CHANGE-IN-ASSETS> 2,403,011
<ACCUMULATED-NII-PRIOR> 19,454
<ACCUMULATED-GAINS-PRIOR> 1,810
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 102,672
<AVERAGE-NET-ASSETS> 43,365,418
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORUM
FUNDS SEMI-ANNUAL REPORT DATED FEBRUARY 28, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000315774
<NAME> FORUM FUNDS
<SERIES>
<NUMBER> 026
<NAME> DAILY ASSETS TREASURY OBLIGATION FUND
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> NOV-26-1997
<PERIOD-END> JAN-22-1998
<INVESTMENTS-AT-COST> 61,193,009
<INVESTMENTS-AT-VALUE> 61,193,009
<RECEIVABLES> 0
<ASSETS-OTHER> 4,950
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 61,197,959
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 270,996
<TOTAL-LIABILITIES> 270,996
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60,926,092
<SHARES-COMMON-STOCK> 60,926,092
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 871
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 60,926,963
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 360,197
<OTHER-INCOME> (9,831)
<EXPENSES-NET> 3,263
<NET-INVESTMENT-INCOME> 347,103
<REALIZED-GAINS-CURRENT> 871
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 347,974
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 347,103
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 80,339,501
<NUMBER-OF-SHARES-REDEEMED> 19,413,109
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 60,926,963
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,966
<AVERAGE-NET-ASSETS> 62,660,299
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .01
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Exhibit 18
FORUM FUNDS
MULTICLASS (RULE 18F-3) PLAN
December 5, 1997
As Amended May 19, 1998
This Plan is adopted by Forum Funds (the "Trust") pursuant to Rule
18f-3 under the Investment Company Act of 1940 (the "Act") in order to document
the separate arrangements and expense allocations of each class of shares of
beneficial interest (the "Classes") of each the series of the Trust identified
in Appendix A (individually a "Fund" and collectively the "Funds") and the
related exchange privileges.
SECTION 1. CLASS DESIGNATIONS
The types of Classes of the Funds are: "Institutional Shares,"
"Institutional Service Shares" and "Investor Shares." Each Class has a different
arrangement for shareholder services or distribution or both, as follows:
(a) INSTITUTIONAL SHARES. Are offered with no sales charges or
distribution expenses. The investment minimum is $1,000,000.
--------------------
(b) INSTITUTIONAL SERVICE SHARES. Are offered with no sales charges or
distribution expenses, but are subject to a shareholder service plan. The
investment minimum is $100,000.
(c) INVESTOR SHARES. Are offered with no sales charges but are subject
to a distribution plan adopted in accordance with Rule 12b-1 under the Act and a
shareholder service plan. The investment minimum is $10,000 (subject to certain
reductions for investment through an Individual Retirement Account or through
exchanges of shares as described in the applicable prospectus).
SECTION 2. VOTING
Each Class shall have exclusive voting rights on any matter submitted
to a shareholder vote that relates solely to the Class' arrangement for
shareholder services or distribution and each Class shall have separate voting
rights with respect to any matter submitted to a shareholder vote in which the
interests of one Class differ from the interests of another Class.
SECTION 3. CLASS EXPENSE ALLOCATIONS
(a) DISTRIBUTION EXPENSES. All expenses incurred under a Class's
distribution plan adopted in accordance with Rule 12b-1 under the Act shall be
allocated to that Class.
(b) SHAREHOLDER SERVICE EXPENSES. All expenses incurred under a Class's
shareholder service plan shall be allocated to that Class.
(c) OTHER CLASS EXPENSES. The following expenses, which are incurred by
Classes in different amounts or reflect differences in the amount or kind of
services that different Classes receive (collectively with expenses under
Sections 3(a) and 3(b), "Class Expenses"), shall be allocated to the Class that
incurred the expenses to the extent practicable:
(i) Administration and transfer agent fees and expenses;
(ii) Litigation, legal and audit fees;
(iii) State and foreign securities registration or other filing
fees;
(iv) Shareholder report expenses;
(v) Trustee fees and expenses;
(vi) Preparation, printing and related fees and expenses for proxy
statements and, with respect to current shareholders,
prospectuses and statements of additional information;
(vii) Expenses incurred in connection with shareholder meetings; and
(viii) Subject to approval by the Trustees, such other fees and
expenses as Forum Administrative Services, LLC ("Forum"),
pursuant to Rule 18f-3, deems to be allocable to specified
Classes.
(d) CLASS EXPENSE ALLOCATIONS. Class Expenses are to be borne solely by
the Class to which they relate. Item (i) of Section 3(c) in its entirety is
incurred by the Funds on a Class by Class basis and, accordingly, is wholly
allocated to specific Classes. All fees of a Fund's investment adviser and
custodian and all portfolio based fees of a Fund's fund accountant are incurred
by a Fund and not the individual Classes of the Fund. All other items in Section
3(c) are allocated to a specific Class to the extent they are attributable to
the Classes in different amounts.
SECTION 4. OTHER ALLOCATIONS AND WAIVERS/REIMBURSEMENTS
(a) EXPENSES APPLICABLE TO MORE THAN ONE FUND. Expenses (other than
Class Expenses) incurred by the Trust on behalf of a Fund shall be allocated to
that Fund and expenses (other than Class Expenses) incurred by the Trust on
behalf of more than one Fund shall be allocated among the Funds that incurred
the expenses based on the net asset values of the Funds in relation to the net
asset value of all Funds to which the expense relates.
(b) SETTLED SHARES METHOD Income, realized and unrealized capital gains
and losses and expenses other than Class Expenses related to a Fund shall be
allocated to each Class of the Fund based on the net asset value of the Class
(excluding the value of subscriptions receivable) in relation to the net asset
value of the Fund.
(c) WAIVERS AND REIMBURSEMENTS. Nothing in this Plan shall be construed
as limiting the ability of any person to waive any fee paid by a Fund or Class
to that person or to reimburse any or all expenses of a Fund or Class; provided,
however, that no waiver or reimbursement shall be made such that the waiver or
reimbursement is, in effect, a DE FACTO modification of the fees provided for in
the Fund's advisory or custody agreements.
SECTION 5. EXCHANGE PRIVILEGES
Shareholders of a Class may exchange their shares for shares of the
same Class of any other Fund and for the shares of the other funds (whether
series of the Trust or otherwise) listed in Appendix A in accordance with
Section 11(a) of the Act, the rules thereunder and the requirements of the
applicable prospectuses without charge.
SECTION 6. AMENDMENTS AND BOARD REVIEW
(a) NON-MATERIAL AMENDMENTS. Non-material amendments to this Plan
may be made at any time by Forum after consultation with the applicable Fund's
investment adviser.
(b) MATERIAL AMENDMENTS. Material amendments to this Plan may only be
made by a majority of the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust as defined by the Act, upon
a finding that the amendment is in the best interests of the Classes affected by
the amendment and of the Fund and the Trust. Prior to any material amendment to
this Plan, the Board of Trustees (the "Board") shall request such information as
may be reasonably necessary to evaluate the Plan as proposed to be amended.
(c) BOARD REVIEW. The Board, including a majority of those Trustees who
are not interested persons of the Trust as defined in the Act, shall review
periodically (i) this Plan for its continuing appropriateness and (ii) any fee
waivers and expense reimbursements to determine that the Funds are in compliance
with Section 4(c).
<PAGE>
FORUM FUNDS
MULTICLASS (RULE 18F-3) PLAN
APPENDIX A:
FUNDS AND EXCHANGE PRIVILEGES
as of May 19, 1998
<TABLE>
- ----------------------------------- ---------------------------------------- ----------------------------------------
Class Fund(a) Exchange Privileges(b)
<S> <C> <C>
---------------------------------------- ----------------------------------------
- ----------------------------------- ---------------------------------------- ----------------------------------------
Institutional Shares Daily Assets Government Fund None
---------------------------------------- ----------------------------------------
---------------------------------------- ----------------------------------------
Other Money Funds None
---------------------------------------- ----------------------------------------
- ----------------------------------- ---------------------------------------- ----------------------------------------
Institutional Service Shares Daily Assets Government Fund Institutional Shares of each
series of The CRM Funds(c)
Institutional Shares of each
series of Memorial Funds(c)
---------------------------------------- ----------------------------------------
---------------------------------------- ----------------------------------------
Other Money Funds None
---------------------------------------- ----------------------------------------
- ----------------------------------- ---------------------------------------- ----------------------------------------
Investor Shares Daily Assets Government Fund Each series of the Trust other
than the Funds
Each series of Sound Shore Fund,Inc. (c)
Each series of The Cutler Trust(c)
Investor Shares of each series
of The CRM Funds(c)
Institutional Shares of each
series of Memorial Funds(c)
---------------------------------------- ----------------------------------------
---------------------------------------- ----------------------------------------
Other Money Funds Each series of the Trust other
than the Funds
- ----------------------------------- ---------------------------------------- ----------------------------------------
</TABLE>
(a) Other Money Funds are: (i) Daily Assets Treasury Obligations Fund, (ii)
Daily Assets Government Obligations Fund, (iii) Daily Assets Cash Fund and (iv)
Daily Assets Municipal Fund.
(b) Shareholders of a Class also may exchange their shares for shares of the
same Class of any another Fund.
(c) While shareholders of the funds that are not series of the Trust may
exchange into the Fund indicated, shareholders of the Fund indicated may only
exchange into other funds that are not series of the Trust if the shareholder
originally exchanged from that other fund to the Fund.
